diff --git a/Documentation/git.txt b/Documentation/git.txt
index 3b0d530257..75b3e1b87c 100644
--- a/Documentation/git.txt
+++ b/Documentation/git.txt
@@ -120,7 +120,10 @@ OPTIONS
 	variable.
 
 --bare::
-	Same as --git-dir=`pwd`.
+	Treat the repository as a bare repository.  If GIT_DIR
+	environment is not set, it is set to the current working
+	directory.
+
 
 FURTHER DOCUMENTATION
 ---------------------
diff --git a/git.c b/git.c
index b6e292e29f..fd3d83cd4c 100644
--- a/git.c
+++ b/git.c
@@ -94,7 +94,7 @@ static int handle_options(const char*** argv, int* argc, int* envchanged)
 		} else if (!strcmp(cmd, "--bare")) {
 			static char git_dir[PATH_MAX+1];
 			is_bare_repository_cfg = 1;
-			setenv(GIT_DIR_ENVIRONMENT, getcwd(git_dir, sizeof(git_dir)), 1);
+			setenv(GIT_DIR_ENVIRONMENT, getcwd(git_dir, sizeof(git_dir)), 0);
 			if (envchanged)
 				*envchanged = 1;
 		} else {