diff --git a/setup.c b/setup.c
index 7975230ffb..8c84ec9d4b 100644
--- a/setup.c
+++ b/setup.c
@@ -2028,6 +2028,8 @@ void initialize_repository_version(int hash_algo,
 	if (ref_storage_format != REF_STORAGE_FORMAT_FILES)
 		git_config_set("extensions.refstorage",
 			       ref_storage_format_to_name(ref_storage_format));
+	else if (reinit)
+		git_config_set_gently("extensions.refstorage", NULL);
 }
 
 static int is_reinit(void)