diff --git a/lib/src/blockdev.rs b/lib/src/blockdev.rs
index 455aa0187..e9a76519b 100644
--- a/lib/src/blockdev.rs
+++ b/lib/src/blockdev.rs
@@ -1,7 +1,7 @@
 use crate::install::run_in_host_mountns;
 use crate::task::Task;
 use anyhow::{anyhow, Context, Result};
-use camino::Utf8Path;
+use camino::{Utf8Path, Utf8PathBuf};
 use fn_error_context::context;
 use nix::errno::Errno;
 use once_cell::sync::Lazy;
@@ -10,6 +10,7 @@ use serde::Deserialize;
 use std::collections::HashMap;
 use std::fs::File;
 use std::os::unix::io::AsRawFd;
+use std::path::Path;
 use std::process::Command;
 
 #[derive(Debug, Deserialize)]
@@ -75,6 +76,55 @@ pub(crate) fn list() -> Result<Vec<Device>> {
     list_impl(None)
 }
 
+pub(crate) struct LoopbackDevice {
+    pub(crate) dev: Option<Utf8PathBuf>,
+}
+
+impl LoopbackDevice {
+    // Create a new loopback block device targeting the provided file path.
+    pub(crate) fn new(path: &Path) -> Result<Self> {
+        let dev = Task::new("losetup", "losetup")
+            .args(["--show", "-P", "--find"])
+            .arg(path)
+            .quiet()
+            .read()?;
+        let dev = Utf8PathBuf::from(dev.trim());
+        Ok(Self { dev: Some(dev) })
+    }
+
+    // Access the path to the loopback block device.
+    pub(crate) fn path(&self) -> &Utf8Path {
+        // SAFETY: The option cannot be destructured until we are dropped
+        self.dev.as_deref().unwrap()
+    }
+
+    // Shared backend for our `close` and `drop` implementations.
+    fn impl_close(&mut self) -> Result<()> {
+        // SAFETY: This is the only place we take the option
+        let dev = if let Some(dev) = self.dev.take() {
+            dev
+        } else {
+            return Ok(());
+        };
+        Task::new("losetup", "losetup")
+            .args(["-d", dev.as_str()])
+            .quiet()
+            .run()
+    }
+
+    /// Consume this device, unmounting it.
+    pub(crate) fn close(mut self) -> Result<()> {
+        self.impl_close()
+    }
+}
+
+impl Drop for LoopbackDevice {
+    fn drop(&mut self) {
+        // Best effort to unmount if we're dropped without invoking `close`
+        let _ = self.impl_close();
+    }
+}
+
 pub(crate) fn udev_settle() -> Result<()> {
     // There's a potential window after rereading the partition table where
     // udevd hasn't yet received updates from the kernel, settle will return
diff --git a/lib/src/install.rs b/lib/src/install.rs
index c38478c04..b21e10b67 100644
--- a/lib/src/install.rs
+++ b/lib/src/install.rs
@@ -144,6 +144,10 @@ pub(crate) struct InstallToDiskOpts {
     #[clap(flatten)]
     #[serde(flatten)]
     pub(crate) config_opts: InstallConfigOpts,
+
+    /// Instead of targeting a block device, write to a file via loopback.
+    #[clap(long)]
+    pub(crate) via_loopback: bool,
 }
 
 #[derive(ValueEnum, Debug, Copy, Clone, PartialEq, Eq, Serialize, Deserialize)]
@@ -1039,13 +1043,26 @@ fn installation_complete() {
 
