diff --git a/tests/unit/test_merger_repo.py b/tests/unit/test_merger_repo.py
index fd78726ab3..7806db347d 100644
--- a/tests/unit/test_merger_repo.py
+++ b/tests/unit/test_merger_repo.py
@@ -16,6 +16,8 @@
 import datetime
 import logging
 import os
+import shutil
+from unittest import mock
 
 import git
 import testtools
@@ -678,6 +680,59 @@ class TestMergerRepo(ZuulTestCase):
         new_result = work_repo_underlying.commit('testtag')
         self.assertEqual(new_commit, new_result)
 
+    def test_set_remote_url_clone(self):
+        """Test that we always use the new Git URL for cloning.
+
+        This is a regression test to make sure we always use the new
+        Git URL when a clone of the repo is necessary before updating
+        the config.
+        """
+        parent_path = os.path.join(self.upstream_root, 'org/project1')
+        work_repo = Repo(parent_path, self.workspace_root,
+                         'none@example.org', 'User Name', '0', '0')
+
+        # Simulate an invalid/outdated remote URL with the repo no
+        # longer existing on the file system.
+        work_repo.remote_url = "file:///dev/null"
+        shutil.rmtree(work_repo.local_path)
+
+        # Setting a valid remote URL should update the attribute and
+        # clone the repository.
+        work_repo.setRemoteUrl(parent_path)
+        self.assertEqual(work_repo.remote_url, parent_path)
+        self.assertTrue(os.path.exists(work_repo.local_path))
+
+    def test_set_remote_url_invalid(self):
+        """Test that we don't store the Git URL when failing to set it.
+
+        This is a regression test to make sure we will always update
+        the Git URL after a previously failed attempt.
+        """
+        parent_path = os.path.join(self.upstream_root, 'org/project1')
+        work_repo = Repo(parent_path, self.workspace_root,
+                         'none@example.org', 'User Name', '0', '0')
+
+        # Set the Git remote URL to an invalid value.
+        invalid_url = "file:///dev/null"
+        repo = work_repo.createRepoObject(None)
+        work_repo._git_set_remote_url(repo, invalid_url)
+        work_repo.remote_url = invalid_url
+
+        # Simulate a failed attempt to update the remote URL
+        with mock.patch.object(work_repo, "_git_set_remote_url",
+                               side_effect=RuntimeError):
+            with testtools.ExpectedException(RuntimeError):
+                work_repo.setRemoteUrl(parent_path)
+
+        # Make sure we cleared out the remote URL.
+        self.assertIsNone(work_repo.remote_url)
+
+        # Setting a valid remote URL should update the attribute and
+        # clone the repository.
+        work_repo.setRemoteUrl(parent_path)
+        self.assertEqual(work_repo.remote_url, parent_path)
+        self.assertTrue(os.path.exists(work_repo.local_path))
+
 
 class TestMergerWithAuthUrl(ZuulTestCase):
     config_file = 'zuul-github-driver.conf'
diff --git a/zuul/merger/merger.py b/zuul/merger/merger.py
index d400c253bb..1e2de27b8d 100644
--- a/zuul/merger/merger.py
+++ b/zuul/merger/merger.py
@@ -757,8 +757,19 @@ class Repo(object):
             return
         log = get_annotated_logger(self.log, zuul_event_id)
         log.debug("Set remote url to %s", redact_url(url))
-        self._git_set_remote_url(self.createRepoObject(zuul_event_id), url)
-        self.remote_url = url
+        try:
+            # Update the remote URL as it is used for the clone if the
+            # repo doesn't exist.
+            self.remote_url = url
+            self._git_set_remote_url(
+                self.createRepoObject(zuul_event_id), self.remote_url)
+        except Exception:
+            # Clear out the stored remote URL so we will always set
+            # the Git URL after a failed attempt. This prevents us from
+            # using outdated credentials that might still be stored in
+            # the Git config as part of the URL.
+            self.remote_url = None
+            raise
 
     def mapLine(self, commit, filename, lineno, zuul_event_id=None):
         repo = self.createRepoObject(zuul_event_id)