diff --git a/Cargo.lock b/Cargo.lock
index 7b008bb73a..154da94e64 100644
--- a/Cargo.lock
+++ b/Cargo.lock
@@ -343,6 +343,16 @@ name = "log"
 version = "0.3.6"
 source = "registry+https://github.com/rust-lang/crates.io-index"
 
+[[package]]
+name = "lzma-sys"
+version = "0.1.5"
+source = "registry+https://github.com/rust-lang/crates.io-index"
+dependencies = [
+ "filetime 0.1.10 (registry+https://github.com/rust-lang/crates.io-index)",
+ "gcc 0.3.45 (registry+https://github.com/rust-lang/crates.io-index)",
+ "libc 0.2.22 (registry+https://github.com/rust-lang/crates.io-index)",
+]
+
 [[package]]
 name = "markdown"
 version = "0.2.0"
@@ -593,6 +603,7 @@ dependencies = [
  "walkdir 0.1.8 (registry+https://github.com/rust-lang/crates.io-index)",
  "winapi 0.2.8 (registry+https://github.com/rust-lang/crates.io-index)",
  "winreg 0.3.5 (registry+https://github.com/rust-lang/crates.io-index)",
+ "xz2 0.1.3 (registry+https://github.com/rust-lang/crates.io-index)",
 ]
 
 [[package]]
@@ -613,6 +624,7 @@ dependencies = [
  "walkdir 0.1.8 (registry+https://github.com/rust-lang/crates.io-index)",
  "winapi 0.2.8 (registry+https://github.com/rust-lang/crates.io-index)",
  "winreg 0.3.5 (registry+https://github.com/rust-lang/crates.io-index)",
+ "xz2 0.1.3 (registry+https://github.com/rust-lang/crates.io-index)",
 ]
 
 [[package]]
@@ -980,6 +992,14 @@ dependencies = [
  "libc 0.2.22 (registry+https://github.com/rust-lang/crates.io-index)",
 ]
 
+[[package]]
+name = "xz2"
+version = "0.1.3"
+source = "registry+https://github.com/rust-lang/crates.io-index"
+dependencies = [
+ "lzma-sys 0.1.5 (registry+https://github.com/rust-lang/crates.io-index)",
+]
+
 [metadata]
 "checksum advapi32-sys 0.1.2 (registry+https://github.com/rust-lang/crates.io-index)" = "307c92332867e586720c0222ee9d890bbe8431711efed8a1b06bc5b40fc66bd7"
 "checksum advapi32-sys 0.2.0 (registry+https://github.com/rust-lang/crates.io-index)" = "e06588080cb19d0acb6739808aafa5f26bfb2ca015b2b6370028b44cf7cb8a9a"
@@ -1018,6 +1038,7 @@ dependencies = [
 "checksum libc 0.2.22 (registry+https://github.com/rust-lang/crates.io-index)" = "babb8281da88cba992fa1f4ddec7d63ed96280a1a53ec9b919fd37b53d71e502"
 "checksum libz-sys 1.0.8 (registry+https://github.com/rust-lang/crates.io-index)" = "c18b5826abbfafb0160b37e1991e2d327c1fe38c955e496ea306f72c06d7570c"
 "checksum log 0.3.6 (registry+https://github.com/rust-lang/crates.io-index)" = "ab83497bf8bf4ed2a74259c1c802351fcd67a65baa86394b6ba73c36f4838054"
+"checksum lzma-sys 0.1.5 (registry+https://github.com/rust-lang/crates.io-index)" = "4b539821e4cb7d38539f762580c6620c745fb79d9a03b4bf25eda6739c4ff572"
 "checksum markdown 0.2.0 (registry+https://github.com/rust-lang/crates.io-index)" = "bdb7e864aa1dccbebb05751e899bc84c639df47490c0c24caf4b1a77770b6566"
 "checksum matches 0.1.2 (registry+https://github.com/rust-lang/crates.io-index)" = "15305656809ce5a4805b1ff2946892810992197ce1270ff79baded852187942e"
 "checksum memchr 0.1.11 (registry+https://github.com/rust-lang/crates.io-index)" = "d8b629fb514376c675b98c1421e80b151d3817ac42d7c667717d282761418d20"
@@ -1085,3 +1106,4 @@ dependencies = [
 "checksum winapi-build 0.1.1 (registry+https://github.com/rust-lang/crates.io-index)" = "2d315eee3b34aca4797b2da6b13ed88266e6d612562a0c46390af8299fc699bc"
 "checksum winreg 0.3.5 (registry+https://github.com/rust-lang/crates.io-index)" = "e63857fb213f619b4c4fff86b158285c76766aac7e7474967e92fb6dbbfeefe9"
 "checksum xattr 0.1.10 (registry+https://github.com/rust-lang/crates.io-index)" = "06d6f0e8fd6536f3c623afab15488d87cf3a5dbb907361a22c05d739881136d7"
+"checksum xz2 0.1.3 (registry+https://github.com/rust-lang/crates.io-index)" = "e9510bdf100731599107c61f77daf46713a69a568f75458999c1f9dbf6ba25b0"
diff --git a/src/rustup-dist/Cargo.toml b/src/rustup-dist/Cargo.toml
index f7b8d802cb..9cfea72b8b 100644
--- a/src/rustup-dist/Cargo.toml
+++ b/src/rustup-dist/Cargo.toml
@@ -19,6 +19,7 @@ ole32-sys = "0.2.0"
 url = "1.1.0"
 tar = "0.4.0"
 flate2 = "0.2.9"
+xz2 = "0.1.3"
 tempdir = "0.3.4"
 walkdir = "0.1.5"
 toml = "0.1.27"
diff --git a/src/rustup-dist/src/component/package.rs b/src/rustup-dist/src/component/package.rs
index e03b8d2c41..3326231ab0 100644
--- a/src/rustup-dist/src/component/package.rs
+++ b/src/rustup-dist/src/component/package.rs
@@ -4,6 +4,7 @@
 
