OSX 10.10 yosemite beta on git pull: git-sh-setup: No such file or directory

I think the cleanest solution for this for now is to change the initial command in your iTerm session to be

/usr/bin/login -f <your user name>

This fixes the issue for me.

A further data point for analysis of the issue: It seems that in 10.10, multiple copies of the PATH environment variable exist and subshells seem to prefer the second copy.

You can reproduce this by launching any cocoa application on the console as launched by iTerm. You'll get a warning that looks like this:

2014-06-04 19:23:09.859 gitx[14676:362580] *** -[NSProcessInfo environment]: Warning: duplicate definition for key 'PATH' found in environment -- subsequent definitions are ignored.  The first definition was '(the path I have configured in my shell)', the ignored definition is '/usr/bin:/bin:/usr/sbin:/sbin'.

I believe this to be a problem in 10.10 and not iTerm, but something iTerm is doing is causing it to manifest itself (this doesn't happen in Terminal.app)

Update: This is caused by iTerm doing "interesting" stuff to the environment. Update to the official release of iTerm 2.0 to make this problem go away.

I believe this is a bug in iTerm when using zsh. They deliberately don't invoke /usr/bin/login, and they don't use execle to clear the environment variables like they should be.