diff --git a/meta/classes/populate_sdk_base.bbclass b/meta/classes/populate_sdk_base.bbclass
index 23dc1156bd..7ca1df67a2 100644
--- a/meta/classes/populate_sdk_base.bbclass
+++ b/meta/classes/populate_sdk_base.bbclass
@@ -40,7 +40,7 @@ TOOLCHAIN_TARGET_TASK_ATTEMPTONLY ?= ""
 TOOLCHAIN_OUTPUTNAME ?= "${SDK_NAME}-toolchain-${SDK_VERSION}"
 
 SDK_RDEPENDS = "${TOOLCHAIN_TARGET_TASK} ${TOOLCHAIN_HOST_TASK}"
-SDK_DEPENDS = "virtual/fakeroot-native pbzip2-native"
+SDK_DEPENDS = "virtual/fakeroot-native xz-native"
 
 # We want the MULTIARCH_TARGET_SYS to point to the TUNE_PKGARCH, not PACKAGE_ARCH as it
 # could be set to the MACHINE_ARCH
@@ -177,7 +177,7 @@ fakeroot tar_sdk() {
 	# Package it up
 	mkdir -p ${SDK_DEPLOY}
 	cd ${SDK_OUTPUT}/${SDKPATH}
-	tar ${SDKTAROPTS} -cf - . | pbzip2 > ${SDK_DEPLOY}/${TOOLCHAIN_OUTPUTNAME}.tar.bz2
+	tar ${SDKTAROPTS} -cf - . | xz > ${SDK_DEPLOY}/${TOOLCHAIN_OUTPUTNAME}.tar.xz
 }
 
 fakeroot create_shar() {
@@ -216,10 +216,10 @@ EOF
 	chmod +x ${SDK_DEPLOY}/${TOOLCHAIN_OUTPUTNAME}.sh
 
 	# append the SDK tarball
-	cat ${SDK_DEPLOY}/${TOOLCHAIN_OUTPUTNAME}.tar.bz2 >> ${SDK_DEPLOY}/${TOOLCHAIN_OUTPUTNAME}.sh
+	cat ${SDK_DEPLOY}/${TOOLCHAIN_OUTPUTNAME}.tar.xz >> ${SDK_DEPLOY}/${TOOLCHAIN_OUTPUTNAME}.sh
 
 	# delete the old tarball, we don't need it anymore
-	rm ${SDK_DEPLOY}/${TOOLCHAIN_OUTPUTNAME}.tar.bz2
+	rm ${SDK_DEPLOY}/${TOOLCHAIN_OUTPUTNAME}.tar.xz
 }
 
 populate_sdk_log_check() {
diff --git a/meta/files/toolchain-shar-extract.sh b/meta/files/toolchain-shar-extract.sh
index de8c66934e..b1ef4b7668 100644
--- a/meta/files/toolchain-shar-extract.sh
+++ b/meta/files/toolchain-shar-extract.sh
@@ -168,7 +168,7 @@ fi
 payload_offset=$(($(grep -na -m1 "^MARKER:$" $0|cut -d':' -f1) + 1))
 
 printf "Extracting SDK..."
-tail -n +$payload_offset $0| $SUDO_EXEC tar xj -C $target_sdk_dir --checkpoint=.2500
+tail -n +$payload_offset $0| $SUDO_EXEC tar xJ -C $target_sdk_dir --checkpoint=.2500
 echo "done"
 
 printf "Setting it up..."