diff --git a/packages/flutter_tools/lib/src/commands/create.dart b/packages/flutter_tools/lib/src/commands/create.dart
index e8d5525afc2..35576d578de 100644
--- a/packages/flutter_tools/lib/src/commands/create.dart
+++ b/packages/flutter_tools/lib/src/commands/create.dart
@@ -91,13 +91,15 @@ class CreateCommand extends FlutterCommand {
     String relativePath = path.relative(dirPath);
     String projectName = _normalizeProjectName(path.basename(dirPath));
 
-    if (_validateProjectDir(dirPath) != null) {
-      printError(_validateProjectDir(dirPath));
+    String error =_validateProjectDir(dirPath, flutterRoot: flutterRoot);
+    if (error != null) {
+      printError(error);
       return 1;
     }
 
-    if (_validateProjectName(projectName) != null) {
-      printError(_validateProjectName(projectName));
+    error = _validateProjectName(projectName);
+    if (error != null) {
+      printError(error);
       return 1;
     }
 
@@ -242,17 +244,22 @@ String _validateProjectName(String projectName) {
 
 /// Return `null` if the project directory is legal. Return a validation message
 /// if we should disallow the directory name.
-String _validateProjectDir(String projectName) {
-  FileSystemEntityType type = FileSystemEntity.typeSync(projectName);
+String _validateProjectDir(String dirPath, { String flutterRoot }) {
+  if (path.isWithin(flutterRoot, dirPath)) {
+    return "Cannot create a project within the Flutter SDK.\n"
+      "Target directory '$dirPath' is within the Flutter SDK at '$flutterRoot'.";
+  }
+
+  FileSystemEntityType type = FileSystemEntity.typeSync(dirPath);
 
   if (type != FileSystemEntityType.NOT_FOUND) {
     switch(type) {
       case FileSystemEntityType.FILE:
         // Do not overwrite files.
-        return "Invalid project name: '$projectName' - file exists.";
+        return "Invalid project name: '$dirPath' - file exists.";
       case FileSystemEntityType.LINK:
         // Do not overwrite links.
-        return "Invalid project name: '$projectName' - refers to a link.";
+        return "Invalid project name: '$dirPath' - refers to a link.";
     }
   }