diff --git a/mercurial/ui.py b/mercurial/ui.py
--- a/mercurial/ui.py
+++ b/mercurial/ui.py
@@ -2317,6 +2317,8 @@
             u.fragment = None
 
         self.url = u
+        # the url from the config/command line before dealing with `path://`
+        self.raw_url = u.copy()
         self.branch = branch
 
         self.name = name
@@ -2338,6 +2340,10 @@
         if self.url.scheme == b'path':
             assert self.url.path is None
             subpath = paths[self.url.host]
+            if subpath.raw_url.scheme == b'path':
+                m = _('cannot use `%s`, "%s" is also define as a `path://`')
+                m %= (self.rawloc, self.url.host)
+                raise error.Abort(m)
             self.url = subpath.url
             self.rawloc = subpath.rawloc
             self.loc = subpath.loc
diff --git a/mercurial/util.py b/mercurial/util.py
--- a/mercurial/util.py
+++ b/mercurial/util.py
@@ -3144,6 +3144,21 @@
             if v is not None:
                 setattr(self, a, urlreq.unquote(v))
 
+    def copy(self):
+        u = url(b'temporary useless value')
+        u.path = self.path
+        u.scheme = self.scheme
+        u.user = self.user
+        u.passwd = self.passwd
+        u.host = self.host
+        u.path = self.path
+        u.query = self.query
+        u.fragment = self.fragment
+        u._localpath = self._localpath
+        u._hostport = self._hostport
+        u._origpath = self._origpath
+        return u
+
     @encoding.strmethod
     def __repr__(self):
         attrs = []
diff --git a/tests/test-paths.t b/tests/test-paths.t
--- a/tests/test-paths.t
+++ b/tests/test-paths.t
@@ -334,3 +334,39 @@
   adding manifests
   adding file changes
   added 5 changesets with 0 changes to 0 files (+1 heads)
+
+Test chaining path:// definition
+--------------------------------
+
+This is currently unsupported, but feel free to implement the necessary
+dependency detection.
+
+  $ cat << EOF >> .hg/hgrc
+  > chain_path=path://other_default
+  > EOF
+
+  $ hg id
+  000000000000
+  $ hg path
+  abort: cannot use `path://other_default`, "other_default" is also define as a `path://`
+  [255]
+  $ hg pull chain_path
+  abort: cannot use `path://other_default`, "other_default" is also define as a `path://`
+  [255]
+
+Doing an actual circle should always be an issue
+
+  $ cat << EOF >> .hg/hgrc
+  > rock=path://cissors
+  > cissors=path://paper
+  > paper=://rock
+  > EOF
+
+  $ hg id
+  000000000000
+  $ hg path
+  abort: cannot use `path://other_default`, "other_default" is also define as a `path://`
+  [255]
+  $ hg pull chain_path
+  abort: cannot use `path://other_default`, "other_default" is also define as a `path://`
+  [255]