diff --git a/Documentation/git.adoc b/Documentation/git.adoc
index ce099e78b8..66442735ea 100644
--- a/Documentation/git.adoc
+++ b/Documentation/git.adoc
@@ -584,6 +584,11 @@ double-quotes and respecting backslash escapes. E.g., the value
 	repositories will be set to this value. The default is "files".
 	See `--ref-format` in linkgit:git-init[1].
 
+`GIT_REFERENCE_BACKEND`::
+    Specify which reference backend to be used along with its URI.
+    See `extensions.refStorage` option in linkgit:git-config[1] for more
+    details. Overrides the config variable when used.
+
 Git Commits
 ~~~~~~~~~~~
 `GIT_AUTHOR_NAME`::
diff --git a/environment.h b/environment.h
index 27f657af04..540e0a7f6d 100644
--- a/environment.h
+++ b/environment.h
@@ -42,6 +42,7 @@
 #define GIT_OPTIONAL_LOCKS_ENVIRONMENT "GIT_OPTIONAL_LOCKS"
 #define GIT_TEXT_DOMAIN_DIR_ENVIRONMENT "GIT_TEXTDOMAINDIR"
 #define GIT_ATTR_SOURCE_ENVIRONMENT "GIT_ATTR_SOURCE"
+#define GIT_REFERENCE_BACKEND_ENVIRONMENT "GIT_REFERENCE_BACKEND"
 
 /*
  * Environment variable used to propagate the --no-advice global option to the
diff --git a/refs.c b/refs.c
index ef1902e85c..a700a66f08 100644
--- a/refs.c
+++ b/refs.c
@@ -2192,13 +2192,17 @@ int ref_store_create_on_disk(struct ref_store *refs, int flags, struct strbuf *e
 {
 	int ret = refs->be->create_on_disk(refs, flags, err);
 
-	if (!ret &&
-	    ref_storage_format_by_name(refs->be->name) != REF_STORAGE_FORMAT_FILES) {
-		struct strbuf msg = STRBUF_INIT;
-
-		strbuf_addf(&msg, "this repository uses the %s format", refs->be->name);
-		refs_create_refdir_stubs(refs->repo, refs->gitdir, msg.buf);
-		strbuf_release(&msg);
+	if (!ret) {
+		/* Creation of stubs for linked worktrees are handled in the worktree code. */
+		if (!(flags & REF_STORE_CREATE_ON_DISK_IS_WORKTREE) && refs->repo->ref_storage_payload) {
+			refs_create_refdir_stubs(refs->repo, refs->repo->gitdir,
+						 "repository uses alternate refs storage");
+		} else if (ref_storage_format_by_name(refs->be->name) != REF_STORAGE_FORMAT_FILES) {
+			struct strbuf msg = STRBUF_INIT;
+			strbuf_addf(&msg, "this repository uses the %s format", refs->be->name);
+			refs_create_refdir_stubs(refs->repo, refs->gitdir, msg.buf);
+			strbuf_release(&msg);
+		}
 	}
 
 	return ret;
@@ -2208,10 +2212,18 @@ int ref_store_remove_on_disk(struct ref_store *refs, struct strbuf *err)
 {
 	int ret = refs->be->remove_on_disk(refs, err);
 
-	if (!ret &&
-	    ref_storage_format_by_name(refs->be->name) != REF_STORAGE_FORMAT_FILES) {
+	if (!ret) {
+		enum ref_storage_format format = ref_storage_format_by_name(refs->be->name);
 		struct strbuf sb = STRBUF_INIT;
 
+		/* Backends apart from the files backend create stubs. */
+		if (format == REF_STORAGE_FORMAT_FILES)
+			return ret;
+
+		/* Alternate refs backend require stubs in the gitdir. */
+		if (refs->repo->ref_storage_payload)
+			return ret;
+
 		strbuf_addf(&sb, "%s/HEAD", refs->gitdir);
 		if (unlink(sb.buf) < 0) {
 			strbuf_addf(err, "could not delete stub HEAD: %s",
diff --git a/setup.c b/setup.c
index d407f3347b..90cb9be578 100644
--- a/setup.c
+++ b/setup.c
@@ -1838,6 +1838,7 @@ const char *setup_git_directory_gently(int *nongit_ok)
 	static struct strbuf cwd = STRBUF_INIT;
 	struct strbuf dir = STRBUF_INIT, gitdir = STRBUF_INIT, report = STRBUF_INIT;
 	const char *prefix = NULL;
+	const char *ref_backend_uri;
 	struct repository_format repo_fmt = REPOSITORY_FORMAT_INIT;
 
 	/*
@@ -1995,6 +1996,25 @@ const char *setup_git_directory_gently(int *nongit_ok)
 		setenv(GIT_PREFIX_ENVIRONMENT, "", 1);
 	}
 
+	/*
+	 * The env variable should override the repository config
+	 * for 'extensions.refStorage'.
