diff --git a/doc/guix.texi b/doc/guix.texi
index b618480353..008a5cf714 100644
--- a/doc/guix.texi
+++ b/doc/guix.texi
@@ -3292,7 +3292,7 @@ omitted since it will take place implicitly, as we will see later
 @end example
 
 @c See
-@c <https://syntaxexclamation.wordpress.com/2014/06/26/escaping-continuations/> 
+@c <https://syntaxexclamation.wordpress.com/2014/06/26/escaping-continuations/>
 @c for the funny quote.
 Calling the monadic @code{sh-symlink} has no effect.  As someone once
 said, ``you exit a monad like you exit a building on fire: by running''.
@@ -4339,7 +4339,7 @@ So for instance, imagine you want to see the build log of GDB on MIPS,
 but you are actually on an @code{x86_64} machine:
 
 @example
-$ guix build --log-file gdb -s mips64el-linux 
+$ guix build --log-file gdb -s mips64el-linux
 https://hydra.gnu.org/log/@dots{}-gdb-7.10
 @end example
 
@@ -5338,10 +5338,11 @@ Attempt to build for @var{system}---e.g., @code{i686-linux}.
 @itemx -C
 @cindex container
 Run @var{command} within an isolated container.  The current working
-directory outside the container is mapped inside the
-container.  Additionally, the spawned process runs as the current user
-outside the container, but has root privileges in the context of the
-container.
+directory outside the container is mapped inside the container.
+Additionally, a dummy home directory is created that matches the current
+user's home directory, and @file{/etc/passwd} is configured accordingly.
+The spawned process runs as the current user outside the container, but
+has root privileges in the context of the container.
 
 @item --network
 @itemx -N
@@ -8748,7 +8749,7 @@ isn't enough disk space, just skip it.
 @item fcntl
 Use this if possible.  Works with NFS too if lockd is used.
 @item flock
-May not exist in all systems.  Doesn't work with NFS. 
+May not exist in all systems.  Doesn't work with NFS.
 @item lockf
 May not exist in all systems.  Doesn't work with NFS.
 @end table
diff --git a/guix/scripts/environment.scm b/guix/scripts/environment.scm
index b122b4cd40..0d5cab432c 100644
--- a/guix/scripts/environment.scm
+++ b/guix/scripts/environment.scm
@@ -373,6 +373,7 @@ (define* (launch-environment/container #:key command bash user-mappings
                              (list (direct-store-path bash) profile))))
     (return
      (let* ((cwd (getcwd))
+            (passwd (getpwuid (getuid)))
             ;; Bind-mount all requisite store items, user-specified mappings,
             ;; /bin/sh, the current working directory, and possibly networking
             ;; configuration files within the container.
@@ -417,16 +418,26 @@ (define* (launch-environment/container #:key command bash user-mappings
                       ;; The same variables as in Nix's 'build.cc'.
                       '("TMPDIR" "TEMPDIR" "TMP" "TEMP"))
 
-            ;; From Nix build.cc:
-            ;;
-            ;; Set HOME to a non-existing path to prevent certain
-            ;; programs from using /etc/passwd (or NIS, or whatever)
-            ;; to locate the home directory (for example, wget looks
-            ;; for ~/.wgetrc).  I.e., these tools use /etc/passwd if
-            ;; HOME is not set, but they will just assume that the
-            ;; settings file they are looking for does not exist if
-            ;; HOME is set but points to some non-existing path.
-            (setenv "HOME" "/homeless-shelter")
+            ;; Create a dummy home directory under the same name as on the
+            ;; host.
+            (mkdir-p (passwd:dir passwd))
+            (setenv "HOME" (passwd:dir passwd))
+
+            ;; Create a dummy /etc/passwd to satisfy applications that demand
+            ;; to read it, such as 'git clone' over SSH, a valid use-case when
+            ;; sharing the host's network namespace.
+            (mkdir-p "/etc")
+            (call-with-output-file "/etc/passwd"
+              (lambda (port)
+                (display (string-join (list (passwd:name passwd)
+                                            "x" ; but there is no shadow
+                                            "0" "0" ; user is now root
+                                            (passwd:gecos passwd)
+                                            (passwd:dir passwd)
+                                            bash)
+                                      ":")
+                         port)
+                (newline port)))
 
             ;; For convenience, start in the user's current working
             ;; directory rather than the root directory.