diff --git a/apex/Android.bp b/apex/Android.bp
index 765372a..ccbdb3b 100644
--- a/apex/Android.bp
+++ b/apex/Android.bp
@@ -103,7 +103,6 @@
         "microdroid_initrd_normal",
         "microdroid.json",
         "microdroid_kernel",
-        // rialto_bin is a prebuilt target wrapping the signed bare-metal service VM.
         "rialto_bin",
     ],
     host_required: [
diff --git a/encryptedstore/Android.bp b/encryptedstore/Android.bp
index 94ebcfc..8ba5016 100644
--- a/encryptedstore/Android.bp
+++ b/encryptedstore/Android.bp
@@ -14,6 +14,7 @@
         "libclap",
         "libhex",
         "liblog_rust",
+        "libmicrodroid_uids",
         "libnix",
         "libdm_rust",
     ],
diff --git a/encryptedstore/src/main.rs b/encryptedstore/src/main.rs
index 1a16f49..2a698ea 100644
--- a/encryptedstore/src/main.rs
+++ b/encryptedstore/src/main.rs
@@ -21,24 +21,32 @@
 use anyhow::{ensure, Context, Result};
 use clap::arg;
 use dm::{crypt::CipherType, util};
-use log::info;
+use log::{error, info};
 use std::ffi::CString;
 use std::fs::{create_dir_all, OpenOptions};
 use std::io::{Error, Read, Write};
 use std::os::unix::ffi::OsStrExt;
-use std::os::unix::fs::FileTypeExt;
+use std::os::unix::fs::{FileTypeExt, PermissionsExt};
 use std::path::{Path, PathBuf};
 use std::process::Command;
 
 const MK2FS_BIN: &str = "/system/bin/mke2fs";
 const UNFORMATTED_STORAGE_MAGIC: &str = "UNFORMATTED-STORAGE";
 
-fn main() -> Result<()> {
+fn main() {
     android_logger::init_once(
         android_logger::Config::default()
             .with_tag("encryptedstore")
             .with_min_level(log::Level::Info),
     );
+
+    if let Err(e) = try_main() {
+        error!("{:?}", e);
+        std::process::exit(1)
+    }
+}
+
+fn try_main() -> Result<()> {
     info!("Starting encryptedstore binary");
 
     let matches = clap_command().get_matches();
@@ -47,10 +55,12 @@
     let key = matches.get_one::<String>("key").unwrap();
     let mountpoint = Path::new(matches.get_one::<String>("mountpoint").unwrap());
     // Note this error context is used in MicrodroidTests.
-    encryptedstore_init(blkdevice, key, mountpoint).context(format!(
-        "Unable to initialize encryptedstore on {:?} & mount at {:?}",
-        blkdevice, mountpoint
-    ))?;
+    encryptedstore_init(blkdevice, key, mountpoint).with_context(|| {
+        format!(
+            "Unable to initialize encryptedstore on {:?} & mount at {:?}",
+            blkdevice, mountpoint
+        )
+    })?;
     Ok(())
 }
 
@@ -65,7 +75,7 @@
 fn encryptedstore_init(blkdevice: &Path, key: &str, mountpoint: &Path) -> Result<()> {
     ensure!(
         std::fs::metadata(blkdevice)
-            .context(format!("Failed to get metadata of {:?}", blkdevice))?
+            .with_context(|| format!("Failed to get metadata of {:?}", blkdevice))?
             .file_type()
             .is_block_device(),
         "The path:{:?} is not of a block device",
@@ -82,7 +92,12 @@
         info!("Freshly formatting the crypt device");
         format_ext4(&crypt_device)?;
     }
-    mount(&crypt_device, mountpoint).context(format!("Unable to mount {:?}", crypt_device))?;
+    mount(&crypt_device, mountpoint)
+        .with_context(|| format!("Unable to mount {:?}", crypt_device))?;
+    if needs_formatting {
+        std::fs::set_permissions(mountpoint, PermissionsExt::from_mode(0o770))
+            .context("Failed to chmod root directory")?;
+    }
     Ok(())
 }
 
