diff --git a/.gitignore b/.gitignore
index 8054d9ddb8..a213e8e25b 100644
--- a/.gitignore
+++ b/.gitignore
@@ -141,7 +141,6 @@ git-write-tree
 git-core-*/?*
 gitk-wish
 gitweb/gitweb.cgi
-test-absolute-path
 test-chmtime
 test-date
 test-delta
@@ -149,6 +148,7 @@ test-dump-cache-tree
 test-genrandom
 test-match-trees
 test-parse-options
+test-path-utils
 test-sha1
 common-cmds.h
 *.tar.gz
diff --git a/Documentation/git.txt b/Documentation/git.txt
index adc027ce49..b7546aca1c 100644
--- a/Documentation/git.txt
+++ b/Documentation/git.txt
@@ -427,6 +427,14 @@ git so take care if using Cogito etc.
 	This can also be controlled by the '--work-tree' command line
 	option and the core.worktree configuration variable.
 
+'GIT_CEILING_DIRECTORIES'::
+	This should be a colon-separated list of absolute paths.
+	If set, it is a list of directories that git should not chdir
+	up into while looking for a repository directory.
+	It will not exclude the current working directory or
+	a GIT_DIR set on the command line or in the environment.
+	(Useful for excluding slow-loading network directories.)
+
 git Commits
 ~~~~~~~~~~~
 'GIT_AUTHOR_NAME'::
diff --git a/Makefile b/Makefile
index bddd1a7e48..4796565ab3 100644
--- a/Makefile
+++ b/Makefile
@@ -1265,7 +1265,7 @@ endif
 
 ### Testing rules
 
-TEST_PROGRAMS = test-chmtime$X test-genrandom$X test-date$X test-delta$X test-sha1$X test-match-trees$X test-absolute-path$X test-parse-options$X
+TEST_PROGRAMS = test-chmtime$X test-genrandom$X test-date$X test-delta$X test-sha1$X test-match-trees$X test-parse-options$X test-path-utils$X
 
 all:: $(TEST_PROGRAMS)
 
diff --git a/cache.h b/cache.h
index 96c43884cc..0d8eddac77 100644
--- a/cache.h
+++ b/cache.h
@@ -299,6 +299,7 @@ static inline enum object_type object_type(unsigned int mode)
 #define TEMPLATE_DIR_ENVIRONMENT "GIT_TEMPLATE_DIR"
 #define CONFIG_ENVIRONMENT "GIT_CONFIG"
 #define EXEC_PATH_ENVIRONMENT "GIT_EXEC_PATH"
+#define CEILING_DIRECTORIES_ENVIRONMENT "GIT_CEILING_DIRECTORIES"
 #define GITATTRIBUTES_FILE ".gitattributes"
 #define INFOATTRIBUTES_FILE "info/attributes"
 #define ATTRIBUTE_MACRO_PREFIX "[attr]"
@@ -526,6 +527,8 @@ static inline int is_absolute_path(const char *path)
 const char *make_absolute_path(const char *path);
 const char *make_nonrelative_path(const char *path);
 const char *make_relative_path(const char *abs, const char *base);
+int normalize_absolute_path(char *buf, const char *path);
+int longest_ancestor_length(const char *path, const char *prefix_list);
 
 /* Read and unpack a sha1 file into memory, write memory to a sha1 file */
 extern int sha1_object_info(const unsigned char *, unsigned long *);
diff --git a/path.c b/path.c
index 496123ca55..598325598b 100644
--- a/path.c
+++ b/path.c
@@ -343,3 +343,99 @@ const char *make_relative_path(const char *abs, const char *base)
 	strcpy(buf, abs + baselen);
 	return buf;
 }
+
+/*
+ * path = absolute path
+ * buf = buffer of at least max(2, strlen(path)+1) bytes
+ * It is okay if buf == path, but they should not overlap otherwise.
