diff --git a/lib/overcommit/git_config.rb b/lib/overcommit/git_config.rb
index c6057f10..b2d48cfc 100644
--- a/lib/overcommit/git_config.rb
+++ b/lib/overcommit/git_config.rb
@@ -13,7 +13,7 @@ def comment_character
 
     def hooks_path
       path = `git config --get core.hooksPath`.chomp
-      return File.join(Overcommit::Utils.repo_root, '.git', 'hooks') if path.empty?
+      return File.join(Overcommit::Utils.git_dir, 'hooks') if path.empty?
       File.absolute_path(path)
     end
   end
diff --git a/spec/overcommit/installer_spec.rb b/spec/overcommit/installer_spec.rb
index c1159304..622dab43 100644
--- a/spec/overcommit/installer_spec.rb
+++ b/spec/overcommit/installer_spec.rb
@@ -225,6 +225,27 @@ def hook_files_installed?(hooks_dir)
           end
         end
       end
+
+      context 'which has an external git dir' do
+        let(:submodule) { File.join(target, 'submodule') }
+        before do
+          system 'git', 'submodule', 'add', target, 'submodule',
+                 chdir: target, out: :close, err: :close
+        end
+        let(:submodule_git_file) { File.join(submodule, '.git') }
+        let(:submodule_git_dir) do
+          File.expand_path(File.read(submodule_git_file)[/gitdir: (.*)/, 1], submodule)
+        end
+        let(:submodule_hooks_dir) { File.join(submodule_git_dir, 'hooks') }
+
+        subject { installer.run(submodule, options) }
+
+        it 'installs hooks into the correct external directory' do
+          expect { subject }.to change {
+            hook_files_installed?(submodule_hooks_dir)
+          }.from(false).to(true)
+        end
+      end
     end
   end
 end