diff --git a/plugins/virtualenvwrapper/virtualenvwrapper.plugin.zsh b/plugins/virtualenvwrapper/virtualenvwrapper.plugin.zsh
index 88217a7f5..c30216f51 100644
--- a/plugins/virtualenvwrapper/virtualenvwrapper.plugin.zsh
+++ b/plugins/virtualenvwrapper/virtualenvwrapper.plugin.zsh
@@ -35,27 +35,19 @@ if [[ ! $DISABLE_VENV_CD -eq 1 ]]; then
   function workon_cwd {
     if [[ -z "$WORKON_CWD" ]]; then
       local WORKON_CWD=1
-      # Check if this is a Git repo
-      local GIT_REPO_ROOT=""
-      local GIT_TOPLEVEL="$(git rev-parse --show-toplevel 2> /dev/null)"
-      if [[ $? == 0 ]]; then
-        GIT_REPO_ROOT="$GIT_TOPLEVEL"
-      fi
       # Get absolute path, resolving symlinks
       local PROJECT_ROOT="${PWD:A}"
       while [[ "$PROJECT_ROOT" != "/" && ! -e "$PROJECT_ROOT/.venv" \
-               && ! -d "$PROJECT_ROOT/.git"  && "$PROJECT_ROOT" != "$GIT_REPO_ROOT" ]]; do
+          && ! -d "$PROJECT_ROOT/.git" ]]; do
         PROJECT_ROOT="${PROJECT_ROOT:h}"
       done
-      if [[ "$PROJECT_ROOT" == "/" ]]; then
-        PROJECT_ROOT="."
-      fi
+
       # Check for virtualenv name override
       if [[ -f "$PROJECT_ROOT/.venv" ]]; then
         ENV_NAME="$(cat "$PROJECT_ROOT/.venv")"
       elif [[ -f "$PROJECT_ROOT/.venv/bin/activate" ]];then
         ENV_NAME="$PROJECT_ROOT/.venv"
-      elif [[ "$PROJECT_ROOT" != "." ]]; then
+      elif [[ "$PROJECT_ROOT" != "/" ]]; then
         ENV_NAME="${PROJECT_ROOT:t}"
       else
         ENV_NAME=""
@@ -68,14 +60,21 @@ if [[ ! $DISABLE_VENV_CD -eq 1 ]]; then
       fi
       if [[ "$ENV_NAME" != "" ]]; then
         # Activate the environment only if it is not already active
-        if [[ "$VIRTUAL_ENV" != "$WORKON_HOME/$ENV_NAME" ]]; then
+        if [[ ! "$VIRTUAL_ENV" -ef "$WORKON_HOME/$ENV_NAME" ]]; then
           if [[ -e "$WORKON_HOME/$ENV_NAME/bin/activate" ]]; then
             workon "$ENV_NAME" && export CD_VIRTUAL_ENV="$ENV_NAME"
           elif [[ -e "$ENV_NAME/bin/activate" ]]; then
             source $ENV_NAME/bin/activate && export CD_VIRTUAL_ENV="$ENV_NAME"
+          else
+            ENV_NAME=""
           fi
         fi
       fi
+      if [[ "$ENV_NAME" == "" && -n $CD_VIRTUAL_ENV && -n $VIRTUAL_ENV ]]; then
+        # We've just left the repo, deactivate the environment
+        # Note: this only happens if the virtualenv was activated automatically
+        deactivate && unset CD_VIRTUAL_ENV
+      fi
     fi
   }