 extern crate tar;
 extern crate flate2;
+extern crate xz2;
 
 use component::components::*;
 use component::transaction::*;
@@ -261,3 +262,35 @@ impl<'a> Package for TarGzPackage<'a> {
         self.0.components()
     }
 }
+
+#[derive(Debug)]
+pub struct TarXzPackage<'a>(TarPackage<'a>);
+
+impl<'a> TarXzPackage<'a> {
+    pub fn new<R: Read>(stream: R, temp_cfg: &'a temp::Cfg) -> Result<Self> {
+        let stream = xz2::read::XzDecoder::new(stream);
+
+        Ok(TarXzPackage(try!(TarPackage::new(stream, temp_cfg))))
+    }
+    pub fn new_file(path: &Path, temp_cfg: &'a temp::Cfg) -> Result<Self> {
+        let file = try!(File::open(path).chain_err(|| ErrorKind::ExtractingPackage));
+        Self::new(file, temp_cfg)
+    }
+}
+
+impl<'a> Package for TarXzPackage<'a> {
+    fn contains(&self, component: &str, short_name: Option<&str>) -> bool {
+        self.0.contains(component, short_name)
+    }
+    fn install<'b>(&self,
+                   target: &Components,
+                   component: &str,
+                   short_name: Option<&str>,
+                   tx: Transaction<'b>)
+                   -> Result<Transaction<'b>> {
+        self.0.install(target, component, short_name, tx)
+    }
+    fn components(&self) -> Vec<String> {
+        self.0.components()
+    }
+}
diff --git a/src/rustup-dist/src/manifest.rs b/src/rustup-dist/src/manifest.rs
index 5fc5404fac..9953ef3239 100644
--- a/src/rustup-dist/src/manifest.rs
+++ b/src/rustup-dist/src/manifest.rs
@@ -44,6 +44,8 @@ pub struct TargetedPackage {
     pub available: bool,
     pub url: String,
     pub hash: String,
+    pub xz_url: Option<String>,
+    pub xz_hash: Option<String>,
     pub components: Vec<Component>,
     pub extensions: Vec<Component>,
 }
@@ -230,6 +232,8 @@ impl TargetedPackage {
             available: try!(get_bool(&mut table, "available", path)),
             url: try!(get_string(&mut table, "url", path)),
             hash: try!(get_string(&mut table, "hash", path)),
+            xz_url: get_string(&mut table, "xz_url", path).ok(),
+            xz_hash: get_string(&mut table, "xz_hash", path).ok(),
             components: try!(Self::toml_to_components(components,
                                                       &format!("{}{}.", path, "components"))),
             extensions: try!(Self::toml_to_components(extensions,
diff --git a/src/rustup-dist/src/manifestation.rs b/src/rustup-dist/src/manifestation.rs
index 208df01181..0fa581b1c4 100644
--- a/src/rustup-dist/src/manifestation.rs
+++ b/src/rustup-dist/src/manifestation.rs
@@ -4,7 +4,7 @@
 use config::Config;
 use manifest::{Component, Manifest, TargetedPackage};
 use dist::{TargetTriple, DEFAULT_DIST_SERVER};
-use component::{Components, Transaction, TarGzPackage, Package};
+use component::{Components, Transaction, TarGzPackage, TarXzPackage, Package};
 use temp;
 use errors::*;
 use notifications::*;
@@ -16,6 +16,11 @@ use std::path::Path;
 pub const DIST_MANIFEST: &'static str = "multirust-channel-manifest.toml";
 pub const CONFIG_FILE: &'static str = "multirust-config.toml";
 
+enum Format {
+    Gz,
+    Xz,
+}
+
 #[derive(Debug)]
 pub struct Manifestation {
     installation: Components,
@@ -115,20 +120,26 @@ impl Manifestation {
         }
 
         // Map components to urls and hashes
-        let mut components_urls_and_hashes: Vec<(Component, String, String)> = Vec::new();
+        let mut components_urls_and_hashes: Vec<(Component, Format, String, String)> = Vec::new();
         for component in components_to_install {
             let package = try!(new_manifest.get_package(&component.pkg));
             let target_package = try!(package.get_target(component.target.as_ref()));
-            let c_u_h = (component, target_package.url.clone(), target_package.hash.clone());
+            let c_u_h =
+                if let (Some(url), Some(hash)) = (target_package.xz_url.clone(),
+                                                 target_package.xz_hash.clone()) {
+                    (component, Format::Xz, url, hash)
+                } else {
+                    (component, Format::Gz, target_package.url.clone(), target_package.hash.clone())
+                };
             components_urls_and_hashes.push(c_u_h);
         }
 
         let altered = temp_cfg.dist_server != DEFAULT_DIST_SERVER;
 
