diff --git a/setup.c b/setup.c
index df97ad3976..f108c4b990 100644
--- a/setup.c
+++ b/setup.c
@@ -622,24 +622,23 @@ static dev_t get_device_or_die(const char *path, const char *prefix, int prefix_
 }
 
 /*
- * A "string_list_each_func_t" function that normalizes an entry from
- * GIT_CEILING_DIRECTORIES or discards it if unusable.
+ * A "string_list_each_func_t" function that canonicalizes an entry
+ * from GIT_CEILING_DIRECTORIES using real_path_if_valid(), or
+ * discards it if unusable.
  */
-static int normalize_ceiling_entry(struct string_list_item *item, void *unused)
+static int canonicalize_ceiling_entry(struct string_list_item *item,
+				      void *unused)
 {
-	const char *ceil = item->string;
-	int len = strlen(ceil);
-	char buf[PATH_MAX+1];
+	char *ceil = item->string;
+	const char *real_path;
 
-	if (len == 0 || len > PATH_MAX || !is_absolute_path(ceil))
+	if (!*ceil || !is_absolute_path(ceil))
 		return 0;
-	if (normalize_path_copy(buf, ceil) < 0)
+	real_path = real_path_if_valid(ceil);
+	if (!real_path)
 		return 0;
-	len = strlen(buf);
-	if (len > 1 && buf[len-1] == '/')
-		buf[--len] = '\0';
 	free(item->string);
-	item->string = xstrdup(buf);
+	item->string = xstrdup(real_path);
 	return 1;
 }
 
@@ -681,7 +680,8 @@ static const char *setup_git_directory_gently_1(int *nongit_ok)
 
 	if (env_ceiling_dirs) {
 		string_list_split(&ceiling_dirs, env_ceiling_dirs, PATH_SEP, -1);
-		filter_string_list(&ceiling_dirs, 0, normalize_ceiling_entry, NULL);
+		filter_string_list(&ceiling_dirs, 0,
+				   canonicalize_ceiling_entry, NULL);
 		ceil_offset = longest_ancestor_length(cwd, &ceiling_dirs);
 		string_list_clear(&ceiling_dirs, 0);
 	}