diff --git a/data/data/bootstrap/files/etc/systemd/system-generators/node-image-overlay-generator b/data/data/bootstrap/files/etc/systemd/system-generators/node-image-overlay-generator
new file mode 100755
index 00000000000..44ed434a691
--- /dev/null
+++ b/data/data/bootstrap/files/etc/systemd/system-generators/node-image-overlay-generator
@@ -0,0 +1,9 @@
+#!/bin/bash
+set -euo pipefail
+
+UNIT_DIR="${1:-/tmp}"
+
+if ! rpm -q openshift-clients &>/dev/null; then
+    ln -sf "/etc/systemd/system/node-image-overlay.target" \
+        "${UNIT_DIR}/default.target"
+fi
diff --git a/data/data/bootstrap/files/etc/systemd/system/node-image-finish.service b/data/data/bootstrap/files/etc/systemd/system/node-image-finish.service
new file mode 100644
index 00000000000..371fd2412d4
--- /dev/null
+++ b/data/data/bootstrap/files/etc/systemd/system/node-image-finish.service
@@ -0,0 +1,12 @@
+# This is a separate unit because in the assisted-installer flow, we only want
+# `node-image-overlay.service`, not the isolating back to `multi-user.target`.
+
+[Unit]
+Description=Node Image Finish
+Requires=node-image-overlay.service
+After=node-image-overlay.service
+
+[Service]
+Type=oneshot
+# and now, back to our regularly scheduled programming...
+ExecStart=/usr/bin/systemctl --no-block isolate multi-user.target
diff --git a/data/data/bootstrap/files/etc/systemd/system/node-image-overlay.service b/data/data/bootstrap/files/etc/systemd/system/node-image-overlay.service
new file mode 100644
index 00000000000..7e1ea029ee7
--- /dev/null
+++ b/data/data/bootstrap/files/etc/systemd/system/node-image-overlay.service
@@ -0,0 +1,9 @@
+[Unit]
+Description=Node Image Overlay
+Requires=node-image-pull.service
+After=node-image-pull.service
+
+[Service]
+Type=oneshot
+ExecStart=/usr/local/bin/node-image-overlay.sh
+RemainAfterExit=yes
diff --git a/data/data/bootstrap/files/etc/systemd/system/node-image-overlay.target b/data/data/bootstrap/files/etc/systemd/system/node-image-overlay.target
new file mode 100644
index 00000000000..ef52f78ed93
--- /dev/null
+++ b/data/data/bootstrap/files/etc/systemd/system/node-image-overlay.target
@@ -0,0 +1,9 @@
+[Unit]
+Description=Node Image Overlay Target
+Requires=basic.target
+
+# for easier debugging
+Requires=sshd.service getty.target systemd-user-sessions.service
+
+Requires=node-image-overlay.service
+Requires=node-image-finish.service
diff --git a/data/data/bootstrap/files/etc/systemd/system/node-image-pull.service b/data/data/bootstrap/files/etc/systemd/system/node-image-pull.service
new file mode 100644
index 00000000000..1d5b510ac2d
--- /dev/null
+++ b/data/data/bootstrap/files/etc/systemd/system/node-image-pull.service
@@ -0,0 +1,16 @@
+[Unit]
+Description=Node Image Pull
+Requires=network.target NetworkManager.service
+After=network.target
+
+[Service]
+Type=oneshot
+# we need to call ostree container (i.e. rpm-ostree), which has install_exec_t,
+# but by default, we'll run as unconfined_service_t, which is not allowed that
+# transition. Relabel the script itself.
+ExecStartPre=chcon --reference=/usr/bin/ostree /usr/local/bin/node-image-pull.sh
+ExecStart=/usr/local/bin/node-image-pull.sh
+# see related XXX in node-image-pull.sh
+TimeoutStartSec=infinity
+MountFlags=slave
+RemainAfterExit=yes
diff --git a/data/data/bootstrap/files/usr/local/bin/node-image-overlay.sh b/data/data/bootstrap/files/usr/local/bin/node-image-overlay.sh
new file mode 100755
index 00000000000..9a3ad4efb06
--- /dev/null
+++ b/data/data/bootstrap/files/usr/local/bin/node-image-overlay.sh
@@ -0,0 +1,15 @@
+#!/bin/bash
+set -euo pipefail
+
+ostree_checkout=/ostree/repo/tmp/node-image
+if [ ! -d "${ostree_checkout}" ]; then
+    ostree_checkout=/var/ostree-container/checkout
+fi
+
+# keep /usr/lib/modules from the booted deployment for kernel modules
+mount -o bind,ro "/usr/lib/modules" "${ostree_checkout}/usr/lib/modules"
+mount -o rbind,ro "${ostree_checkout}/usr" /usr
+rsync -a "${ostree_checkout}/usr/etc/" /etc
+
+# reload the new policy
+semodule -R
diff --git a/data/data/bootstrap/files/usr/local/bin/node-image-pull.sh.template b/data/data/bootstrap/files/usr/local/bin/node-image-pull.sh.template
new file mode 100755
index 00000000000..97c76c5079d
--- /dev/null
+++ b/data/data/bootstrap/files/usr/local/bin/node-image-pull.sh.template
@@ -0,0 +1,82 @@
+#!/bin/bash
+set -euo pipefail
+
+# shellcheck source=release-image.sh.template
+. /usr/local/bin/release-image.sh
+
+# yuck... this is a good argument for renaming the node image to just `node` in both OCP and OKD
+coreos_img=rhel-coreos
+{{ if .IsOKD }}
+coreos_img=stream-coreos
+{{ end }}
+# XXX: Unset NOTIFY_SOCKET for podman to workaround an outstanding bug in
+# RHEL. When it sees the socket, it wants to keep extending the service start
+# timeout. It writes to stderr, but we use `--quiet` which leaves it null,
+# so it hits SIGSEGV. To work around not having timeout extensions; we use
+# TimeoutStartSec=infinity.
