diff --git a/setup.c b/setup.c
index fc592dc6dd..a09b7b87ec 100644
--- a/setup.c
+++ b/setup.c
@@ -1359,7 +1359,8 @@ static enum discovery_result setup_git_directory_gently_1(struct strbuf *dir,
 
 		if (is_git_directory(dir->buf)) {
 			trace2_data_string("setup", NULL, "implicit-bare-repository", dir->buf);
-			if (get_allowed_bare_repo() == ALLOWED_BARE_REPO_EXPLICIT)
+			if (get_allowed_bare_repo() == ALLOWED_BARE_REPO_EXPLICIT &&
+			    !ends_with_path_components(dir->buf, ".git"))
 				return GIT_DIR_DISALLOWED_BARE;
 			if (!ensure_valid_ownership(NULL, NULL, dir->buf, report))
 				return GIT_DIR_INVALID_OWNERSHIP;
diff --git a/t/t0035-safe-bare-repository.sh b/t/t0035-safe-bare-repository.sh
index 038b8b788d..8048856379 100755
--- a/t/t0035-safe-bare-repository.sh
+++ b/t/t0035-safe-bare-repository.sh
@@ -78,4 +78,12 @@ test_expect_success 'no trace when GIT_DIR is explicitly provided' '
 	expect_accepted_explicit "$pwd/outer-repo/bare-repo"
 '
 
+test_expect_success 'no trace when "bare repository" is .git' '
+	expect_accepted_implicit -C outer-repo/.git
+'
+
+test_expect_success 'no trace when "bare repository" is a subdir of .git' '
+	expect_accepted_implicit -C outer-repo/.git/objects
+'
+
 test_done