diff --git a/lib/vagrant-lxc/action/handle_box_metadata.rb b/lib/vagrant-lxc/action/handle_box_metadata.rb
index c61cbc2..a03348f 100644
--- a/lib/vagrant-lxc/action/handle_box_metadata.rb
+++ b/lib/vagrant-lxc/action/handle_box_metadata.rb
@@ -4,6 +4,7 @@ module Vagrant
       # Prepare arguments to be used for lxc-create
       class HandleBoxMetadata < BaseAction
         LXC_TEMPLATES_PATH = Pathname.new("/usr/share/lxc/templates")
+        TEMP_PREFIX        = "vagrant-lxc-rootfs-temp-"
 
         def initialize(app, env)
           super
@@ -11,25 +12,40 @@ module Vagrant
         end
 
         def call(env)
+          # We _could_ extract the rootfs to a folder under ~/.vagrant.d/boxes
+          # but it would open up for a few issues:
+          #   * The rootfs owner is the root user, so we'd need to prepend "sudo" to
+          #     `vagrant box remove`
+          #   * We'd waste a lot of disk space: a compressed Ubuntu rootfs fits 80mb,
+          #     extracted it takes 262mb
+          #   * If something goes wrong during the Container creation process and
+          #     somehow we don't handle, writing to /tmp means that things will get
+          #     flushed on next reboot
+          rootfs_cache  = Dir.mktmpdir(TEMP_PREFIX)
           box           = env[:machine].box
-          metadata      = box.metadata
-
-          metadata.merge!(
-            'template-name'       => "vagrant-#{box.name}",
-            'lxc-cache-path'      => box.directory.to_s
-          )
+          template_name = "vagrant-#{box.name}"
 
           # Prepends "lxc-" to the template file so that `lxc-create` is able to find it
-          src  = box.directory.join('lxc-template').to_s
-          dest = LXC_TEMPLATES_PATH.join("lxc-#{metadata['template-name']}").to_s
-
+          lxc_template_src = box.directory.join('lxc-template').to_s
+          unless File.exists?(lxc_template_src)
+            raise Errors::TemplateFileMissing.new name: box.name
+          end
+          dest = LXC_TEMPLATES_PATH.join("lxc-#{template_name}").to_s
           @logger.debug('Copying LXC template into place')
-          # This should only ask for administrative permission once, even
-          # though its executed in multiple subshells.
-          system(%Q[sudo su root -c "cp #{src} #{dest}"])
-          system(%Q[sudo su root -c "cd #{box.directory} && tar xfz rootfs.tar.gz"])
+          system(%Q[sudo su root -c "cp #{lxc_template_src} #{dest}"])
+
+          @logger.debug('Extracting rootfs')
+          system(%Q[sudo su root -c "cd #{box.directory} && tar xfz rootfs.tar.gz -C #{rootfs_cache}"])
+
+          box.metadata.merge!(
+            'template-name'     => template_name,
+            'rootfs-cache-path' => rootfs_cache
+          )
 
           @app.call(env)
+
+        ensure
+          system %Q[sudo su root -c "rm -rf #{rootfs_cache}"]
         end
       end
     end
diff --git a/lib/vagrant-lxc/container.rb b/lib/vagrant-lxc/container.rb
index 7945d13..223459a 100644
--- a/lib/vagrant-lxc/container.rb
+++ b/lib/vagrant-lxc/container.rb
@@ -33,13 +33,12 @@ module Vagrant
 
       def create(metadata = {})
         # FIXME: Ruby 1.8 users dont have SecureRandom
-        # @logger.info('Creating container...')
+        @logger.debug('Creating container using lxc-create...')
+
         @name      = SecureRandom.hex(6)
         public_key = Vagrant.source_root.join('keys', 'vagrant.pub').expand_path.to_s
 
-        meta_opts  = metadata.fetch('template-opts', {}).map do |opt, value|
-          [opt, value]
-        end.flatten
+        meta_opts  = metadata.fetch('template-opts', {}).to_a.flatten
 
         # TODO: Handle errors
         lxc :create,
@@ -49,7 +48,7 @@ module Vagrant
             '--',
               # Template options
               '--auth-key',   public_key,
-              '--cache', metadata['lxc-cache-path'],
+              '--cache', metadata['rootfs-cache-path'],
               *meta_opts
 
