diff --git a/R/libgit2.r b/R/libgit2.r
index 3d1cf45d8..d3e79092a 100644
--- a/R/libgit2.r
+++ b/R/libgit2.r
@@ -47,7 +47,7 @@ libgit2_version <- function() {
 ##' @export
 ##' @examples
 ##' libgit2_sha()
-libgit2_sha <- function() "d8243465be6ae4c3d0482ec262da58276f3a4e58"
+libgit2_sha <- function() "e4218450338cf6757077f63bac570ea77f655eff"
 
 ##' Set the SSL certificate-authority locations
 ##'
diff --git a/src/libgit2/include/git2/repository.h b/src/libgit2/include/git2/repository.h
index 3d70d1b89..85b7e6861 100644
--- a/src/libgit2/include/git2/repository.h
+++ b/src/libgit2/include/git2/repository.h
@@ -95,29 +95,11 @@ GIT_EXTERN(int) git_repository_discover(
  * * GIT_REPOSITORY_OPEN_BARE - Open repository as a bare repo regardless
  *   of core.bare config, and defer loading config file for faster setup.
  *   Unlike `git_repository_open_bare`, this can follow gitlinks.
- * * GIT_REPOSITORY_OPEN_NO_DOTGIT - Do not check for a repository by
- *   appending /.git to the start_path; only open the repository if
- *   start_path itself points to the git directory.
- * * GIT_REPOSITORY_OPEN_FROM_ENV - Find and open a git repository,
- *   respecting the environment variables used by the git command-line
- *   tools. If set, `git_repository_open_ext` will ignore the other
- *   flags and the `ceiling_dirs` argument, and will allow a NULL `path`
- *   to use `GIT_DIR` or search from the current directory. The search
- *   for a repository will respect $GIT_CEILING_DIRECTORIES and
- *   $GIT_DISCOVERY_ACROSS_FILESYSTEM.  The opened repository will
- *   respect $GIT_INDEX_FILE, $GIT_NAMESPACE, $GIT_OBJECT_DIRECTORY, and
- *   $GIT_ALTERNATE_OBJECT_DIRECTORIES.  In the future, this flag will
- *   also cause `git_repository_open_ext` to respect $GIT_WORK_TREE and
- *   $GIT_COMMON_DIR; currently, `git_repository_open_ext` with this
- *   flag will error out if either $GIT_WORK_TREE or $GIT_COMMON_DIR is
- *   set.
  */
 typedef enum {
 	GIT_REPOSITORY_OPEN_NO_SEARCH = (1 << 0),
 	GIT_REPOSITORY_OPEN_CROSS_FS  = (1 << 1),
 	GIT_REPOSITORY_OPEN_BARE      = (1 << 2),
-	GIT_REPOSITORY_OPEN_NO_DOTGIT = (1 << 3),
-	GIT_REPOSITORY_OPEN_FROM_ENV  = (1 << 4),
 } git_repository_open_flag_t;
 
 /**
@@ -128,8 +110,7 @@ typedef enum {
  *        see if a repo at this path could be opened.
  * @param path Path to open as git repository.  If the flags
  *        permit "searching", then this can be a path to a subdirectory
- *        inside the working directory of the repository. May be NULL if
- *        flags is GIT_REPOSITORY_OPEN_FROM_ENV.
+ *        inside the working directory of the repository.
  * @param flags A combination of the GIT_REPOSITORY_OPEN flags above.
  * @param ceiling_dirs A GIT_PATH_LIST_SEPARATOR delimited list of path
  *        prefixes at which the search for a containing repository should
diff --git a/src/libgit2/src/repository.c b/src/libgit2/src/repository.c
index ecc07806e..d39a9015d 100644
--- a/src/libgit2/src/repository.c
+++ b/src/libgit2/src/repository.c
@@ -357,50 +357,29 @@ static int find_repo(
 {
 	int error;
 	git_buf path = GIT_BUF_INIT;
-	git_buf repo_link = GIT_BUF_INIT;
 	struct stat st;
 	dev_t initial_device = 0;
-	int min_iterations;
-	bool in_dot_git;
+	bool try_with_dot_git = ((flags & GIT_REPOSITORY_OPEN_BARE) != 0);
 	int ceiling_offset;
 
 	git_buf_free(repo_path);
 