@@ -124,6 +139,11 @@
 }
 
 fn format_ext4(device: &Path) -> Result<()> {
+    let root_dir_uid_gid = format!(
+        "root_owner={}:{}",
+        microdroid_uids::ROOT_UID,
+        microdroid_uids::MICRODROID_PAYLOAD_GID
+    );
     let mkfs_options = [
         "-j", // Create appropriate sized journal
         /* metadata_csum: enabled for filesystem integrity
@@ -131,20 +151,22 @@
          * 64bit: larger fields afforded by this feature enable full-strength checksumming.
          */
         "-O metadata_csum, extents, 64bit",
-        "-b 4096", // block size in the filesystem
+        "-b 4096", // block size in the filesystem,
+        "-E",
+        &root_dir_uid_gid,
     ];
     let mut cmd = Command::new(MK2FS_BIN);
     let status = cmd
         .args(mkfs_options)
         .arg(device)
         .status()
-        .context(format!("failed to execute {}", MK2FS_BIN))?;
+        .with_context(|| format!("failed to execute {}", MK2FS_BIN))?;
     ensure!(status.success(), "mkfs failed with {:?}", status);
     Ok(())
 }
 
 fn mount(source: &Path, mountpoint: &Path) -> Result<()> {
-    create_dir_all(mountpoint).context(format!("Failed to create {:?}", &mountpoint))?;
+    create_dir_all(mountpoint).with_context(|| format!("Failed to create {:?}", &mountpoint))?;
     let mount_options = CString::new(
         "fscontext=u:object_r:encryptedstore_fs:s0,context=u:object_r:encryptedstore_file:s0",
     )
diff --git a/libs/microdroid_uids/Android.bp b/libs/microdroid_uids/Android.bp
new file mode 100644
index 0000000..497948d
--- /dev/null
+++ b/libs/microdroid_uids/Android.bp
@@ -0,0 +1,15 @@
+package {
+    default_applicable_licenses: ["Android-Apache-2.0"],
+}
+
+rust_library {
+    name: "libmicrodroid_uids",
+    crate_name: "microdroid_uids",
+    srcs: ["src/lib.rs"],
+    edition: "2021",
+    // TODO(b/296393106): Figure out how/when to enable this
+    // cfgs: ["payload_not_root"],
+    apex_available: [
+        "com.android.virt",
+    ],
+}
diff --git a/libs/microdroid_uids/src/lib.rs b/libs/microdroid_uids/src/lib.rs
new file mode 100644
index 0000000..1f09c65
--- /dev/null
+++ b/libs/microdroid_uids/src/lib.rs
@@ -0,0 +1,24 @@
+// Copyright 2023 The Android Open Source Project
+//
+// Licensed under the Apache License, Version 2.0 (the "License");
+// you may not use this file except in compliance with the License.
+// You may obtain a copy of the License at
+//
+//      http://www.apache.org/licenses/LICENSE-2.0
+//
+// Unless required by applicable law or agreed to in writing, software
+// distributed under the License is distributed on an "AS IS" BASIS,
+// WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+// See the License for the specific language governing permissions and
+// limitations under the License.
+
+//! User and group IDs within Microdroid
+
+/// Always the user ID of Root.
+pub const ROOT_UID: u32 = 0;
+
+/// Group ID shared by all payload users.
+pub const MICRODROID_PAYLOAD_GID: u32 = if cfg!(payload_not_root) { 6000 } else { 0 };
+
+/// User ID for the initial payload user.
+pub const MICRODROID_PAYLOAD_UID: u32 = if cfg!(payload_not_root) { 6000 } else { 0 };
diff --git a/microdroid/Android.bp b/microdroid/Android.bp
index 2d3f084..1e594b7 100644
--- a/microdroid/Android.bp
+++ b/microdroid/Android.bp
@@ -54,6 +54,8 @@
     deps: [
         "init_second_stage.microdroid",
         "microdroid_build_prop",
+        "microdroid_etc_passwd",
+        "microdroid_etc_group",
         "microdroid_init_debug_policy",
         "microdroid_init_rc",
         "microdroid_ueventd_rc",
@@ -156,6 +158,20 @@
     installable: false, // avoid collision with system partition's ueventd.rc
 }
 