         // Download component packages and validate hashes
-        let mut things_to_install: Vec<(Component, File)> = Vec::new();
+        let mut things_to_install: Vec<(Component, Format, File)> = Vec::new();
         let mut things_downloaded: Vec<String> = Vec::new();
-        for (component, url, hash) in components_urls_and_hashes {
+        for (component, format, url, hash) in components_urls_and_hashes {
 
             notify_handler(Notification::DownloadingComponent(&component.pkg,
                                                               &self.target_triple,
@@ -146,7 +157,7 @@ impl Manifestation {
             }));
             things_downloaded.push(hash);
 
-            things_to_install.push((component, dowloaded_file));
+            things_to_install.push((component, format, dowloaded_file));
         }
 
         // Begin transaction
@@ -167,13 +178,24 @@ impl Manifestation {
         }
 
         // Install components
-        for (component, installer_file) in things_to_install {
+        for (component, format, installer_file) in things_to_install {
 
             notify_handler(Notification::InstallingComponent(&component.pkg,
                                                              &self.target_triple,
                                                              component.target.as_ref()));
 
-            let package = try!(TarGzPackage::new_file(&installer_file, temp_cfg));
+            let gz;
+            let xz;
+            let package: &Package = match format {
+                Format::Gz => {
+                    gz = try!(TarGzPackage::new_file(&installer_file, temp_cfg));
+                    &gz
+                }
+                Format::Xz => {
+                    xz = try!(TarXzPackage::new_file(&installer_file, temp_cfg));
+                    &xz
+                }
+            };
 
             // For historical reasons, the rust-installer component
             // names are not the same as the dist manifest component
diff --git a/src/rustup-dist/tests/dist.rs b/src/rustup-dist/tests/dist.rs
index 39c210f504..2e42432703 100644
--- a/src/rustup-dist/tests/dist.rs
+++ b/src/rustup-dist/tests/dist.rs
@@ -246,7 +246,7 @@ fn mock_dist_server_smoke_test() {
     let tempdir = TempDir::new("multirust").unwrap();
     let path = tempdir.path();
 
-    create_mock_dist_server(&path, None).write(&[ManifestVersion::V2]);
+    create_mock_dist_server(&path, None).write(&[ManifestVersion::V2], false);
 
     assert!(utils::path_exists(path.join("dist/2016-02-01/rustc-nightly-x86_64-apple-darwin.tar.gz")));
     assert!(utils::path_exists(path.join("dist/2016-02-01/rustc-nightly-i686-apple-darwin.tar.gz")));
@@ -307,10 +307,10 @@ fn uninstall(toolchain: &ToolchainDesc, prefix: &InstallPrefix, temp_cfg: &temp:
     Ok(())
 }
 
-fn setup(edit: Option<&Fn(&str, &mut MockPackage)>,
+fn setup(edit: Option<&Fn(&str, &mut MockPackage)>, enable_xz: bool,
          f: &Fn(&Url, &ToolchainDesc, &InstallPrefix, &DownloadCfg, &temp::Cfg)) {
     let dist_tempdir = TempDir::new("multirust").unwrap();
-    create_mock_dist_server(dist_tempdir.path(), edit).write(&[ManifestVersion::V2]);
+    create_mock_dist_server(dist_tempdir.path(), edit).write(&[ManifestVersion::V2], enable_xz);
 
     let prefix_tempdir = TempDir::new("multirust").unwrap();
 
@@ -334,7 +334,17 @@ fn setup(edit: Option<&Fn(&str, &mut MockPackage)>,
 
 #[test]
 fn initial_install() {
-    setup(None, &|url, toolchain, prefix, download_cfg, temp_cfg| {
+    setup(None, false, &|url, toolchain, prefix, download_cfg, temp_cfg| {
+        update_from_dist(url, toolchain, prefix, &[], &[], download_cfg, temp_cfg).unwrap();
+
+        assert!(utils::path_exists(&prefix.path().join("bin/rustc")));
+        assert!(utils::path_exists(&prefix.path().join("lib/libstd.rlib")));
+    });
+}
+
+#[test]
+fn initial_install_xz() {
+    setup(None, true, &|url, toolchain, prefix, download_cfg, temp_cfg| {
         update_from_dist(url, toolchain, prefix, &[], &[], download_cfg, temp_cfg).unwrap();
 
         assert!(utils::path_exists(&prefix.path().join("bin/rustc")));
@@ -344,7 +354,7 @@ fn initial_install() {
 
 #[test]
 fn test_uninstall() {
-    setup(None, &|url, toolchain, prefix, download_cfg, temp_cfg| {
+    setup(None, false, &|url, toolchain, prefix, download_cfg, temp_cfg| {
         update_from_dist(url, toolchain, prefix, &[], &[], download_cfg, temp_cfg).unwrap();
         uninstall(toolchain, prefix, temp_cfg, &|_| ()).unwrap();
 