-	error = git_path_prettify(&path, start_path, NULL);
-	if (error < 0)
+	if ((error = git_path_prettify(&path, start_path, NULL)) < 0)
 		return error;
 
-	/* in_dot_git toggles each loop:
-	 * /a/b/c/.git, /a/b/c, /a/b/.git, /a/b, /a/.git, /a
-	 * With GIT_REPOSITORY_OPEN_BARE or GIT_REPOSITORY_OPEN_NO_DOTGIT, we
-	 * assume we started with /a/b/c.git and don't append .git the first
-	 * time through.
-	 * min_iterations indicates the number of iterations left before going
-	 * further counts as a search. */
-	if (flags & (GIT_REPOSITORY_OPEN_BARE | GIT_REPOSITORY_OPEN_NO_DOTGIT)) {
-		in_dot_git = true;
-		min_iterations = 1;
-	} else {
-		in_dot_git = false;
-		min_iterations = 2;
-	}
+	ceiling_offset = find_ceiling_dir_offset(path.ptr, ceiling_dirs);
 
-	for (;;) {
-		if (!(flags & GIT_REPOSITORY_OPEN_NO_DOTGIT)) {
-			if (!in_dot_git) {
-				error = git_buf_joinpath(&path, path.ptr, DOT_GIT);
-				if (error < 0)
-					break;
-			}
-			in_dot_git = !in_dot_git;
-		}
+	if (!try_with_dot_git &&
+		(error = git_buf_joinpath(&path, path.ptr, DOT_GIT)) < 0)
+		return error;
 
+	while (!error && !git_buf_len(repo_path)) {
 		if (p_stat(path.ptr, &st) == 0) {
 			/* check that we have not crossed device boundaries */
 			if (initial_device == 0)
 				initial_device = st.st_dev;
 			else if (st.st_dev != initial_device &&
-				 !(flags & GIT_REPOSITORY_OPEN_CROSS_FS))
+				(flags & GIT_REPOSITORY_OPEN_CROSS_FS) == 0)
 				break;
 
 			if (S_ISDIR(st.st_mode)) {
@@ -411,37 +390,41 @@ static int find_repo(
 				}
 			}
 			else if (S_ISREG(st.st_mode)) {
-				error = read_gitfile(&repo_link, path.ptr);
-				if (error < 0)
-					break;
-				if (valid_repository_path(&repo_link)) {
-					git_buf_swap(repo_path, &repo_link);
+				git_buf repo_link = GIT_BUF_INIT;
+
+				if (!(error = read_gitfile(&repo_link, path.ptr))) {
+					if (valid_repository_path(&repo_link)) {
+						git_buf_swap(repo_path, &repo_link);
+
+						if (link_path)
+							error = git_buf_put(link_path, 
+								path.ptr, path.size);
+					}
 
-					if (link_path)
-						error = git_buf_put(link_path, path.ptr, path.size);
+					git_buf_free(&repo_link);
+					break;
 				}
-				break;
+				git_buf_free(&repo_link);
 			}
 		}
 
-		/* Move up one directory. If we're in_dot_git, we'll search the
-		 * parent itself next. If we're !in_dot_git, we'll search .git
-		 * in the parent directory next (added at the top of the loop). */
+		/* move up one directory level */
 		if (git_path_dirname_r(&path, path.ptr) < 0) {
 			error = -1;
 			break;
 		}
 