+prebuilt_etc {
+    name: "microdroid_etc_passwd",
+    src: "microdroid_passwd",
+    filename: "passwd",
+    installable: false,
+}
+
+prebuilt_etc {
+    name: "microdroid_etc_group",
+    src: "microdroid_group",
+    filename: "group",
+    installable: false,
+}
+
 prebuilt_root {
     name: "microdroid_build_prop",
     filename: "build.prop",
diff --git a/microdroid/init.rc b/microdroid/init.rc
index 42033d6..91931ab 100644
--- a/microdroid/init.rc
+++ b/microdroid/init.rc
@@ -28,6 +28,10 @@
 on init
     mkdir /mnt/apk 0755 system system
     mkdir /mnt/extra-apk 0755 root root
+
+    # Allow the payload access to the console (default is 0600)
+    chmod 0666 /dev/console
+
     # Microdroid_manager starts apkdmverity/zipfuse/apexd
     start microdroid_manager
 
diff --git a/microdroid/microdroid_group b/microdroid/microdroid_group
new file mode 100644
index 0000000..4eb8fa5
--- /dev/null
+++ b/microdroid/microdroid_group
@@ -0,0 +1 @@
+system_payload::6000:
diff --git a/microdroid/microdroid_passwd b/microdroid/microdroid_passwd
new file mode 100644
index 0000000..bd15182
--- /dev/null
+++ b/microdroid/microdroid_passwd
@@ -0,0 +1 @@
+system_payload_0::6000:6000:::
diff --git a/microdroid_manager/Android.bp b/microdroid_manager/Android.bp
index 23f174e..fe0cf6a 100644
--- a/microdroid_manager/Android.bp
+++ b/microdroid_manager/Android.bp
@@ -32,6 +32,7 @@
         "liblog_rust",
         "libmicrodroid_metadata",
         "libmicrodroid_payload_config",
+        "libmicrodroid_uids",
         "libnix",
         "libonce_cell",
         "libopenssl",
diff --git a/microdroid_manager/microdroid_manager.rc b/microdroid_manager/microdroid_manager.rc
index e257547..da38564 100644
--- a/microdroid_manager/microdroid_manager.rc
+++ b/microdroid_manager/microdroid_manager.rc
@@ -8,8 +8,8 @@
     # TODO(jooyung) remove this when microdroid_manager becomes a daemon
     oneshot
     # CAP_SYS_BOOT is required to exec kexecload from microdroid_manager
-    # CAP_SETCAP is required to allow microdroid_manager to drop capabilities
+    # CAP_SETPCAP is required to allow microdroid_manager to drop capabilities
     #   before executing the payload
-    capabilities AUDIT_CONTROL SYS_ADMIN SYS_BOOT SETPCAP
+    capabilities AUDIT_CONTROL SYS_ADMIN SYS_BOOT SETPCAP SETUID SETGID
     user root
     socket vm_payload_service stream 0666 system system
diff --git a/microdroid_manager/src/main.rs b/microdroid_manager/src/main.rs
index 319d2df..a48d540 100644
--- a/microdroid_manager/src/main.rs
+++ b/microdroid_manager/src/main.rs
@@ -528,8 +528,6 @@
 }
 
