diff --git a/src/pylorax/treebuilder.py b/src/pylorax/treebuilder.py
index c02d0ea6..395d71e2 100644
--- a/src/pylorax/treebuilder.py
+++ b/src/pylorax/treebuilder.py
@@ -23,6 +23,7 @@ logger = logging.getLogger("pylorax.treebuilder")
 import os, re
 from os.path import basename
 from shutil import copytree, copy2
+from subprocess import CalledProcessError
 from pathlib import Path
 import itertools
 
@@ -228,8 +229,14 @@ class RuntimeBuilder(object):
         workdir = joinpaths(os.path.dirname(outfile), "runtime-workdir")
         os.makedirs(joinpaths(workdir, "LiveOS"))
 
-        imgutils.mkrootfsimg(self.vars.root, joinpaths(workdir, "LiveOS/rootfs.img"),
-                             "Anaconda", size=size)
+        # Catch problems with the rootfs being too small and clearly log them
+        try:
+            imgutils.mkrootfsimg(self.vars.root, joinpaths(workdir, "LiveOS/rootfs.img"),
+                                 "Anaconda", size=size)
+        except CalledProcessError as e:
+            if e.stdout and "No space left on device" in e.stdout:
+                logger.error("The rootfs ran out of space with size=%d", size)
+            raise
 
         # squash the live rootfs and clean up workdir
         imgutils.mksquashfs(workdir, outfile, compression, compressargs)
diff --git a/tests/pylorax/test_imgutils.py b/tests/pylorax/test_imgutils.py
index f40f6bd8..56d2dcad 100644
--- a/tests/pylorax/test_imgutils.py
+++ b/tests/pylorax/test_imgutils.py
@@ -17,6 +17,7 @@
 import glob
 import os
 import parted
+from subprocess import CalledProcessError
 import tarfile
 import tempfile
 import unittest
@@ -270,6 +271,22 @@ class ImgUtilsTest(unittest.TestCase):
                 file_details = get_file_magic(disk_img.name)
                 self.assertTrue("ext2 filesystem" in file_details, file_details)
 
+    @unittest.skipUnless(os.geteuid() == 0 and not os.path.exists("/.in-container"), "requires root privileges, and no containers")
+    def test_small_mkext4img(self):
+        """Test mkext4img error handling"""
+        with tempfile.TemporaryDirectory(prefix="lorax.test.") as work_dir:
+            with tempfile.NamedTemporaryFile(prefix="lorax.test.disk.") as disk_img:
+                mkfakerootdir(work_dir)
+                # Add a 8MiB file
+                with open(joinpaths(work_dir, "large-file"), "w") as f:
+                    for _ in range(5):
+                        f.write("A" * 1024**2)
+                graft = {work_dir+"/etc/yum.repos.d/": "./tests/pylorax/repos/server-2.repo"}
+                try:
+                    mkext4img(work_dir, disk_img.name, graft=graft, size=5*1024**2)
+                except CalledProcessError as e:
+                    self.assertTrue(e.stdout and "No space left on device" in e.stdout)
+
     @unittest.skipUnless(os.geteuid() == 0 and not os.path.exists("/.in-container"), "requires root privileges, and no containers")
     def test_mkbtrfsimg(self):
         """Test mkbtrfsimg function (requires loop)"""