+# This is fixed upstream by https://github.com/containers/common/pull/1758.
+# Should request backport...
+while ! COREOS_IMAGE=$(unset NOTIFY_SOCKET; image_for ${coreos_img}); do
+    echo 'Failed to query release image; retrying...'
+    sleep 10
+done
+
+# try to do this in the system repo so we get hardlinks and the checkout is
+# read-only, but fallback to using /var if we're in the live environment since
+# that's truly read-only
+ostree_repo=/ostree/repo
+ostree_checkout="${ostree_repo}/tmp/node-image"
+hardlink='-H'
+if grep -q coreos.liveiso= /proc/cmdline; then
+    ostree_repo=/var/ostree-container/repo
+    ostree_checkout=/var/ostree-container/checkout
+    mkdir -p "${ostree_repo}"
+    ostree init --mode=bare --repo="${ostree_repo}"
+    # if there are layers, import all the content in the system repo for
+    # layer-level deduping
+    if [ -d /ostree/repo/refs/heads/ostree/container ]; then
+        ostree pull-local --repo="${ostree_repo}" /ostree/repo
+    fi
+    # but we won't be able to force hardlinks cross-device
+    hardlink=''
+else
+    # (remember, we're MountFlags=slave)
+    mount -o rw,remount /sysroot
+fi
+
+# Use ostree stack to pull the container here. This gives us efficient
+# downloading with layers we already have, and also handles SELinux.
+while ! ostree container image pull --authfile "/root/.docker/config.json" \
+  "${ostree_repo}" ostree-unverified-image:docker://"${COREOS_IMAGE}"; do
+    echo 'Failed to fetch release image; retrying...'
+    sleep 10
+done
+
+# ideally, `ostree container image pull` would support `--write-ref` or a
+# command to escape a pullspec, but for now it's pretty easy to tell which ref
+# it is since it's the only docker one
+ref=$(ostree refs --repo "${ostree_repo}" | grep ^ostree/container/image/docker)
+if [ $(echo "$ref" | wc -l) != 1 ]; then
+    echo "Expected single docker ref, found:"
+    echo "$ref"
+    exit 1
+fi
+ostree refs --repo "${ostree_repo}" "$ref" --create coreos/node-image
+
+# massive hack to make ostree admin config-diff work in live ISO where /etc
+# is actually on a separate mount and not the deployment root proper... should
+# enhance libostree for this (remember, we're MountFlags=slave)
+if grep -q coreos.liveiso= /proc/cmdline; then
+    mount -o bind,ro /etc /ostree/deploy/*/deploy/*/etc
+fi
+
+# get all state files in /etc; this is a cheap way to get "3-way /etc merge" semantics
+etc_keep=$(ostree admin config-diff | cut -f5 -d' ' | sed -e 's,^,/usr/etc/,')
+
+# check out the commit
+ostree checkout --repo "${ostree_repo}" ${hardlink} coreos/node-image "${ostree_checkout}" --skip-list=<(cat <<< "$etc_keep")
+
+# in the assisted-installer case, nuke the temporary repo to save RAM
+if grep -q coreos.liveiso= /proc/cmdline; then
+    rm -rf "${ostree_repo}"
+fi
diff --git a/pkg/asset/ignition/bootstrap/common.go b/pkg/asset/ignition/bootstrap/common.go
index 97db5b7373e..13182760d85 100644
--- a/pkg/asset/ignition/bootstrap/common.go
+++ b/pkg/asset/ignition/bootstrap/common.go
@@ -438,7 +438,7 @@ func AddStorageFiles(config *igntypes.Config, base string, uri string, templateD
 
 	var mode int
 	appendToFile := false
-	if parentDir == "bin" || parentDir == "dispatcher.d" {
+	if parentDir == "bin" || parentDir == "dispatcher.d" || parentDir == "system-generators" {
 		mode = 0555
 	} else if filename == "motd" || filename == "containers.conf" {
 		mode = 0644