diff --git a/Documentation/config.txt b/Documentation/config.txt
index 0e93aef8626..e480f99c3e1 100644
--- a/Documentation/config.txt
+++ b/Documentation/config.txt
@@ -493,6 +493,8 @@ include::config/rebase.txt[]
 
 include::config/receive.txt[]
 
+include::config/refs.txt[]
+
 include::config/remote.txt[]
 
 include::config/remotes.txt[]
diff --git a/Documentation/config/extensions.txt b/Documentation/config/extensions.txt
index 18071c336d0..05abb821e07 100644
--- a/Documentation/config/extensions.txt
+++ b/Documentation/config/extensions.txt
@@ -35,17 +35,34 @@ indicate the existence of different layers:
 	`files`, the `packed` format will only be used to group multiple
 	loose object files upon request via the `git pack-refs` command or
 	via the `pack-refs` maintenance task.
+
+`packed-v2`;;
+	When present, references may be stored as a group in a
+	`packed-refs` file in its version 2 format. This file is in the
+	same position and interacts with loose refs the same as when the
+	`packed` value exists. Both `packed` and `packed-v2` must exist to
+	upgrade an existing `packed-refs` file from version 1 to version 2
+	or to downgrade from version 2 to version 1. When both are
+	present, the `refs.packedRefsVersion` config value indicates which
+	file format version is used during writes, but both versions are
+	understood when reading the file.
 --
 +
 The following combinations are supported by this version of Git:
 +
 --
-`files` and `packed`;;
+`files` and (`packed` and/or `packed-v2`);;
 	This set of values indicates that references are stored both as
-	loose reference files and in the `packed-refs` file in its v1
-	format. Loose references are preferred, and the `packed-refs` file
-	is updated only when deleting a reference that is stored in the
-	`packed-refs` file or during a `git pack-refs` command.
+	loose reference files and in the `packed-refs` file. Loose
+	references are preferred, and the `packed-refs` file is updated
+	only when deleting a reference that is stored in the `packed-refs`
+	file or during a `git pack-refs` command.
++
+The presence of `packed` and `packed-v2` specifies whether the `packed-refs`
+file is allowed to be in its v1 or v2 formats, respectively. When only one
+is present, Git will refuse to read the `packed-refs` file that do not
+match the expected format. When both are present, the `refs.packedRefsVersion`
+config option indicates which file format is used during writes.
 
 `files`;;
 	When only this value is present, Git will ignore the `packed-refs`
diff --git a/Documentation/config/refs.txt b/Documentation/config/refs.txt
new file mode 100644
index 00000000000..b2fdb2923f7
--- /dev/null
+++ b/Documentation/config/refs.txt
@@ -0,0 +1,13 @@
+refs.packedRefsVersion::
+	Specifies the file format version to use when writing a `packed-refs`
+	file. Defaults to `1`.
++
+The only other value currently allowed is `2`, which uses a structured file
+format to result in a smaller `packed-refs` file. In order to write this
+file format version, the repository must also have the `packed-v2` extension
+enabled. The most typical setup will include the
+`core.repositoryFormatVersion=1` config value and the `extensions.refFormat`
+key will have three values: `files`, `packed`, and `packed-v2`.
++
+If `extensions.refFormat` has the value `packed-v2` and not `packed`, then
+`refs.packedRefsVersion` defaults to `2`.
diff --git a/refs.c b/refs.c
index 21441ddb162..bf53d1445f2 100644
--- a/refs.c
+++ b/refs.c
@@ -1987,6 +1987,8 @@ static int add_ref_format_flags(enum ref_format_flags flags, int caps) {
 		caps |= REF_STORE_FORMAT_FILES;
 	if (flags & REF_FORMAT_PACKED)
 		caps |= REF_STORE_FORMAT_PACKED;
+	if (flags & REF_FORMAT_PACKED_V2)
+		caps |= REF_STORE_FORMAT_PACKED_V2;
 
 	return caps;
 }
@@ -2006,7 +2008,7 @@ static struct ref_store *ref_store_init(struct repository *repo,
 	flags = add_ref_format_flags(repo->ref_format, flags);
 
 	if (!(flags & REF_STORE_FORMAT_FILES) &&
-	    (flags & REF_STORE_FORMAT_PACKED))
+	    packed_refs_enabled(flags))
 		be_name = "packed";
 
 	be = find_ref_storage_backend(be_name);
diff --git a/refs/packed-backend.c b/refs/packed-backend.c
index 7ed9475812c..655aab939be 100644
--- a/refs/packed-backend.c
+++ b/refs/packed-backend.c
@@ -236,7 +236,13 @@ static struct snapshot *create_snapshot(struct packed_ref_store *refs)
 	if (!load_contents(snapshot))
 		return snapshot;
 