 impl Zipfuse {
-    const MICRODROID_PAYLOAD_UID: u32 = 0; // TODO(b/264861173) should be non-root
-    const MICRODROID_PAYLOAD_GID: u32 = 0; // TODO(b/264861173) should be non-root
     fn mount(
         &mut self,
         noexec: MountForExec,
@@ -542,9 +540,13 @@
         if let MountForExec::Disallowed = noexec {
             cmd.arg("--noexec");
         }
+        // Let root own the files in APK, so we can access them, but set the group to
+        // allow all payloads to have access too.
+        let (uid, gid) = (microdroid_uids::ROOT_UID, microdroid_uids::MICRODROID_PAYLOAD_GID);
+
         cmd.args(["-p", &ready_prop, "-o", option]);
-        cmd.args(["-u", &Self::MICRODROID_PAYLOAD_UID.to_string()]);
-        cmd.args(["-g", &Self::MICRODROID_PAYLOAD_GID.to_string()]);
+        cmd.args(["-u", &uid.to_string()]);
+        cmd.args(["-g", &gid.to_string()]);
         cmd.arg(zip_path).arg(mount_dir);
         self.ready_properties.push(ready_prop);
         cmd.spawn().with_context(|| format!("Failed to run zipfuse for {mount_dir:?}"))
@@ -850,10 +852,15 @@
 fn exec_task(task: &Task, service: &Strong<dyn IVirtualMachineService>) -> Result<i32> {
     info!("executing main task {:?}...", task);
     let mut command = match task.type_ {
-        TaskType::Executable => Command::new(&task.command),
+        TaskType::Executable => {
+            // TODO(b/296393106): Run system payloads as non-root.
+            Command::new(&task.command)
+        }
         TaskType::MicrodroidLauncher => {
             let mut command = Command::new("/system/bin/microdroid_launcher");
             command.arg(find_library_path(&task.command)?);
+            command.uid(microdroid_uids::MICRODROID_PAYLOAD_UID);
+            command.gid(microdroid_uids::MICRODROID_PAYLOAD_GID);
             command
         }
     };
diff --git a/rialto/Android.bp b/rialto/Android.bp
index ed9a284..7ac7136 100644
--- a/rialto/Android.bp
+++ b/rialto/Android.bp
@@ -76,6 +76,7 @@
 }
 
 prebuilt_etc {
+    // rialto_bin is a prebuilt target wrapping the signed bare-metal service VM.
     name: "rialto_bin",
     filename: "rialto.bin",
     target: {
diff --git a/tests/aidl/com/android/microdroid/testservice/ITestService.aidl b/tests/aidl/com/android/microdroid/testservice/ITestService.aidl
index 8d467cd..e81f6d7 100644
--- a/tests/aidl/com/android/microdroid/testservice/ITestService.aidl
+++ b/tests/aidl/com/android/microdroid/testservice/ITestService.aidl
@@ -55,6 +55,9 @@
     /** Returns a mask of effective capabilities that the process running the payload binary has. */
     String[] getEffectiveCapabilities();
 
+    /* Return the uid of the process running the binary. */
+    int getUid();
+
     /* write the content into the specified file. */
     void writeToFile(String content, String path);
 
diff --git a/tests/helper/src/java/com/android/microdroid/test/device/MicrodroidDeviceTestBase.java b/tests/helper/src/java/com/android/microdroid/test/device/MicrodroidDeviceTestBase.java
index e6d90ea..9f03ab7 100644
--- a/tests/helper/src/java/com/android/microdroid/test/device/MicrodroidDeviceTestBase.java
+++ b/tests/helper/src/java/com/android/microdroid/test/device/MicrodroidDeviceTestBase.java
@@ -451,6 +451,7 @@
         public String mApkContentsPath;
         public String mEncryptedStoragePath;
         public String[] mEffectiveCapabilities;
+        public int mUid;
         public String mFileContent;
         public byte[] mBcc;
         public long[] mTimings;
diff --git a/tests/testapk/src/java/com/android/microdroid/test/MicrodroidTests.java b/tests/testapk/src/java/com/android/microdroid/test/MicrodroidTests.java
index f6dc1b8..a928dcf 100644
--- a/tests/testapk/src/java/com/android/microdroid/test/MicrodroidTests.java
+++ b/tests/testapk/src/java/com/android/microdroid/test/MicrodroidTests.java
@@ -72,6 +72,7 @@
 
 import org.junit.After;
 import org.junit.Before;
+import org.junit.Ignore;
 import org.junit.Rule;
 import org.junit.Test;
 import org.junit.function.ThrowingRunnable;
@@ -1523,6 +1524,30 @@
     }
 
