diff --git a/Documentation/git-clone.txt b/Documentation/git-clone.txt
index bfddb21fee..874934a332 100644
--- a/Documentation/git-clone.txt
+++ b/Documentation/git-clone.txt
@@ -11,8 +11,7 @@ SYNOPSIS
 [verse]
 'git-clone' [--template=<template_directory>] [-l [-s]] [-q] [-n] [--bare]
 	  [-o <name>] [-u <upload-pack>] [--reference <repository>]
-	  [--use-separate-remote | --no-separate-remote] <repository>
-	  [<directory>]
+	  <repository> [<directory>]
 
 DESCRIPTION
 -----------
@@ -99,18 +98,6 @@ OPTIONS
 	if unset the templates are taken from the installation
 	defined default, typically `/usr/share/git-core/templates`.
 
---use-separate-remote::
-	Save remotes heads under `$GIT_DIR/refs/remotes/origin/` instead
-	of `$GIT_DIR/refs/heads/`.  Only the local master branch is
-	saved in the latter. This is the default.
-
---no-separate-remote::
-	Save remotes heads in the same namespace as the local
-	heads, `$GIT_DIR/refs/heads/'.  In regular repositories,
-	this is a legacy setup git-clone created by default in
-	older Git versions, and will be removed before the next
-	major release.
-
 <repository>::
 	The (possibly remote) repository to clone from.  It can
 	be any URL git-fetch supports.
diff --git a/builtin-init-db.c b/builtin-init-db.c
index 1d7d15e8d5..01f366ad0b 100644
--- a/builtin-init-db.c
+++ b/builtin-init-db.c
@@ -124,8 +124,11 @@ static void copy_templates(const char *git_dir, int len, const char *template_di
 	int template_len;
 	DIR *dir;
 
-	if (!template_dir)
-		template_dir = DEFAULT_GIT_TEMPLATE_DIR;
+	if (!template_dir) {
+		template_dir = getenv(TEMPLATE_DIR_ENVIRONMENT);
+		if (!template_dir)
+			template_dir = DEFAULT_GIT_TEMPLATE_DIR;
+	}
 	strcpy(template_path, template_dir);
 	template_len = strlen(template_path);
 	if (template_path[template_len-1] != '/') {
diff --git a/builtin-repo-config.c b/builtin-repo-config.c
index a7ab4cee58..90633119d4 100644
--- a/builtin-repo-config.c
+++ b/builtin-repo-config.c
@@ -66,10 +66,10 @@ static int get_value(const char* key_, const char* regex_)
 	char *global = NULL, *repo_config = NULL;
 	const char *local;
 
-	local = getenv("GIT_CONFIG");
+	local = getenv(CONFIG_ENVIRONMENT);
 	if (!local) {
 		const char *home = getenv("HOME");
-		local = getenv("GIT_CONFIG_LOCAL");
+		local = getenv(CONFIG_LOCAL_ENVIRONMENT);
 		if (!local)
 			local = repo_config = xstrdup(git_path("config"));
 		if (home)
diff --git a/cache.h b/cache.h
index 8ad5920d2b..4943056c19 100644
--- a/cache.h
+++ b/cache.h
@@ -122,6 +122,10 @@ extern int cache_errno;
 #define DB_ENVIRONMENT "GIT_OBJECT_DIRECTORY"
 #define INDEX_ENVIRONMENT "GIT_INDEX_FILE"
 #define GRAFT_ENVIRONMENT "GIT_GRAFT_FILE"
+#define TEMPLATE_DIR_ENVIRONMENT "GIT_TEMPLATE_DIR"
+#define CONFIG_ENVIRONMENT "GIT_CONFIG"
+#define CONFIG_LOCAL_ENVIRONMENT "GIT_CONFIG_LOCAL"
+#define EXEC_PATH_ENVIRONMENT "GIT_EXEC_PATH"
 