@@ -355,7 +365,7 @@ fn test_uninstall() {
 
 #[test]
 fn uninstall_removes_config_file() {
-    setup(None, &|url, toolchain, prefix, download_cfg, temp_cfg| {
+    setup(None, false, &|url, toolchain, prefix, download_cfg, temp_cfg| {
         update_from_dist(url, toolchain, prefix, &[], &[], download_cfg, temp_cfg).unwrap();
         assert!(utils::path_exists(&prefix.manifest_file("multirust-config.toml")));
         uninstall(toolchain, prefix, temp_cfg, &|_| ()).unwrap();
@@ -365,7 +375,7 @@ fn uninstall_removes_config_file() {
 
 #[test]
 fn upgrade() {
-    setup(None, &|url, toolchain, prefix, download_cfg, temp_cfg| {
+    setup(None, false, &|url, toolchain, prefix, download_cfg, temp_cfg| {
         change_channel_date(url, "nightly", "2016-02-01");
         update_from_dist(url, toolchain, prefix, &[], &[], download_cfg, temp_cfg).unwrap();
         assert_eq!("2016-02-01", utils_raw::read_file(&prefix.path().join("bin/rustc")).unwrap());
@@ -387,7 +397,7 @@ fn update_removes_components_that_dont_exist() {
             });
         }
     };
-    setup(Some(edit), &|url, toolchain, prefix, download_cfg, temp_cfg| {
+    setup(Some(edit), false, &|url, toolchain, prefix, download_cfg, temp_cfg| {
         change_channel_date(url, "nightly", "2016-02-01");
         update_from_dist(url, toolchain, prefix, &[], &[], download_cfg, temp_cfg).unwrap();
         assert!(utils::path_exists(&prefix.path().join("bin/bonus")));
@@ -399,7 +409,7 @@ fn update_removes_components_that_dont_exist() {
 
 #[test]
 fn update_preserves_extensions() {
-    setup(None, &|url, toolchain, prefix, download_cfg, temp_cfg| {
+    setup(None, false, &|url, toolchain, prefix, download_cfg, temp_cfg| {
         let ref adds = vec![
             Component {
                 pkg: "rust-std".to_string(), target: Some(TargetTriple::from_str("i686-apple-darwin"))
@@ -441,7 +451,7 @@ fn update_preserves_extensions_that_became_components() {
             });
         }
     };
-    setup(Some(edit), &|url, toolchain, prefix, download_cfg, temp_cfg| {
+    setup(Some(edit), false, &|url, toolchain, prefix, download_cfg, temp_cfg| {
         let ref adds = vec![
             Component {
                 pkg: "bonus".to_string(), target: Some(TargetTriple::from_str("x86_64-apple-darwin"))
@@ -477,7 +487,7 @@ fn update_preserves_components_that_became_extensions() {
             });
         }
     };
-    setup(Some(edit), &|url, toolchain, prefix, download_cfg, temp_cfg| {
+    setup(Some(edit), false, &|url, toolchain, prefix, download_cfg, temp_cfg| {
         change_channel_date(url, "nightly", "2016-02-01");
         update_from_dist(url, toolchain, prefix, &[], &[], download_cfg, temp_cfg).unwrap();
         assert!(utils::path_exists(&prefix.path().join("bin/bonus")));
@@ -489,7 +499,7 @@ fn update_preserves_components_that_became_extensions() {
 
 #[test]
 fn update_makes_no_changes_for_identical_manifest() {
-    setup(None, &|url, toolchain, prefix, download_cfg, temp_cfg| {
+    setup(None, false, &|url, toolchain, prefix, download_cfg, temp_cfg| {
         let status = update_from_dist(url, toolchain, prefix, &[], &[], download_cfg, temp_cfg).unwrap();
         assert_eq!(status, UpdateStatus::Changed);
         let status = update_from_dist(url, toolchain, prefix, &[], &[], download_cfg, temp_cfg).unwrap();
@@ -499,7 +509,7 @@ fn update_makes_no_changes_for_identical_manifest() {
 
 #[test]
 fn add_extensions_for_initial_install() {
-    setup(None, &|url, toolchain, prefix, download_cfg, temp_cfg| {
+    setup(None, false, &|url, toolchain, prefix, download_cfg, temp_cfg| {
         let ref adds = vec![
             Component {
                 pkg: "rust-std".to_string(), target: Some(TargetTriple::from_str("i686-apple-darwin"))
@@ -517,7 +527,7 @@ fn add_extensions_for_initial_install() {
 