         @name
diff --git a/lib/vagrant-lxc/errors.rb b/lib/vagrant-lxc/errors.rb
index 8d0057b..f94b831 100644
--- a/lib/vagrant-lxc/errors.rb
+++ b/lib/vagrant-lxc/errors.rb
@@ -4,6 +4,9 @@ module Vagrant
       class ExecuteError < Vagrant::Errors::VagrantError
         error_key(:lxc_execute_error)
       end
+      class TemplateFileMissing < Vagrant::Errors::VagrantError
+        error_key(:lxc_template_file_missing)
+      end
     end
   end
 end
diff --git a/locales/en.yml b/locales/en.yml
index 5b9b88e..786b5ef 100644
--- a/locales/en.yml
+++ b/locales/en.yml
@@ -6,3 +6,7 @@ en:
 
         For more information on the failure, enable detailed logging by setting
         the environment variable VAGRANT_LOG to DEBUG.
+
+      lxc_template_file_missing: |-
+        The template file used for creating the container was not found for %{name}
+        box.
diff --git a/spec/unit/action/handle_box_metadata_spec.rb b/spec/unit/action/handle_box_metadata_spec.rb
index 9fabbcc..f661132 100644
--- a/spec/unit/action/handle_box_metadata_spec.rb
+++ b/spec/unit/action/handle_box_metadata_spec.rb
@@ -5,20 +5,24 @@ require 'vagrant-lxc/action/handle_box_metadata'
 
 describe Vagrant::LXC::Action::HandleBoxMetadata do
   let(:metadata)      { {'template-opts' => {'--foo' => 'bar'}} }
-  let(:box)           { mock(:box, name: 'box-name', metadata: metadata, directory: Pathname.new('/path/to/box')) }
+  let(:box)           { mock(:box, name: 'box-name', metadata: metadata, directory: box_directory) }
+  let(:box_directory) { Pathname.new('/path/to/box') }
   let(:machine)       { mock(:machine, box: box) }
   let(:app)           { mock(:app, call: true) }
   let(:env)           { {machine: machine} }
+  let(:tmpdir)        { '/tmp/rootfs/dir' }
 
   subject { described_class.new(app, env) }
 
   before do
+    Dir.stub(mktmpdir: tmpdir)
+    File.stub(exists?: true)
     subject.stub(:system)
     subject.call(env)
   end
 
-  it 'sets box directory as lxc-cache-path' do
-    metadata['lxc-cache-path'].should == box.directory.to_s
+  it 'creates a tmp directory to store rootfs-cache-path' do
+    metadata['rootfs-cache-path'].should == tmpdir
   end
 
   it 'prepends vagrant and box name to template-name' do
@@ -26,10 +30,15 @@ describe Vagrant::LXC::Action::HandleBoxMetadata do
   end
 
   it 'copies box template file to the right folder' do
-    src  = box.directory.join('lxc-template').to_s
+    src  = box_directory.join('lxc-template').to_s
     dest = "/usr/share/lxc/templates/lxc-#{metadata['template-name']}"
-    subject.should have_received(:system).with("sudo su root -c \"cp #{src} #{dest}\"")
+
+    subject.should have_received(:system).
+                   with("sudo su root -c \"cp #{src} #{dest}\"")
   end
 
-  pending 'extracts rootfs'
+  it 'extracts rootfs into a tmp folder' do
+    subject.should have_received(:system).
+                   with(%Q[sudo su root -c "cd #{box_directory} && tar xfz rootfs.tar.gz -C #{tmpdir}"])
+  end
 end
diff --git a/spec/unit/container_spec.rb b/spec/unit/container_spec.rb
index bf0ab56..0d0d4e8 100644
--- a/spec/unit/container_spec.rb
+++ b/spec/unit/container_spec.rb
@@ -78,13 +78,13 @@ describe Vagrant::LXC::Container do
   describe 'creation' do
     let(:name)            { 'random-container-name' }
     let(:template_name)   { 'template-name' }
-    let(:lxc_cache)       { '/path/to/cache' }
+    let(:rootfs_cache)    { '/path/to/cache' }
     let(:public_key_path) { Vagrant.source_root.join('keys', 'vagrant.pub').expand_path.to_s }
 
     before do
       subject.stub(lxc: true)
       SecureRandom.stub(hex: name)
-      subject.create 'template-name' => template_name, 'lxc-cache-path' => lxc_cache, 'template-opts' => { '--foo' => 'bar'}
+      subject.create 'template-name' => template_name, 'rootfs-cache-path' => rootfs_cache, 'template-opts' => { '--foo' => 'bar'}
     end
 
     it 'calls lxc-create with the right arguments' do
@@ -94,7 +94,7 @@ describe Vagrant::LXC::Container do
         '--name', name,
         '--',
         '--auth-key', public_key_path,
-        '--cache', lxc_cache,
+        '--cache', rootfs_cache,
         '--foo', 'bar'
       )
     end