diff --git a/setup.c b/setup.c
index 393b970ae4..02e5a71779 100644
--- a/setup.c
+++ b/setup.c
@@ -920,10 +920,14 @@ int verify_repository_format(const struct repository_format *format,
 void read_gitfile_error_die(int error_code, const char *path, const char *dir)
 {
 	switch (error_code) {
-	case READ_GITFILE_ERR_STAT_FAILED:
-	case READ_GITFILE_ERR_NOT_A_FILE:
+	case READ_GITFILE_ERR_MISSING:
+	case READ_GITFILE_ERR_IS_A_DIR:
 		/* non-fatal; follow return path */
 		break;
+	case READ_GITFILE_ERR_STAT_FAILED:
+		die(_("error reading '%s'"), path);
+	case READ_GITFILE_ERR_NOT_A_FILE:
+		die(_("not a regular file: '%s'"), path);
 	case READ_GITFILE_ERR_OPEN_FAILED:
 		die_errno(_("error opening '%s'"), path);
 	case READ_GITFILE_ERR_TOO_LARGE:
@@ -964,8 +968,14 @@ const char *read_gitfile_gently(const char *path, int *return_error_code)
 	static struct strbuf realpath = STRBUF_INIT;
 
 	if (stat(path, &st)) {
-		/* NEEDSWORK: discern between ENOENT vs other errors */
-		error_code = READ_GITFILE_ERR_STAT_FAILED;
+		if (errno == ENOENT || errno == ENOTDIR)
+			error_code = READ_GITFILE_ERR_MISSING;
+		else
+			error_code = READ_GITFILE_ERR_STAT_FAILED;
+		goto cleanup_return;
+	}
+	if (S_ISDIR(st.st_mode)) {
+		error_code = READ_GITFILE_ERR_IS_A_DIR;
 		goto cleanup_return;
 	}
 	if (!S_ISREG(st.st_mode)) {
@@ -1601,20 +1611,31 @@ static enum discovery_result setup_git_directory_gently_1(struct strbuf *dir,
 		if (offset > min_offset)
 			strbuf_addch(dir, '/');
 		strbuf_addstr(dir, DEFAULT_GIT_DIR_ENVIRONMENT);
-		gitdirenv = read_gitfile_gently(dir->buf, die_on_error ?
-						NULL : &error_code);
+		gitdirenv = read_gitfile_gently(dir->buf, &error_code);
 		if (!gitdirenv) {
-			if (die_on_error ||
-			    error_code == READ_GITFILE_ERR_NOT_A_FILE) {
-				/* NEEDSWORK: fail if .git is not file nor dir */
+			switch (error_code) {
+			case READ_GITFILE_ERR_MISSING:
+				/* no .git in this directory, move on */
+				break;
+			case READ_GITFILE_ERR_IS_A_DIR:
 				if (is_git_directory(dir->buf)) {
 					gitdirenv = DEFAULT_GIT_DIR_ENVIRONMENT;
 					gitdir_path = xstrdup(dir->buf);
 				}
-			} else if (error_code != READ_GITFILE_ERR_STAT_FAILED)
-				return GIT_DIR_INVALID_GITFILE;
-		} else
+				/*
+				 * NEEDSWORK: should we catch a directory .git
+				 * that is not a git directory here?
+				 */
+				break;
+			default:
+				if (die_on_error || error_code == READ_GITFILE_ERR_NOT_A_FILE)
+					read_gitfile_error_die(error_code, dir->buf, NULL);
+				else
+					return GIT_DIR_INVALID_GITFILE;
+			}
+		} else {
 			gitfile = xstrdup(dir->buf);
+		}
 		/*
 		 * Earlier, we tentatively added DEFAULT_GIT_DIR_ENVIRONMENT
 		 * to check that directory for a repository.
diff --git a/setup.h b/setup.h
index bcb16b0b4a..80bc6e5f07 100644
--- a/setup.h
+++ b/setup.h
@@ -36,6 +36,8 @@ int is_nonbare_repository_dir(struct strbuf *path);
 #define READ_GITFILE_ERR_NO_PATH 6
 #define READ_GITFILE_ERR_NOT_A_REPO 7
 #define READ_GITFILE_ERR_TOO_LARGE 8
+#define READ_GITFILE_ERR_MISSING 9
+#define READ_GITFILE_ERR_IS_A_DIR 10
 void read_gitfile_error_die(int error_code, const char *path, const char *dir);
 const char *read_gitfile_gently(const char *path, int *return_error_code);
 #define read_gitfile(path) read_gitfile_gently((path), NULL)
diff --git a/submodule.c b/submodule.c
index 4f9aaa2c75..cd879a5cfe 100644
--- a/submodule.c
+++ b/submodule.c
@@ -2559,7 +2559,7 @@ void absorb_git_dir_into_superproject(const char *path,
 		const struct submodule *sub;
 		struct strbuf sub_gitdir = STRBUF_INIT;
 
