diff --git a/src/libostree/ostree-repo.c b/src/libostree/ostree-repo.c
index c395b1dc..7caf528e 100644
--- a/src/libostree/ostree-repo.c
+++ b/src/libostree/ostree-repo.c
@@ -2210,6 +2210,13 @@ ostree_repo_create (OstreeRepo     *self,
   if (!g_file_make_directory (self->tmp_dir, cancellable, error))
     goto out;
 
+  {
+    g_autoptr(GFile) extensions_dir =
+      g_file_resolve_relative_path (self->repodir, "extensions");
+    if (!g_file_make_directory (extensions_dir, cancellable, error))
+      goto out;
+  }
+
   g_clear_object (&child);
   child = g_file_get_child (self->repodir, "refs");
   if (!g_file_make_directory (child, cancellable, error))
diff --git a/tests/basic-test.sh b/tests/basic-test.sh
index a44ee630..0373fcbc 100755
--- a/tests/basic-test.sh
+++ b/tests/basic-test.sh
@@ -19,7 +19,7 @@
 
 set -euo pipefail
 
-echo "1..55"
+echo "1..56"
 
 $OSTREE checkout test2 checkout-test2
 echo "ok checkout"
@@ -508,5 +508,9 @@ cd ..
 if cmp timestamp-{orig,new}.txt; then
     assert_not_reached "failed to update mtime on repo"
 fi
-
 echo "ok mtime updated"
+
+cd ${test_tmpdir}
+$OSTREE init --mode=bare --repo=repo-extensions
+assert_has_dir repo-extensions/extensions
+echo "ok extensions dir"