diff --git a/contrib/chg/chg.c b/contrib/chg/chg.c
--- a/contrib/chg/chg.c
+++ b/contrib/chg/chg.c
@@ -227,6 +227,8 @@ static void execcmdserver(const struct c
 	memcpy(argv + baseargvsize, opts->args, sizeof(char *) * opts->argsize);
 	argv[argsize - 1] = NULL;
 
+	if (putenv("CHGINTERNALMARK=") != 0)
+		abortmsg("failed to putenv (errno = %d)", errno);
 	if (execvp(hgcmd, (char **)argv) < 0)
 		abortmsg("failed to exec cmdserver (errno = %d)", errno);
 	free(argv);
@@ -490,6 +492,12 @@ int main(int argc, const char *argv[], c
 	if (getenv("CHGDEBUG"))
 		enabledebugmsg();
 
+	if (getenv("CHGINTERNALMARK"))
+		abortmsg("chg started by chg detected.\n"
+			 "Please make sure ${HG:-hg} is not a symlink or "
+			 "wrapper to chg. Alternatively, set $CHGHG to the "
+			 "path of real hg.");
+
 	if (isunsupported(argc - 1, argv + 1))
 		execoriginalhg(argv);
 
diff --git a/hgext/chgserver.py b/hgext/chgserver.py
--- a/hgext/chgserver.py
+++ b/hgext/chgserver.py
@@ -472,3 +472,8 @@ class chgunixservice(commandserver.unixs
 
 def uisetup(ui):
     commandserver._servicemap['chgunix'] = chgunixservice
+
+    # CHGINTERNALMARK is temporarily set by chg client to detect if chg will
+    # start another chg. drop it to avoid possible side effects.
+    if 'CHGINTERNALMARK' in os.environ:
+        del os.environ['CHGINTERNALMARK']