diff --git a/overlay.d/05core/usr/lib/dracut/modules.d/40ignition-ostree/ignition-ostree-firstboot-populate-initramfs.service b/overlay.d/05core/usr/lib/dracut/modules.d/40ignition-ostree/ignition-ostree-firstboot-populate-initramfs.service
new file mode 100644
index 0000000000..3549cd1c83
--- /dev/null
+++ b/overlay.d/05core/usr/lib/dracut/modules.d/40ignition-ostree/ignition-ostree-firstboot-populate-initramfs.service
@@ -0,0 +1,28 @@
+[Unit]
+Description=Ignition OSTree: Populate initramfs for Ignition
+DefaultDependencies=false
+# Any services looking at mounts need to order after (or before) this
+# because it causes device re-probing.
+Before=coreos-gpt-setup.service
+# Also this one is probing disks
+Before=coreos-unique-boot.service
+# On the ignition boot, we must have a device labeled `root`.
+Wants=systemd-udevd.service
+After=systemd-udevd.service
+Requires=dev-disk-by\x2dlabel-root.device
+After=dev-disk-by\x2dlabel-root.device
+# We need to run before any services which execute:
+# - /usr/bin/ignition
+# - /usr/bin/afterburn
+Before=ignition-fetch.service
+Before=afterburn-network-kargs.service
+ConditionKernelCommandLine=ostree
+OnFailure=emergency.target
+OnFailureJobMode=isolate
+
+[Service]
+Type=oneshot
+RemainAfterExit=yes
+# So we can transiently mount sysroot
+MountFlags=slave
+ExecStart=/usr/libexec/ignition-ostree-transposefs populate-initramfs-pre-ignition
diff --git a/overlay.d/05core/usr/lib/dracut/modules.d/40ignition-ostree/ignition-ostree-subsequent-populate-initramfs.service b/overlay.d/05core/usr/lib/dracut/modules.d/40ignition-ostree/ignition-ostree-subsequent-populate-initramfs.service
new file mode 100644
index 0000000000..a15e97bfa9
--- /dev/null
+++ b/overlay.d/05core/usr/lib/dracut/modules.d/40ignition-ostree/ignition-ostree-subsequent-populate-initramfs.service
@@ -0,0 +1,19 @@
+[Unit]
+Description=Ignition OSTree: Populate initramfs (subsequent boot)
+After=initrd-root-fs.target
+# We need to run before any services which execute:
+# - /usr/bin/ignition
+# - /usr/bin/afterburn
+Before=afterburn-hostname.service
+# This ensures we don't duplicate work on firstboot
+ConditionPathExists=!/usr/bin/ignition
+ConditionKernelCommandLine=ostree
+OnFailure=emergency.target
+OnFailureJobMode=isolate
+
+[Service]
+Type=oneshot
+RemainAfterExit=yes
+# So we can transiently mount sysroot
+MountFlags=slave
+ExecStart=/usr/libexec/ignition-ostree-transposefs populate-initramfs-subsequent
diff --git a/overlay.d/05core/usr/lib/dracut/modules.d/40ignition-ostree/ignition-ostree-transposefs.sh b/overlay.d/05core/usr/lib/dracut/modules.d/40ignition-ostree/ignition-ostree-transposefs.sh
index 145a05c318..f5d5c387e8 100755
--- a/overlay.d/05core/usr/lib/dracut/modules.d/40ignition-ostree/ignition-ostree-transposefs.sh
+++ b/overlay.d/05core/usr/lib/dracut/modules.d/40ignition-ostree/ignition-ostree-transposefs.sh
@@ -5,6 +5,10 @@ boot_sector_size=440
 esp_typeguid=c12a7328-f81f-11d2-ba4b-00a0c93ec93b
 bios_typeguid=21686148-6449-6e6f-744e-656564454649
 prep_typeguid=9e1a2d38-c612-4316-aa26-8b49521e5a8b
+# Binaries we store in the real root; keep this list in sync
+# with what's in module-setup.sh to remove them.
+rootfs_initramfs_binaries=(/usr/bin/afterburn)
+rootfs_ignition=/usr/lib/dracut/modules.d/30ignition/ignition
 
 # This is implementation details of Ignition; in the future, we should figure
 # out a way to ask Ignition directly whether there's a filesystem with label
@@ -84,6 +88,25 @@ mount_and_restore_filesystem_by_label() {
 }
 
 case "${1:-}" in
+    # See documentation in the unit for this
+    populate-initramfs-pre-ignition)
+        # We're running before Ignition; we must mount sysroot on our own and find
+        # the ostree deployment, similar to the transposefs-save case.
+        mount_verbose "${root_part}" /sysroot
+        deployment=$(ls -d /sysroot/ostree/deploy/*/deploy/*/)
+        for binary in ${rootfs_initramfs_binaries[@]}; do
+            cp -p ${deployment}${binary} ${binary}
+        done
+        cp -p ${deployment}${rootfs_ignition} /usr/bin/ignition
+        ;;
+    # See documentation in the unit for this
+    populate-initramfs-subsequent)
+        for binary in ${rootfs_initramfs_binaries[@]}; do
+            # Here we have /sysroot mounted already, so just copy from there.
+            cp -p /sysroot${binary} ${binary}
+        done
+        cp -p /sysroot${rootfs_ignition} /usr/bin/ignition
+        ;;
     detect)
         # Mounts are not in a private namespace so we can mount ${saved_data}
         wipes_root=$(jq "$(query_fslabel root) | length" "${ignition_cfg}")
diff --git a/overlay.d/05core/usr/lib/dracut/modules.d/40ignition-ostree/module-setup.sh b/overlay.d/05core/usr/lib/dracut/modules.d/40ignition-ostree/module-setup.sh
index bf9a7872ab..bcfa1e1d10 100755
--- a/overlay.d/05core/usr/lib/dracut/modules.d/40ignition-ostree/module-setup.sh
+++ b/overlay.d/05core/usr/lib/dracut/modules.d/40ignition-ostree/module-setup.sh
@@ -6,13 +6,19 @@ depends() {
     echo ignition rdcore
 }
 
-install_ignition_unit() {
+install_unit() {
     local unit=$1; shift
-    local target=${1:-complete}
+    local target=${1:-initrd}
     inst_simple "$moddir/$unit" "$systemdsystemunitdir/$unit"
     # note we `|| exit 1` here so we error out if e.g. the units are missing
     # see https://github.com/coreos/fedora-coreos-config/issues/799
-    systemctl -q --root="$initdir" add-requires "ignition-${target}.target" "$unit" || exit 1
+    systemctl -q --root="$initdir" add-requires "${target}.target" "$unit" || exit 1
+}
+
+install_ignition_unit() {
+    local unit=$1; shift
+    local target=${1:-complete}
+    install_unit "${unit}" "ignition-${target}"
 }
 
 installkernel() {
@@ -92,6 +98,13 @@ install() {
     inst_script "$moddir/coreos-rootflags.sh" \
         "/usr/sbin/coreos-rootflags"
 
+    # Support for initramfs binaries loaded from the real root
+    # https://github.com/coreos/fedora-coreos-tracker/issues/1247
+    install_ignition_unit ignition-ostree-firstboot-populate-initramfs.service diskful
+    install_unit ignition-ostree-subsequent-populate-initramfs.service initrd
+    # Keep this in sync with ignition-ostree-transposefs.sh
+    rm -v "${initdir}"/usr/bin/{ignition,afterburn}
+
     install_ignition_unit ignition-ostree-growfs.service
     inst_script "$moddir/ignition-ostree-growfs.sh" \
         /usr/sbin/ignition-ostree-growfs