diff --git a/builtin/fsmonitor--daemon.c b/builtin/fsmonitor--daemon.c
index 46be55a4618..66b78a0353f 100644
--- a/builtin/fsmonitor--daemon.c
+++ b/builtin/fsmonitor--daemon.c
@@ -1423,6 +1423,7 @@ static int try_to_start_background_daemon(void)
 int cmd_fsmonitor__daemon(int argc, const char **argv, const char *prefix)
 {
 	const char *subcmd;
+	enum fsmonitor_reason reason;
 	int detach_console = 0;
 
 	struct option options[] = {
@@ -1449,6 +1450,23 @@ int cmd_fsmonitor__daemon(int argc, const char **argv, const char *prefix)
 		die(_("invalid 'ipc-threads' value (%d)"),
 		    fsmonitor__ipc_threads);
 
+	prepare_repo_settings(the_repository);
+	/*
+	 * If the repo is fsmonitor-compatible, explicitly set IPC-mode
+	 * (without bothering to load the `core.fsmonitor` config settings).
+	 *
+	 * If the repo is not compatible, the repo-settings will be set to
+	 * incompatible rather than IPC, so we can use one of the __get
+	 * routines to detect the discrepancy.
+	 */
+	fsm_settings__set_ipc(the_repository);
+
+	reason = fsm_settings__get_reason(the_repository);
+	if (reason > FSMONITOR_REASON_OK)
+		die("%s",
+		    fsm_settings__get_incompatible_msg(the_repository,
+						       reason));
+
 	if (!strcmp(subcmd, "start"))
 		return !!try_to_start_background_daemon();
 
diff --git a/builtin/update-index.c b/builtin/update-index.c
index 876112abb21..01ed4c4976b 100644
--- a/builtin/update-index.c
+++ b/builtin/update-index.c
@@ -1237,6 +1237,22 @@ int cmd_update_index(int argc, const char **argv, const char *prefix)
 
 	if (fsmonitor > 0) {
 		enum fsmonitor_mode fsm_mode = fsm_settings__get_mode(r);
+		enum fsmonitor_reason reason = fsm_settings__get_reason(r);
+
+		/*
+		 * The user wants to turn on FSMonitor using the command
+		 * line argument.  (We don't know (or care) whether that
+		 * is the IPC or HOOK version.)
+		 *
+		 * Use one of the __get routines to force load the FSMonitor
+		 * config settings into the repo-settings.  That will detect
+		 * whether the file system is compatible so that we can stop
+		 * here with a nice error message.
+		 */
+		if (reason > FSMONITOR_REASON_OK)
+			die("%s",
+			    fsm_settings__get_incompatible_msg(r, reason));
+
 		if (fsm_mode == FSMONITOR_MODE_DISABLED) {
 			warning(_("core.fsmonitor is unset; "
 				"set it if you really want to "
diff --git a/fsmonitor-settings.c b/fsmonitor-settings.c
index 757d230d538..7d3177d441a 100644
--- a/fsmonitor-settings.c
+++ b/fsmonitor-settings.c
@@ -9,23 +9,42 @@
  */
 struct fsmonitor_settings {
 	enum fsmonitor_mode mode;
+	enum fsmonitor_reason reason;
 	char *hook_path;
 };
 
-static void lookup_fsmonitor_settings(struct repository *r)
+static enum fsmonitor_reason check_for_incompatible(struct repository *r)
+{
+	if (!r->worktree) {
+		/*
+		 * Bare repositories don't have a working directory and
+		 * therefore have nothing to watch.
+		 */
+		return FSMONITOR_REASON_BARE;
+	}
+
+	return FSMONITOR_REASON_OK;
+}
+
+static struct fsmonitor_settings *alloc_settings(void)
 {
 	struct fsmonitor_settings *s;
+
+	CALLOC_ARRAY(s, 1);
+	s->mode = FSMONITOR_MODE_DISABLED;
+	s->reason = FSMONITOR_REASON_UNTESTED;
+
+	return s;
+}
+
+static void lookup_fsmonitor_settings(struct repository *r)
+{
 	const char *const_str;
 	int bool_value;
 
 	if (r->settings.fsmonitor)
 		return;
 