+ *
+ * Performs the following normalizations on path, storing the result in buf:
+ * - Removes trailing slashes.
+ * - Removes empty components.
+ * - Removes "." components.
+ * - Removes ".." components, and the components the precede them.
+ * "" and paths that contain only slashes are normalized to "/".
+ * Returns the length of the output.
+ *
+ * Note that this function is purely textual.  It does not follow symlinks,
+ * verify the existence of the path, or make any system calls.
+ */
+int normalize_absolute_path(char *buf, const char *path)
+{
+	const char *comp_start = path, *comp_end = path;
+	char *dst = buf;
+	int comp_len;
+	assert(buf);
+	assert(path);
+
+	while (*comp_start) {
+		assert(*comp_start == '/');
+		while (*++comp_end && *comp_end != '/')
+			; /* nothing */
+		comp_len = comp_end - comp_start;
+
+		if (!strncmp("/",  comp_start, comp_len) ||
+		    !strncmp("/.", comp_start, comp_len))
+			goto next;
+
+		if (!strncmp("/..", comp_start, comp_len)) {
+			while (dst > buf && *--dst != '/')
+				; /* nothing */
+			goto next;
+		}
+
+		memcpy(dst, comp_start, comp_len);
+		dst += comp_len;
+	next:
+		comp_start = comp_end;
+	}
+
+	if (dst == buf)
+		*dst++ = '/';
+
+	*dst = '\0';
+	return dst - buf;
+}
+
+/*
+ * path = Canonical absolute path
+ * prefix_list = Colon-separated list of absolute paths
+ *
+ * Determines, for each path in parent_list, whether the "prefix" really
+ * is an ancestor directory of path.  Returns the length of the longest
+ * ancestor directory, excluding any trailing slashes, or -1 if no prefix
+ * is an ancestor.  (Note that this means 0 is returned if prefix_list is
+ * "/".) "/foo" is not considered an ancestor of "/foobar".  Directories
+ * are not considered to be their own ancestors.  path must be in a
+ * canonical form: empty components, or "." or ".." components are not
+ * allowed.  prefix_list may be null, which is like "".
+ */
+int longest_ancestor_length(const char *path, const char *prefix_list)
+{
+	char buf[PATH_MAX+1];
+	const char *ceil, *colon;
+	int len, max_len = -1;
+
+	if (prefix_list == NULL || !strcmp(path, "/"))
+		return -1;
+
+	for (colon = ceil = prefix_list; *colon; ceil = colon+1) {
+		for (colon = ceil; *colon && *colon != ':'; colon++);
+		len = colon - ceil;
+		if (len == 0 || len > PATH_MAX || !is_absolute_path(ceil))
+			continue;
+		strlcpy(buf, ceil, len+1);
+		len = normalize_absolute_path(buf, buf);
+		/* Strip "trailing slashes" from "/". */
+		if (len == 1)
+			len = 0;
+
+		if (!strncmp(path, buf, len) &&
+		    path[len] == '/' &&
+		    len > max_len) {
+			max_len = len;
+		}
+	}
+
+	return max_len;
+}
diff --git a/setup.c b/setup.c
index cc3fb380c1..6cf909463d 100644
--- a/setup.c
+++ b/setup.c
@@ -376,11 +376,11 @@ const char *read_gitfile_gently(const char *path)
 const char *setup_git_directory_gently(int *nongit_ok)
 {
 	const char *work_tree_env = getenv(GIT_WORK_TREE_ENVIRONMENT);
+	const char *env_ceiling_dirs = getenv(CEILING_DIRECTORIES_ENVIRONMENT);
 	static char cwd[PATH_MAX+1];
 	const char *gitdirenv;
 	const char *gitfile_dir;
-	int len, offset;
-	int minoffset = 0;
+	int len, offset, ceil_offset;
 
 	/*
 	 * Let's assume that we are in a git repository.