     @Test
+    @Ignore // Figure out how to run this conditionally
+    @CddTest(requirements = {"9.17/C-1-1"})
+    public void payloadIsNotRoot() throws Exception {
+        assumeSupportedDevice();
+
+        VirtualMachineConfig config =
+                newVmConfigBuilder()
+                        .setPayloadBinaryName("MicrodroidTestNativeLib.so")
+                        .setMemoryBytes(minMemoryRequired())
+                        .setDebugLevel(DEBUG_LEVEL_FULL)
+                        .build();
+        VirtualMachine vm = forceCreateNewVirtualMachine("test_vm", config);
+        TestResults testResults =
+                runVmTestService(
+                        TAG,
+                        vm,
+                        (ts, tr) -> {
+                            tr.mUid = ts.getUid();
+                        });
+        testResults.assertNoException();
+        assertThat(testResults.mUid).isNotEqualTo(0);
+    }
+
+    @Test
     @CddTest(requirements = {"9.17/C-1-1"})
     public void encryptedStorageIsPersistent() throws Exception {
         assumeSupportedDevice();
@@ -1971,8 +1996,12 @@
                         | OsConstants.S_IROTH
                         | OsConstants.S_IWOTH
                         | OsConstants.S_IXOTH;
-        assertThat(testResults.mFileMode & allPermissionsMask)
-                .isEqualTo(OsConstants.S_IRUSR | OsConstants.S_IXUSR);
+        int expectedPermissions =
+                OsConstants.S_IRUSR
+                        | OsConstants.S_IXUSR
+                        | OsConstants.S_IRGRP
+                        | OsConstants.S_IXGRP;
+        assertThat(testResults.mFileMode & allPermissionsMask).isEqualTo(expectedPermissions);
     }
 
     // Taken from bionic/libc/kernel/uapi/linux/mount.h
diff --git a/tests/testapk/src/native/testbinary.cpp b/tests/testapk/src/native/testbinary.cpp
index 297b505..c9b5e3a 100644
--- a/tests/testapk/src/native/testbinary.cpp
+++ b/tests/testapk/src/native/testbinary.cpp
@@ -248,6 +248,11 @@
             return ScopedAStatus::ok();
         }
 
+        ScopedAStatus getUid(int* out) override {
+            *out = getuid();
+            return ScopedAStatus::ok();
+        }
+
         ScopedAStatus runEchoReverseServer() override {
             auto result = start_echo_reverse_server();
             if (result.ok()) {
diff --git a/tests/vmshareapp/src/java/com/android/microdroid/test/sharevm/VmShareServiceImpl.java b/tests/vmshareapp/src/java/com/android/microdroid/test/sharevm/VmShareServiceImpl.java
index 0ddf70b..dc8908b 100644
--- a/tests/vmshareapp/src/java/com/android/microdroid/test/sharevm/VmShareServiceImpl.java
+++ b/tests/vmshareapp/src/java/com/android/microdroid/test/sharevm/VmShareServiceImpl.java
@@ -220,6 +220,11 @@
         }
 
         @Override
+        public int getUid() throws RemoteException {
+            throw new UnsupportedOperationException("Not supported");
+        }
+
+        @Override
         public void writeToFile(String content, String path) throws RemoteException {
             throw new UnsupportedOperationException("Not supported");
         }
diff --git a/zipfuse/src/inode.rs b/zipfuse/src/inode.rs
index ef48389..3175a30 100644
--- a/zipfuse/src/inode.rs
+++ b/zipfuse/src/inode.rs
@@ -31,10 +31,11 @@
 const INVALID: Inode = 0;
 const ROOT: Inode = 1;
 
-const DEFAULT_DIR_MODE: u32 = libc::S_IRUSR | libc::S_IXUSR;
+const DEFAULT_DIR_MODE: u32 = libc::S_IRUSR | libc::S_IXUSR | libc::S_IRGRP | libc::S_IXGRP;
 // b/264668376 some files in APK don't have unix permissions specified. Default to 400
 // otherwise those files won't be readable even by the owner.
-const DEFAULT_FILE_MODE: u32 = libc::S_IRUSR;
+const DEFAULT_FILE_MODE: u32 = libc::S_IRUSR | libc::S_IRGRP;
+const EXECUTABLE_FILE_MODE: u32 = DEFAULT_FILE_MODE | libc::S_IXUSR | libc::S_IXGRP;
 
 /// `InodeData` represents an inode which has metadata about a file or a directory
 #[derive(Debug)]
@@ -191,7 +192,7 @@
                 // additional binaries that they might want to execute.
                 // An example of such binary is measure_io one used in the authfs performance tests.
                 // More context available at b/265261525 and b/270955654.
-                file_mode |= libc::S_IXUSR;
+                file_mode = EXECUTABLE_FILE_MODE;
             }
 
             while let Some(name) = iter.next() {