diff --git a/repos/system_upgrade/el8toel9/actors/addarmbootloaderworkaround/libraries/addupgradebootloader.py b/repos/system_upgrade/el8toel9/actors/addarmbootloaderworkaround/libraries/addupgradebootloader.py
index f287bd3efd..3263f21dc5 100644
--- a/repos/system_upgrade/el8toel9/actors/addarmbootloaderworkaround/libraries/addupgradebootloader.py
+++ b/repos/system_upgrade/el8toel9/actors/addarmbootloaderworkaround/libraries/addupgradebootloader.py
@@ -66,6 +66,8 @@ def process():
         leapp_efi_grubenv = os.path.join(EFI_MOUNTPOINT, LEAPP_EFIDIR_CANONICAL_PATH, 'grubenv')
         patch_efi_redhat_grubcfg_to_load_correct_grubenv()
 
+        upgrade_bls_dir = modify_our_grubenv_to_have_separate_blsdir(leapp_efi_grubenv)
+
         _set_bootnext(upgrade_boot_entry.boot_number)
 
         efibootentry_fields = ['boot_number', 'label', 'active', 'efi_bin_source']
@@ -73,6 +75,7 @@ def process():
             ArmWorkaroundEFIBootloaderInfo(
                 original_entry=EFIBootEntry(**{f: getattr(current_boot_entry, f) for f in efibootentry_fields}),
                 upgrade_entry=EFIBootEntry(**{f: getattr(upgrade_boot_entry, f) for f in efibootentry_fields}),
+                upgrade_bls_dir=upgrade_bls_dir,
             )
         )
 
@@ -231,3 +234,75 @@ def patch_efi_redhat_grubcfg_to_load_correct_grubenv():
     shutil.copy(patched_grub2_cfg_path, leapp_grub_cfg_path)
 
 
+def _list_grubenv_variables():
+    try:
+        output_lines = run(['grub2-editenv', 'list'], split=True)['stdout']
+    except CalledProcessError:
+        raise StopActorExecutionError('Failed to list grubenv variables used by the system')
+
+    vars_with_values = {}
+    for line in output_lines:
+        var_with_value = line.lsplit('=')
+        if len(var_with_value) <= 1:
+            api.current_logger().warning(
+                'Skipping \'{}\' in grub2-editenv output, the line does not have the form <var>=<value>'
+            )
+            continue
+        vars_with_values[var_with_value[0]] = var_with_value[1]
+
+    return vars_with_values
+
+
+def modify_our_grubenv_to_have_separate_blsdir(leapp_efi_grubenv_path):
+    api.current_logger().debug(
+        'Setting up separate blsdir for the upgrade using grubenv: {}'.format(leapp_efi_grubenv_path)
+    )
+
+    grubenv_vars = _list_grubenv_variables()
+    system_bls_dir = grubenv_vars.get('blsdir', '/boot/loader/entries')
+
+    # Find our loader enty
+    try:
+        bls_entries = os.listdir(system_bls_dir)
+    except FileNotFoundError:
+        details = {
+            'details': 'Failed to list {}.'.format(system_bls_dir)
+        }
+        raise StopActorExecutionError('Failed to set up bootloader for the upgrade.', details=details)
+
+    leapp_bls_entry = None
+    for bls_entry in bls_entries:
+        if bls_entry.endswith('upgrade.aarch64.conf'):
+            leapp_bls_entry = bls_entry
+            break
+
+    if not leapp_bls_entry:
+        details = {
+            'details': 'Failed to identify BLS entry that belongs to leapp in {}'.format(system_bls_dir)
+        }
+        raise StopActorExecutionError('Failed to set up bootloader for the upgrade.')
+
+    # The 'blsdir' grubenv variable specifies location of bls directory relative to /boot
+    leapp_bls_dir_rel_to_boot = '/upgrade-loader/entries'
+    leapp_bls_dir = os.path.join('/boot/', leapp_bls_dir_rel_to_boot.lstrip('/'))
+    os.makedirs(leapp_bls_dir)
+    api.current_logger().debug('Successfully created upgrade BLS directory: {}'.format(leapp_bls_dir))
+
+    leapp_bls_entry_fullpath = os.path.join(system_bls_dir, leapp_bls_entry)
+    bls_entry_dst = os.path.join(leapp_bls_dir, leapp_bls_entry)
+    api.current_logger().debug(
+        'Moving leapp\'s BLS entry ({}) into a separate BLS dir located at {}'.format(leapp_bls_entry, leapp_bls_dir)
+    )
+
+    shutil.move(leapp_bls_entry_fullpath, bls_entry_dst)
+
+    # Modify leapp's grubenv to define our own BLSDIR
+    try:
+        run(['grub2-editenv', leapp_efi_grubenv_path, 'set', 'blsdir="{}"'.format(leapp_bls_dir_rel_to_boot)])
+    except CalledProcessError as error:
+        details = {
+            'details': 'Failed to modify upgrade grubenv to contain a custom blsdir definition. Error {}'.format(error)
+        }
+        raise StopActorExecutionError('Failed to set up bootloader for the upgrade.', details=details)
+
+    return leapp_bls_dir
diff --git a/repos/system_upgrade/el8toel9/models/upgradeefientry.py b/repos/system_upgrade/el8toel9/models/upgradeefientry.py
index 877cdc8fc6..1e9da6b32b 100644
--- a/repos/system_upgrade/el8toel9/models/upgradeefientry.py
+++ b/repos/system_upgrade/el8toel9/models/upgradeefientry.py
@@ -12,3 +12,11 @@ class ArmWorkaroundEFIBootloaderInfo(Model):
     original_entry = fields.Model(EFIBootEntry)
 
     upgrade_entry = fields.Model(EFIBootEntry)
+
+    upgrade_bls_dir = fields.Nullable(fields.String())
+    """
+    Path to custom BLS dir used by the upgrade EFI bootloader
+
+    The path is absolute w.r.t. '/'. The actual value of the 'blsdir' variable
+    that is set in the upgrade grubenv will be relative to '/boot/'.
+    """