diff --git a/builtin-init-db.c b/builtin-init-db.c
index fc63d0fce5d306..4e02b33bb77b89 100644
--- a/builtin-init-db.c
+++ b/builtin-init-db.c
@@ -194,6 +194,8 @@ static int create_default_files(const char *template_path)
 
 	git_config(git_default_config, NULL);
 	is_bare_repository_cfg = init_is_bare_repository;
+
+	/* reading existing config may have overwrote it */
 	if (init_shared_repository != -1)
 		shared_repository = init_shared_repository;
 
@@ -312,12 +314,15 @@ int init_db(const char *template_dir, unsigned int flags)
 		 * and compatibility values for PERM_GROUP and
 		 * PERM_EVERYBODY.
 		 */
-		if (shared_repository == PERM_GROUP)
+		if (shared_repository < 0)
+			/* force to the mode value */
+			sprintf(buf, "0%o", -shared_repository);
+		else if (shared_repository == PERM_GROUP)
 			sprintf(buf, "%d", OLD_PERM_GROUP);
 		else if (shared_repository == PERM_EVERYBODY)
 			sprintf(buf, "%d", OLD_PERM_EVERYBODY);
 		else
-			sprintf(buf, "0%o", shared_repository);
+			die("oops");
 		git_config_set("core.sharedrepository", buf);
 		git_config_set("receive.denyNonFastforwards", "true");
 	}
@@ -397,6 +402,9 @@ int cmd_init_db(int argc, const char **argv, const char *prefix)
 			usage(init_db_usage);
 	}
 
+	if (init_shared_repository != -1)
+		shared_repository = init_shared_repository;
+
 	/*
 	 * GIT_WORK_TREE makes sense only in conjunction with GIT_DIR
 	 * without --bare.  Catch the error early.
diff --git a/cache.h b/cache.h
index 9cf5a13c2cbec3..61664addd76829 100644
--- a/cache.h
+++ b/cache.h
@@ -623,7 +623,8 @@ enum sharedrepo {
 	PERM_EVERYBODY      = 0664,
 };
 int git_config_perm(const char *var, const char *value);
-int adjust_shared_perm(const char *path);
+int set_shared_perm(const char *path, int mode);
+#define adjust_shared_perm(path) set_shared_perm((path), 0)
 int safe_create_leading_directories(char *path);
 int safe_create_leading_directories_const(const char *path);
 char *enter_repo(char *path, int strict);
diff --git a/fast-import.c b/fast-import.c
index db44da3e096fcd..23c496d6839646 100644
--- a/fast-import.c
+++ b/fast-import.c
@@ -903,9 +903,6 @@ static char *keep_pack(char *curr_index_name)
 	static const char *keep_msg = "fast-import";
 	int keep_fd;
 
-	chmod(pack_data->pack_name, 0444);
-	chmod(curr_index_name, 0444);
-
 	keep_fd = odb_pack_keep(name, sizeof(name), pack_data->sha1);
 	if (keep_fd < 0)
 		die("cannot create keep file");
diff --git a/http-push.c b/http-push.c
index 6ce5a1d550d4cf..e465b20c1acd3f 100644
--- a/http-push.c
+++ b/http-push.c
@@ -748,7 +748,6 @@ static void finish_request(struct transfer_request *request)
 			aborted = 1;
 		}
 	} else if (request->state == RUN_FETCH_LOOSE) {
-		fchmod(request->local_fileno, 0444);
 		close(request->local_fileno); request->local_fileno = -1;
 
 		if (request->curl_result != CURLE_OK &&
diff --git a/http-walker.c b/http-walker.c
index 0dbad3c888c6c9..c5a3ea3b31045b 100644
--- a/http-walker.c
+++ b/http-walker.c
@@ -231,7 +231,6 @@ static void finish_object_request(struct object_request *obj_req)
 {
 	struct stat st;
 
