diff --git a/cli/src/lib.rs b/cli/src/lib.rs
index 0ec8f9a3f7..35b2f99598 100644
--- a/cli/src/lib.rs
+++ b/cli/src/lib.rs
@@ -1452,6 +1452,22 @@ fn process_command(opts: Opts) -> Result<()> {
     }
 }
 
+/// Cargo does not support nested workspaces. If `start` lives inside a
+/// directory tree containing any `Cargo.toml`, refuse to create a new
+/// Anchor workspace here and point at `anchor new`, which is the
+/// supported flow for adding a program to an existing project.
+fn reject_if_inside_cargo_project(start: PathBuf) -> Result<()> {
+    if let Some(parent) = Manifest::discover_from_path(start)? {
+        return Err(anyhow!(
+            "Cannot run `anchor init` inside an existing Cargo project at `{}`.\nTo add a new \
+             program to the existing project, run `anchor new <name>` from the workspace root. To \
+             create a fresh Anchor workspace, run `anchor init` outside any Cargo project tree.",
+            parent.path().display()
+        ));
+    }
+    Ok(())
+}
+
 #[allow(clippy::too_many_arguments)]
 fn init(
     cfg_override: &ConfigOverride,
@@ -1466,8 +1482,11 @@ fn init(
     force: bool,
     install_agent_skills: bool,
 ) -> Result<()> {
-    if !force && Config::discover(cfg_override)?.is_some() {
-        return Err(anyhow!("Workspace already initialized"));
+    if !force {
+        if Config::discover(cfg_override)?.is_some() {
+            return Err(anyhow!("Workspace already initialized"));
+        }
+        reject_if_inside_cargo_project(std::env::current_dir()?)?;
     }
 
     // We need to format different cases for the dir and the name