 extern int is_bare_git_dir(const char *dir);
 extern const char *get_git_dir(void);
diff --git a/config.c b/config.c
index e86b2328ab..1662a4626e 100644
--- a/config.c
+++ b/config.c
@@ -349,10 +349,10 @@ int git_config(config_fn_t fn)
 	 * $GIT_CONFIG_LOCAL will make it process it in addition to the
 	 * global config file, the same way it would the per-repository
 	 * config file otherwise. */
-	filename = getenv("GIT_CONFIG");
+	filename = getenv(CONFIG_ENVIRONMENT);
 	if (!filename) {
 		home = getenv("HOME");
-		filename = getenv("GIT_CONFIG_LOCAL");
+		filename = getenv(CONFIG_LOCAL_ENVIRONMENT);
 		if (!filename)
 			filename = repo_config = xstrdup(git_path("config"));
 	}
@@ -543,9 +543,9 @@ int git_config_set_multivar(const char* key, const char* value,
 	char* lock_file;
 	const char* last_dot = strrchr(key, '.');
 
-	config_filename = getenv("GIT_CONFIG");
+	config_filename = getenv(CONFIG_ENVIRONMENT);
 	if (!config_filename) {
-		config_filename = getenv("GIT_CONFIG_LOCAL");
+		config_filename = getenv(CONFIG_LOCAL_ENVIRONMENT);
 		if (!config_filename)
 			config_filename  = git_path("config");
 	}
@@ -753,9 +753,9 @@ int git_config_rename_section(const char *old_name, const char *new_name)
 	int out_fd;
 	char buf[1024];
 
-	config_filename = getenv("GIT_CONFIG");
+	config_filename = getenv(CONFIG_ENVIRONMENT);
 	if (!config_filename) {
-		config_filename = getenv("GIT_CONFIG_LOCAL");
+		config_filename = getenv(CONFIG_LOCAL_ENVIRONMENT);
 		if (!config_filename)
 			config_filename  = git_path("config");
 	}
diff --git a/exec_cmd.c b/exec_cmd.c
index 5d6a1247b4..3996bce33f 100644
--- a/exec_cmd.c
+++ b/exec_cmd.c
@@ -21,7 +21,7 @@ const char *git_exec_path(void)
 	if (current_exec_path)
 		return current_exec_path;
 
-	env = getenv("GIT_EXEC_PATH");
+	env = getenv(EXEC_PATH_ENVIRONMENT);
 	if (env && *env) {
 		return env;
 	}
@@ -35,7 +35,7 @@ int execv_git_cmd(const char **argv)
 	char git_command[PATH_MAX + 1];
 	int i;
 	const char *paths[] = { current_exec_path,
-				getenv("GIT_EXEC_PATH"),
+				getenv(EXEC_PATH_ENVIRONMENT),
 				builtin_exec_path };
 
 	for (i = 0; i < ARRAY_SIZE(paths); ++i) {
diff --git a/git-clone.sh b/git-clone.sh
index 1f5d07a057..490f3e48db 100755
--- a/git-clone.sh
+++ b/git-clone.sh
@@ -14,7 +14,7 @@ die() {
 }
 
 usage() {
-	die "Usage: $0 [--template=<template_directory>] [--no-separate-remote] [--reference <reference-repo>] [--bare] [-l [-s]] [-q] [-u <upload-pack>] [--origin <name>] [-n] <repo> [<dir>]"
+	die "Usage: $0 [--template=<template_directory>] [--reference <reference-repo>] [--bare] [-l [-s]] [-q] [-u <upload-pack>] [--origin <name>] [-n] <repo> [<dir>]"
 }
 
 get_repo_base() {
@@ -137,11 +137,9 @@ while
 	*,--template=*)
 	  template="$1" ;;
 	*,-q|*,--quiet) quiet=-q ;;
-	*,--use-separate-remote)
-		# default
-		use_separate_remote=t ;;
+	*,--use-separate-remote) ;;
 	*,--no-separate-remote)
-		use_separate_remote= ;;
+		die "clones are always made with separate-remote layout" ;;
 	1,--reference) usage ;;
 	*,--reference)
 		shift; reference="$1" ;;
@@ -327,12 +325,8 @@ cd "$D" || exit
 