-		if (err_code == READ_GITFILE_ERR_STAT_FAILED) {
+		if (err_code == READ_GITFILE_ERR_MISSING) {
 			/* unpopulated as expected */
 			strbuf_release(&gitdir);
 			return;
diff --git a/t/meson.build b/t/meson.build
index 89b7a9cf58..7d3b59248d 100644
--- a/t/meson.build
+++ b/t/meson.build
@@ -81,6 +81,7 @@ integration_tests = [
   't0006-date.sh',
   't0007-git-var.sh',
   't0008-ignores.sh',
+  't0009-git-dir-validation.sh',
   't0010-racy-git.sh',
   't0012-help.sh',
   't0013-sha1dc.sh',
diff --git a/t/t0009-git-dir-validation.sh b/t/t0009-git-dir-validation.sh
new file mode 100755
index 0000000000..7e2c711a63
--- /dev/null
+++ b/t/t0009-git-dir-validation.sh
@@ -0,0 +1,77 @@
+#!/bin/sh
+
+test_description='setup: validation of .git file/directory types
+
+Verify that setup_git_directory() correctly handles:
+1. Valid .git directories (including symlinks to them).
+2. Invalid .git files (FIFOs, sockets) by erroring out.
+3. Invalid .git files (garbage) by erroring out.
+'
+
+. ./test-lib.sh
+
+test_expect_success 'setup: create parent git repository' '
+	git init parent &&
+	test_commit -C parent "root-commit"
+'
+
+test_expect_success SYMLINKS 'setup: .git as a symlink to a directory is valid' '
+	test_when_finished "rm -rf parent/link-to-dir" &&
+	mkdir -p parent/link-to-dir &&
+	(
+		cd parent/link-to-dir &&
+		git init real-repo &&
+		ln -s real-repo/.git .git &&
+		git rev-parse --git-dir >actual &&
+		echo .git >expect &&
+		test_cmp expect actual
+	)
+'
+
+test_expect_success PIPE 'setup: .git as a FIFO (named pipe) is rejected' '
+	test_when_finished "rm -rf parent/fifo-trap" &&
+	mkdir -p parent/fifo-trap &&
+	(
+		cd parent/fifo-trap &&
+		mkfifo .git &&
+		test_must_fail git rev-parse --git-dir 2>stderr &&
+		grep "not a regular file" stderr
+	)
+'
+
+test_expect_success SYMLINKS,PIPE 'setup: .git as a symlink to a FIFO is rejected' '
+	test_when_finished "rm -rf parent/symlink-fifo-trap" &&
+	mkdir -p parent/symlink-fifo-trap &&
+	(
+		cd parent/symlink-fifo-trap &&
+		mkfifo target-fifo &&
+		ln -s target-fifo .git &&
+		test_must_fail git rev-parse --git-dir 2>stderr &&
+		grep "not a regular file" stderr
+	)
+'
+
+test_expect_success 'setup: .git with garbage content is rejected' '
+	test_when_finished "rm -rf parent/garbage-trap" &&
+	mkdir -p parent/garbage-trap &&
+	(
+		cd parent/garbage-trap &&
+		echo "garbage" >.git &&
+		test_must_fail git rev-parse --git-dir 2>stderr &&
+		grep "invalid gitfile format" stderr
+	)
+'
+
+test_expect_success 'setup: .git as an empty directory is ignored' '
+	test_when_finished "rm -rf parent/empty-dir" &&
+	mkdir -p parent/empty-dir &&
+	(
+		cd parent/empty-dir &&
+		mkdir .git &&
+		git rev-parse --git-dir >actual &&
+		echo "$TRASH_DIRECTORY/parent/.git" >expect &&
+		test_cmp expect actual
+	)
+'
+
+test_done
diff --git a/worktree.c b/worktree.c
index e9ff6e6ef2..6552e30053 100644
--- a/worktree.c
+++ b/worktree.c
@@ -673,7 +673,8 @@ static void repair_gitfile(struct worktree *wt,
 		}
 	}
 
-	if (err == READ_GITFILE_ERR_NOT_A_FILE)
+	if (err == READ_GITFILE_ERR_NOT_A_FILE ||
+		err == READ_GITFILE_ERR_IS_A_DIR)
 		fn(1, wt->path, _(".git is not a file"), cb_data);
 	else if (err)
 		repair = _(".git file broken");
@@ -853,7 +854,8 @@ void repair_worktree_at_path(const char *path,
 			strbuf_addstr(&backlink, dotgit_contents);
 			strbuf_realpath_forgiving(&backlink, backlink.buf, 0);
 		}
-	} else if (err == READ_GITFILE_ERR_NOT_A_FILE) {
+	} else if (err == READ_GITFILE_ERR_NOT_A_FILE ||
+			err == READ_GITFILE_ERR_IS_A_DIR) {
 		fn(1, dotgit.buf, _("unable to locate repository; .git is not a file"), cb_data);
 		goto done;
 	} else if (err == READ_GITFILE_ERR_NOT_A_REPO) {