-		/* Once we've checked the directory (and .git if applicable),
-		 * find the ceiling for a search. */
-		if (min_iterations && (--min_iterations == 0))
-			ceiling_offset = find_ceiling_dir_offset(path.ptr, ceiling_dirs);
-
-		/* Check if we should stop searching here. */
-		if (min_iterations == 0
-		    && (path.ptr[ceiling_offset] == 0
-			|| (flags & GIT_REPOSITORY_OPEN_NO_SEARCH)))
-			break;
+		if (try_with_dot_git) {
+			/* if we tried original dir with and without .git AND either hit
+			 * directory ceiling or NO_SEARCH was requested, then be done.
+			 */
+			if (path.ptr[ceiling_offset] == '\0' ||
+				(flags & GIT_REPOSITORY_OPEN_NO_SEARCH) != 0)
+				break;
+			/* otherwise look first for .git item */
+			error = git_buf_joinpath(&path, path.ptr, DOT_GIT);
+		}
+		try_with_dot_git = !try_with_dot_git;
 	}
 
 	if (!error && parent_path && !(flags & GIT_REPOSITORY_OPEN_BARE)) {
@@ -455,16 +438,14 @@ static int find_repo(
 			return -1;
 	}
 
-	/* If we didn't find the repository, and we don't have any other error
-	 * to report, report that. */
+	git_buf_free(&path);
+
 	if (!git_buf_len(repo_path) && !error) {
 		giterr_set(GITERR_REPOSITORY,
 			"Could not find repository from '%s'", start_path);
 		error = GIT_ENOTFOUND;
 	}
 