 #[test]
 fn add_extensions_for_same_manifest() {
-    setup(None, &|url, toolchain, prefix, download_cfg, temp_cfg| {
+    setup(None, false, &|url, toolchain, prefix, download_cfg, temp_cfg| {
         update_from_dist(url, toolchain, prefix, &[], &[], download_cfg, temp_cfg).unwrap();
 
         let ref adds = vec![
@@ -538,7 +548,7 @@ fn add_extensions_for_same_manifest() {
 
 #[test]
 fn add_extensions_for_upgrade() {
-    setup(None, &|url, toolchain, prefix, download_cfg, temp_cfg| {
+    setup(None, false, &|url, toolchain, prefix, download_cfg, temp_cfg| {
         change_channel_date(url, "nightly", "2016-02-01");
 
         update_from_dist(url, toolchain, prefix, &[], &[], download_cfg, temp_cfg).unwrap();
@@ -564,7 +574,7 @@ fn add_extensions_for_upgrade() {
 #[test]
 #[should_panic]
 fn add_extension_not_in_manifest() {
-    setup(None, &|url, toolchain, prefix, download_cfg, temp_cfg| {
+    setup(None, false, &|url, toolchain, prefix, download_cfg, temp_cfg| {
         let ref adds = vec![
             Component {
                 pkg: "rust-bogus".to_string(), target: Some(TargetTriple::from_str("i686-apple-darwin"))
@@ -578,7 +588,7 @@ fn add_extension_not_in_manifest() {
 #[test]
 #[should_panic]
 fn add_extension_that_is_required_component() {
-    setup(None, &|url, toolchain, prefix, download_cfg, temp_cfg| {
+    setup(None, false, &|url, toolchain, prefix, download_cfg, temp_cfg| {
         let ref adds = vec![
             Component {
                 pkg: "rustc".to_string(), target: Some(TargetTriple::from_str("x86_64-apple-darwin"))
@@ -601,7 +611,7 @@ fn add_extensions_for_same_manifest_when_extension_already_installed() {
 
 #[test]
 fn add_extensions_does_not_remove_other_components() {
-    setup(None, &|url, toolchain, prefix, download_cfg, temp_cfg| {
+    setup(None, false, &|url, toolchain, prefix, download_cfg, temp_cfg| {
         update_from_dist(url, toolchain, prefix, &[], &[], download_cfg, temp_cfg).unwrap();
 
         let ref adds = vec![
@@ -620,7 +630,7 @@ fn add_extensions_does_not_remove_other_components() {
 #[test]
 #[should_panic]
 fn remove_extensions_for_initial_install() {
-    setup(None, &|url, toolchain, prefix, download_cfg, temp_cfg| {
+    setup(None, false, &|url, toolchain, prefix, download_cfg, temp_cfg| {
         let ref removes = vec![
             Component {
                 pkg: "rustc".to_string(), target: Some(TargetTriple::from_str("x86_64-apple-darwin"))
@@ -633,7 +643,7 @@ fn remove_extensions_for_initial_install() {
 
 #[test]
 fn remove_extensions_for_same_manifest() {
-    setup(None, &|url, toolchain, prefix, download_cfg, temp_cfg| {
+    setup(None, false, &|url, toolchain, prefix, download_cfg, temp_cfg| {
         let ref adds = vec![
             Component {
                 pkg: "rust-std".to_string(), target: Some(TargetTriple::from_str("i686-apple-darwin"))
@@ -660,7 +670,7 @@ fn remove_extensions_for_same_manifest() {
 
 #[test]
 fn remove_extensions_for_upgrade() {
-    setup(None, &|url, toolchain, prefix, download_cfg, temp_cfg| {
+    setup(None, false, &|url, toolchain, prefix, download_cfg, temp_cfg| {
         change_channel_date(url, "nightly", "2016-02-01");
 
         let ref adds = vec![
@@ -692,7 +702,7 @@ fn remove_extensions_for_upgrade() {
 #[test]
 #[should_panic]
 fn remove_extension_not_in_manifest() {
-    setup(None, &|url, toolchain, prefix, download_cfg, temp_cfg| {
+    setup(None, false, &|url, toolchain, prefix, download_cfg, temp_cfg| {
         change_channel_date(url, "nightly", "2016-02-01");
 
         update_from_dist(url, toolchain, prefix, &[], &[], download_cfg, temp_cfg).unwrap();
@@ -724,7 +734,7 @@ fn remove_extension_not_in_manifest_but_is_already_installed() {
             });
         }
     };
-    setup(Some(edit), &|url, toolchain, prefix, download_cfg, temp_cfg| {
+    setup(Some(edit), false, &|url, toolchain, prefix, download_cfg, temp_cfg| {
         change_channel_date(url, "nightly", "2016-02-01");
 
         let ref adds = vec![
@@ -749,7 +759,7 @@ fn remove_extension_not_in_manifest_but_is_already_installed() {
 #[test]
 #[should_panic]
 fn remove_extension_that_is_required_component() {
-    setup(None, &|url, toolchain, prefix, download_cfg, temp_cfg| {
+    setup(None, false, &|url, toolchain, prefix, download_cfg, temp_cfg| {
         update_from_dist(url, toolchain, prefix, &[], &[], download_cfg, temp_cfg).unwrap();
 
         let ref removes = vec![
@@ -765,7 +775,7 @@ fn remove_extension_that_is_required_component() {
 #[test]
 #[should_panic]
 fn remove_extension_not_installed() {
-    setup(None, &|url, toolchain, prefix, download_cfg, temp_cfg| {
+    setup(None, false, &|url, toolchain, prefix, download_cfg, temp_cfg| {
         update_from_dist(url, toolchain, prefix, &[], &[], download_cfg, temp_cfg).unwrap();
 
         let ref removes = vec![
@@ -785,7 +795,7 @@ fn remove_extensions_for_same_manifest_does_not_reinstall_other_components() {
 
