diff --git a/Makefile-decls.am b/Makefile-decls.am
index 0b4d22c646..3c70aa3046 100644
--- a/Makefile-decls.am
+++ b/Makefile-decls.am
@@ -24,6 +24,7 @@ NULL =
 BUILT_SOURCES =
 MANPAGES =
 CLEANFILES =
+DISTCLEANFILES =
 EXTRA_DIST =
 bin_PROGRAMS =
 sbin_PROGRAMS =
diff --git a/Makefile-selinux.am b/Makefile-selinux.am
new file mode 100644
index 0000000000..336418c931
--- /dev/null
+++ b/Makefile-selinux.am
@@ -0,0 +1,18 @@
+if BUILD_SELINUX_MODULE
+selinux_moduledir = ${datadir}/selinux/packages
+selinux_module_DATA = $(NULL)
+
+ostree.pp.bz2: selinux/ostree.te selinux/ostree.fc selinux/build-selinux.sh
+	$(srcdir)/selinux/build-selinux.sh . $^
+
+selinux_module_DATA += ostree.pp.bz2
+endif
+
+EXTRA_DIST += \
+	selinux/build-selinux.sh \
+	selinux/ostree.te \
+	selinux/ostree.fc \
+	selinux/meson.build \
+	$(NULL)
+
+DISTCLEANFILES += ostree.pp.bz2
diff --git a/Makefile.am b/Makefile.am
index 19abc0c1e1..3d97ee7377 100644
--- a/Makefile.am
+++ b/Makefile.am
@@ -138,6 +138,7 @@ include Makefile-tests.am
 include Makefile-boot.am
 include Makefile-man.am
 include Makefile-bash.am
+include Makefile-selinux.am
 
 release-tag:
 	cd $(srcdir) && git $(srcdir) tag -m "Release $(VERSION)" v$(VERSION)
diff --git a/configure.ac b/configure.ac
index 4416bc06f9..2e15183cbd 100644
--- a/configure.ac
+++ b/configure.ac
@@ -681,6 +681,17 @@ AM_COND_IF([BUILDOPT_IS_DEVEL_BUILD],
             release_build_type=release)
 OSTREE_FEATURES="$OSTREE_FEATURES $release_build_type"
 
+AC_ARG_ENABLE(selinux-module,
+        [AS_HELP_STRING([--enable-selinux-module],[Enable selinux module for system-helper])],
+        enable_selinux_module=$enableval, enable_selinux_module=auto)
+if test x$enable_selinux_module = xauto ; then
+   AC_CHECK_FILE([/usr/share/selinux/devel/Makefile], [enable_selinux_module=yes],  [enable_selinux_module=no])
+fi
+if test x$enable_selinux_module = xyes ; then
+   AC_CHECK_FILE([/usr/share/selinux/devel/Makefile], [],  [AC_MSG_ERROR([selinux-policy-devel needed to build selinux module])])
+fi
+AM_CONDITIONAL(BUILD_SELINUX_MODULE, test x$enable_selinux_module = xyes)
+
 # P2P API is public in OSTree >= 2018.6
 OSTREE_FEATURES="$OSTREE_FEATURES p2p"
 
@@ -722,6 +733,7 @@ echo "
     dracut:                                       $with_dracut
     mkinitcpio:                                   $with_mkinitcpio
     Static compiler for ostree-prepare-root:      $with_static_compiler
+    Build selinux module:                         $enable_selinux_module
     Composefs:                                    $with_composefs"
 AS_IF([test x$with_builtin_grub2_mkconfig = xyes], [
     echo "    builtin grub2-mkconfig (instead of system):   $with_builtin_grub2_mkconfig"
diff --git a/selinux/build-selinux.sh b/selinux/build-selinux.sh
new file mode 100755
index 0000000000..0655074860
--- /dev/null
+++ b/selinux/build-selinux.sh
@@ -0,0 +1,16 @@
+#!/bin/sh
+# Copyright 2023 Red Hat Inc.
+# SPDX-License-Identifier: LGPL-2.1-or-later
+
+set -x
+set -eu
+
+TMP=$(mktemp -d selinux-build-XXXXXX)
+output="$1"
+shift
+cp -- "$@" "$TMP/"
+
+make -C "$TMP" -f /usr/share/selinux/devel/Makefile ostree.pp
+bzip2 -9 "$TMP/ostree.pp"
+cp "$TMP/ostree.pp.bz2" "$output"
+rm -fr "$TMP"
diff --git a/selinux/ostree.fc b/selinux/ostree.fc
new file mode 100644
index 0000000000..e69de29bb2
diff --git a/selinux/ostree.if b/selinux/ostree.if
new file mode 100644
index 0000000000..fcc6bb2dff
--- /dev/null
+++ b/selinux/ostree.if
@@ -0,0 +1 @@
+## <summary>selinux</summary>
diff --git a/selinux/ostree.te b/selinux/ostree.te
new file mode 100644
index 0000000000..d33f0141df
--- /dev/null
+++ b/selinux/ostree.te
@@ -0,0 +1,20 @@
+policy_module(ostree, 1.0)
+
+gen_require(`
+	type kernel_t;
+')
+
+# When using transient /etc, ostree-prepare-root will mount an overlayfs on /etc
+# from the initrd. This overlay mount will have the context kernel_t, meaning
+# that not only will an external process need to pass its selinux checks against
+# the overlay file, the overlay filesystem itself need to pass the selinux check
+# against the overlayfs upper/work dirs.
+#
+# Unfortunately, for historical reasons kernel_t doesn't really have any permissions in
+# the selinux, so the overlayfs will not be able to do most operations against the etc_t
+# (and similar) upper files.
+#
+# To fix this we make the kernel context unconfined. It essentially is anyway, as
+# the kernel is the entity that validates the permissions anyway.
+
+unconfined_domain(kernel_t)