+	 */
+	ref_backend_uri = getenv(GIT_REFERENCE_BACKEND_ENVIRONMENT);
+	if (ref_backend_uri) {
+		char *backend, *payload;
+		enum ref_storage_format format;
+
+		parse_reference_uri(ref_backend_uri, &backend, &payload);
+		format = ref_storage_format_by_name(backend);
+		if (format == REF_STORAGE_FORMAT_UNKNOWN)
+			die(_("unknown ref storage format: '%s'"), backend);
+		repo_set_ref_storage_format(the_repository, format, payload);
+
+		free(backend);
+		free(payload);
+	}
+
 	setup_original_cwd();
 
 	strbuf_release(&dir);
@@ -2337,7 +2357,8 @@ void initialize_repository_version(int hash_algo,
 	 * the remote repository's format.
 	 */
 	if (hash_algo != GIT_HASH_SHA1_LEGACY ||
-	    ref_storage_format != REF_STORAGE_FORMAT_FILES)
+	    ref_storage_format != REF_STORAGE_FORMAT_FILES ||
+	    the_repository->ref_storage_payload)
 		target_version = GIT_REPO_VERSION_READ;
 
 	if (hash_algo != GIT_HASH_SHA1_LEGACY && hash_algo != GIT_HASH_UNKNOWN)
@@ -2346,11 +2367,20 @@ void initialize_repository_version(int hash_algo,
 	else if (reinit)
 		repo_config_set_gently(the_repository, "extensions.objectformat", NULL);
 
-	if (ref_storage_format != REF_STORAGE_FORMAT_FILES)
+	if (the_repository->ref_storage_payload) {
+		struct strbuf ref_uri = STRBUF_INIT;
+
+		strbuf_addf(&ref_uri, "%s://%s",
+			    ref_storage_format_to_name(ref_storage_format),
+			    the_repository->ref_storage_payload);
+		repo_config_set(the_repository, "extensions.refstorage", ref_uri.buf);
+		strbuf_release(&ref_uri);
+	} else if (ref_storage_format != REF_STORAGE_FORMAT_FILES) {
 		repo_config_set(the_repository, "extensions.refstorage",
 				ref_storage_format_to_name(ref_storage_format));
-	else if (reinit)
+	} else if (reinit) {
 		repo_config_set_gently(the_repository, "extensions.refstorage", NULL);
+	}
 
 	if (reinit) {
 		struct strbuf config = STRBUF_INIT;
@@ -2623,6 +2653,7 @@ static void repository_format_configure(struct repository_format *repo_fmt,
 		.ignore_repo = 1,
 		.ignore_worktree = 1,
 	};
+	const char *ref_backend_uri;
 	const char *env;
 
 	config_with_options(read_default_format_config, &cfg, NULL, NULL, &opts);
@@ -2668,6 +2699,24 @@ static void repository_format_configure(struct repository_format *repo_fmt,
 	} else {
 		repo_fmt->ref_storage_format = REF_STORAGE_FORMAT_DEFAULT;
 	}
+
+
+	ref_backend_uri = getenv(GIT_REFERENCE_BACKEND_ENVIRONMENT);
+	if (ref_backend_uri) {
+		char *backend, *payload;
+		enum ref_storage_format format;
+
+		parse_reference_uri(ref_backend_uri, &backend, &payload);
+		format = ref_storage_format_by_name(backend);
+		if (format == REF_STORAGE_FORMAT_UNKNOWN)
+			die(_("unknown ref storage format: '%s'"), backend);
+
+		repo_fmt->ref_storage_format = format;
+		repo_fmt->ref_storage_payload = payload;
+
+		free(backend);
+	}
+
 	repo_set_ref_storage_format(the_repository, repo_fmt->ref_storage_format,
 				    repo_fmt->ref_storage_payload);
 }
diff --git a/t/t1423-ref-backend.sh b/t/t1423-ref-backend.sh
index 82cccb7a65..fd47d77e8e 100755
--- a/t/t1423-ref-backend.sh
+++ b/t/t1423-ref-backend.sh
@@ -11,16 +11,25 @@ test_description='Test reference backend URIs'