 #[test]
 fn remove_extensions_does_not_remove_other_components() {
-    setup(None, &|url, toolchain, prefix, download_cfg, temp_cfg| {
+    setup(None, false, &|url, toolchain, prefix, download_cfg, temp_cfg| {
         let ref adds = vec![
             Component {
                 pkg: "rust-std".to_string(), target: Some(TargetTriple::from_str("i686-apple-darwin"))
@@ -808,7 +818,7 @@ fn remove_extensions_does_not_remove_other_components() {
 
 #[test]
 fn add_and_remove_for_upgrade() {
-    setup(None, &|url, toolchain, prefix, download_cfg, temp_cfg| {
+    setup(None, false, &|url, toolchain, prefix, download_cfg, temp_cfg| {
         change_channel_date(url, "nightly", "2016-02-01");
 
         let ref adds = vec![
@@ -842,7 +852,7 @@ fn add_and_remove_for_upgrade() {
 
 #[test]
 fn add_and_remove() {
-    setup(None, &|url, toolchain, prefix, download_cfg, temp_cfg| {
+    setup(None, false, &|url, toolchain, prefix, download_cfg, temp_cfg| {
         let ref adds = vec![
             Component {
                 pkg: "rust-std".to_string(), target: Some(TargetTriple::from_str("i686-unknown-linux-gnu"))
@@ -873,7 +883,7 @@ fn add_and_remove() {
 #[test]
 #[should_panic]
 fn add_and_remove_same_component() {
-    setup(None, &|url, toolchain, prefix, download_cfg, temp_cfg| {
+    setup(None, false, &|url, toolchain, prefix, download_cfg, temp_cfg| {
         update_from_dist(url, toolchain, prefix, &[], &[], download_cfg, temp_cfg).unwrap();
 
         let ref adds = vec![
@@ -894,7 +904,7 @@ fn add_and_remove_same_component() {
 
 #[test]
 fn bad_component_hash() {
-    setup(None, &|url, toolchain, prefix, download_cfg, temp_cfg| {
+    setup(None, false, &|url, toolchain, prefix, download_cfg, temp_cfg| {
         let path = url.to_file_path().unwrap();
         let path = path.join("dist/2016-02-02/rustc-nightly-x86_64-apple-darwin.tar.gz");
         utils_raw::write_file(&path, "bogus").unwrap();
@@ -910,7 +920,7 @@ fn bad_component_hash() {
 
 #[test]
 fn unable_to_download_component() {
-    setup(None, &|url, toolchain, prefix, download_cfg, temp_cfg| {
+    setup(None, false, &|url, toolchain, prefix, download_cfg, temp_cfg| {
         let path = url.to_file_path().unwrap();
         let path = path.join("dist/2016-02-02/rustc-nightly-x86_64-apple-darwin.tar.gz");
         fs::remove_file(&path).unwrap();
@@ -937,7 +947,7 @@ fn allow_installation(prefix: &InstallPrefix) {
 
 #[test]
 fn reuse_downloaded_file() {
-    setup(None, &|url, toolchain, prefix, download_cfg, temp_cfg| {
+    setup(None, false, &|url, toolchain, prefix, download_cfg, temp_cfg| {
 
         prevent_installation(prefix);
 
@@ -967,7 +977,7 @@ fn reuse_downloaded_file() {
 
 #[test]
 fn checks_files_hashes_before_reuse() {
-    setup(None, &|url, toolchain, prefix, download_cfg, temp_cfg| {
+    setup(None, false, &|url, toolchain, prefix, download_cfg, temp_cfg| {
 
         let path = url.to_file_path().unwrap();
         let target_hash = utils::read_file("target hash", &path.join("dist/2016-02-02/rustc-nightly-x86_64-apple-darwin.tar.gz.sha256")).unwrap()[.. 64].to_owned();
diff --git a/src/rustup-mock/Cargo.toml b/src/rustup-mock/Cargo.toml
index 66430f4ee2..719717cfa5 100644
--- a/src/rustup-mock/Cargo.toml
+++ b/src/rustup-mock/Cargo.toml
@@ -15,6 +15,7 @@ scopeguard = "0.1.2"
 lazy_static = "0.1.15"
 walkdir = "0.1.5"
 flate2 = "0.2.9"
+xz2 = "0.1.3"
 tempdir = "0.3.4"
 itertools = "0.4.1"
 tar = "0.4.0"
diff --git a/src/rustup-mock/src/clitools.rs b/src/rustup-mock/src/clitools.rs
index b29935c0f9..07854d22ff 100644
--- a/src/rustup-mock/src/clitools.rs
+++ b/src/rustup-mock/src/clitools.rs
@@ -334,7 +334,7 @@ fn create_mock_dist_server(path: &Path, s: Scenario) {
     MockDistServer {
         path: path.to_owned(),
         channels: chans,
-    }.write(vs);
+    }.write(vs, true);
 