-	CALLOC_ARRAY(s, 1);
-	s->mode = FSMONITOR_MODE_DISABLED;
-
-	r->settings.fsmonitor = s;
-
 	/*
 	 * Overload the existing "core.fsmonitor" config setting (which
 	 * has historically been either unset or a hook pathname) to
@@ -38,6 +57,8 @@ static void lookup_fsmonitor_settings(struct repository *r)
 	case 0: /* config value was set to <bool> */
 		if (bool_value)
 			fsm_settings__set_ipc(r);
+		else
+			fsm_settings__set_disabled(r);
 		return;
 
 	case 1: /* config value was unset */
@@ -53,18 +74,18 @@ static void lookup_fsmonitor_settings(struct repository *r)
 		return;
 	}
 
-	if (!const_str || !*const_str)
-		return;
-
-	fsm_settings__set_hook(r, const_str);
+	if (const_str && *const_str)
+		fsm_settings__set_hook(r, const_str);
+	else
+		fsm_settings__set_disabled(r);
 }
 
 enum fsmonitor_mode fsm_settings__get_mode(struct repository *r)
 {
 	if (!r)
 		r = the_repository;
-
-	lookup_fsmonitor_settings(r);
+	if (!r->settings.fsmonitor)
+		lookup_fsmonitor_settings(r);
 
 	return r->settings.fsmonitor->mode;
 }
@@ -73,31 +94,55 @@ const char *fsm_settings__get_hook_path(struct repository *r)
 {
 	if (!r)
 		r = the_repository;
-
-	lookup_fsmonitor_settings(r);
+	if (!r->settings.fsmonitor)
+		lookup_fsmonitor_settings(r);
 
 	return r->settings.fsmonitor->hook_path;
 }
 
 void fsm_settings__set_ipc(struct repository *r)
 {
+	enum fsmonitor_reason reason = check_for_incompatible(r);
+
+	if (reason != FSMONITOR_REASON_OK) {
+		fsm_settings__set_incompatible(r, reason);
+		return;
+	}
+
+	/*
+	 * Caller requested IPC explicitly, so avoid (possibly
+	 * recursive) config lookup.
+	 */
 	if (!r)
 		r = the_repository;
-
-	lookup_fsmonitor_settings(r);
+	if (!r->settings.fsmonitor)
+		r->settings.fsmonitor = alloc_settings();
 
 	r->settings.fsmonitor->mode = FSMONITOR_MODE_IPC;
+	r->settings.fsmonitor->reason = reason;
 	FREE_AND_NULL(r->settings.fsmonitor->hook_path);
 }
 
 void fsm_settings__set_hook(struct repository *r, const char *path)
 {
+	enum fsmonitor_reason reason = check_for_incompatible(r);
+
+	if (reason != FSMONITOR_REASON_OK) {
+		fsm_settings__set_incompatible(r, reason);
+		return;
+	}
+
+	/*
+	 * Caller requested hook explicitly, so avoid (possibly
+	 * recursive) config lookup.
+	 */
 	if (!r)
 		r = the_repository;
-
-	lookup_fsmonitor_settings(r);
+	if (!r->settings.fsmonitor)
+		r->settings.fsmonitor = alloc_settings();
 
 	r->settings.fsmonitor->mode = FSMONITOR_MODE_HOOK;
+	r->settings.fsmonitor->reason = reason;
 	FREE_AND_NULL(r->settings.fsmonitor->hook_path);
 	r->settings.fsmonitor->hook_path = strdup(path);
 }
@@ -106,9 +151,57 @@ void fsm_settings__set_disabled(struct repository *r)
 {
 	if (!r)
 		r = the_repository;
-
-	lookup_fsmonitor_settings(r);
+	if (!r->settings.fsmonitor)
+		r->settings.fsmonitor = alloc_settings();
 
