diff --git a/build_library/catalyst.sh b/build_library/catalyst.sh
index 74fe5cf182..84894caa82 100644
--- a/build_library/catalyst.sh
+++ b/build_library/catalyst.sh
@@ -80,11 +80,28 @@ export PORTAGE_GRPNAME=portage
 EOF
 }
 
+repos_conf() {
+cat <<EOF
+[DEFAULT]
+main-repo = portage-stable
+
+[gentoo]
+disabled = true
+
+[coreos]
+location = /usr/portage
+
+[portage-stable]
+location = /usr/local/portage
+EOF
+}
+
 # Common values for all stage spec files
 catalyst_stage_default() {
 cat <<EOF
 subarch: $ARCH
 rel_type: $TYPE
+portage_confdir: $TEMPDIR/portage
 portage_overlay: $FLAGS_coreos_overlay
 profile: $FLAGS_profile
 snapshot: $FLAGS_version
@@ -212,20 +229,22 @@ write_configs() {
     export CCACHE_DIR="$TEMPDIR/ccache"
 
     info "Creating output directories..."
-    mkdir -m 775 -p "$TEMPDIR" "$DISTDIR" "$CCACHE_DIR"
+    mkdir -m 775 -p "$TEMPDIR/portage/repos.conf" "$DISTDIR" "$CCACHE_DIR"
     chown portage:portage "$DISTDIR" "$CCACHE_DIR"
     info "Writing out catalyst configs..."
-    info "    $TEMPDIR/catalyst.conf"
+    info "    catalyst.conf"
     catalyst_conf > "$TEMPDIR/catalyst.conf"
-    info "    $TEMPDIR/catalystrc"
+    info "    catalystrc"
     catalystrc > "$TEMPDIR/catalystrc"
-    info "    $TEMPDIR/stage1.spec"
+    info "    portage/repos.conf/coreos.conf"
+    repos_conf > "$TEMPDIR/portage/repos.conf/coreos.conf"
+    info "    stage1.spec"
     catalyst_stage1 > "$TEMPDIR/stage1.spec"
-    info "    $TEMPDIR/stage2.spec"
+    info "    stage2.spec"
     catalyst_stage2 > "$TEMPDIR/stage2.spec"
-    info "    $TEMPDIR/stage3.spec"
+    info "    stage3.spec"
     catalyst_stage3 > "$TEMPDIR/stage3.spec"
-    info "    $TEMPDIR/stage4.spec"
+    info "    stage4.spec"
     catalyst_stage4 > "$TEMPDIR/stage4.spec"
 }
 
diff --git a/build_library/catalyst_toolchains.sh b/build_library/catalyst_toolchains.sh
index 4106b6af42..07428f7350 100644
--- a/build_library/catalyst_toolchains.sh
+++ b/build_library/catalyst_toolchains.sh
@@ -32,8 +32,7 @@ build_target_toolchain() {
         run_merge -u --root="$ROOT" "${TOOLCHAIN_PKGS[@]}"
 }
 
-mkdir -p "/tmp/crossdev"
-export PORTDIR_OVERLAY="/tmp/crossdev $(portageq envvar PORTDIR_OVERLAY)"
+configure_crossdev_overlay / /tmp/crossdev
 
 for cross_chost in $(get_chost_list); do
     echo "Building cross toolchain for ${cross_chost}"
diff --git a/build_library/toolchain_util.sh b/build_library/toolchain_util.sh
index 388a7c58fa..f6e0bafa73 100644
--- a/build_library/toolchain_util.sh
+++ b/build_library/toolchain_util.sh
@@ -172,6 +172,35 @@ get_binonly_args() {
 
 ### Toolchain building utilities ###
 
+# Create the crossdev overlay and repos.conf entry.
+# crossdev will try to setup this itself but doesn't do everything needed
+# to make the newer repos.conf based configuration system happy. This can
+# probably go away if crossdev itself is improved.
+configure_crossdev_overlay() {
+    local root="$1"
+    local location="$2"
+
+    # may be called from either catalyst (root) or update_chroot (user)
+    local sudo="env"
+    if [[ $(id -u) -ne 0 ]]; then
+        sudo="sudo -E"
+    fi
+
+    $sudo mkdir -p "${root}${location}/"{profiles,metadata}
+    echo "x-crossdev" | \
+        $sudo tee "${root}${location}/profiles/repo_name" > /dev/null
+    $sudo tee "${root}${location}/metadata/layout.conf" > /dev/null <<EOF
+masters = portage-stable coreos
+use-manifests = true
+thin-manifests = true
+EOF
+
+    $sudo tee "${root}/etc/portage/repos.conf/crossdev.conf" > /dev/null <<EOF
+[x-crossdev]
+location = ${location}
+EOF
+}
+
 # Ugly hack to get a dependency list of a set of packages.
 # This is required to figure out what to install in the crossdev sysroot.
 # Usage: ROOT=/foo/bar _get_dependency_list pkgs... [--portage-opts...]
@@ -198,7 +227,8 @@ _configure_sysroot() {
         sudo="sudo -E"
     fi
 
-    $sudo mkdir -p "${ROOT}/etc/portage"
+    $sudo mkdir -p "${ROOT}/etc/portage/"{profile,repos.conf}
+    $sudo cp /etc/portage/repos.conf/* "${ROOT}/etc/portage/repos.conf/"
     $sudo eselect profile set --force "$profile"
 
     $sudo tee "${ROOT}/etc/portage/make.conf" >/dev/null <<EOF
@@ -240,6 +270,16 @@ install_cross_toolchain() {
         sudo="sudo -E"
     fi
 
+    # crossdev will arbitrarily choose an overlay that it finds first.
+    # Force it to use the one created by configure_crossdev_overlay
+    local cross_overlay=$(portageq get_repo_path / x-crossdev)
+    if [[ -n "${cross_overlay}" ]]; then
+        cross_flags+=( --ov-output "${cross_overlay}" )
+    else
+        echo "No x-crossdev overlay found!" >&2
+        return 1
+    fi
+
     # Only call crossdev to regenerate configs if something has changed
     if ! cmp --quiet - "${cross_cfg}" <<<"${cross_cfg_data}"
     then
diff --git a/update_chroot b/update_chroot
index 44f170d242..ac1c4248af 100755
--- a/update_chroot
+++ b/update_chroot
@@ -125,16 +125,7 @@ sudo eselect profile set --force "$(get_sdk_profile)"
 
 # Create crossdev repo_name and metadata
 info "Setting up crossdev..."
-sudo mkdir -p "${FLAGS_chroot}/${CROSSDEV_OVERLAY}/profiles"
-echo "x-crossdev" | \
-    sudo tee "/${CROSSDEV_OVERLAY}/profiles/repo_name" > /dev/null
-
-sudo mkdir -p "/${CROSSDEV_OVERLAY}/metadata"
-sudo tee "/${CROSSDEV_OVERLAY}/metadata/layout.conf" > /dev/null <<EOF
-masters = portage-stable coreos
-use-manifests = true
-thin-manifests = true
-EOF
+configure_crossdev_overlay "${FLAGS_chroot}" "${CROSSDEV_OVERLAY}"
 
 # Run version hooks as pre-update
 if [[ -f /etc/os-release ]]; then