diff --git a/rust/src/cliwrap/cliutil.rs b/rust/src/cliwrap/cliutil.rs
index b02a027719..58dea2a429 100644
--- a/rust/src/cliwrap/cliutil.rs
+++ b/rust/src/cliwrap/cliutil.rs
@@ -1,6 +1,9 @@
 // SPDX-License-Identifier: Apache-2.0 OR MIT
 
 use anyhow::Result;
+use std::collections::HashMap;
+use std::fs::File;
+use std::io::{self, BufRead, BufReader, Error, ErrorKind};
 use std::os::unix::process::CommandExt;
 use std::{thread, time};
 
@@ -94,3 +97,31 @@ pub fn run_unprivileged<T: AsRef<str>>(
         exec_real_binary(target_bin, &argv)
     }
 }
+
+pub fn read_config_file(file_path: &str, key_to_check: &str) -> Result<Option<String>, io::Error> {
+    let file = File::open(file_path)?;
+    let reader = BufReader::new(file);
+
+    let mut config_map = HashMap::new();
+
+    for line in reader.lines() {
+        let line = line?;
+        // Ignore comments
+        if !line.trim().starts_with("#") {
+            // Split the line into key and value using '=' as a delimiter
+            let parts: Vec<&str> = line.splitn(2, '=').map(|s| s.trim()).collect();
+            if parts.len() == 2 {
+                config_map.insert(parts[0].to_string(), parts[1].to_string());
+            } else {
+                return Err(Error::new(ErrorKind::Other, "An example error occurred"));
+            }
+        }
+    }
+
+    // Check the value of the specified key
+    if let Some(value) = config_map.get(key_to_check) {
+        Ok(Some(value.clone()))
+    } else {
+        Ok(None)
+    }
+}
diff --git a/rust/src/cliwrap/kernel_install.rs b/rust/src/cliwrap/kernel_install.rs
index cc2a0077b0..8d8a995404 100644
--- a/rust/src/cliwrap/kernel_install.rs
+++ b/rust/src/cliwrap/kernel_install.rs
@@ -64,6 +64,30 @@ fn redo_systemctl_wrap() -> Result<()> {
     Ok(())
 }
 
+#[context("Running initoverlayfs")]
+fn run_initoverlayfs() -> Result<()> {
+    const OSTREED_CONFIGFILE: &str = "/etc/ostreed.conf";
+    const INITOVERLAY_CONFIGNAME: &str = "InitOverlayFS";
+    const INITOVERLAY_INSTALL_CMD: &str = "initoverlayfs-install";
+
+    match crate::cliwrap::cliutil::read_config_file(OSTREED_CONFIGFILE, INITOVERLAY_CONFIGNAME) {
+        Ok(Some(value)) if value == "true" => {
+            let empty_argv: Vec<&str> = Vec::new();
+            if let Err(err) = cliutil::exec_real_binary(INITOVERLAY_INSTALL_CMD, &empty_argv) {
+                return Err(anyhow!(
+                    "Error: Command '{}' failed with: {}",
+                    INITOVERLAY_INSTALL_CMD,
+                    err
+                ));
+            }
+        }
+        _ => {
+            // Ignore all other cases (key not found or value not equal to "true")
+        }
+    }
+    Ok(())
+}
+
 #[context("Running dracut")]
 fn run_dracut(kernel_dir: &str) -> Result<()> {
     let root_fs = Utf8Dir::open_ambient_dir("/", cap_std::ambient_authority())?;
@@ -108,5 +132,10 @@ fn run_dracut(kernel_dir: &str) -> Result<()> {
         &root_fs,
         (Utf8Path::new("lib/modules").join(kernel_dir)).join("initramfs.img"),
     )?;
+
+    if let Err(error) = run_initoverlayfs() {
+        return Err(anyhow!("Failed to execute initoverlayfs: {}", error));
+    }
+
     Ok(())
 }
diff --git a/src/daemon/rpm-ostreed.conf b/src/daemon/rpm-ostreed.conf
index 05a8aa63c1..5944cded8e 100644
--- a/src/daemon/rpm-ostreed.conf
+++ b/src/daemon/rpm-ostreed.conf
@@ -6,3 +6,4 @@
 #AutomaticUpdatePolicy=none
 #IdleExitTimeout=60
 #LockLayering=false
+#InitOverlayFS=false