 	r->settings.fsmonitor->mode = FSMONITOR_MODE_DISABLED;
+	r->settings.fsmonitor->reason = FSMONITOR_REASON_OK;
+	FREE_AND_NULL(r->settings.fsmonitor->hook_path);
+}
+
+void fsm_settings__set_incompatible(struct repository *r,
+				    enum fsmonitor_reason reason)
+{
+	if (!r)
+		r = the_repository;
+	if (!r->settings.fsmonitor)
+		r->settings.fsmonitor = alloc_settings();
+
+	r->settings.fsmonitor->mode = FSMONITOR_MODE_INCOMPATIBLE;
+	r->settings.fsmonitor->reason = reason;
 	FREE_AND_NULL(r->settings.fsmonitor->hook_path);
 }
+
+enum fsmonitor_reason fsm_settings__get_reason(struct repository *r)
+{
+	if (!r)
+		r = the_repository;
+	if (!r->settings.fsmonitor)
+		lookup_fsmonitor_settings(r);
+
+	return r->settings.fsmonitor->reason;
+}
+
+char *fsm_settings__get_incompatible_msg(const struct repository *r,
+					 enum fsmonitor_reason reason)
+{
+	struct strbuf msg = STRBUF_INIT;
+
+	switch (reason) {
+	case FSMONITOR_REASON_UNTESTED:
+	case FSMONITOR_REASON_OK:
+		goto done;
+
+	case FSMONITOR_REASON_BARE:
+		strbuf_addf(&msg,
+			    _("bare repository '%s' is incompatible with fsmonitor"),
+			    xgetcwd());
+		goto done;
+	}
+
+	BUG("Unhandled case in fsm_settings__get_incompatible_msg: '%d'",
+	    reason);
+
+done:
+	return strbuf_detach(&msg, NULL);
+}
diff --git a/fsmonitor-settings.h b/fsmonitor-settings.h
index a4c5d7b4889..4c7592896e4 100644
--- a/fsmonitor-settings.h
+++ b/fsmonitor-settings.h
@@ -4,18 +4,34 @@
 struct repository;
 
 enum fsmonitor_mode {
+	FSMONITOR_MODE_INCOMPATIBLE = -1, /* see _reason */
 	FSMONITOR_MODE_DISABLED = 0,
 	FSMONITOR_MODE_HOOK = 1, /* core.fsmonitor=<hook_path> */
 	FSMONITOR_MODE_IPC = 2,  /* core.fsmonitor=<true> */
 };
 
+/*
+ * Incompatibility reasons.
+ */
+enum fsmonitor_reason {
+	FSMONITOR_REASON_UNTESTED = 0,
+	FSMONITOR_REASON_OK, /* no incompatibility or when disbled */
+	FSMONITOR_REASON_BARE,
+};
+
 void fsm_settings__set_ipc(struct repository *r);
 void fsm_settings__set_hook(struct repository *r, const char *path);
 void fsm_settings__set_disabled(struct repository *r);
+void fsm_settings__set_incompatible(struct repository *r,
+				    enum fsmonitor_reason reason);
 
 enum fsmonitor_mode fsm_settings__get_mode(struct repository *r);
 const char *fsm_settings__get_hook_path(struct repository *r);
 
+enum fsmonitor_reason fsm_settings__get_reason(struct repository *r);
+char *fsm_settings__get_incompatible_msg(const struct repository *r,
+					 enum fsmonitor_reason reason);
+
 struct fsmonitor_settings;
 
 #endif /* FSMONITOR_SETTINGS_H */
diff --git a/t/t7519-status-fsmonitor.sh b/t/t7519-status-fsmonitor.sh
index a6308acf006..9a8e21c5608 100755
--- a/t/t7519-status-fsmonitor.sh
+++ b/t/t7519-status-fsmonitor.sh
@@ -55,6 +55,29 @@ test_lazy_prereq UNTRACKED_CACHE '
 	test $ret -ne 1
 '
 
+# Test that we detect and disallow repos that are incompatible with FSMonitor.
+test_expect_success 'incompatible bare repo' '
+	test_when_finished "rm -rf ./bare-clone actual expect" &&
+	git init --bare bare-clone &&
+
+	test_must_fail \
+		git -C ./bare-clone -c core.fsmonitor=foo \
+			update-index --fsmonitor 2>actual &&
+	grep "bare repository .* is incompatible with fsmonitor" actual &&
+
+	test_must_fail \
+		git -C ./bare-clone -c core.fsmonitor=true \
+			update-index --fsmonitor 2>actual &&
+	grep "bare repository .* is incompatible with fsmonitor" actual
+'
+
+test_expect_success FSMONITOR_DAEMON 'run fsmonitor-daemon in bare repo' '
+	test_when_finished "rm -rf ./bare-clone actual" &&
+	git init --bare bare-clone &&
+	test_must_fail git -C ./bare-clone fsmonitor--daemon run 2>actual &&
+	grep "bare repository .* is incompatible with fsmonitor" actual
+'
+
 test_expect_success 'setup' '
 	mkdir -p .git/hooks &&
 	: >tracked &&
