diff --git a/setup.c b/setup.c
index a09b7b87ec..25d98ee6dd 100644
--- a/setup.c
+++ b/setup.c
@@ -1231,6 +1231,32 @@ static const char *allowed_bare_repo_to_string(
 	return NULL;
 }
 
+static int is_implicit_bare_repo(const char *path)
+{
+	/*
+	 * what we found is a ".git" directory at the root of
+	 * the working tree.
+	 */
+	if (ends_with_path_components(path, ".git"))
+		return 1;
+
+	/*
+	 * we are inside $GIT_DIR of a secondary worktree of a
+	 * non-bare repository.
+	 */
+	if (strstr(path, "/.git/worktrees/"))
+		return 1;
+
+	/*
+	 * we are inside $GIT_DIR of a worktree of a non-embedded
+	 * submodule, whose superproject is not a bare repository.
+	 */
+	if (strstr(path, "/.git/modules/"))
+		return 1;
+
+	return 0;
+}
+
 /*
  * We cannot decide in this function whether we are in the work tree or
  * not, since the config can only be read _after_ this function was called.
@@ -1360,7 +1386,7 @@ static enum discovery_result setup_git_directory_gently_1(struct strbuf *dir,
 		if (is_git_directory(dir->buf)) {
 			trace2_data_string("setup", NULL, "implicit-bare-repository", dir->buf);
 			if (get_allowed_bare_repo() == ALLOWED_BARE_REPO_EXPLICIT &&
-			    !ends_with_path_components(dir->buf, ".git"))
+			    !is_implicit_bare_repo(dir->buf))
 				return GIT_DIR_DISALLOWED_BARE;
 			if (!ensure_valid_ownership(NULL, NULL, dir->buf, report))
 				return GIT_DIR_INVALID_OWNERSHIP;
diff --git a/t/t0035-safe-bare-repository.sh b/t/t0035-safe-bare-repository.sh
index 8048856379..d3cb2a1cb9 100755
--- a/t/t0035-safe-bare-repository.sh
+++ b/t/t0035-safe-bare-repository.sh
@@ -29,9 +29,20 @@ expect_rejected () {
 	grep -F "implicit-bare-repository:$pwd" "$pwd/trace.perf"
 }
 
-test_expect_success 'setup bare repo in worktree' '
+test_expect_success 'setup an embedded bare repo, secondary worktree and submodule' '
 	git init outer-repo &&
-	git init --bare outer-repo/bare-repo
+	git init --bare --initial-branch=main outer-repo/bare-repo &&
+	git -C outer-repo worktree add ../outer-secondary &&
+	test_path_is_dir outer-secondary &&
+	(
+		cd outer-repo &&
+		test_commit A &&
+		git push bare-repo +HEAD:refs/heads/main &&
+		git -c protocol.file.allow=always \
+			submodule add --name subn -- ./bare-repo subd
+	) &&
+	test_path_is_dir outer-repo/.git/worktrees/outer-secondary &&
+	test_path_is_dir outer-repo/.git/modules/subn
 '
 
 test_expect_success 'safe.bareRepository unset' '
@@ -53,8 +64,7 @@ test_expect_success 'safe.bareRepository in the repository' '
 	# safe.bareRepository must not be "explicit", otherwise
 	# git config fails with "fatal: not in a git directory" (like
 	# safe.directory)
-	test_config -C outer-repo/bare-repo safe.bareRepository \
-		all &&
+	test_config -C outer-repo/bare-repo safe.bareRepository all &&
 	test_config_global safe.bareRepository explicit &&
 	expect_rejected -C outer-repo/bare-repo
 '
@@ -86,4 +96,12 @@ test_expect_success 'no trace when "bare repository" is a subdir of .git' '
 	expect_accepted_implicit -C outer-repo/.git/objects
 '
 
+test_expect_success 'no trace in $GIT_DIR of secondary worktree' '
+	expect_accepted_implicit -C outer-repo/.git/worktrees/outer-secondary
+'
+
+test_expect_success 'no trace in $GIT_DIR of a submodule' '
+	expect_accepted_implicit -C outer-repo/.git/modules/subn
+'
+
 test_done