diff --git a/meta-phosphor/conf/distro/openbmc-phosphor.conf b/meta-phosphor/conf/distro/openbmc-phosphor.conf
index b59715d..418a98e 100644
--- a/meta-phosphor/conf/distro/openbmc-phosphor.conf
+++ b/meta-phosphor/conf/distro/openbmc-phosphor.conf
@@ -7,6 +7,7 @@
 
 GCCVERSION ?= "4.9.3"
 IMAGE_FSTYPES += "cpio.gz"
+IMAGE_FSTYPES += "squashfs-xz"
 IMAGE_LINGUAS = "en-us"
 
 VIRTUAL-RUNTIME_keymaps = ""