@@ -431,8 +431,10 @@ const char *setup_git_directory_gently(int *nongit_ok)
 
 	if (!getcwd(cwd, sizeof(cwd)-1))
 		die("Unable to read current working directory");
-	if (has_dos_drive_prefix(cwd))
-		minoffset = 2;
+
+	ceil_offset = longest_ancestor_length(cwd, env_ceiling_dirs);
+	if (ceil_offset < 0 && has_dos_drive_prefix(cwd))
+		ceil_offset = 1;
 
 	/*
 	 * Test in the following order (relative to the cwd):
@@ -463,18 +465,17 @@ const char *setup_git_directory_gently(int *nongit_ok)
 			check_repository_format_gently(nongit_ok);
 			return NULL;
 		}
-		chdir("..");
-		do {
-			if (offset <= minoffset) {
-				if (nongit_ok) {
-					if (chdir(cwd))
-						die("Cannot come back to cwd");
-					*nongit_ok = 1;
-					return NULL;
-				}
-				die("Not a git repository");
+		while (--offset > ceil_offset && cwd[offset] != '/');
+		if (offset <= ceil_offset) {
+			if (nongit_ok) {
+				if (chdir(cwd))
+					die("Cannot come back to cwd");
+				*nongit_ok = 1;
+				return NULL;
 			}
-		} while (offset > minoffset && cwd[--offset] != '/');
+			die("Not a git repository");
+		}
+		chdir("..");
 	}
 
 	inside_git_dir = 0;
diff --git a/t/t0000-basic.sh b/t/t0000-basic.sh
index 690f80ab27..d7cbc5c6da 100755
--- a/t/t0000-basic.sh
+++ b/t/t0000-basic.sh
@@ -301,14 +301,14 @@ test_expect_success 'absolute path works as expected' '
 	mkdir third &&
 	dir="$(cd .git; pwd -P)" &&
 	dir2=third/../second/other/.git &&
-	test "$dir" = "$(test-absolute-path $dir2)" &&
+	test "$dir" = "$(test-path-utils make_absolute_path $dir2)" &&
 	file="$dir"/index &&
-	test "$file" = "$(test-absolute-path $dir2/index)" &&
+	test "$file" = "$(test-path-utils make_absolute_path $dir2/index)" &&
 	basename=blub &&
-	test "$dir/$basename" = "$(cd .git && test-absolute-path "$basename")" &&
+	test "$dir/$basename" = "$(cd .git && test-path-utils make_absolute_path "$basename")" &&
 	ln -s ../first/file .git/syml &&
 	sym="$(cd first; pwd -P)"/file &&
-	test "$sym" = "$(test-absolute-path "$dir2/syml")"
+	test "$sym" = "$(test-path-utils make_absolute_path "$dir2/syml")"
 '
 
 test_expect_success 'very long name in the index handled sanely' '
diff --git a/t/t0060-path-utils.sh b/t/t0060-path-utils.sh
new file mode 100755
index 0000000000..6e7501f352
--- /dev/null
+++ b/t/t0060-path-utils.sh
@@ -0,0 +1,87 @@
+#!/bin/sh
+#
+# Copyright (c) 2008 David Reiss
+#
+
+test_description='Test various path utilities'
+
+. ./test-lib.sh
+
+norm_abs() {