 #   <backend> is the original ref storage of the repo.
 #   <uri> is the new URI to be set for the ref storage.
 #   <cmd> is the git subcommand to be run in the repository.
+#   <via> if 'config', set the backend via the 'extensions.refStorage' config.
+#         if 'env', set the backend via the 'GIT_REFERENCE_BACKEND' env.
 run_with_uri () {
 	repo=$1 &&
 	backend=$2 &&
 	uri=$3 &&
 	cmd=$4 &&
+	via=$5 &&
 
-	git -C "$repo" config set core.repositoryformatversion 1
-	git -C "$repo" config set extensions.refStorage "$uri" &&
-	git -C "$repo" $cmd &&
-	git -C "$repo" config set extensions.refStorage "$backend"
+	git -C "$repo" config set core.repositoryformatversion 1 &&
+	if test "$via" = "env"
+	then
+		test_env GIT_REFERENCE_BACKEND="$uri" git -C "$repo" $cmd
+	elif test "$via" = "config"
+	then
+		git -C "$repo" config set extensions.refStorage "$uri" &&
+		git -C "$repo" $cmd &&
+		git -C "$repo" config set extensions.refStorage "$backend"
+	fi
 }
 
 # Test a repository with a given reference storage by running and comparing
@@ -30,44 +39,84 @@ run_with_uri () {
 #   <repo> is the relative path to the repo to run the command in.
 #   <backend> is the original ref storage of the repo.
 #   <uri> is the new URI to be set for the ref storage.
+#   <via> if 'config', set the backend via the 'extensions.refStorage' config.
+#         if 'env', set the backend via the 'GIT_REFERENCE_BACKEND' env.
 #   <err_msg> (optional) if set, check if 'git-refs(1)' failed with the provided msg.
 test_refs_backend () {
 	repo=$1 &&
 	backend=$2 &&
 	uri=$3 &&
-	err_msg=$4 &&
+	via=$4 &&
+	err_msg=$5 &&
+
 
-	git -C "$repo" config set core.repositoryformatversion 1 &&
 	if test -n "$err_msg";
 	then
-		git -C "$repo" config set extensions.refStorage "$uri" &&
-		test_must_fail git -C "$repo" refs list 2>err &&
-		test_grep "$err_msg" err
+		if test "$via" = "env"
+		then
+			test_env GIT_REFERENCE_BACKEND="$uri" test_must_fail git -C "$repo" refs list 2>err
+		elif test "$via" = "config"
+		then
+			git -C "$repo" config set extensions.refStorage "$uri" &&
+			test_must_fail git -C "$repo" refs list 2>err &&
+			test_grep "$err_msg" err
+		fi
 	else
 		git -C "$repo" refs list >expect &&
-		run_with_uri "$repo" "$backend" "$uri" "refs list" >actual &&
+		run_with_uri "$repo" "$backend" "$uri" "refs list" "$via">actual &&
 		test_cmp expect actual
 	fi
 }
 
-test_expect_success 'URI is invalid' '
+# Verify that the expected files are present in the gitdir and the refsdir.
+# Usage: verify_files_exist <gitdir> <refdir>
+#   <gitdir> is the path for the gitdir.
+#   <refdir> is the path for the refdir.