-	git_buf_free(&path);
-	git_buf_free(&repo_link);
 	return error;
 }
 
@@ -499,172 +480,6 @@ int git_repository_open_bare(
 	return 0;
 }
 
-static int _git_repository_open_ext_from_env(
-	git_repository **out,
-	const char *start_path)
-{
-	git_repository *repo = NULL;
-	git_index *index = NULL;
-	git_odb *odb = NULL;
-	git_buf dir_buf = GIT_BUF_INIT;
-	git_buf ceiling_dirs_buf = GIT_BUF_INIT;
-	git_buf across_fs_buf = GIT_BUF_INIT;
-	git_buf index_file_buf = GIT_BUF_INIT;
-	git_buf namespace_buf = GIT_BUF_INIT;
-	git_buf object_dir_buf = GIT_BUF_INIT;
-	git_buf alts_buf = GIT_BUF_INIT;
-	git_buf work_tree_buf = GIT_BUF_INIT;
-	git_buf common_dir_buf = GIT_BUF_INIT;
-	const char *ceiling_dirs = NULL;
-	unsigned flags = 0;
-	int error;
-
-	if (!start_path) {
-		error = git__getenv(&dir_buf, "GIT_DIR");
-		if (error == GIT_ENOTFOUND) {
-			giterr_clear();
-			start_path = ".";
-		} else if (error < 0)
-			goto error;
-		else {
-			start_path = git_buf_cstr(&dir_buf);
-			flags |= GIT_REPOSITORY_OPEN_NO_SEARCH;
-			flags |= GIT_REPOSITORY_OPEN_NO_DOTGIT;
-		}
-	}
-
-	error = git__getenv(&ceiling_dirs_buf, "GIT_CEILING_DIRECTORIES");
-	if (error == GIT_ENOTFOUND)
-		giterr_clear();
-	else if (error < 0)
-		goto error;
-	else
-		ceiling_dirs = git_buf_cstr(&ceiling_dirs_buf);
-
-	error = git__getenv(&across_fs_buf, "GIT_DISCOVERY_ACROSS_FILESYSTEM");
-	if (error == GIT_ENOTFOUND)
-		giterr_clear();
-	else if (error < 0)
-		goto error;
-	else {
-		int across_fs = 0;
-		error = git_config_parse_bool(&across_fs, git_buf_cstr(&across_fs_buf));
-		if (error < 0)
-			goto error;
-		if (across_fs)
-			flags |= GIT_REPOSITORY_OPEN_CROSS_FS;
-	}
-
-	error = git__getenv(&index_file_buf, "GIT_INDEX_FILE");
-	if (error == GIT_ENOTFOUND)
-		giterr_clear();
-	else if (error < 0)
-		goto error;
-	else {
-		error = git_index_open(&index, git_buf_cstr(&index_file_buf));
-		if (error < 0)
-			goto error;
-	}
-
-	error = git__getenv(&namespace_buf, "GIT_NAMESPACE");
-	if (error == GIT_ENOTFOUND)
-		giterr_clear();
-	else if (error < 0)
-		goto error;
-
-	error = git__getenv(&object_dir_buf, "GIT_OBJECT_DIRECTORY");
-	if (error == GIT_ENOTFOUND)
-		giterr_clear();
-	else if (error < 0)
-		goto error;
-	else {
-		error = git_odb_open(&odb, git_buf_cstr(&object_dir_buf));
-		if (error < 0)
-			goto error;
-	}
-
-	error = git__getenv(&work_tree_buf, "GIT_WORK_TREE");
-	if (error == GIT_ENOTFOUND)
-		giterr_clear();
-	else if (error < 0)
-		goto error;
-	else {
-		giterr_set(GITERR_INVALID, "GIT_WORK_TREE unimplemented");
-		error = GIT_ERROR;
-		goto error;
-	}
-
-	error = git__getenv(&work_tree_buf, "GIT_COMMON_DIR");
-	if (error == GIT_ENOTFOUND)
-		giterr_clear();
-	else if (error < 0)
-		goto error;
-	else {
-		giterr_set(GITERR_INVALID, "GIT_COMMON_DIR unimplemented");
-		error = GIT_ERROR;
-		goto error;
-	}
-
-	error = git_repository_open_ext(&repo, start_path, flags, ceiling_dirs);
-	if (error < 0)
-		goto error;
-
-	if (odb)
-		git_repository_set_odb(repo, odb);
-
-	error = git__getenv(&alts_buf, "GIT_ALTERNATE_OBJECT_DIRECTORIES");
-	if (error == GIT_ENOTFOUND)
-		giterr_clear();
-	else if (error < 0)
-		goto error;
-        else {
-		const char *end;
-		char *alt, *sep;
-		if (!odb) {
-			error = git_repository_odb(&odb, repo);
-			if (error < 0)
-				goto error;
-		}
-
-		end = git_buf_cstr(&alts_buf) + git_buf_len(&alts_buf);
-		for (sep = alt = alts_buf.ptr; sep != end; alt = sep+1) {
-			for (sep = alt; *sep && *sep != GIT_PATH_LIST_SEPARATOR; sep++)
-				;
-			if (*sep)
-				*sep = '\0';
-			error = git_odb_add_disk_alternate(odb, alt);
-			if (error < 0)
-				goto error;
-		}
-	}
-
-	error = git_repository_set_namespace(repo, git_buf_cstr(&namespace_buf));
-	if (error < 0)
-		goto error;
-
-	git_repository_set_index(repo, index);
-
-	if (out) {
-		*out = repo;
-		goto success;
-	}
-error:
-	git_repository_free(repo);
-success:
-	git_odb_free(odb);
-	git_index_free(index);
-	git_buf_free(&common_dir_buf);
-	git_buf_free(&work_tree_buf);
-	git_buf_free(&alts_buf);
-	git_buf_free(&object_dir_buf);
-	git_buf_free(&namespace_buf);
-	git_buf_free(&index_file_buf);
-	git_buf_free(&across_fs_buf);
-	git_buf_free(&ceiling_dirs_buf);
-	git_buf_free(&dir_buf);
-	return error;
-}
-
 int git_repository_open_ext(
 	git_repository **repo_ptr,
 	const char *start_path,
@@ -677,9 +492,6 @@ int git_repository_open_ext(
 	git_repository *repo;
 	git_config *config = NULL;
 
-	if (flags & GIT_REPOSITORY_OPEN_FROM_ENV)
-		return _git_repository_open_ext_from_env(repo_ptr, start_path);
-
 	if (repo_ptr)
 		*repo_ptr = NULL;