diff --git a/ext4/internal/compactext4/compact.go b/ext4/internal/compactext4/compact.go
index e35536b9fa..e64d86eba4 100644
--- a/ext4/internal/compactext4/compact.go
+++ b/ext4/internal/compactext4/compact.go
@@ -414,6 +414,15 @@ func (w *Writer) makeInode(f *File, node *inode) (*inode, error) {
 	node.Devmajor = f.Devmajor
 	node.Devminor = f.Devminor
 	node.Data = nil
+	if f.Xattrs == nil {
+		f.Xattrs = make(map[string][]byte)
+	}
+
+	// copy over existing xattrs first, we need to merge existing xattrs and the passed xattrs.
+	existingXattrs := make(map[string][]byte)
+	if len(node.XattrInline) > 0 {
+		getXattrs(node.XattrInline[4:], existingXattrs, 0)
+	}
 	node.XattrInline = nil
 
 	var xstate xattrState
@@ -452,6 +461,13 @@ func (w *Writer) makeInode(f *File, node *inode) (*inode, error) {
 		return nil, fmt.Errorf("invalid mode %o", mode)
 	}
 
+	// merge xattrs but prefer currently passed over existing
+	for name, data := range existingXattrs {
+		if _, ok := f.Xattrs[name]; !ok {
+			f.Xattrs[name] = data
+		}
+	}
+
 	// Accumulate the extended attributes.
 	if len(f.Xattrs) != 0 {
 		// Sort the xattrs to avoid non-determinism in map iteration.
@@ -514,15 +530,16 @@ func (w *Writer) lookup(name string, mustExist bool) (*inode, *inode, string, er
 	return dir, child, childname, nil
 }
 
-// CreateWithParents adds a file to the file system creating the parent directories in the path if
-// they don't exist (like `mkdir -p`). These non existing parent directories are created
+// MakeParents ensures that all the parent directories in the path specified by `name` exists. If
+// they don't exist it creates them (like `mkdir -p`). These non existing parent directories are created
 // with the same permissions as that of it's parent directory. It is expected that the a
 // call to make these parent directories will be made at a later point with the correct
 // permissions, at that time the permissions of these directories will be updated.
-func (w *Writer) CreateWithParents(name string, f *File) error {
+func (w *Writer) MakeParents(name string) error {
 	if err := w.finishInode(); err != nil {
 		return err
 	}
+
 	// go through the directories in the path one by one and create the
 	// parent directories if they don't exist.
 	cleanname := path.Clean("/" + name)[1:]
@@ -553,7 +570,7 @@ func (w *Writer) CreateWithParents(name string, f *File) error {
 		}
 		root = root.Children[dirname]
 	}
-	return w.Create(name, f)
+	return nil
 }
 
 // Create adds a file to the file system.
diff --git a/ext4/tar2ext4/tar2ext4.go b/ext4/tar2ext4/tar2ext4.go
index 5fcc3ba78a..d9ba3131c7 100644
--- a/ext4/tar2ext4/tar2ext4.go
+++ b/ext4/tar2ext4/tar2ext4.go
@@ -5,7 +5,6 @@ import (
 	"bufio"
 	"bytes"
 	"encoding/binary"
-	"github.com/pkg/errors"
 	"io"
 	"io/ioutil"
 	"os"
@@ -13,6 +12,8 @@ import (
 	"strings"
 	"unsafe"
 
+	"github.com/pkg/errors"
+
 	"github.com/Microsoft/hcsshim/ext4/dmverity"
 	"github.com/Microsoft/hcsshim/ext4/internal/compactext4"
 	"github.com/Microsoft/hcsshim/ext4/internal/format"
@@ -86,6 +87,10 @@ func Convert(r io.Reader, w io.ReadWriteSeeker, options ...Option) error {
 			return err
 		}
 
