diff --git a/src/cmd/go/internal/modcmd/mod.go b/src/cmd/go/internal/modcmd/mod.go
index ddf5000dd8..b2769fd5d6 100644
--- a/src/cmd/go/internal/modcmd/mod.go
+++ b/src/cmd/go/internal/modcmd/mod.go
@@ -207,7 +207,7 @@ func init() {
 
 func runMod(cmd *base.Command, args []string) {
 	if modload.Init(); !modload.Enabled() {
-		base.Fatalf("go mod: cannot use outside module")
+		base.Fatalf("go mod: cannot use outside module; see 'go help modules'")
 	}
 	if len(args) != 0 {
 		base.Fatalf("go mod: mod takes no arguments")
diff --git a/src/cmd/go/internal/modload/init.go b/src/cmd/go/internal/modload/init.go
index cfcc65cb39..602d33acb3 100644
--- a/src/cmd/go/internal/modload/init.go
+++ b/src/cmd/go/internal/modload/init.go
@@ -17,7 +17,6 @@ import (
 	"cmd/go/internal/module"
 	"cmd/go/internal/mvs"
 	"cmd/go/internal/search"
-	"cmd/go/internal/str"
 	"encoding/json"
 	"fmt"
 	"io/ioutil"
@@ -96,8 +95,8 @@ func Init() {
 	}
 
 	// If this is testgo - the test binary during cmd/go tests -
-	// then do not let it look for a go.mod unless GO111MODULE has an explicit setting.
-	if base := filepath.Base(os.Args[0]); (base == "testgo" || base == "testgo.exe") && env == "" {
+	// then do not let it look for a go.mod unless GO111MODULE has an explicit setting or this is 'go mod -init'.
+	if base := filepath.Base(os.Args[0]); (base == "testgo" || base == "testgo.exe") && env == "" && !CmdModInit {
 		return
 	}
 
@@ -134,25 +133,27 @@ func Init() {
 		base.Fatalf("go: %v", err)
 	}
 
+	inGOPATH := false
+	for _, gopath := range filepath.SplitList(cfg.BuildContext.GOPATH) {
+		if gopath == "" {
+			continue
+		}
+		if search.InDir(cwd, filepath.Join(gopath, "src")) != "" {
+			inGOPATH = true
+			break
+		}
+	}
+	if inGOPATH && !MustUseModules && cfg.CmdName == "mod" {
+		base.Fatalf("go: modules disabled inside GOPATH/src by GO111MODULE=auto; see 'go help modules'")
+	}
+
 	if CmdModInit {
 		// Running 'go mod -init': go.mod will be created in current directory.
 		ModRoot = cwd
 	} else {
-		inGOPATH := false
-		for _, gopath := range filepath.SplitList(cfg.BuildContext.GOPATH) {
-			if gopath == "" {
-				continue
-			}
-			if str.HasFilePathPrefix(cwd, filepath.Join(gopath, "src")) {
-				inGOPATH = true
-				break
-			}
-		}
-		if inGOPATH {
-			if !MustUseModules {
-				// No automatic enabling in GOPATH.
-				return
-			}
+		if inGOPATH && !MustUseModules {
+			// No automatic enabling in GOPATH.
+			return
 		}
 		root, _ := FindModuleRoot(cwd, "", MustUseModules)
 		if root == "" {
@@ -422,22 +423,12 @@ func FindModulePath(dir string) (string, error) {
 	}
 
 	// Look for path in GOPATH.
-	xdir, errdir := filepath.EvalSymlinks(dir)
 	for _, gpdir := range filepath.SplitList(cfg.BuildContext.GOPATH) {
-		xgpdir, errgpdir := filepath.EvalSymlinks(gpdir)
-		src := filepath.Join(gpdir, "src") + string(filepath.Separator)
-		xsrc := filepath.Join(xgpdir, "src") + string(filepath.Separator)
-		if strings.HasPrefix(dir, src) {
-			return filepath.ToSlash(dir[len(src):]), nil
+		if gpdir == "" {
+			continue
 		}
-		if errdir == nil && strings.HasPrefix(xdir, src) {
-			return filepath.ToSlash(xdir[len(src):]), nil
-		}
-		if errgpdir == nil && strings.HasPrefix(dir, xsrc) {
-			return filepath.ToSlash(dir[len(xsrc):]), nil
-		}
-		if errdir == nil && errgpdir == nil && strings.HasPrefix(xdir, xsrc) {
-			return filepath.ToSlash(xdir[len(xsrc):]), nil
+		if rel := search.InDir(dir, filepath.Join(gpdir, "src")); rel != "" && rel != "." {
+			return filepath.ToSlash(rel), nil
 		}
 	}
 
