diff --git a/setup/hosting.py b/setup/hosting.py
index 29509a7417..650e4db325 100644
--- a/setup/hosting.py
+++ b/setup/hosting.py
@@ -164,7 +164,7 @@ class GoogleCode(Base):  # {{{
                 fname.endswith('.zip') else 'Installer')
         ext = os.path.splitext(fname)[1][1:]
         op  = 'OpSys-'+{'msi':'Windows','exe':'Windows',
-                'dmg':'OSX','bz2':'Linux','xz':'All'}[ext]
+                'dmg':'OSX','txz':'Linux','xz':'All'}[ext]
         desc = self.files[fname]
         start = time.time()
         for i in range(retries):
@@ -445,7 +445,7 @@ def generate_index():  # {{{
                 if osx:
                     body.append('<dt>Apple Mac</dt><dd><a href="{0}" title="{1}">{1}</a></dd>'.format(
                         osx[0], 'OS X Disk Image (.dmg)'))
-                linux = [x for x in files if x.endswith('.bz2')]
+                linux = [x for x in files if x.endswith('.txz')]
                 if linux:
                     linux = ['<li><a href="{0}" title="{1}">{1}</a></li>'.format(
                         x, 'Linux 64-bit binary' if 'x86_64' in x else 'Linux 32-bit binary')
diff --git a/setup/installer/linux/__init__.py b/setup/installer/linux/__init__.py
index 20a8e7a31a..890edc825a 100644
--- a/setup/installer/linux/__init__.py
+++ b/setup/installer/linux/__init__.py
@@ -14,7 +14,7 @@ class Linux32(VMInstaller):
 
     description = 'Build 32bit linux binary installer'
 
-    INSTALLER_EXT = 'tar.bz2'
+    INSTALLER_EXT = 'txz'
     VM_NAME = 'linux32-build'
     FREEZE_COMMAND = 'linux_freeze'
     FREEZE_TEMPLATE = 'python -OO setup.py {freeze_command}'
diff --git a/setup/installer/linux/freeze2.py b/setup/installer/linux/freeze2.py
index b25b34e400..704a5139c6 100644
--- a/setup/installer/linux/freeze2.py
+++ b/setup/installer/linux/freeze2.py
@@ -260,10 +260,12 @@ class LinuxFreeze(Command):
                     tf.add(x)
             finally:
                 os.chdir(cwd)
-        subprocess.check_call(['bzip2', '-f', '-9', dist])
-        dist += '.bz2'
-        self.info('Archive %s created: %.2f MB'%(dist,
-            os.stat(dist).st_size/(1024.**2)))
+        self.info('Compressing archive...')
+        subprocess.check_call(['xz', '-f', '-9', dist])
+        ans = dist.rpartition('.')[0] + '.txz'
+        os.rename(dist + '.xz', ans)
+        self.info('Archive %s created: %.2f MB'%(
+            os.path.basename(ans), os.stat(ans).st_size/(1024.**2)))
 
     def build_launchers(self):
         self.obj_dir = self.j(self.src_root, 'build', 'launcher')
diff --git a/setup/linux-installer.py b/setup/linux-installer.py
index 780af4426f..776f90ebc7 100644
--- a/setup/linux-installer.py
+++ b/setup/linux-installer.py
@@ -290,7 +290,8 @@ def do_download(dest):
     prints('Downloaded %s bytes'%os.path.getsize(dest))
 
 def download_tarball():
-    fname = 'calibre-%s-i686.tar.bz2'%calibre_version
+    ext = 'tar.bz2' if calibre_version.startswith('1.') else 'txz'
+    fname = 'calibre-%s-i686.%s'%(calibre_version, ext)
     if is64bit:
         fname = fname.replace('i686', 'x86_64')
     tdir = tempfile.gettempdir()
@@ -592,9 +593,10 @@ def get_https_resource_securely(url, timeout=60, max_redirects=5, ssl_version=No
 # }}}
 
 def extract_tarball(raw, destdir):
+    c = 'j' if calibre_version.startswith('1.') else 'J'
     prints('Extracting application files...')
     with open('/dev/null', 'w') as null:
-        p = subprocess.Popen(['tar', 'xjof', '-', '-C', destdir], stdout=null, stdin=subprocess.PIPE, close_fds=True,
+        p = subprocess.Popen(['tar', 'x%sof' % c, '-', '-C', destdir], stdout=null, stdin=subprocess.PIPE, close_fds=True,
             preexec_fn=lambda:
                         signal.signal(signal.SIGPIPE, signal.SIG_DFL))
         p.stdin.write(raw)
diff --git a/setup/upload.py b/setup/upload.py
index 8ef0dc1fc8..6fc2cba8aa 100644
--- a/setup/upload.py
+++ b/setup/upload.py
@@ -26,8 +26,8 @@ STAGING_USER = 'root'
 STAGING_DIR = '/root/staging'
 
 def installers():
-    installers = list(map(installer_name, ('dmg', 'msi', 'tar.bz2')))
-    installers.append(installer_name('tar.bz2', is64bit=True))
+    installers = list(map(installer_name, ('dmg', 'msi', 'txz')))
+    installers.append(installer_name('txz', is64bit=True))
     installers.append(installer_name('msi', is64bit=True))
     installers.insert(0, 'dist/%s-%s.tar.xz'%(__appname__, __version__))
     installers.append('dist/%s-portable-installer-%s.exe'%(__appname__, __version__))
@@ -36,7 +36,7 @@ def installers():
 def installer_description(fname):
     if fname.endswith('.tar.xz'):
         return 'Source code'
-    if fname.endswith('.tar.bz2'):
+    if fname.endswith('.txz'):
         bits = '32' if 'i686' in fname else '64'
         return bits + 'bit Linux binary'
     if fname.endswith('.msi'):