+		if err = fs.MakeParents(hdr.Name); err != nil {
+			return errors.Wrapf(err, "failed to ensure parent directories for %s", hdr.Name)
+		}
+
 		if p.convertWhiteout {
 			dir, name := path.Split(hdr.Name)
 			if strings.HasPrefix(name, whiteoutPrefix) {
@@ -93,12 +98,12 @@ func Convert(r io.Reader, w io.ReadWriteSeeker, options ...Option) error {
 					// Update the directory with the appropriate xattr.
 					f, err := fs.Stat(dir)
 					if err != nil {
-						return err
+						return errors.Wrapf(err, "failed to stat parent directory of whiteout %s", hdr.Name)
 					}
 					f.Xattrs["trusted.overlay.opaque"] = []byte("y")
 					err = fs.Create(dir, f)
 					if err != nil {
-						return err
+						return errors.Wrapf(err, "failed to create opaque dir %s", hdr.Name)
 					}
 				} else {
 					// Create an overlay-style whiteout.
@@ -109,7 +114,7 @@ func Convert(r io.Reader, w io.ReadWriteSeeker, options ...Option) error {
 					}
 					err = fs.Create(path.Join(dir, name[len(whiteoutPrefix):]), f)
 					if err != nil {
-						return err
+						return errors.Wrapf(err, "failed to create whiteout file for %s", hdr.Name)
 					}
 				}
 
@@ -161,7 +166,7 @@ func Convert(r io.Reader, w io.ReadWriteSeeker, options ...Option) error {
 			}
 			f.Mode &= ^compactext4.TypeMask
 			f.Mode |= typ
-			err = fs.CreateWithParents(hdr.Name, f)
+			err = fs.Create(hdr.Name, f)
 			if err != nil {
 				return err
 			}
diff --git a/ext4/tar2ext4/tar2ext4_test.go b/ext4/tar2ext4/tar2ext4_test.go
index b5117b0419..bc6f327335 100644
--- a/ext4/tar2ext4/tar2ext4_test.go
+++ b/ext4/tar2ext4/tar2ext4_test.go
@@ -28,10 +28,11 @@ func Test_UnorderedTarExpansion(t *testing.T) {
 	var files = []struct {
 		path, body string
 	}{
-		{"foo/bar.txt", "inside bar.txt"},
+		{"foo/.wh.bar.txt", "inside bar.txt"},
 		{"data/", ""},
 		{"root.txt", "inside root.txt"},
 		{"foo/", ""},
+		{"A/.wh..wh..opq", ""},
 		{"A/B/b.txt", "inside b.txt"},
 		{"A/a.txt", "inside a.txt"},
 		{"A/", ""},
diff --git a/test/vendor/github.com/Microsoft/hcsshim/ext4/internal/compactext4/compact.go b/test/vendor/github.com/Microsoft/hcsshim/ext4/internal/compactext4/compact.go
index e35536b9fa..e64d86eba4 100644
--- a/test/vendor/github.com/Microsoft/hcsshim/ext4/internal/compactext4/compact.go
+++ b/test/vendor/github.com/Microsoft/hcsshim/ext4/internal/compactext4/compact.go
@@ -414,6 +414,15 @@ func (w *Writer) makeInode(f *File, node *inode) (*inode, error) {
 	node.Devmajor = f.Devmajor
 	node.Devminor = f.Devminor
 	node.Data = nil
+	if f.Xattrs == nil {
+		f.Xattrs = make(map[string][]byte)
+	}
+
+	// copy over existing xattrs first, we need to merge existing xattrs and the passed xattrs.
+	existingXattrs := make(map[string][]byte)
+	if len(node.XattrInline) > 0 {
+		getXattrs(node.XattrInline[4:], existingXattrs, 0)
+	}
 	node.XattrInline = nil
 
 	var xstate xattrState
@@ -452,6 +461,13 @@ func (w *Writer) makeInode(f *File, node *inode) (*inode, error) {
 		return nil, fmt.Errorf("invalid mode %o", mode)
 	}
 
+	// merge xattrs but prefer currently passed over existing
+	for name, data := range existingXattrs {
+		if _, ok := f.Xattrs[name]; !ok {
+			f.Xattrs[name] = data
+		}
+	}
+
 	// Accumulate the extended attributes.
 	if len(f.Xattrs) != 0 {
 		// Sort the xattrs to avoid non-determinism in map iteration.
@@ -514,15 +530,16 @@ func (w *Writer) lookup(name string, mustExist bool) (*inode, *inode, string, er
 	return dir, child, childname, nil
 }
 
