diff --git a/README b/README
index e2f76b08301..ca045e89342 100644
--- a/README
+++ b/README
@@ -1,19 +1,81 @@
+*** Building the installation CD ***
+
+- Make sure that you have a very recent Nix.
+
+- Pull from the Nixpkgs channel to speed up building.
+
+- Check out https://svn.cs.uu.nl:12443/repos/trace/nixos/trunk/.
+
+- Build the ISO image:
+
+  $ nix-build instances/rescue-cd.nix -A rescueCD
+
+  This gives you an image in result/iso/nixos.iso.
+
+- Burn the ISO image or attach it to a CD-ROM drive in VMware.
+
+
+*** Installation ***
+
+- Boot from the CD.
+
+- The CD contains a pretty complete NixOS installation.  When it's
+  finished booting, it should have detected most of your hardware and
+  brought up networking (check ifconfig).  Networking is necessary for
+  the installer.  It's best if you have a DHCP server on your
+  network.  Otherwise configure manually.
+
+- Login as "root", empty password.
+
+- The NixOS installer doesn't do any partitioning or formatting yet,
+  so you need to that yourself.  Use "fdisk" and "e2fsck".
+
+- Unpack the NixOS and Nixpkgs sources:
+
+  $ tar xf /nixos.tar.bz2
+  $ tar xf /nixpkgs.tar.bz2
+  $ ln -s nixpkgs-*/pkgs .
+
+  (TODO: do this automatically.)
+
+- The installation is declarative; you need to make a description of
+  the configuration that is to be built and activated.  The
+  configuration is specified in a Nix expression.  See
+  instances/examples for example machine configurations.  You can copy
+  and edit one of those (e.g., instances/examples/basic.nix to
+  my-config.nix).  See configuration/options.nix for available
+  configuration settings.  The text editor "nano" is available.
+
+  In particular you need to specify boot.rootDevice and
+  boot.grubDevice for the devices where the OS and Grub are to be
+  installed, respectively.
+
+- Do the installation:
+
+  $ nixos-installer.sh /dev/TARGET . my-config.nix
+
+  where TARGET matched boot.rootDevice in your configuration.  (TODO:
+  this should be extracted automatically.)
+
+- If everything went well:
+
+  $ reboot
+
+  You should now be able to boot into the installed NixOS.
+  
+
+*** Troubleshooting ***        
+
+
 To get a Stage 1 shell:
 
-Add "debug1" to the kernel command line.
+- Add "debug1" to the kernel command line.
 
 
-Switching to maintenance mode:
+To switch to maintenance mode:
 
-$ shutdown now
+  $ shutdown now
 
 To get out of maintenance mode:
 
-$ initctl emit startup 
-
-
-Updating the current system configuration:
-
-$ nix-env -p /nix/var/nix/profiles/system -f system-configuration.nix -i -A systemConfiguration
-$ /nix/var/nix/profiles/system/bin/switch-to-configuration
-
+  $ initctl emit startup 
diff --git a/installer/nixos-installer.sh b/installer/nixos-installer.sh
index 6b6878f987e..e2ab51599f9 100644
--- a/installer/nixos-installer.sh
+++ b/installer/nixos-installer.sh
@@ -16,14 +16,16 @@
 set -e
 
 targetDevice="$1"
-nixExpr="$2"
+nixosDir="$2"
+configuration="$3"
 
-if test -z "$targetDevice" -o -z "$nixExpr"; then
-    echo "Syntax: installer.sh <targetDevice> <nixExpr>"
+if test -z "$targetDevice" -o -z "$nixosDir" -o -z "$configuration"; then
+    echo "Syntax: installer.sh <targetDevice> <nixosDir> <configuration>"
     exit 1
 fi
 
-nixExpr=$(readlink -f "$nixExpr")
+nixosDir=$(readlink -f "$nixosDir")
+configuration=$(readlink -f "$configuration")
 
 
 # Make sure that the target device isn't mounted.
@@ -121,7 +123,17 @@ fi
 
 chroot $mountPoint @nix@/bin/nix-env \
     -p /nix/var/nix/profiles/system \
-    -f "/mnt/$nixExpr" -i --set system
+    -f "/mnt/$nixosDir/configuration/system.nix" \
+    --arg configuration "import /mnt/$configuration" \
+    --set -A system
+
+
+# Copy the configuration to /etc/nixos.
+if test -e $mountPoint/etc/nixos/configuration.nix; then
+    mv $mountPoint/etc/nixos/configuration.nix \
+       $mountPoint/etc/nixos/configuration.backup-$(date "+%Y%m%d%H%M%S").nix
+fi
+cp $configuration $mountPoint/etc/nixos/configuration.nix
 
 
 # Grub needs a mtab.