 if test -z "$bare" && test -f "$GIT_DIR/REMOTE_HEAD"
 then
-	# Figure out which remote branch HEAD points at.
-	case "$use_separate_remote" in
-	'')	remote_top=refs/heads ;;
-	*)	remote_top="refs/remotes/$origin" ;;
-	esac
-
+	# a non-bare repository is always in separate-remote layout
+	remote_top="refs/remotes/$origin"
 	head_sha1=`cat "$GIT_DIR/REMOTE_HEAD"`
 	case "$head_sha1" in
 	'ref: refs/'*)
@@ -366,41 +360,26 @@ then
 		)
 	)
 
-	# Write out remotes/$origin file, and update our "$head_points_at".
+	# Write out remote.$origin config, and update our "$head_points_at".
 	case "$head_points_at" in
 	?*)
-		mkdir -p "$GIT_DIR/remotes" &&
+		# Local default branch
 		git-symbolic-ref HEAD "refs/heads/$head_points_at" &&
-		case "$use_separate_remote" in
-		t)	origin_track="$remote_top/$head_points_at"
-			git-update-ref HEAD "$head_sha1" ;;
-		*)	origin_track="$remote_top/$origin"
-			git-update-ref "refs/heads/$origin" "$head_sha1" ;;
-		esac &&
+
+		# Tracking branch for the primary branch at the remote.
+		origin_track="$remote_top/$head_points_at" &&
+		git-update-ref HEAD "$head_sha1" &&
+
+		# Upstream URL
 		git-repo-config remote."$origin".url "$repo" &&
+
+		# Set up the mappings to track the remote branches.
 		git-repo-config remote."$origin".fetch \
-			"refs/heads/$head_points_at:$origin_track" &&
-		(cd "$GIT_DIR/$remote_top" && find . -type f -print) |
-		while read dotslref
-		do
-			name=`expr "$dotslref" : './\(.*\)'`
-			if test "z$head_points_at" = "z$name"
-			then
-				continue
-			fi
-			if test "$use_separate_remote" = '' &&
-			   test "z$origin" = "z$name"
-			then
-				continue
-			fi
-			git-repo-config remote."$origin".fetch "refs/heads/${name}:$remote_top/${name}" '^$'
-		done &&
-		case "$use_separate_remote" in
-		t)
-			rm -f "refs/remotes/$origin/HEAD"
-			git-symbolic-ref "refs/remotes/$origin/HEAD" \
-				"refs/remotes/$origin/$head_points_at"
-		esac &&
+			"refs/heads/*:$remote_top/*" '^$' &&
+		rm -f "refs/remotes/$origin/HEAD"
+		git-symbolic-ref "refs/remotes/$origin/HEAD" \
+			"refs/remotes/$origin/$head_points_at" &&
+
 		git-repo-config branch."$head_points_at".remote "$origin" &&
 		git-repo-config branch."$head_points_at".merge "refs/heads/$head_points_at"
 	esac
diff --git a/git-parse-remote.sh b/git-parse-remote.sh
index bc881cc5f9..ea7511e8a0 100755
--- a/git-parse-remote.sh
+++ b/git-parse-remote.sh
@@ -132,7 +132,6 @@ canon_refs_list_for_fetch () {
 	# or the first one otherwise; add prefix . to the rest
 	# to prevent the secondary branches to be merged by default.
 	merge_branches=
-	found_mergeref=
 	curr_branch=
 	if test "$1" = "-d"
 	then
@@ -142,7 +141,8 @@ canon_refs_list_for_fetch () {
 			curr_branch=$(git-symbolic-ref HEAD | \
 			    sed -e 's|^refs/heads/||')
 			merge_branches=$(git-repo-config \
-			    --get-all "branch.${curr_branch}.merge")
+			    --get-all "branch.${curr_branch}.merge") ||
+			merge_branches=.this.would.never.match.any.ref.
 		fi
 		set x $(expand_refs_wildcard "$@")
 		shift
@@ -171,10 +171,6 @@ canon_refs_list_for_fetch () {
 			    dot_prefix= && break
 			done
 		fi
-		if test -z $dot_prefix
-		then
-			found_mergeref=true
-		fi
 		case "$remote" in
 		'') remote=HEAD ;;
 		refs/heads/* | refs/tags/* | refs/remotes/*) ;;
@@ -195,11 +191,6 @@ canon_refs_list_for_fetch () {
 		fi
 		echo "${dot_prefix}${force}${remote}:${local}"
 	done
-	if test -z "$found_mergeref" -a "$curr_branch"
-	then
-		echo >&2 "Warning: No merge candidate found because value of config option
-         \"branch.${curr_branch}.merge\" does not match any remote branch fetched."
-	fi
 }
 