+	test_expect_success "normalize absolute" \
+	"test \$(test-path-utils normalize_absolute_path '$1') = '$2'"
+}
+
+ancestor() {
+	test_expect_success "longest ancestor" \
+	"test \$(test-path-utils longest_ancestor_length '$1' '$2') = '$3'"
+}
+
+norm_abs "" /
+norm_abs / /
+norm_abs // /
+norm_abs /// /
+norm_abs /. /
+norm_abs /./ /
+norm_abs /./.. /
+norm_abs /../. /
+norm_abs /./../.// /
+norm_abs /dir/.. /
+norm_abs /dir/sub/../.. /
+norm_abs /dir /dir
+norm_abs /dir// /dir
+norm_abs /./dir /dir
+norm_abs /dir/. /dir
+norm_abs /dir///./ /dir
+norm_abs /dir//sub/.. /dir
+norm_abs /dir/sub/../ /dir
+norm_abs //dir/sub/../. /dir
+norm_abs /dir/s1/../s2/ /dir/s2
+norm_abs /d1/s1///s2/..//../s3/ /d1/s3
+norm_abs /d1/s1//../s2/../../d2 /d2
+norm_abs /d1/.../d2 /d1/.../d2
+norm_abs /d1/..././../d2 /d1/d2
+
+ancestor / "" -1
+ancestor / / -1
+ancestor /foo "" -1
+ancestor /foo : -1
+ancestor /foo ::. -1
+ancestor /foo ::..:: -1
+ancestor /foo / 0
+ancestor /foo /fo -1
+ancestor /foo /foo -1
+ancestor /foo /foo/ -1
+ancestor /foo /bar -1
+ancestor /foo /bar/ -1
+ancestor /foo /foo/bar -1
+ancestor /foo /foo:/bar/ -1
+ancestor /foo /foo/:/bar/ -1
+ancestor /foo /foo::/bar/ -1
+ancestor /foo /:/foo:/bar/ 0
+ancestor /foo /foo:/:/bar/ 0
+ancestor /foo /:/bar/:/foo 0
+ancestor /foo/bar "" -1
+ancestor /foo/bar / 0
+ancestor /foo/bar /fo -1
+ancestor /foo/bar foo -1
+ancestor /foo/bar /foo 4
+ancestor /foo/bar /foo/ 4
+ancestor /foo/bar /foo/ba -1
+ancestor /foo/bar /:/fo 0
+ancestor /foo/bar /foo:/foo/ba 4
+ancestor /foo/bar /bar -1
+ancestor /foo/bar /bar/ -1
+ancestor /foo/bar /fo: -1
+ancestor /foo/bar :/fo -1
+ancestor /foo/bar /foo:/bar/ 4
+ancestor /foo/bar /:/foo:/bar/ 4
+ancestor /foo/bar /foo:/:/bar/ 4
+ancestor /foo/bar /:/bar/:/fo 0
+ancestor /foo/bar /:/bar/ 0
+ancestor /foo/bar :://foo/. 4
+ancestor /foo/bar :://foo/.:: 4
+ancestor /foo/bar //foo/./::/bar 4
+ancestor /foo/bar ::/bar -1
+
+test_done
diff --git a/t/t1504-ceiling-dirs.sh b/t/t1504-ceiling-dirs.sh
new file mode 100755
index 0000000000..91b704a3a4
--- /dev/null
+++ b/t/t1504-ceiling-dirs.sh
@@ -0,0 +1,163 @@
+#!/bin/sh
+
+test_description='test GIT_CEILING_DIRECTORIES'
+. ./test-lib.sh
+
+test_prefix() {
+	test_expect_success "$1" \
+	"test '$2' = \"\$(git rev-parse --show-prefix)\""
+}
+
+test_fail() {
+	test_expect_code 128 "$1: prefix" \
+	"git rev-parse --show-prefix"
+}
+
+TRASH_ROOT="$(pwd)"
+ROOT_PARENT=$(dirname "$TRASH_ROOT")