+verify_files_exist () {
+	gitdir=$1 &&
+	refdir=$2 &&
+
+	# verify that the stubs were added to the $GITDIR.
+	echo "repository uses alternate refs storage" >expect &&
+	test_cmp expect $gitdir/refs/heads &&
+	echo "ref: refs/heads/.invalid" >expect &&
+	test_cmp expect $gitdir/HEAD
+
+	# verify that backend specific files exist.
+	case "$GIT_DEFAULT_REF_FORMAT" in
+	files)
+		test_path_is_dir $refdir/refs/heads &&
+		test_path_is_file $refdir/HEAD;;
+	reftable)
+		test_path_is_dir $refdir/reftable &&
+		test_path_is_file $refdir/reftable/tables.list;;
+	*)
+		BUG "unhandled ref format $GIT_DEFAULT_REF_FORMAT";;
+	esac
+}
+
+methods="config env"
+for method in $methods
+do
+
+test_expect_success "$method: URI is invalid" '
 	test_when_finished "rm -rf repo" &&
 	git init repo &&
-	test_refs_backend repo files "reftable@/home/reftable" \
+	test_refs_backend repo files "reftable@/home/reftable" "$method" \
 		"invalid value for ${SQ}extensions.refstorage${SQ}"
 '
 
-test_expect_success 'URI ends with colon' '
+test_expect_success "$method: URI ends with colon" '
 	test_when_finished "rm -rf repo" &&
 	git init repo &&
-	test_refs_backend repo files "reftable:" \
+	test_refs_backend repo files "reftable:" "$method" \
 		"invalid value for ${SQ}extensions.refstorage${SQ}"
 '
 
-test_expect_success 'unknown reference backend' '
+test_expect_success "$method: unknown reference backend" '
 	test_when_finished "rm -rf repo" &&
 	git init repo &&
-	test_refs_backend repo files "db://.git" \
+	test_refs_backend repo files "db://.git" "$method" \
 		"invalid value for ${SQ}extensions.refstorage${SQ}"
 '
 
@@ -86,7 +135,7 @@ do
 	for dir in "$(pwd)/repo/.git" "."
 	do
 
-		test_expect_success "read from $to_format backend, $dir dir" '
+		test_expect_success "$method: read from $to_format backend, $dir dir" '
 			test_when_finished "rm -rf repo" &&
 			git init --ref-format=$from_format repo &&
 			(
@@ -101,7 +150,7 @@ do
 			)
 		'
 
-		test_expect_success "write to $to_format backend, $dir dir" '
+		test_expect_success "$method: write to $to_format backend, $dir dir" '
 			test_when_finished "rm -rf repo" &&
 			git init --ref-format=$from_format repo &&
 			(
@@ -113,20 +162,22 @@ do
 				git refs migrate --dry-run --ref-format=$to_format >out &&
 				BACKEND_PATH="$dir/$(sed "s/.* ${SQ}.git\/\(.*\)${SQ}/\1/" out)" &&
 
-				test_refs_backend . $from_format "$to_format://$BACKEND_PATH" &&
+				test_refs_backend . $from_format "$to_format://$BACKEND_PATH" "$method" &&
 
 				git refs list >expect &&
-				run_with_uri . "$from_format" "$to_format://$BACKEND_PATH" "tag -d 1" &&
+				run_with_uri . "$from_format" "$to_format://$BACKEND_PATH" \
+					"tag -d 1" "$method" &&
 				git refs list >actual &&
 				test_cmp expect actual &&
 
 				git refs list | grep -v "refs/tags/1" >expect &&
-				run_with_uri . "$from_format" "$to_format://$BACKEND_PATH" "refs list" >actual &&
+				run_with_uri . "$from_format" "$to_format://$BACKEND_PATH" \
+					"refs list" "$method" >actual &&
 				test_cmp expect actual
 			)
 		'
 
-		test_expect_success "with worktree and $to_format backend, $dir dir" '
+		test_expect_success "$method: with worktree and $to_format backend, $dir dir" '
