diff --git a/CHANGELOG b/CHANGELOG
index 9c19bd89d..64d48e193 100644
--- a/CHANGELOG
+++ b/CHANGELOG
@@ -1,6 +1,9 @@
 Changes between 2.0.2 and 2.0.3.dev
 ----------------------------------------------
 
+- fix issue38: nicer tracebacks on calls to hooks, particularly early
+  configure/sessionstart ones
+
 - fix missing skip reason/meta information in junitxml files, reported
   via http://lists.idyll.org/pipermail/testing-in-python/2011-March/003928.html
 
diff --git a/_pytest/core.py b/_pytest/core.py
index abe7a26de..2087a8401 100644
--- a/_pytest/core.py
+++ b/_pytest/core.py
@@ -265,8 +265,15 @@ class PluginManager(object):
         config.hook.pytest_unconfigure(config=config)
         config.pluginmanager.unregister(self)
 
-    def notify_exception(self, excinfo):
-        excrepr = excinfo.getrepr(funcargs=True, showlocals=True)
+    def notify_exception(self, excinfo, option=None):
+        if option and option.fulltrace:
+            style = "long"
+        else:
+            style = "native"
+        excrepr = excinfo.getrepr(funcargs=True,
+            showlocals=getattr(option, 'showlocals', False),
+            style=style,
+        )
         res = self.hook.pytest_internalerror(excrepr=excrepr)
         if not py.builtin.any(res):
             for line in str(excrepr).split("\n"):
diff --git a/_pytest/main.py b/_pytest/main.py
index d7948c6fa..f73ff597a 100644
--- a/_pytest/main.py
+++ b/_pytest/main.py
@@ -71,7 +71,7 @@ def pytest_cmdline_main(config):
         session.exitstatus = EXIT_INTERRUPTED
     except:
         excinfo = py.code.ExceptionInfo()
-        config.pluginmanager.notify_exception(excinfo)
+        config.pluginmanager.notify_exception(excinfo, config.option)
         session.exitstatus = EXIT_INTERNALERROR
         if excinfo.errisinstance(SystemExit):
             sys.stderr.write("mainloop: caught Spurious SystemExit!\n")
diff --git a/testing/acceptance_test.py b/testing/acceptance_test.py
index 7d00d056a..f67eb2847 100644
--- a/testing/acceptance_test.py
+++ b/testing/acceptance_test.py
@@ -13,6 +13,26 @@ class TestGeneralUsage:
             '*ERROR: hello'
         ])
 
+    def test_early_hook_error_issue38_1(self, testdir):
+        testdir.makeconftest("""
+            def pytest_sessionstart():
+                0 / 0
+        """)
+        result = testdir.runpytest(testdir.tmpdir)
+        assert result.ret != 0
+        # tracestyle is native by default for hook failures
+        result.stdout.fnmatch_lines([
+            '*INTERNALERROR*File*conftest.py*line 2*',
+            '*0 / 0*',
+        ])
+        result = testdir.runpytest(testdir.tmpdir, "--fulltrace")
+        assert result.ret != 0
+        # tracestyle is native by default for hook failures
+        result.stdout.fnmatch_lines([
+            '*INTERNALERROR*def pytest_sessionstart():*',
+            '*INTERNALERROR*0 / 0*',
+        ])
+
     def test_file_not_found(self, testdir):
         result = testdir.runpytest("asd")
         assert result.ret != 0