+
+
+unset GIT_CEILING_DIRECTORIES
+test_prefix no_ceil ""
+
+export GIT_CEILING_DIRECTORIES
+
+GIT_CEILING_DIRECTORIES=""
+test_prefix ceil_empty ""
+
+GIT_CEILING_DIRECTORIES="$ROOT_PARENT"
+test_prefix ceil_at_parent ""
+
+GIT_CEILING_DIRECTORIES="$ROOT_PARENT/"
+test_prefix ceil_at_parent_slash ""
+
+GIT_CEILING_DIRECTORIES="$TRASH_ROOT"
+test_prefix ceil_at_trash ""
+
+GIT_CEILING_DIRECTORIES="$TRASH_ROOT/"
+test_prefix ceil_at_trash_slash ""
+
+GIT_CEILING_DIRECTORIES="$TRASH_ROOT/sub"
+test_prefix ceil_at_sub ""
+
+GIT_CEILING_DIRECTORIES="$TRASH_ROOT/sub/"
+test_prefix ceil_at_sub_slash ""
+
+
+mkdir -p sub/dir || exit 1
+cd sub/dir || exit 1
+
+unset GIT_CEILING_DIRECTORIES
+test_prefix subdir_no_ceil "sub/dir/"
+
+export GIT_CEILING_DIRECTORIES
+
+GIT_CEILING_DIRECTORIES=""
+test_prefix subdir_ceil_empty "sub/dir/"
+
+GIT_CEILING_DIRECTORIES="$TRASH_ROOT"
+test_fail subdir_ceil_at_trash
+
+GIT_CEILING_DIRECTORIES="$TRASH_ROOT/"
+test_fail subdir_ceil_at_trash_slash
+
+GIT_CEILING_DIRECTORIES="$TRASH_ROOT/sub"
+test_fail subdir_ceil_at_sub
+
+GIT_CEILING_DIRECTORIES="$TRASH_ROOT/sub/"
+test_fail subdir_ceil_at_sub_slash
+
+GIT_CEILING_DIRECTORIES="$TRASH_ROOT/sub/dir"
+test_prefix subdir_ceil_at_subdir "sub/dir/"
+
+GIT_CEILING_DIRECTORIES="$TRASH_ROOT/sub/dir/"
+test_prefix subdir_ceil_at_subdir_slash "sub/dir/"
+
+
+GIT_CEILING_DIRECTORIES="$TRASH_ROOT/su"
+test_prefix subdir_ceil_at_su "sub/dir/"
+
+GIT_CEILING_DIRECTORIES="$TRASH_ROOT/su/"
+test_prefix subdir_ceil_at_su_slash "sub/dir/"
+
+GIT_CEILING_DIRECTORIES="$TRASH_ROOT/sub/di"
+test_prefix subdir_ceil_at_sub_di "sub/dir/"
+
+GIT_CEILING_DIRECTORIES="$TRASH_ROOT/sub/di"
+test_prefix subdir_ceil_at_sub_di_slash "sub/dir/"
+
+GIT_CEILING_DIRECTORIES="$TRASH_ROOT/subdi"
+test_prefix subdir_ceil_at_subdi "sub/dir/"
+
+GIT_CEILING_DIRECTORIES="$TRASH_ROOT/subdi"
+test_prefix subdir_ceil_at_subdi_slash "sub/dir/"
+
+
+GIT_CEILING_DIRECTORIES="foo:$TRASH_ROOT/sub"
+test_fail second_of_two
+
+GIT_CEILING_DIRECTORIES="$TRASH_ROOT/sub:bar"
+test_fail first_of_two
+
+GIT_CEILING_DIRECTORIES="foo:$TRASH_ROOT/sub:bar"
+test_fail second_of_three
+
+
+GIT_CEILING_DIRECTORIES="$TRASH_ROOT/sub"
+GIT_DIR=../../.git
+export GIT_DIR
+test_prefix git_dir_specified ""
+unset GIT_DIR
+
+
+cd ../.. || exit 1
+mkdir -p s/d || exit 1
+cd s/d || exit 1
+
+unset GIT_CEILING_DIRECTORIES
+test_prefix sd_no_ceil "s/d/"
+
+export GIT_CEILING_DIRECTORIES
+
