diff --git a/target/linux/mpc85xx/Makefile b/target/linux/mpc85xx/Makefile
index df8204dba2..92064d0dca 100644
--- a/target/linux/mpc85xx/Makefile
+++ b/target/linux/mpc85xx/Makefile
@@ -10,7 +10,7 @@ ARCH:=powerpc
 BOARD:=mpc85xx
 BOARDNAME:=Freescale MPC85xx
 CFLAGS:=-Os -pipe -fno-caller-saves -mcpu=8540
-FEATURES:=spe_fpu ramdisk
+FEATURES:=spe_fpu squashfs
 MAINTAINER:=Imre Kaloz <kaloz@openwrt.org>
 
 LINUX_VERSION:=3.7.9
diff --git a/target/linux/mpc85xx/image/Makefile b/target/linux/mpc85xx/image/Makefile
index 45cd7abdc2..b762515ec3 100644
--- a/target/linux/mpc85xx/image/Makefile
+++ b/target/linux/mpc85xx/image/Makefile
@@ -24,6 +24,11 @@ define Image/Build/ext2
 	cp $(KDIR)/root.$(1) $(BIN_DIR)/$(IMG_PREFIX)-ext2.img
 endef
 
+define Image/Build/squashfs
+	$(call prepare_generic_squashfs,$(KDIR)/root.squashfs)
+	cp $(KDIR)/root.squashfs $(BIN_DIR)/$(IMG_PREFIX)-root.squashfs
+endef
+
 define Image/Build
 	$(call Image/Build/$(1),$(1))
 endef