     // Also create the manifests for stable releases by version
     if s == Scenario::Full || s == Scenario::ArchivesV1 || s == Scenario::ArchivesV2 {
diff --git a/src/rustup-mock/src/dist.rs b/src/rustup-mock/src/dist.rs
index 1c07f73c20..db82b1299a 100644
--- a/src/rustup-mock/src/dist.rs
+++ b/src/rustup-mock/src/dist.rs
@@ -11,6 +11,7 @@ use tempdir::TempDir;
 use sha2::{Sha256, Digest};
 use toml;
 use flate2;
+use xz2;
 use tar;
 use walkdir;
 
@@ -102,16 +103,22 @@ pub struct MockComponent {
     pub target: String,
 }
 
+#[derive(Clone)]
+pub struct MockHashes {
+    pub gz: String,
+    pub xz: Option<String>,
+}
+
 pub enum ManifestVersion { V1, V2 }
 
 impl MockDistServer {
-    pub fn write(&self, vs: &[ManifestVersion]) {
+    pub fn write(&self, vs: &[ManifestVersion], enable_xz: bool) {
         fs::create_dir_all(&self.path).unwrap();
 
         for channel in self.channels.iter() {
             let ref mut hashes = HashMap::new();
             for package in &channel.packages {
-                let new_hashes = self.build_package(&channel, &package);
+                let new_hashes = self.build_package(&channel, &package, enable_xz);
                 hashes.extend(new_hashes.into_iter());
             }
             for v in vs {
@@ -123,16 +130,21 @@ impl MockDistServer {
         }
     }
 
-    fn build_package(&self, channel: &MockChannel, package: &MockPackage) -> HashMap<MockComponent, String> {
+    fn build_package(&self, channel: &MockChannel, package: &MockPackage, enable_xz: bool) -> HashMap<MockComponent, MockHashes> {
         let mut hashes = HashMap::new();
 
         for target_package in &package.targets {
-            let hash = self.build_target_package(channel, package, target_package);
+            let gz_hash = self.build_target_package(channel, package, target_package, ".tar.gz");
+            let xz_hash = if enable_xz {
+                Some(self.build_target_package(channel, package, target_package, ".tar.xz"))
+            } else {
+                None
+            };
             let component = MockComponent {
                 name: package.name.to_string(),
                 target: target_package.target.to_string(),
             };
-            hashes.insert(component, hash);
+            hashes.insert(component, MockHashes { gz: gz_hash, xz: xz_hash });
         }
 
         return hashes;
@@ -142,7 +154,8 @@ impl MockDistServer {
     fn build_target_package(&self,
                             channel: &MockChannel,
                             package: &MockPackage,
-                            target_package: &MockTargetedPackage) -> String {
+                            target_package: &MockTargetedPackage,
+                            format: &str) -> String {
         // This is where the tarball, sums and sigs will go
         let ref dist_dir = self.path.join("dist");
         let ref archive_dir = dist_dir.join(&channel.date);
@@ -158,8 +171,8 @@ impl MockDistServer {
             format!("{}-{}", package.name, channel.name)
         };
         let ref installer_dir = workdir.join(installer_name);
-        let ref installer_tarball = archive_dir.join(format!("{}.tar.gz", installer_name));
-        let ref installer_hash = archive_dir.join(format!("{}.tar.gz.sha256", installer_name));
+        let ref installer_tarball = archive_dir.join(format!("{}{}", installer_name, format));
+        let ref installer_hash = archive_dir.join(format!("{}{}.sha256", installer_name, format));
 
         fs::create_dir_all(installer_dir).unwrap();
 
@@ -172,8 +185,8 @@ impl MockDistServer {
 
         // Copy from the archive to the main dist directory
         if package.name == "rust" {
-            let ref main_installer_tarball = dist_dir.join(format!("{}.tar.gz", installer_name));
-            let ref main_installer_hash = dist_dir.join(format!("{}.tar.gz.sha256", installer_name));
+            let ref main_installer_tarball = dist_dir.join(format!("{}{}", installer_name, format));
+            let ref main_installer_hash = dist_dir.join(format!("{}{}.sha256", installer_name, format));
             fs::copy(installer_tarball, main_installer_tarball).unwrap();
             fs::copy(installer_hash, main_installer_hash).unwrap();
         }
@@ -210,7 +223,7 @@ impl MockDistServer {
         fs::copy(hash_path, archive_hash_path).unwrap();
     }
 
-    fn write_manifest_v2(&self, channel: &MockChannel, hashes: &HashMap<MockComponent, String>) {
+    fn write_manifest_v2(&self, channel: &MockChannel, hashes: &HashMap<MockComponent, MockHashes>) {
         let mut toml_manifest = toml::Table::new();
 
         toml_manifest.insert(String::from("manifest-version"), toml::Value::String(MOCK_MANIFEST_VERSION.to_owned()));
@@ -235,14 +248,19 @@ impl MockDistServer {
                 };
                 let path = self.path.join("dist").join(&channel.date).join(package_file_name);
                 let url = format!("file://{}", path.to_string_lossy());
-                toml_target.insert(String::from("url"), toml::Value::String(url));
+                toml_target.insert(String::from("url"), toml::Value::String(url.clone()));
 
                 let ref component = MockComponent {
                     name: package.name.to_owned(),
                     target: target.target.to_owned(),
                 };
                 let hash = hashes[component].clone();
-                toml_target.insert(String::from("hash"), toml::Value::String(hash));
+                toml_target.insert(String::from("hash"), toml::Value::String(hash.gz));
+
+                if let Some(xz_hash) = hash.xz {
+                    toml_target.insert(String::from("xz_url"), toml::Value::String(url.replace(".tar.gz", ".tar.xz")));
+                    toml_target.insert(String::from("xz_hash"), toml::Value::String(xz_hash));
+                }
 
