diff --git a/project.py b/project.py
index 516d3b6c..effe75c4 100644
--- a/project.py
+++ b/project.py
@@ -1854,16 +1854,17 @@ class Project(object):
     if GitCommand(self, cmd).Wait() != 0:
       raise GitError('%s merge %s ' % (self.name, head))
 
-  def _InitGitDir(self):
+  def _InitGitDir(self, mirror_git=None):
     if not os.path.exists(self.gitdir):
       os.makedirs(self.gitdir)
       self.bare_git.init()
 
       mp = self.manifest.manifestProject
-      ref_dir = mp.config.GetString('repo.reference')
+      ref_dir = mp.config.GetString('repo.reference') or ''
 
-      if ref_dir:
-        mirror_git = os.path.join(ref_dir, self.name + '.git')
+      if ref_dir or mirror_git:
+        if not mirror_git:
+          mirror_git = os.path.join(ref_dir, self.name + '.git')
         repo_git = os.path.join(ref_dir, '.repo', 'projects',
                                 self.relpath + '.git')
 
diff --git a/subcmds/init.py b/subcmds/init.py
index 29730cc4..1f915268 100644
--- a/subcmds/init.py
+++ b/subcmds/init.py
@@ -19,6 +19,15 @@ import platform
 import re
 import shutil
 import sys
+try:
+  # For python3
+  import urllib.parse
+except ImportError:
+  # For python2
+  import imp
+  import urlparse
+  urllib = imp.new_module('urllib')
+  urllib.parse = urlparse.urlparse
 
 from color import Coloring
 from command import InteractiveCommand, MirrorSafeCommand
@@ -135,7 +144,19 @@ to update the working directory files.
       if not opt.quiet:
         print('Get %s' % GitConfig.ForUser().UrlInsteadOf(opt.manifest_url),
               file=sys.stderr)
-      m._InitGitDir()
+
+      # The manifest project object doesn't keep track of the path on the
+      # server where this git is located, so let's save that here.
+      mirrored_manifest_git = None
+      if opt.reference:
+        manifest_git_path = urllib.parse(opt.manifest_url).path[1:]
+        mirrored_manifest_git = os.path.join(opt.reference, manifest_git_path)
+        if not mirrored_manifest_git.endswith(".git"):
+          mirrored_manifest_git += ".git"
+        if not os.path.exists(mirrored_manifest_git):
+          mirrored_manifest_git = os.path.join(opt.reference + '/.repo/manifests.git')
+
+      m._InitGitDir(mirror_git=mirrored_manifest_git)
 
       if opt.manifest_branch:
         m.revisionExpr = opt.manifest_branch