diff --git a/share/templates.d/99-generic/arm.tmpl b/share/templates.d/99-generic/arm.tmpl
index 31c2acb8..afbc83b2 100644
--- a/share/templates.d/99-generic/arm.tmpl
+++ b/share/templates.d/99-generic/arm.tmpl
@@ -43,7 +43,7 @@ treeinfo ${basearch} platforms ${platforms}
 <% images=["product", "updates"] %>
 %for img in images:
     %if exists("%s/%s/" % (LORAXDIR, img)):
-        installimg ${LORAXDIR}/${img}/ images/${img}.img
+        installimg --xz -9 --memlimit-compress=3700MiB ${LORAXDIR}/${img}/ images/${img}.img
     %endif
 %endfor
 
diff --git a/share/templates.d/99-generic/live/arm.tmpl b/share/templates.d/99-generic/live/arm.tmpl
index 2a0b126b..7e9ed946 100644
--- a/share/templates.d/99-generic/live/arm.tmpl
+++ b/share/templates.d/99-generic/live/arm.tmpl
@@ -36,7 +36,7 @@ mkdir ${KERNELDIR}
 <% images=["product", "updates"] %>
 %for img in images:
     %if exists("%s/%s/" % (LORAXDIR, img)):
-        installimg ${LORAXDIR}/${img}/ images/${img}.img
+        installimg --xz -9 --memlimit-compress=3700MiB ${LORAXDIR}/${img}/ images/${img}.img
     %endif
 %endfor
 
diff --git a/share/templates.d/99-generic/live/x86.tmpl b/share/templates.d/99-generic/live/x86.tmpl
index 364b3c10..9d1bdc5d 100644
--- a/share/templates.d/99-generic/live/x86.tmpl
+++ b/share/templates.d/99-generic/live/x86.tmpl
@@ -85,10 +85,14 @@ hardlink ${KERNELDIR}/initrd.img ${BOOTDIR}
 %endif
 
 # Create optional product.img and updates.img
-<% imggraft=""; images=["product", "updates"] %>
+<% imggraft=""; images=["product", "updates"]; compressargs=None; %>
+%if basearch == 'i386':
+    # Limit the amount of memory xz uses on i386
+    <% compressargs="--xz -9 --memlimit-compress=3700MiB" %>
+%endif
 %for img in images:
     %if exists("%s/%s/" % (LORAXDIR, img)):
-        installimg ${LORAXDIR}/${img}/ images/${img}.img
+        installimg ${compressargs} ${LORAXDIR}/${img}/ images/${img}.img
         <% imggraft += " images/{0}.img={1}/images/{0}.img".format(img, outroot) %>
     %endif
 %endfor
diff --git a/share/templates.d/99-generic/x86.tmpl b/share/templates.d/99-generic/x86.tmpl
index bf25d5d6..a49b5dc2 100644
--- a/share/templates.d/99-generic/x86.tmpl
+++ b/share/templates.d/99-generic/x86.tmpl
@@ -87,10 +87,14 @@ hardlink ${KERNELDIR}/initrd.img ${BOOTDIR}
 %endif
 
 # Create optional product.img and updates.img
-<% imggraft=""; images=["product", "updates"] %>
+<% imggraft=""; images=["product", "updates"]; compressargs=None; %>
+%if basearch == 'i386':
+    # Limit the amount of memory xz uses on i386
+    <% compressargs="--xz -9 --memlimit-compress=3700MiB" %>
+%endif
 %for img in images:
     %if exists("%s/%s/" % (LORAXDIR, img)):
-        installimg ${LORAXDIR}/${img}/ images/${img}.img
+        installimg ${compressargs} ${LORAXDIR}/${img}/ images/${img}.img
         <% imggraft += " images/{0}.img={1}/images/{0}.img".format(img, outroot) %>
     %endif
 %endfor