 			test_when_finished "rm -rf repo wt" &&
 			git init --ref-format=$from_format repo &&
 			(
@@ -138,22 +189,92 @@ do
 				git refs migrate --dry-run --ref-format=$to_format >out &&
 				BACKEND_PATH="$dir/$(sed "s/.* ${SQ}.git\/\(.*\)${SQ}/\1/" out)" &&
 
-				git config set core.repositoryformatversion 1 &&
-				git config set extensions.refStorage "$to_format://$BACKEND_PATH" &&
+				run_with_uri . "$from_format" "$to_format://$BACKEND_PATH" \
+					"worktree add ../wt 2" "$method" &&
 
-				git worktree add ../wt 2
-			) &&
+				run_with_uri . "$from_format" "$to_format://$BACKEND_PATH" \
+					"for-each-ref --include-root-refs" "$method" >actual &&
+				run_with_uri ../wt "$from_format" "$to_format://$BACKEND_PATH" \
+					"for-each-ref --include-root-refs" "$method" >expect &&
+				! test_cmp expect actual &&
 
-			git -C repo for-each-ref --include-root-refs >expect &&
-			git -C wt for-each-ref --include-root-refs >expect &&
-			! test_cmp expect actual &&
-
-			git -C wt rev-parse 2 >expect &&
-			git -C wt rev-parse HEAD >actual &&
-			test_cmp expect actual
+				run_with_uri . "$from_format" "$to_format://$BACKEND_PATH" \
+					"rev-parse 2" "$method" >actual &&
+				run_with_uri ../wt "$from_format" "$to_format://$BACKEND_PATH" \
+					"rev-parse HEAD" "$method" >expect &&
+				test_cmp expect actual
+			)
 		'
 	done # closes dir
+
+	test_expect_success "migrating repository to $to_format with alternate refs directory" '
+		test_when_finished "rm -rf repo refdir" &&
+		mkdir refdir &&
+		GIT_REFERENCE_BACKEND="${from_format}://$(pwd)/refdir" git init repo &&
+		(
+			cd repo &&
+
+			test_commit 1 &&
+			test_commit 2 &&
+			test_commit 3 &&
+
+			git refs migrate --ref-format=$to_format &&
+			git refs list >out &&
+			test_grep "refs/tags/1"	out &&
+			test_grep "refs/tags/2"	out &&
+			test_grep "refs/tags/3"	out
+		)
+	'
+
 done # closes to_format
 done # closes from_format
 
+done # closes method
+
+test_expect_success 'initializing repository with alt ref directory' '
+	test_when_finished "rm -rf repo refdir" &&
+	mkdir refdir &&
+	BACKEND="$(test_detect_ref_format)://$(pwd)/refdir" &&
+	GIT_REFERENCE_BACKEND=$BACKEND git init repo &&
+	verify_files_exist repo/.git refdir &&
+	(
+		cd repo &&
+
+		git config get extensions.refstorage >actual &&
+		echo $BACKEND >expect &&
+		test_cmp expect actual &&
+
+		test_commit 1 &&
+		test_commit 2 &&
+		test_commit 3 &&
+		git refs list >out &&
+		test_grep "refs/tags/1"	out &&
+		test_grep "refs/tags/2"	out &&
+		test_grep "refs/tags/3"	out
+	)
+'
+
+test_expect_success 'cloning repository with alt ref directory' '
+	test_when_finished "rm -rf source repo refdir" &&
+	mkdir refdir &&
+
+	git init source &&
+	test_commit -C source 1 &&
+	test_commit -C source 2 &&
+	test_commit -C source 3 &&
+
+	BACKEND="$(test_detect_ref_format)://$(pwd)/refdir" &&
+	GIT_REFERENCE_BACKEND=$BACKEND git clone source repo &&
+
+	git -C repo config get extensions.refstorage >actual &&
+	echo $BACKEND >expect &&
+	test_cmp expect actual &&
+
+	verify_files_exist repo/.git refdir &&
+
+	git -C source for-each-ref refs/tags/ >expect &&
+	git -C repo for-each-ref refs/tags/ >actual &&
+	test_cmp expect actual
+'
+
 test_done