diff --git a/tests/basic/test_sanity_check_repo.py b/tests/basic/test_sanity_check_repo.py
new file mode 100644
index 000000000..72989cfa3
--- /dev/null
+++ b/tests/basic/test_sanity_check_repo.py
@@ -0,0 +1,179 @@
+import os
+import shutil
+import struct
+from unittest import mock
+
+import pytest
+from git import GitError, Repo
+
+from aider.main import sanity_check_repo
+
+
+@pytest.fixture
+def mock_io():
+    """Fixture to create a mock io object."""
+    return mock.Mock()
+
+
+@pytest.fixture
+def create_repo(tmp_path):
+    """
+    Fixture to create a standard Git repository.
+    Returns the path to the repo and the Repo object.
+    """
+    repo_path = tmp_path / "test_repo"
+    repo = Repo.init(repo_path)
+    # Create an initial commit
+    file_path = repo_path / "README.md"
+    file_path.write_text("# Test Repository")
+    repo.index.add([str(file_path.relative_to(repo_path))])
+    repo.index.commit("Initial commit")
+    return repo_path, repo
+
+
+def set_git_index_version(repo_path, version):
+    """
+    Sets the Git index version by modifying the .git/index file.
+    The index version is stored in the first 4 bytes as a little-endian integer.
+    """
+    index_path = os.path.join(repo_path, ".git", "index")
+    with open(index_path, "r+b") as f:
+        # Read the first 4 bytes (signature) and the next 4 bytes (version)
+        signature = f.read(4)
+        if signature != b"DIRC":
+            raise ValueError("Invalid git index file signature.")
+        # Write the new version
+        f.seek(4)
+        f.write(struct.pack("<I", version))
+
+
+def detach_head(repo):
+    """
+    Detaches the HEAD of the repository by checking out the current commit hash.
+    """
+    current_commit = repo.head.commit
+    repo.git.checkout(current_commit.hexsha)
+
+
+def mock_repo_wrapper(repo_obj, git_repo_error=None):
+    """
+    Creates a mock 'repo' object to pass to sanity_check_repo.
+    The mock object has:
+    - repo.repo: the Repo object
+    - repo.get_tracked_files(): returns a list of tracked files or raises GitError
+    - repo.git_repo_error: the GitError if any
+    """
+    mock_repo = mock.Mock()
+    mock_repo.repo = repo_obj
+    if git_repo_error:
+
+        def get_tracked_files_side_effect():
+            raise git_repo_error
+
+        mock_repo.get_tracked_files.side_effect = get_tracked_files_side_effect
+        mock_repo.git_repo_error = git_repo_error
+    else:
+        mock_repo.get_tracked_files.return_value = [
+            str(path) for path in repo_obj.git.ls_files().splitlines()
+        ]
+        mock_repo.git_repo_error = None
+    return mock_repo
+
+
+def test_detached_head_state(create_repo, mock_io):
+    repo_path, repo = create_repo
+    # Detach the HEAD
+    detach_head(repo)
+
+    # Create the mock 'repo' object
+    mock_repo_obj = mock_repo_wrapper(repo)
+
+    # Call the function
+    result = sanity_check_repo(mock_repo_obj, mock_io)
+
+    # Assert that the function returns True
+    assert result is True
+
+    # Assert that no errors were logged
+    mock_io.tool_error.assert_not_called()
+    mock_io.tool_output.assert_not_called()
+
+
+def test_git_index_version_greater_than_2(create_repo, mock_io):
+    repo_path, repo = create_repo
+    # Set the git index version to 3
+    set_git_index_version(str(repo_path), 3)
+
+    # Simulate that get_tracked_files raises an error due to index version
+    git_error = GitError("index version in (1, 2) is required")
+    mock_repo_obj = mock_repo_wrapper(repo, git_repo_error=git_error)
+
+    # Call the function
+    result = sanity_check_repo(mock_repo_obj, mock_io)
+
+    # Assert that the function returns False
+    assert result is False
+
+    # Assert that the appropriate error messages were logged
+    mock_io.tool_error.assert_called_with(
+        "Aider only works with git repos with version number 1 or 2."
+    )
+    mock_io.tool_error.assert_any_call(
+        "Aider only works with git repos with version number 1 or 2."
+    )
+    mock_io.tool_output.assert_any_call(
+        "You may be able to convert your repo: git update-index --index-version=2"
+    )
+    mock_io.tool_output.assert_any_call("Or run aider --no-git to proceed without using git.")
+    mock_io.tool_output.assert_any_call("https://github.com/paul-gauthier/aider/issues/211")
+
+
+def test_bare_repository(create_repo, mock_io, tmp_path):
+    # Initialize a bare repository
+    bare_repo_path = tmp_path / "bare_repo.git"
+    bare_repo = Repo.init(bare_repo_path, bare=True)
+
+    # Create the mock 'repo' object
+    mock_repo_obj = mock_repo_wrapper(bare_repo)
+
+    # Call the function
+    result = sanity_check_repo(mock_repo_obj, mock_io)
+
+    # Assert that the function returns False
+    assert result is False
+
+    # Assert that the appropriate error message was logged
+    mock_io.tool_error.assert_called_with("The git repo does not seem to have a working tree?")
+    mock_io.tool_output.assert_not_called()
+
+
+def test_sanity_check_repo_with_corrupt_repo(create_repo, mock_io):
+    repo_path, repo = create_repo
+    # Simulate a corrupt repository by removing the .git directory
+    shutil.rmtree(os.path.join(repo_path, ".git"))
+
+    # Create the mock 'repo' object with GitError
+    git_error = GitError("Unable to read git repository, it may be corrupt?")
+    mock_repo_obj = mock_repo_wrapper(repo, git_repo_error=git_error)
+
+    # Call the function
+    result = sanity_check_repo(mock_repo_obj, mock_io)
+
+    # Assert that the function returns False
+    assert result is False
+
+    # Assert that the appropriate error messages were logged
+    mock_io.tool_error.assert_called_with("Unable to read git repository, it may be corrupt?")
+    mock_io.tool_output.assert_called_with(str(git_error))
+
+
+def test_sanity_check_repo_with_no_repo(mock_io):
+    # Call the function with repo=None
+    result = sanity_check_repo(None, mock_io)
+
+    # Assert that the function returns True
+    assert result is True
+
+    # Assert that no errors or outputs were logged
+    mock_io.tool_error.assert_not_called()
+    mock_io.tool_output.assert_not_called()