diff --git a/src/cmd/go/internal/search/search.go b/src/cmd/go/internal/search/search.go
index 0c3400915a..b020f600c1 100644
--- a/src/cmd/go/internal/search/search.go
+++ b/src/cmd/go/internal/search/search.go
@@ -437,3 +437,74 @@ func IsStandardImportPath(path string) bool {
 func IsRelativePath(pattern string) bool {
 	return strings.HasPrefix(pattern, "./") || strings.HasPrefix(pattern, "../") || pattern == "." || pattern == ".."
 }
+
+// InDir checks whether path is in the file tree rooted at dir.
+// If so, InDir returns an equivalent path relative to dir.
+// If not, InDir returns an empty string.
+// InDir makes some effort to succeed even in the presence of symbolic links.
+// TODO(rsc): Replace internal/test.inDir with a call to this function for Go 1.12.
+func InDir(path, dir string) string {
+	if rel := inDirLex(path, dir); rel != "" {
+		return rel
+	}
+	xpath, err := filepath.EvalSymlinks(path)
+	if err != nil || xpath == path {
+		xpath = ""
+	} else {
+		if rel := inDirLex(xpath, dir); rel != "" {
+			return rel
+		}
+	}
+
+	xdir, err := filepath.EvalSymlinks(dir)
+	if err == nil && xdir != dir {
+		if rel := inDirLex(path, xdir); rel != "" {
+			return rel
+		}
+		if xpath != "" {
+			if rel := inDirLex(xpath, xdir); rel != "" {
+				return rel
+			}
+		}
+	}
+	return ""
+}
+
+// inDirLex is like inDir but only checks the lexical form of the file names.
+// It does not consider symbolic links.
+// TODO(rsc): This is a copy of str.HasFilePathPrefix, modified to
+// return the suffix. Most uses of str.HasFilePathPrefix should probably
+// be calling InDir instead.
+func inDirLex(path, dir string) string {
+	pv := strings.ToUpper(filepath.VolumeName(path))
+	dv := strings.ToUpper(filepath.VolumeName(dir))
+	path = path[len(pv):]
+	dir = dir[len(dv):]
+	switch {
+	default:
+		return ""
+	case pv != dv:
+		return ""
+	case len(path) == len(dir):
+		if path == dir {
+			return "."
+		}
+		return ""
+	case dir == "":
+		return path
+	case len(path) > len(dir):
+		if dir[len(dir)-1] == filepath.Separator {
+			if path[:len(dir)] == dir {
+				return path[len(dir):]
+			}
+			return ""
+		}
+		if path[len(dir)] == filepath.Separator && path[:len(dir)] == dir {
+			if len(path) == len(dir)+1 {
+				return "."
+			}
+			return path[len(dir)+1:]
+		}
+		return ""
+	}
+}
diff --git a/src/cmd/go/testdata/script/mod_find.txt b/src/cmd/go/testdata/script/mod_find.txt
index 673a817c02..9f4393d0de 100644
--- a/src/cmd/go/testdata/script/mod_find.txt
+++ b/src/cmd/go/testdata/script/mod_find.txt
@@ -1,7 +1,4 @@
-env GO111MODULE=on
-
 # Derive module path from import comment.
-# TODO SHOULD NOT NEED ENV VAR YET
 cd $WORK/x
 exists x.go
 go mod -init
@@ -13,6 +10,13 @@ addcrlf x.go
 go mod -init
 stderr 'module x'
 
+# go mod should die in GOPATH if modules are not enabled for GOPATH
+cd $GOPATH/src/example.com/x/y
+! go mod -init
+stderr 'go: modules disabled inside GOPATH/src by GO111MODULE=auto; see ''go help modules'''
+
+env GO111MODULE=on
+
 # Derive module path from location inside GOPATH.
 cd $GOPATH/src/example.com/x/y
 go mod -init