 /// Implementation of the `bootc install to-disk` CLI command.
 pub(crate) async fn install_to_disk(opts: InstallToDiskOpts) -> Result<()> {
-    let block_opts = opts.block_opts;
+    let mut block_opts = opts.block_opts;
     let target_blockdev_meta = block_opts
         .device
         .metadata()
         .with_context(|| format!("Querying {}", &block_opts.device))?;
-    if !target_blockdev_meta.file_type().is_block_device() {
-        anyhow::bail!("Not a block device: {}", block_opts.device);
+    let mut loopback = None;
+    if opts.via_loopback {
+        if !target_blockdev_meta.file_type().is_file() {
+            anyhow::bail!(
+                "Not a regular file (to be used via loopback): {}",
+                block_opts.device
+            );
+        }
+        let loopback_dev = crate::blockdev::LoopbackDevice::new(block_opts.device.as_std_path())?;
+        block_opts.device = loopback_dev.path().into();
+        loopback = Some(loopback_dev);
+    } else {
+        if !target_blockdev_meta.file_type().is_block_device() {
+            anyhow::bail!("Not a block device: {}", block_opts.device);
+        }
     }
     let state = prepare_install(opts.config_opts, opts.target_opts).await?;
 
@@ -1069,6 +1086,10 @@ pub(crate) async fn install_to_disk(opts: InstallToDiskOpts) -> Result<()> {
         Task::new_and_run("Closing root LUKS device", "cryptsetup", ["close", luksdev])?;
     }
 
+    if let Some(loopback_dev) = loopback {
+        loopback_dev.close()?;
+    }
+
     installation_complete();
 
     Ok(())
diff --git a/lib/src/privtests.rs b/lib/src/privtests.rs
index d1290778a..310a16ebb 100644
--- a/lib/src/privtests.rs
+++ b/lib/src/privtests.rs
@@ -1,45 +1,18 @@
 use std::process::Command;
 
 use anyhow::Result;
-use camino::{Utf8Path, Utf8PathBuf};
+use camino::Utf8Path;
 use fn_error_context::context;
 use rustix::fd::AsFd;
 use xshell::{cmd, Shell};
 
-use crate::spec::HostType;
+use crate::blockdev::LoopbackDevice;
 
 use super::cli::TestingOpts;
 use super::spec::Host;
 
 const IMGSIZE: u64 = 20 * 1024 * 1024 * 1024;
 
-struct LoopbackDevice {
-    #[allow(dead_code)]
-    tmpf: tempfile::NamedTempFile,
-    dev: Utf8PathBuf,
-}
-
-impl LoopbackDevice {
-    fn new_temp(sh: &xshell::Shell) -> Result<Self> {
-        let mut tmpd = tempfile::NamedTempFile::new_in("/var/tmp")?;
-        rustix::fs::ftruncate(tmpd.as_file_mut().as_fd(), IMGSIZE)?;
-        let diskpath = tmpd.path();
-        let path = cmd!(sh, "losetup --find --show {diskpath}").read()?;
-        Ok(Self {
-            tmpf: tmpd,
-            dev: path.into(),
-        })
-    }
-}
-
-impl Drop for LoopbackDevice {
-    fn drop(&mut self) {
-        let _ = Command::new("losetup")
-            .args(["-d", self.dev.as_str()])
-            .status();
-    }
-}
-
 fn init_ostree(sh: &Shell, rootfs: &Utf8Path) -> Result<()> {
     cmd!(sh, "ostree admin init-fs --modern {rootfs}").run()?;
     Ok(())
@@ -49,8 +22,10 @@ fn init_ostree(sh: &Shell, rootfs: &Utf8Path) -> Result<()> {
 fn run_bootc_status() -> Result<()> {
     let sh = Shell::new()?;
 
-    let loopdev = LoopbackDevice::new_temp(&sh)?;
-    let devpath = &loopdev.dev;
+    let mut tmpdisk = tempfile::NamedTempFile::new_in("/var/tmp")?;
+    rustix::fs::ftruncate(tmpdisk.as_file_mut().as_fd(), IMGSIZE)?;
+    let loopdev = LoopbackDevice::new(tmpdisk.path())?;
+    let devpath = loopdev.path();
     println!("Using {devpath:?}");
 
     let td = tempfile::tempdir()?;