diff --git a/builtin/fsmonitor--daemon.c b/builtin/fsmonitor--daemon.c
index 97ca2a356e5..00eaffbb945 100644
--- a/builtin/fsmonitor--daemon.c
+++ b/builtin/fsmonitor--daemon.c
@@ -1443,6 +1443,15 @@ 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);
+	fsm_settings__set_ipc(the_repository);
+
+	if (fsm_settings__get_mode(the_repository) == FSMONITOR_MODE_INCOMPATIBLE) {
+		const char *msg = fsm_settings__get_reason_msg(the_repository);
+
+		return error("%s '%s'", msg ? msg : "???", xgetcwd());
+	}
+
 	if (!strcmp(subcmd, "start"))
 		return !!try_to_start_background_daemon();
 
diff --git a/builtin/update-index.c b/builtin/update-index.c
index d335f1ac72a..8f460e7195f 100644
--- a/builtin/update-index.c
+++ b/builtin/update-index.c
@@ -1237,6 +1237,13 @@ 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);
+
+		if (fsm_mode == FSMONITOR_MODE_INCOMPATIBLE) {
+			const char *msg = fsm_settings__get_reason_msg(r);
+
+			return error("%s '%s'", msg ? msg : "???", xgetcwd());
+		}
+
 		if (fsm_mode == FSMONITOR_MODE_DISABLED) {
 			advise(_("core.fsmonitor is unset; "
 				 "set it if you really want to "
diff --git a/fsmonitor-settings.c b/fsmonitor-settings.c
index 3b54e7a51f6..8410cc73404 100644
--- a/fsmonitor-settings.c
+++ b/fsmonitor-settings.c
@@ -9,9 +9,33 @@
  */
 struct fsmonitor_settings {
 	enum fsmonitor_mode mode;
+	enum fsmonitor_reason reason;
 	char *hook_path;
 };
 
+static void set_incompatible(struct repository *r,
+			     enum fsmonitor_reason reason)
+{
+	struct fsmonitor_settings *s = r->settings.fsmonitor;
+
+	s->mode = FSMONITOR_MODE_INCOMPATIBLE;
+	s->reason = reason;
+}
+
+static int check_for_incompatible(struct repository *r)
+{
+	if (!r->worktree) {
+		/*
+		 * Bare repositories don't have a working directory and
+		 * therefore have nothing to watch.
+		 */
+		set_incompatible(r, FSMONITOR_REASON_BARE);
+		return 1;
+	}
+
+	return 0;
+}
+
 static void lookup_fsmonitor_settings(struct repository *r)
 {
 	struct fsmonitor_settings *s;
@@ -87,6 +111,9 @@ void fsm_settings__set_ipc(struct repository *r)
 
 	lookup_fsmonitor_settings(r);
 
+	if (check_for_incompatible(r))
+		return;
+
 	r->settings.fsmonitor->mode = FSMONITOR_MODE_IPC;
 	FREE_AND_NULL(r->settings.fsmonitor->hook_path);
 }
@@ -98,6 +125,9 @@ void fsm_settings__set_hook(struct repository *r, const char *path)
 
 	lookup_fsmonitor_settings(r);
 
+	if (check_for_incompatible(r))
+		return;
+
 	r->settings.fsmonitor->mode = FSMONITOR_MODE_HOOK;
 	FREE_AND_NULL(r->settings.fsmonitor->hook_path);
 	r->settings.fsmonitor->hook_path = strdup(path);
@@ -111,5 +141,32 @@ void fsm_settings__set_disabled(struct repository *r)
 	lookup_fsmonitor_settings(r);
 
 	r->settings.fsmonitor->mode = FSMONITOR_MODE_DISABLED;
+	r->settings.fsmonitor->reason = FSMONITOR_REASON_OK;
 	FREE_AND_NULL(r->settings.fsmonitor->hook_path);
 }
+
+enum fsmonitor_reason fsm_settings__get_reason(struct repository *r)
+{
+	if (!r)
+		r = the_repository;
+
+	lookup_fsmonitor_settings(r);
+
+	return r->settings.fsmonitor->reason;
+}
+
+const char *fsm_settings__get_reason_msg(struct repository *r)
+{
+	enum fsmonitor_reason reason = fsm_settings__get_reason(r);
+
+	switch (reason) {
+	case FSMONITOR_REASON_OK:
+		return NULL;
+
+	case FSMONITOR_REASON_BARE:
+		return _("bare repos are incompatible with fsmonitor");
+	}
+
+	BUG("Unhandled case in fsm_settings__get_reason_msg '%d'",
+	    reason);
+}
diff --git a/fsmonitor-settings.h b/fsmonitor-settings.h
index a4c5d7b4889..a1af058a287 100644
--- a/fsmonitor-settings.h
+++ b/fsmonitor-settings.h
@@ -4,11 +4,20 @@
 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_OK = 0, /* 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);
@@ -16,6 +25,9 @@ void fsm_settings__set_disabled(struct repository *r);
 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);
+const char *fsm_settings__get_reason_msg(struct repository *r);
+
 struct fsmonitor_settings;
 
 #endif /* FSMONITOR_SETTINGS_H */
diff --git a/t/t7519-status-fsmonitor.sh b/t/t7519-status-fsmonitor.sh
index a6308acf006..cf258d88f04 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 repos are incompatible with fsmonitor" actual &&
+
+	test_must_fail \
+		git -C ./bare-clone -c core.fsmonitor=true \
+			update-index --fsmonitor 2>actual &&
+	grep "bare repos are 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 repos are incompatible with fsmonitor" actual
+'
+
 test_expect_success 'setup' '
 	mkdir -p .git/hooks &&
 	: >tracked &&