                 // [pkg.*.target.*.components.*]
                 let mut toml_components = toml::Array::new();
@@ -291,8 +309,20 @@ impl MockDistServer {
 
 fn create_tarball(relpath: &Path, src: &Path, dst: &Path) {
     let outfile = File::create(dst).unwrap();
-    let gzwriter = flate2::write::GzEncoder::new(outfile, flate2::Compression::None);
-    let mut tar = tar::Builder::new(gzwriter);
+    let mut gzwriter;
+    let mut xzwriter;
+    let writer: &mut Write = match &dst.to_string_lossy() {
+        s if s.ends_with(".tar.gz") => {
+            gzwriter = flate2::write::GzEncoder::new(outfile, flate2::Compression::None);
+            &mut gzwriter
+        }
+        s if s.ends_with(".tar.xz") => {
+            xzwriter = xz2::write::XzEncoder::new(outfile, 0);
+            &mut xzwriter
+        }
+        _ => panic!("Unsupported archive format"),
+    };
+    let mut tar = tar::Builder::new(writer);
     for entry in walkdir::WalkDir::new(src) {
         let entry = entry.unwrap();
         let parts: Vec<_> = entry.path().iter().map(|p| p.to_owned()).collect();
diff --git a/src/rustup-mock/src/lib.rs b/src/rustup-mock/src/lib.rs
index cf2fe3914b..3a860a001b 100644
--- a/src/rustup-mock/src/lib.rs
+++ b/src/rustup-mock/src/lib.rs
@@ -6,6 +6,7 @@ extern crate lazy_static;
 extern crate scopeguard;
 extern crate walkdir;
 extern crate flate2;
+extern crate xz2;
 extern crate tempdir;
 extern crate itertools;
 extern crate tar;
diff --git a/tests/cli-rustup.rs b/tests/cli-rustup.rs
index a4f5f7bd7b..0dab4a693e 100644
--- a/tests/cli-rustup.rs
+++ b/tests/cli-rustup.rs
@@ -11,7 +11,7 @@ use std::process;
 use rustup_utils::raw;
 use rustup_mock::clitools::{self, Config, Scenario,
                                expect_ok, expect_ok_ex,
-                               expect_stdout_ok,
+                               expect_stderr_ok, expect_stdout_ok,
                                expect_err,
                                set_current_dist_date,
                                this_host_triple};
@@ -206,6 +206,15 @@ info: default toolchain set to 'nightly-{0}'
     });
 }
 
+#[test]
+fn rustup_xz() {
+    setup(&|config| {
+        set_current_dist_date(config, "2015-01-01");
+        expect_stderr_ok(config, &["rustup", "--verbose", "update", "nightly"],
+for_host!(r"dist/2015-01-01/rust-std-nightly-{0}.tar.xz"));
+    });
+}
+
 #[test]
 fn add_target() {
     setup(&|config| {
diff --git a/tests/cli-v1.rs b/tests/cli-v1.rs
index a75a94a42b..9f23ef6f54 100644
--- a/tests/cli-v1.rs
+++ b/tests/cli-v1.rs
@@ -165,8 +165,10 @@ fn bad_sha_on_installer() {
         let dir = config.distdir.join("dist");
         for file in fs::read_dir(&dir).unwrap() {
             let file = file.unwrap();
-            if file.path().to_string_lossy().ends_with(".tar.gz") {
-                rustup_utils::raw::write_file(&file.path(), "xxx").unwrap();
+            let path = file.path();
+            let filename = path.to_string_lossy();
+            if filename.ends_with(".tar.gz") || filename.ends_with(".tar.xz") {
+                rustup_utils::raw::write_file(&path, "xxx").unwrap();
             }
         }
         expect_err(config, &["rustup", "default", "nightly"],
diff --git a/tests/cli-v2.rs b/tests/cli-v2.rs
index dd6da4228d..38aa04f8d6 100644
--- a/tests/cli-v2.rs
+++ b/tests/cli-v2.rs
@@ -209,8 +209,10 @@ fn bad_sha_on_installer() {
         let dir = config.distdir.join("dist/2015-01-02");
         for file in fs::read_dir(&dir).unwrap() {
             let file = file.unwrap();
-            if file.path().to_string_lossy().ends_with(".tar.gz") {
-                rustup_utils::raw::write_file(&file.path(), "xxx").unwrap();
+            let path = file.path();
+            let filename = path.to_string_lossy();
+            if filename.ends_with(".tar.gz") || filename.ends_with(".tar.xz") {
+                rustup_utils::raw::write_file(&path, "xxx").unwrap();
             }
         }
         expect_err(config, &["rustup", "default", "nightly"],