 # Returns list of src: (no store), or src:dst (store)
diff --git a/git-pull.sh b/git-pull.sh
index e23beb685d..1703091bbb 100755
--- a/git-pull.sh
+++ b/git-pull.sh
@@ -76,6 +76,10 @@ merge_head=$(sed -e '/	not-for-merge	/d' \
 
 case "$merge_head" in
 '')
+	curr_branch=$(git-symbolic-ref HEAD | \
+		sed -e 's|^refs/heads/||')
+	echo >&2 "Warning: No merge candidate found because value of config option
+         \"branch.${curr_branch}.merge\" does not match any remote branch fetched."
 	echo >&2 "No changes."
 	exit 0
 	;;
diff --git a/merge-recursive.c b/merge-recursive.c
index 1de273ea1e..ae7ae4cd2a 100644
--- a/merge-recursive.c
+++ b/merge-recursive.c
@@ -1272,7 +1272,7 @@ int main(int argc, char *argv[])
 	struct commit *result, *h1, *h2;
 
 	git_config(git_default_config); /* core.filemode */
-	original_index_file = getenv("GIT_INDEX_FILE");
+	original_index_file = getenv(INDEX_ENVIRONMENT);
 
 	if (!original_index_file)
 		original_index_file = xstrdup(git_path("index"));
diff --git a/t/t5510-fetch.sh b/t/t5510-fetch.sh
index a11ab0ad41..90eeeba2a3 100755
--- a/t/t5510-fetch.sh
+++ b/t/t5510-fetch.sh
@@ -23,15 +23,14 @@ test_expect_success "clone and setup child repos" '
 	git clone . two &&
 	cd two &&
 	git repo-config branch.master.remote one &&
-	{
-		echo "URL: ../one/.git/"
-		echo "Pull: refs/heads/master:refs/heads/one"
-	} >.git/remotes/one
+	git repo-config remote.one.url ../one/.git/ &&
+	git repo-config remote.one.fetch refs/heads/master:refs/heads/one &&
 	cd .. &&
 	git clone . three &&
 	cd three &&
 	git repo-config branch.master.remote two &&
 	git repo-config branch.master.merge refs/heads/one &&
+	mkdir -p .git/remotes &&
 	{
 		echo "URL: ../two/.git/"
 		echo "Pull: refs/heads/master:refs/heads/two"
diff --git a/t/test-lib.sh b/t/test-lib.sh
index ac7be769b4..f0f9cd6be0 100755
--- a/t/test-lib.sh
+++ b/t/test-lib.sh
@@ -208,8 +208,9 @@ test_done () {
 # t/ subdirectory and are run in trash subdirectory.
 PATH=$(pwd)/..:$PATH
 GIT_EXEC_PATH=$(pwd)/..
+GIT_TEMPLATE_DIR=$(pwd)/../templates/blt
 HOME=$(pwd)/trash
-export PATH GIT_EXEC_PATH HOME
+export PATH GIT_EXEC_PATH GIT_TEMPLATE_DIR HOME
 
 GITPERLLIB=$(pwd)/../perl/blib/lib:$(pwd)/../perl/blib/arch/auto/Git
 export GITPERLLIB
diff --git a/templates/remotes-- b/templates/remotes--
deleted file mode 100644
index fae88709a6..0000000000
--- a/templates/remotes--
+++ /dev/null
@@ -1 +0,0 @@
-: this is just to ensure the directory exists.