-// CreateWithParents adds a file to the file system creating the parent directories in the path if
-// they don't exist (like `mkdir -p`). These non existing parent directories are created
+// MakeParents ensures that all the parent directories in the path specified by `name` exists. If
+// they don't exist it creates them (like `mkdir -p`). These non existing parent directories are created
 // with the same permissions as that of it's parent directory. It is expected that the a
 // call to make these parent directories will be made at a later point with the correct
 // permissions, at that time the permissions of these directories will be updated.
-func (w *Writer) CreateWithParents(name string, f *File) error {
+func (w *Writer) MakeParents(name string) error {
 	if err := w.finishInode(); err != nil {
 		return err
 	}
+
 	// go through the directories in the path one by one and create the
 	// parent directories if they don't exist.
 	cleanname := path.Clean("/" + name)[1:]
@@ -553,7 +570,7 @@ func (w *Writer) CreateWithParents(name string, f *File) error {
 		}
 		root = root.Children[dirname]
 	}
-	return w.Create(name, f)
+	return nil
 }
 
 // Create adds a file to the file system.
diff --git a/test/vendor/github.com/Microsoft/hcsshim/ext4/tar2ext4/tar2ext4.go b/test/vendor/github.com/Microsoft/hcsshim/ext4/tar2ext4/tar2ext4.go
index 5fcc3ba78a..d9ba3131c7 100644
--- a/test/vendor/github.com/Microsoft/hcsshim/ext4/tar2ext4/tar2ext4.go
+++ b/test/vendor/github.com/Microsoft/hcsshim/ext4/tar2ext4/tar2ext4.go
@@ -5,7 +5,6 @@ import (
 	"bufio"
 	"bytes"
 	"encoding/binary"
-	"github.com/pkg/errors"
 	"io"
 	"io/ioutil"
 	"os"
@@ -13,6 +12,8 @@ import (
 	"strings"
 	"unsafe"
 
+	"github.com/pkg/errors"
+
 	"github.com/Microsoft/hcsshim/ext4/dmverity"
 	"github.com/Microsoft/hcsshim/ext4/internal/compactext4"
 	"github.com/Microsoft/hcsshim/ext4/internal/format"
@@ -86,6 +87,10 @@ func Convert(r io.Reader, w io.ReadWriteSeeker, options ...Option) error {
 			return err
 		}
 
+		if err = fs.MakeParents(hdr.Name); err != nil {
+			return errors.Wrapf(err, "failed to ensure parent directories for %s", hdr.Name)
+		}
+
 		if p.convertWhiteout {
 			dir, name := path.Split(hdr.Name)
 			if strings.HasPrefix(name, whiteoutPrefix) {
@@ -93,12 +98,12 @@ func Convert(r io.Reader, w io.ReadWriteSeeker, options ...Option) error {
 					// Update the directory with the appropriate xattr.
 					f, err := fs.Stat(dir)
 					if err != nil {
-						return err
+						return errors.Wrapf(err, "failed to stat parent directory of whiteout %s", hdr.Name)
 					}
 					f.Xattrs["trusted.overlay.opaque"] = []byte("y")
 					err = fs.Create(dir, f)
 					if err != nil {
-						return err
+						return errors.Wrapf(err, "failed to create opaque dir %s", hdr.Name)
 					}
 				} else {
 					// Create an overlay-style whiteout.
@@ -109,7 +114,7 @@ func Convert(r io.Reader, w io.ReadWriteSeeker, options ...Option) error {
 					}
 					err = fs.Create(path.Join(dir, name[len(whiteoutPrefix):]), f)
 					if err != nil {
-						return err
+						return errors.Wrapf(err, "failed to create whiteout file for %s", hdr.Name)
 					}
 				}
 
@@ -161,7 +166,7 @@ func Convert(r io.Reader, w io.ReadWriteSeeker, options ...Option) error {
 			}
 			f.Mode &= ^compactext4.TypeMask
 			f.Mode |= typ
-			err = fs.CreateWithParents(hdr.Name, f)
+			err = fs.Create(hdr.Name, f)
 			if err != nil {
 				return err
 			}