diff --git a/setup-repo/src/main.rs b/setup-repo/src/main.rs
index 02269a6..d7def01 100644
--- a/setup-repo/src/main.rs
+++ b/setup-repo/src/main.rs
@@ -14,7 +14,7 @@ struct Args {
 
     /// Target directory for the repository setup
     #[arg(short, long)]
-    target_dir: String,
+    target_dir: Option<String>,
 
     /// Enable verbose output
     #[arg(short, long)]
@@ -32,28 +32,45 @@ fn main() -> Result<()> {
     // Enable or disable colored output
     colored::control::set_override(!args.no_color);
 
+    let target_dir = match args.target_dir {
+        Some(dir) => dir,
+
+        // If a directory is not provided construct one from the last part of the URI.
+        // This behavior follows git itself
+        None => {
+            let start = args.repo_url.rfind("/").unwrap() + 1;
+            let end = match args.repo_url.rfind(".git")
+            {
+                Some(index) => index,
+                None => args.repo_url.len()
+            };
+
+            args.repo_url[start..end].to_owned()
+        }
+    };
+
     // Print verbose information if enabled
     if args.verbose {
         println!("{}", "Verbose mode enabled".dimmed());
         println!("{}", format!("Repository URL: {}", args.repo_url).dimmed());
-        println!("{}", format!("Target directory: {}", args.target_dir).dimmed());
+        println!("{}", format!("Target directory: {}", target_dir).dimmed());
     }
 
     println!("{}", "Setting up repository for worktree development".blue());
 
     // Clone the repository as a bare clone
-    Git::clone_bare_repo(&args.repo_url, &args.target_dir)?;
+    Git::clone_bare_repo(&args.repo_url, &target_dir)?;
 
     // Set up the .git file to point to the .bare directory
-    Git::setup_git_pointer(&args.target_dir)?;
+    Git::setup_git_pointer(&target_dir)?;
 
     // Configure the remote.origin.fetch setting
-    Git::configure_remote_fetch(&args.target_dir)?;
+    Git::configure_remote_fetch(&target_dir)?;
 
     // Fetch all remotes
-    Git::fetch_remotes(&args.target_dir)?;
+    Git::fetch_remotes(&target_dir)?;
 
     println!("{}", "Repository setup complete.".green());
-    println!("{}", format!("You can now create worktrees in '{}'.", args.target_dir).green());
+    println!("{}", format!("You can now create worktrees in '{}'.", target_dir).green());
     Ok(())
 }