diff --git a/doc/vcsh.1.ronn b/doc/vcsh.1.ronn
index 89ebff5a161a60eb8a1b2857259392a7addf1133..56df4ed26e74cdbb7a4109056b8415570843d846 100644
--- a/doc/vcsh.1.ronn
+++ b/doc/vcsh.1.ronn
@@ -184,6 +184,15 @@ Interesting knobs you can turn:
 
   Defaults to <exact>.
 
+* <$VCSH_VCSH_WORKTREE>:
+  Can be <absolute>, or <relative>.
+
+  <absolute> will set an absolute path; defaulting to <$HOME>.
+
+  <relative> will set a path relative to <$GIT_DIR>.
+
+  Defaults to <absolute>.
+
 Less interesting knobs you could turn:
 
 * <$VCSH_DEBUG>:
diff --git a/vcsh b/vcsh
index 2ec49557b39b6d00d39d37eb70762d7fe5956538..d1283e4e3e8bc3bc9bbf9ba4962ca8ec4fd5ee81 100755
--- a/vcsh
+++ b/vcsh
@@ -81,6 +81,11 @@ fi
 [ -z "$VCSH_HOOK_D" ]                 && VCSH_HOOK_D="$XDG_CONFIG_HOME/vcsh/hooks-enabled"
 [ -z "$VCSH_BASE" ]                   && VCSH_BASE="$HOME"
 [ -z "$VCSH_GITIGNORE" ]              && VCSH_GITIGNORE='exact'
+[ -z "$VCSH_WORKTREE" ]               && VCSH_WORKTREE='absolute'
+
+if [ ! "x$VCSH_WORKTREE" = 'xabsolute' ] && [ ! "x$VCSH_WORKTREE" = 'xrelative' ]; then
+	fatal "'\$VCSH_WORKTREE' must equal 'absolute', or 'relative'" 1
+fi
 
 
 help() {
@@ -214,9 +219,8 @@ hook() {
 init() {
 	hook pre-init
 	[ ! -e "$GIT_DIR" ] || fatal "'$GIT_DIR' exists" 10
-	export GIT_WORK_TREE="$VCSH_BASE"
-	mkdir -p "$GIT_WORK_TREE" || fatal "could not create '$GIT_WORK_TREE'" 50
-	cd "$GIT_WORK_TREE" || fatal "could not enter '$GIT_WORK_TREE'" 11
+	mkdir -p "$VCSH_BASE" || fatal "could not create '$VCSH_BASE'" 50
+	cd "$VCSH_BASE" || fatal "could not enter '$VCSH_BASE'" 11
 	git init
 	upgrade
 	hook post-init
@@ -269,7 +273,6 @@ push() {
 }
 
 retire() {
-	unset GIT_WORK_TREE
 	unset VCSH_DIRECTORY
 }
 
@@ -311,17 +314,26 @@ status() {
 
 upgrade() {
 	hook pre-upgrade
-	use
-	git config core.worktree     "$GIT_WORK_TREE"
+	# fake-bare repositories are not bare, actually. Set this to false
+	# because otherwise Git complains "fatal: core.bare and core.worktree
+	# do not make sense"
+	git config core.bare false
+	# core.worktree may be absolute or relative to $GIT_DIR, depending on
+	# user preference
+	if [ ! "x$VCSH_WORKTREE" = 'xabsolute' ]; then
+		git config core.worktree $(cd $GIT_DIR && GIT_WORK_TREE="$VCSH_BASE" git rev-parse --show-cdup)
+	elif [ ! "x$VCSH_WORKTREE" = 'xrelative' ]; then
+		git config core.worktree "$VCSH_BASE"
+	fi
 	[ ! "x$VCSH_GITIGNORE" = 'xnone' ] && git config core.excludesfile ".gitignore.d/$VCSH_REPO_NAME"
 	git config vcsh.vcsh         'true'
+	use
 	[ -e "$VCSH_BASE/.gitignore.d/$VCSH_REPO_NAME" ] && git add -f "$VCSH_BASE/.gitignore.d/$VCSH_REPO_NAME"
 	hook post-upgrade
 }
 
 use() {
 	git_dir_exists
-	export GIT_WORK_TREE="$(git config --get core.worktree)"
 	export VCSH_DIRECTORY="$VCSH_REPO_NAME"
 }