diff --git a/Documentation/git-remote-helpers.txt b/Documentation/git-remote-helpers.txt
index 58f6ad4994..18b8341f24 100644
--- a/Documentation/git-remote-helpers.txt
+++ b/Documentation/git-remote-helpers.txt
@@ -47,6 +47,9 @@ arguments. The first argument specifies a remote repository as in git;
 it is either the name of a configured remote or a URL. The second
 argument specifies a URL; it is usually of the form
 '<transport>://<address>', but any arbitrary string is possible.
+The 'GIT_DIR' environment variable is set up for the remote helper
+and can be used to determine where to store additional data or from
+which directory to invoke auxiliary git commands.
 
 When git encounters a URL of the form '<transport>://<address>', where
 '<transport>' is a protocol that it cannot handle natively, it
diff --git a/git-remote-testgit.py b/git-remote-testgit.py
index e4a99a33ef..b0c1e9b273 100644
--- a/git-remote-testgit.py
+++ b/git-remote-testgit.py
@@ -35,7 +35,7 @@ def get_repo(alias, url):
     prefix = 'refs/testgit/%s/' % alias
     debug("prefix: '%s'", prefix)
 
-    repo.gitdir = ""
+    repo.gitdir = os.environ["GIT_DIR"]
     repo.alias = alias
     repo.prefix = prefix
 
@@ -70,7 +70,6 @@ def do_capabilities(repo, args):
 
     print "import"
     print "export"
-    print "gitdir"
     print "refspec refs/heads/*:%s*" % repo.prefix
 
     print # end capabilities
@@ -150,22 +149,11 @@ def do_export(repo, args):
     repo.non_local.push(repo.gitdir)
 
 
-def do_gitdir(repo, args):
-    """Stores the location of the gitdir.
-    """
-
-    if not args:
-        die("gitdir needs an argument")
-
-    repo.gitdir = ' '.join(args)
-
-
 COMMANDS = {
     'capabilities': do_capabilities,
     'list': do_list,
     'import': do_import,
     'export': do_export,
-    'gitdir': do_gitdir,
 }
 
 
diff --git a/transport-helper.c b/transport-helper.c
index 34d18aaeda..6cccb20f8d 100644
--- a/transport-helper.c
+++ b/transport-helper.c
@@ -105,6 +105,12 @@ static struct child_process *get_helper(struct transport *transport)
 	int refspec_alloc = 0;
 	int duped;
 	int code;
+	char git_dir_buf[sizeof(GIT_DIR_ENVIRONMENT) + PATH_MAX + 1];
+	const char *helper_env[] = {
+		git_dir_buf,
+		NULL
+	};
+
 
 	if (data->helper)
 		return data->helper;
@@ -120,6 +126,10 @@ static struct child_process *get_helper(struct transport *transport)
 	helper->argv[2] = remove_ext_force(transport->url);
 	helper->git_cmd = 0;
 	helper->silent_exec_failure = 1;
+
+	snprintf(git_dir_buf, sizeof(git_dir_buf), "%s=%s", GIT_DIR_ENVIRONMENT, get_git_dir());
+	helper->env = helper_env;
+
 	code = start_command(helper);
 	if (code < 0 && errno == ENOENT)
 		die("Unable to find remote helper for '%s'", data->name);
@@ -174,11 +184,6 @@ static struct child_process *get_helper(struct transport *transport)
 			refspecs[refspec_nr++] = strdup(buf.buf + strlen("refspec "));
 		} else if (!strcmp(capname, "connect")) {
 			data->connect = 1;
-		} else if (!strcmp(buf.buf, "gitdir")) {
-			struct strbuf gitdir = STRBUF_INIT;
-			strbuf_addf(&gitdir, "gitdir %s\n", get_git_dir());
-			sendline(data, &gitdir);
-			strbuf_release(&gitdir);
 		} else if (mandatory) {
 			die("Unknown mandatory capability %s. This remote "
 			    "helper probably needs newer version of Git.\n",