diff --git a/pkg/elemental/elemental.go b/pkg/elemental/elemental.go
index cef5628fe78..7618a9dfe80 100644
--- a/pkg/elemental/elemental.go
+++ b/pkg/elemental/elemental.go
@@ -355,6 +355,7 @@ func CreateImageFromTree(c types.Config, img *types.Image, rootDir string, prelo
 		}
 	}()
 
+	excludes := cnst.GetDefaultSystemExcludes(rootDir)
 	if img.FS == cnst.SquashFs {
 		c.Logger.Infof("Creating squashfs image for file %s", img.File)
 
@@ -369,13 +370,12 @@ func CreateImageFromTree(c types.Config, img *types.Image, rootDir string, prelo
 			c.Logger.Warnf("failed SELinux labelling at %s: %v", rootDir, err)
 		}
 
-		err = utils.CreateSquashFS(c.Runner, c.Logger, rootDir, img.File, c.SquashFsCompressionConfig)
+		err = utils.CreateSquashFS(c.Runner, c.Logger, rootDir, img.File, c.SquashFsCompressionConfig, excludes...)
 		if err != nil {
 			c.Logger.Errorf("failed creating squashfs image for %s: %v", img.File, err)
 			return err
 		}
 	} else {
-		excludes := cnst.GetDefaultSystemExcludes(rootDir)
 		err = CreateFileSystemImage(c, img, rootDir, preload, excludes...)
 		if err != nil {
 			c.Logger.Errorf("failed creating filesystem image: %v", err)
diff --git a/pkg/utils/common.go b/pkg/utils/common.go
index b42c58bced9..44433db2745 100644
--- a/pkg/utils/common.go
+++ b/pkg/utils/common.go
@@ -279,17 +279,26 @@ func CosignVerify(fs types.FS, runner types.Runner, image string, publicKey stri
 }
 
 // CreateSquashFS creates a squash file at destination from a source, with options
-// TODO: Check validity of source maybe?
-func CreateSquashFS(runner types.Runner, logger types.Logger, source string, destination string, options []string) error {
+func CreateSquashFS(runner types.Runner, logger types.Logger, source string, destination string, options []string, excludes ...string) error {
 	// create args
 	args := []string{source, destination}
 	// append options passed to args in order to have the correct order
 	// protect against options passed together in the same string , i.e. "-x add" instead of "-x", "add"
 	var optionsExpanded []string
 	for _, op := range options {
-		optionsExpanded = append(optionsExpanded, strings.Split(op, " ")...)
+		opExpanded := strings.Split(op, " ")
+		if opExpanded[0] == "-e" {
+			logger.Warnf("Ignoring option '%s', exclude directories must be passed as excludes argument", op)
+			continue
+		}
+		optionsExpanded = append(optionsExpanded, opExpanded...)
 	}
 	args = append(args, optionsExpanded...)
+	if len(excludes) >= 0 {
+		excludesOpt := []string{"-e"}
+		excludesOpt = append(excludesOpt, excludes...)
+		args = append(args, excludesOpt...)
+	}
 	out, err := runner.Run("mksquashfs", args...)
 	if err != nil {
 		logger.Debugf("Error running squashfs creation, stdout: %s", out)
diff --git a/pkg/utils/utils_test.go b/pkg/utils/utils_test.go
index c64f497349a..b34278b2c4e 100644
--- a/pkg/utils/utils_test.go
+++ b/pkg/utils/utils_test.go
@@ -948,6 +948,30 @@ var _ = Describe("Utils", Label("utils"), func() {
 			})).To(BeNil())
 			Expect(err).ToNot(HaveOccurred())
 		})
+		It("ignores any '-e' option", func() {
+			args := append(constants.GetDefaultSquashfsCompressionOptions(), "-e /some/path")
+			err := utils.CreateSquashFS(runner, logger, "source", "dest", args)
+			cmd := []string{"mksquashfs", "source", "dest"}
+			cmd = append(cmd, constants.GetDefaultSquashfsCompressionOptions()...)
+			Expect(runner.IncludesCmds([][]string{
+				cmd,
+			})).To(BeNil())
+			Expect(err).ToNot(HaveOccurred())
+		})
+		It("excludes given paths", func() {
+
+			err := utils.CreateSquashFS(
+				runner, logger, "source", "dest", constants.GetDefaultSquashfsCompressionOptions(),
+				"/root/some/path", "/root/another/path",
+			)
+			cmd := []string{"mksquashfs", "source", "dest"}
+			cmd = append(cmd, constants.GetDefaultSquashfsCompressionOptions()...)
+			cmd = append(cmd, "-e", "/root/some/path", "/root/another/path")
+			Expect(runner.IncludesCmds([][]string{
+				cmd,
+			})).To(BeNil())
+			Expect(err).ToNot(HaveOccurred())
+		})
 		It("returns an error if it fails", func() {
 			runner.ReturnError = errors.New("error")
 			err := utils.CreateSquashFS(runner, logger, "source", "dest", []string{})