-	if (parse_packed_format_v1_header(refs, snapshot, &sorted)) {
+	/*
+	 * If this is a v1 file format, but we don't have v1 enabled,
+	 * then ignore it the same way we would as if we didn't
+	 * understand it.
+	 */
+	if (parse_packed_format_v1_header(refs, snapshot, &sorted) ||
+	    !(refs->store_flags & REF_STORE_FORMAT_PACKED)) {
 		clear_snapshot(refs);
 		return NULL;
 	}
@@ -310,6 +316,12 @@ static int packed_read_raw_ref(struct ref_store *ref_store, const char *refname,
 		packed_downcast(ref_store, REF_STORE_READ, "read_raw_ref");
 	struct snapshot *snapshot = get_snapshot(refs);
 
+	if (!snapshot) {
+		/* refname is not a packed reference. */
+		*failure_errno = ENOENT;
+		return -1;
+	}
+
 	return packed_read_raw_ref_v1(refs, snapshot, refname,
 				      oid, type, failure_errno);
 }
@@ -410,6 +422,9 @@ static struct ref_iterator *packed_ref_iterator_begin(
 	 */
 	snapshot = get_snapshot(refs);
 
+	if (!snapshot)
+		return empty_ref_iterator_begin();
+
 	if (prefix && *prefix)
 		start = find_reference_location_v1(snapshot, prefix, 0);
 	else
diff --git a/refs/refs-internal.h b/refs/refs-internal.h
index a1900848a87..39b93fce97c 100644
--- a/refs/refs-internal.h
+++ b/refs/refs-internal.h
@@ -522,11 +522,12 @@ struct ref_store;
 				 REF_STORE_MAIN)
 
 #define REF_STORE_FORMAT_FILES		(1 << 8) /* can use loose ref files */
-#define REF_STORE_FORMAT_PACKED		(1 << 9) /* can use packed-refs file */
+#define REF_STORE_FORMAT_PACKED		(1 << 9) /* can use v1 packed-refs file */
+#define REF_STORE_FORMAT_PACKED_V2	(1 << 10) /* can use v2 packed-refs file */
 
 static inline int packed_refs_enabled(int flags)
 {
-	return flags & REF_STORE_FORMAT_PACKED;
+	return flags & (REF_STORE_FORMAT_PACKED | REF_STORE_FORMAT_PACKED_V2);
 }
 
 /*
diff --git a/repository.h b/repository.h
index 5cfde4282c5..ee3a90efc72 100644
--- a/repository.h
+++ b/repository.h
@@ -64,6 +64,7 @@ struct repo_path_cache {
 enum ref_format_flags {
 	REF_FORMAT_FILES = (1 << 0),
 	REF_FORMAT_PACKED = (1 << 1),
+	REF_FORMAT_PACKED_V2 = (1 << 2),
 };
 
 struct repository {
diff --git a/setup.c b/setup.c
index a5e63479558..72bfa289ade 100644
--- a/setup.c
+++ b/setup.c
@@ -582,6 +582,8 @@ static enum extension_result handle_extension(const char *var,
 			data->ref_format |= REF_FORMAT_FILES;
 		else if (!strcmp(value, "packed"))
 			data->ref_format |= REF_FORMAT_PACKED;
+		else if (!strcmp(value, "packed-v2"))
+			data->ref_format |= REF_FORMAT_PACKED_V2;
 		else
 			return error(_("invalid value for '%s': '%s'"),
 				     "extensions.refFormat", value);
diff --git a/t/t3212-ref-formats.sh b/t/t3212-ref-formats.sh
index 67aa65c116f..cd1b399bbb8 100755
--- a/t/t3212-ref-formats.sh
+++ b/t/t3212-ref-formats.sh
@@ -56,4 +56,23 @@ test_expect_success 'extensions.refFormat=files only' '
 	)
 '
 
+test_expect_success 'extensions.refFormat=files,packed-v2' '
+	test_commit Q &&
+	git pack-refs --all &&
+	git init no-packed-v1 &&
+	(
+		cd no-packed-v1 &&
+		git config core.repositoryFormatVersion 1 &&
+		git config extensions.refFormat files &&
+		git config --add extensions.refFormat packed-v2 &&
+		test_commit A &&
+		test_commit B &&
+
+		# Refuse to parse a v1 packed-refs file.
+		cp ../.git/packed-refs .git/packed-refs &&
+		test_must_fail git rev-parse refs/tags/Q &&
+		rm -f .git/packed-refs
+	)
+'
+
 test_done
