diff --git a/internal/commands/project/create/project_create.go b/internal/commands/project/create/project_create.go
index ba301fabccebc83b728d253c23f9d5830c082425..b2d11d691e8ea85dcad0590303da089f5c04f354 100644
--- a/internal/commands/project/create/project_create.go
+++ b/internal/commands/project/create/project_create.go
@@ -109,16 +109,24 @@ func runCreateProject(cmd *cobra.Command, args []string, f cmdutils.Factory) err
 		return err
 	}
 	skipGitInit, _ := cmd.Flags().GetBool("skipGitInit")
-	if !skipGitInit && f.IO().PromptEnabled() {
-		doInit := true
-		err := f.IO().Confirm(cmd.Context(), &doInit, "Directory not Git initialized. Run `git init`?")
-		if err != nil || !doInit {
-			return err
-		}
 
-		err = initGit(defaultBranch)
-		if err != nil {
-			return err
+	// Check if directory is already git initialized
+	gitDir := path.Join(config.GitDir(false)...)
+	stat, statErr := os.Stat(gitDir)
+	isGitInitialized := statErr == nil && stat.Mode().IsDir()
+
+	// Early validation: check if we need to init git and if we can
+	var needsGitInit bool
+	if !skipGitInit && !isGitInitialized {
+		if f.IO().PromptEnabled() {
+			doInit := true
+			err := f.IO().Confirm(cmd.Context(), &doInit, "Directory not Git initialized. Run `git init`?")
+			if err != nil {
+				return err
+			}
+			needsGitInit = doInit
+		} else {
+			needsGitInit = true
 		}
 	}
 
@@ -139,12 +147,25 @@ func runCreateProject(cmd *cobra.Command, args []string, f cmdutils.Factory) err
 		if user.Username == namespace {
 			namespace = ""
 		}
+		// When a project name is provided as argument, we won't init git in current directory
+		// Instead, we'll create a subdirectory and init there (or just add remote if already in git repo)
+		needsGitInit = false
 	} else {
-		projectPath, err = git.ToplevelDir()
-		if err != nil {
-			return err
+		// If we're in a git repository, use the repo name
+		// Otherwise, use the current directory name
+		if isGitInitialized {
+			projectPath, err = git.ToplevelDir()
+			if err != nil {
+				return err
+			}
+			projectPath = path.Base(projectPath)
+		} else {
+			cwd, err := os.Getwd()
+			if err != nil {
+				return fmt.Errorf("cannot get current directory: %v", err)
+			}
+			projectPath = path.Base(cwd)
 		}
-		projectPath = path.Base(projectPath)
 		isPath = true
 
 		c, err := f.ApiClient(f.DefaultHostname())
@@ -215,6 +236,18 @@ func runCreateProject(cmd *cobra.Command, args []string, f cmdutils.Factory) err
 
 	if err == nil {
 		fmt.Fprintf(f.IO().StdOut, "%s Created repository %s on GitLab: %s\n", greenCheck, project.NameWithNamespace, project.WebURL)
+
+		// Execute git init if needed (we already validated it will work)
+		if needsGitInit {
+			err = initGit("")
+			if err != nil {
+				// Project exists on GitLab but git init failed
+				fmt.Fprintf(f.IO().StdErr, "Warning: Project created on GitLab but git init failed: %v\n", err)
+				fmt.Fprintf(f.IO().StdErr, "You can manually initialize the repository with: git init\n")
+				// Don't return error since project was created successfully
+			}
+		}
+
 		if isPath {
 			cfg := f.Config()
 			webURL, _ := url.Parse(project.WebURL)
@@ -227,6 +260,16 @@ func runCreateProject(cmd *cobra.Command, args []string, f cmdutils.Factory) err
 			}
 			fmt.Fprintf(f.IO().StdOut, "%s Added remote %s\n", greenCheck, remote)
 
+			// Create default branch after remote is added (if specified)
+			if needsGitInit && defaultBranch != "" {
+				gitBranch := git.GitCommand("checkout", "-b", defaultBranch)
+				gitBranch.Stdout = os.Stdout
+				gitBranch.Stdin = os.Stdin
+				if err := run.PrepareCmd(gitBranch).Run(); err != nil {
+					fmt.Fprintf(f.IO().StdErr, "Warning: Failed to create branch %s: %v\n", defaultBranch, err)
+				}
+			}
+
 		} else if f.IO().PromptEnabled() {
 			doSetup := true
 			err := f.IO().Confirm(cmd.Context(), &doSetup, fmt.Sprintf("Create a local project directory for %s?", project.NameWithNamespace))
diff --git a/internal/commands/project/create/project_create_test.go b/internal/commands/project/create/project_create_test.go
index 56f684326cae4cca9f6e71edfe614ed709835092..959e02cea6d8c271ca23f6d629d3ddf81da7c48d 100644
--- a/internal/commands/project/create/project_create_test.go
+++ b/internal/commands/project/create/project_create_test.go
@@ -63,6 +63,11 @@ func Test_projectCreateCmd(t *testing.T) {
 			Args:        []string{"reponame/"},
 			ExpectedMsg: []string{"✓ Created repository reponame on GitLab: \n"},
 		},
+		{
+			Name:        "Create project with --skipGitInit flag",
+			Args:        []string{"test-repo", "--skipGitInit"},
+			ExpectedMsg: []string{"✓ Created repository test-repo on GitLab: \n"},
+		},
 	}
 
 	cmd := NewCmdCreate(f)