diff --git a/GITALY_SERVER_VERSION b/GITALY_SERVER_VERSION
index 9db5ea12f52..7f3a46a841e 100644
--- a/GITALY_SERVER_VERSION
+++ b/GITALY_SERVER_VERSION
@@ -1 +1 @@
-1.48.0
+1.49.0
diff --git a/changelogs/unreleased/gitaly-version-v1.49.0.yml b/changelogs/unreleased/gitaly-version-v1.49.0.yml
new file mode 100644
index 00000000000..8795bab0209
--- /dev/null
+++ b/changelogs/unreleased/gitaly-version-v1.49.0.yml
@@ -0,0 +1,5 @@
+---
+title: Upgrade to Gitaly v1.49.0
+merge_request: 29990
+author:
+type: changed
diff --git a/lib/gitlab/git/repository.rb b/lib/gitlab/git/repository.rb
index a6739f12280..19b6aab1c4f 100644
--- a/lib/gitlab/git/repository.rb
+++ b/lib/gitlab/git/repository.rb
@@ -15,11 +15,6 @@ module Gitlab
 
       SEARCH_CONTEXT_LINES = 3
       REV_LIST_COMMIT_LIMIT = 2_000
-      # In https://gitlab.com/gitlab-org/gitaly/merge_requests/698
-      # We copied these two prefixes into gitaly-go, so don't change these
-      # or things will break! (REBASE_WORKTREE_PREFIX and SQUASH_WORKTREE_PREFIX)
-      REBASE_WORKTREE_PREFIX = 'rebase'.freeze
-      SQUASH_WORKTREE_PREFIX = 'squash'.freeze
       GITALY_INTERNAL_URL = 'ssh://gitaly/internal.git'.freeze
       GITLAB_PROJECTS_TIMEOUT = Gitlab.config.gitlab_shell.git_timeout
       EMPTY_REPOSITORY_CHECKSUM = '0000000000000000000000000000000000000000'.freeze
diff --git a/spec/lib/gitlab/git/repository_spec.rb b/spec/lib/gitlab/git/repository_spec.rb
index e72fb9c6fbc..cceeae8afe6 100644
--- a/spec/lib/gitlab/git/repository_spec.rb
+++ b/spec/lib/gitlab/git/repository_spec.rb
@@ -2038,24 +2038,24 @@ describe Gitlab::Git::Repository, :seed_helper do
   end
 
   describe '#clean_stale_repository_files' do
-    let(:worktree_path) { File.join(repository_path, 'worktrees', 'delete-me') }
+    let(:worktree_id) { 'rebase-1' }
+    let(:gitlab_worktree_path) { File.join(repository_path, 'gitlab-worktree', worktree_id) }
+    let(:admin_dir) { File.join(repository_path, 'worktrees') }
 
     it 'cleans up the files' do
-      create_worktree = %W[git -C #{repository_path} worktree add --detach #{worktree_path} master]
+      create_worktree = %W[git -C #{repository_path} worktree add --detach #{gitlab_worktree_path} master]
       raise 'preparation failed' unless system(*create_worktree, err: '/dev/null')
 
-      FileUtils.touch(worktree_path, mtime: Time.now - 8.hours)
+      FileUtils.touch(gitlab_worktree_path, mtime: Time.now - 8.hours)
       # git rev-list --all will fail in git 2.16 if HEAD is pointing to a non-existent object,
       # but the HEAD must be 40 characters long or git will ignore it.
-      File.write(File.join(worktree_path, 'HEAD'), Gitlab::Git::BLANK_SHA)
-
-      # git 2.16 fails with "fatal: bad object HEAD"
-      expect(rev_list_all).to be false
+      File.write(File.join(admin_dir, worktree_id, 'HEAD'), Gitlab::Git::BLANK_SHA)
 
+      expect(rev_list_all).to be(false)
       repository.clean_stale_repository_files
 
-      expect(rev_list_all).to be true
-      expect(File.exist?(worktree_path)).to be_falsey
+      expect(rev_list_all).to be(true)
+      expect(File.exist?(gitlab_worktree_path)).to be_falsey
     end
 
     def rev_list_all