+GIT_CEILING_DIRECTORIES=""
+test_prefix sd_ceil_empty "s/d/"
+
+GIT_CEILING_DIRECTORIES="$TRASH_ROOT"
+test_fail sd_ceil_at_trash
+
+GIT_CEILING_DIRECTORIES="$TRASH_ROOT/"
+test_fail sd_ceil_at_trash_slash
+
+GIT_CEILING_DIRECTORIES="$TRASH_ROOT/s"
+test_fail sd_ceil_at_s
+
+GIT_CEILING_DIRECTORIES="$TRASH_ROOT/s/"
+test_fail sd_ceil_at_s_slash
+
+GIT_CEILING_DIRECTORIES="$TRASH_ROOT/s/d"
+test_prefix sd_ceil_at_sd "s/d/"
+
+GIT_CEILING_DIRECTORIES="$TRASH_ROOT/s/d/"
+test_prefix sd_ceil_at_sd_slash "s/d/"
+
+
+GIT_CEILING_DIRECTORIES="$TRASH_ROOT/su"
+test_prefix sd_ceil_at_su "s/d/"
+
+GIT_CEILING_DIRECTORIES="$TRASH_ROOT/su/"
+test_prefix sd_ceil_at_su_slash "s/d/"
+
+GIT_CEILING_DIRECTORIES="$TRASH_ROOT/s/di"
+test_prefix sd_ceil_at_s_di "s/d/"
+
+GIT_CEILING_DIRECTORIES="$TRASH_ROOT/s/di"
+test_prefix sd_ceil_at_s_di_slash "s/d/"
+
+GIT_CEILING_DIRECTORIES="$TRASH_ROOT/sdi"
+test_prefix sd_ceil_at_sdi "s/d/"
+
+GIT_CEILING_DIRECTORIES="$TRASH_ROOT/sdi"
+test_prefix sd_ceil_at_sdi_slash "s/d/"
+
+
+test_done
diff --git a/t/test-lib.sh b/t/test-lib.sh
index c0c5e0e83b..8e2849b5ce 100644
--- a/t/test-lib.sh
+++ b/t/test-lib.sh
@@ -35,6 +35,7 @@ unset GIT_WORK_TREE
 unset GIT_EXTERNAL_DIFF
 unset GIT_INDEX_FILE
 unset GIT_OBJECT_DIRECTORY
+unset GIT_CEILING_DIRECTORIES
 unset SHA1_FILE_DIRECTORIES
 unset SHA1_FILE_DIRECTORY
 GIT_MERGE_VERBOSITY=5
diff --git a/test-absolute-path.c b/test-absolute-path.c
deleted file mode 100644
index c959ea20d3..0000000000
--- a/test-absolute-path.c
+++ /dev/null
@@ -1,11 +0,0 @@
-#include "cache.h"
-
-int main(int argc, char **argv)
-{
-	while (argc > 1) {
-		puts(make_absolute_path(argv[1]));
-		argc--;
-		argv++;
-	}
-	return 0;
-}
diff --git a/test-path-utils.c b/test-path-utils.c
new file mode 100644
index 0000000000..a0bcb0e210
--- /dev/null
+++ b/test-path-utils.c
@@ -0,0 +1,26 @@
+#include "cache.h"
+
+int main(int argc, char **argv)
+{
+	if (argc == 3 && !strcmp(argv[1], "normalize_absolute_path")) {
+		char *buf = xmalloc(strlen(argv[2])+1);
+		int rv = normalize_absolute_path(buf, argv[2]);
+		assert(strlen(buf) == rv);
+		puts(buf);
+	}
+
+	if (argc >= 2 && !strcmp(argv[1], "make_absolute_path")) {
+		while (argc > 2) {
+			puts(make_absolute_path(argv[2]));
+			argc--;
+			argv++;
+		}
+	}
+
+	if (argc == 4 && !strcmp(argv[1], "longest_ancestor_length")) {
+		int len = longest_ancestor_length(argv[2], argv[3]);
+		printf("%d\n", len);
+	}
+
+	return 0;
+}