-	fchmod(obj_req->local, 0444);
 	close(obj_req->local); obj_req->local = -1;
 
 	if (obj_req->http_code == 416) {
diff --git a/index-pack.c b/index-pack.c
index 75468228d3933c..6e93ee6af64593 100644
--- a/index-pack.c
+++ b/index-pack.c
@@ -823,8 +823,7 @@ static void final(const char *final_pack_name, const char *curr_pack_name,
 		}
 		if (move_temp_to_file(curr_pack_name, final_pack_name))
 			die("cannot store pack file");
-	}
-	if (from_stdin)
+	} else if (from_stdin)
 		chmod(final_pack_name, 0444);
 
 	if (final_index_name != curr_index_name) {
@@ -835,8 +834,8 @@ static void final(const char *final_pack_name, const char *curr_pack_name,
 		}
 		if (move_temp_to_file(curr_index_name, final_index_name))
 			die("cannot store index file");
-	}
-	chmod(final_index_name, 0444);
+	} else
+		chmod(final_index_name, 0444);
 
 	if (!from_stdin) {
 		printf("%s\n", sha1_to_hex(sha1));
diff --git a/path.c b/path.c
index e332b504a6b8c6..8a0a6741fd664f 100644
--- a/path.c
+++ b/path.c
@@ -311,36 +311,49 @@ char *enter_repo(char *path, int strict)
 	return NULL;
 }
 
-int adjust_shared_perm(const char *path)
+int set_shared_perm(const char *path, int mode)
 {
 	struct stat st;
-	int mode;
+	int tweak, shared, orig_mode;
 
-	if (!shared_repository)
+	if (!shared_repository) {
+		if (mode)
+			return chmod(path, mode & ~S_IFMT);
 		return 0;
-	if (lstat(path, &st) < 0)
-		return -1;
-	mode = st.st_mode;
-
-	if (shared_repository) {
-		int tweak = shared_repository;
-		if (!(mode & S_IWUSR))
-			tweak &= ~0222;
-		mode |= tweak;
-	} else {
-		/* Preserve old PERM_UMASK behaviour */
-		if (mode & S_IWUSR)
-			mode |= S_IWGRP;
 	}
+	if (!mode) {
+		if (lstat(path, &st) < 0)
+			return -1;
+		mode = st.st_mode;
+		orig_mode = mode;
+	} else
+		orig_mode = 0;
+	if (shared_repository < 0)
+		shared = -shared_repository;
+	else
+		shared = shared_repository;
+	tweak = shared;
+
+	if (!(mode & S_IWUSR))
+		tweak &= ~0222;
+	if (mode & S_IXUSR)
+		/* Copy read bits to execute bits */
+		tweak |= (tweak & 0444) >> 2;
+	if (shared_repository < 0)
+		mode = (mode & ~0777) | tweak;
+	else
+		mode |= tweak;
 
 	if (S_ISDIR(mode)) {
-		mode |= FORCE_DIR_SET_GID;
-
 		/* Copy read bits to execute bits */
-		mode |= (shared_repository & 0444) >> 2;
+		mode |= (shared & 0444) >> 2;
+		mode |= FORCE_DIR_SET_GID;
 	}
 
-	if ((mode & st.st_mode) != mode && chmod(path, mode) < 0)
+	if (((shared_repository < 0
+	      ? (orig_mode & (FORCE_DIR_SET_GID | 0777))
+	      : (orig_mode & mode)) != mode) &&
+	    chmod(path, (mode & ~S_IFMT)) < 0)
 		return -2;
 	return 0;
 }
diff --git a/setup.c b/setup.c
index 6c2deda18492ac..ebd60de9ce5b52 100644
--- a/setup.c
+++ b/setup.c
@@ -434,7 +434,7 @@ int git_config_perm(const char *var, const char *value)
 
