diff --git a/target/share/squashfs.in b/target/share/squashfs.in
index ee41d96..1528e8b 100644
--- a/target/share/squashfs.in
+++ b/target/share/squashfs.in
@@ -37,7 +37,10 @@ squashfs_install_flist() {
 
 # weak functions
 #
-squashfs_install_overlay() { overlay_apply "$@"; }
+squashfs_install_overlay() {
+	local x="$1/squashfs"
+	[ ! -d "$x" ] || overlay_apply "$x" "$2"
+}
 
 # should this package be extracted by flist or not?
 # squashfs_install <pkg_name> <sandbox> <rootfs>
diff --git a/target/share/squashfs/build.sh b/target/share/squashfs/build.sh
index 4098f2a..5028891 100644
--- a/target/share/squashfs/build.sh
+++ b/target/share/squashfs/build.sh
@@ -58,7 +58,7 @@ done
 [ -z "$SQUASHFS_POSTINSTALL_HOOK" ] || eval "$SQUASHFS_POSTINSTALL_HOOK"
 
 # Apply overlay
-[ ! -d "target/$target/squashfs" ] || squashfs_install_overlay "target/$target/squashfs" "$rootfs"
+squashfs_install_overlay "target/$target" "$rootfs"
 
 # hook $SQUASHFS_POSTOVERLAY_HOOK
 #