 	/*
 	 * Treat values 0, 1 and 2 as compatibility cases, otherwise it is
-	 * a chmod value.
+	 * a chmod value to restrict to.
 	 */
 	switch (i) {
 	case PERM_UMASK:               /* 0 */
@@ -456,7 +456,7 @@ int git_config_perm(const char *var, const char *value)
 	 * Mask filemode value. Others can not get write permission.
 	 * x flags for directories are handled separately.
 	 */
-	return i & 0666;
+	return -(i & 0666);
 }
 
 int check_repository_format_version(const char *var, const char *value, void *cb)
diff --git a/sha1_file.c b/sha1_file.c
index 37e833b77d1ee5..8fe135dc619081 100644
--- a/sha1_file.c
+++ b/sha1_file.c
@@ -2216,11 +2216,15 @@ static void write_sha1_file_prepare(const void *buf, unsigned long len,
 }
 
 /*
- * Move the just written object into its final resting place
+ * Move the just written object into its final resting place.
+ * NEEDSWORK: this should be renamed to finalize_temp_file() as
+ * "moving" is only a part of what it does, when no patch between
+ * master to pu changes the call sites of this function.
  */
 int move_temp_to_file(const char *tmpfile, const char *filename)
 {
 	int ret = 0;
+
 	if (link(tmpfile, filename))
 		ret = errno;
 
@@ -2232,12 +2236,12 @@ int move_temp_to_file(const char *tmpfile, const char *filename)
 	 *
 	 * The same holds for FAT formatted media.
 	 *
-	 * When this succeeds, we just return 0. We have nothing
+	 * When this succeeds, we just return.  We have nothing
 	 * left to unlink.
 	 */
 	if (ret && ret != EEXIST) {
 		if (!rename(tmpfile, filename))
-			return 0;
+			goto out;
 		ret = errno;
 	}
 	unlink(tmpfile);
@@ -2248,6 +2252,9 @@ int move_temp_to_file(const char *tmpfile, const char *filename)
 		/* FIXME!!! Collision check here ? */
 	}
 
+out:
+	if (set_shared_perm(filename, (S_IFREG|0444)))
+		return error("unable to set permission to '%s'", filename);
 	return 0;
 }
 
@@ -2272,7 +2279,6 @@ static void close_sha1_file(int fd)
 {
 	if (fsync_object_files)
 		fsync_or_die(fd, "sha1 file");
-	fchmod(fd, 0444);
 	if (close(fd) != 0)
 		die("error when closing sha1 file (%s)", strerror(errno));
 }
diff --git a/t/t1301-shared-repo.sh b/t/t1301-shared-repo.sh
index dc4485409dd5e5..750fbb32e87e0e 100755
--- a/t/t1301-shared-repo.sh
+++ b/t/t1301-shared-repo.sh
@@ -126,4 +126,41 @@ test_expect_success POSIXPERM 'git reflog expire honors core.sharedRepository' '
 	esac
 '
 
+test_expect_success 'forced modes' '
+	mkdir -p templates/hooks &&
+	echo update-server-info >templates/hooks/post-update &&
+	chmod +x templates/hooks/post-update &&
+	echo : >random-file &&
+	mkdir new &&
+	(
+		cd new &&
+		umask 002 &&
+		git init --shared=0660 --template=../templates &&
+		>frotz &&
+		git add frotz &&
+		git commit -a -m initial &&
+		git repack
+	) &&
+	find new/.git -print |
+	xargs ls -ld >actual &&
+
+	# Everything must be unaccessible to others
+	test -z "$(sed -n -e "/^.......---/d" actual)" &&
+
+	# All directories must have either 2770 or 770
+	test -z "$(sed -n -e "/^drwxrw[sx]---/d" -e "/^d/p" actual)" &&
+
+	# post-update hook must be 0770
+	test -z "$(sed -n -e "/post-update/{
+		/^-rwxrwx---/d
+		p
+	}" actual)" &&
+
+	# All files inside objects must be 0440
+	test -z "$(sed -n -e "/objects\//{
+		/^d/d
+		/^-r--r-----/d
+	}" actual)"
+'
+
 test_done