diff --git a/payload_generator/extent_ranges.cc b/payload_generator/extent_ranges.cc
index 4600efe..2098639 100644
--- a/payload_generator/extent_ranges.cc
+++ b/payload_generator/extent_ranges.cc
@@ -202,6 +202,15 @@
   }
 }
 
+bool ExtentRanges::OverlapsWithExtent(const Extent& extent) const {
+  for (const auto& entry : extent_set_) {
+    if (ExtentsOverlap(entry, extent)) {
+      return true;
+    }
+  }
+  return false;
+}
+
 bool ExtentRanges::ContainsBlock(uint64_t block) const {
   auto lower = extent_set_.lower_bound(ExtentForRange(block, 1));
   // The block could be on the extent before the one in |lower|.
diff --git a/payload_generator/extent_ranges.h b/payload_generator/extent_ranges.h
index 62ffff4..68aa27f 100644
--- a/payload_generator/extent_ranges.h
+++ b/payload_generator/extent_ranges.h
@@ -63,6 +63,9 @@
   void AddRanges(const ExtentRanges& ranges);
   void SubtractRanges(const ExtentRanges& ranges);
 
+  // Returns true if the input extent overlaps with the current ExtentRanges.
+  bool OverlapsWithExtent(const Extent& extent) const;
+
   // Returns whether the block |block| is in this ExtentRange.
   bool ContainsBlock(uint64_t block) const;
 
diff --git a/payload_generator/merge_sequence_generator.cc b/payload_generator/merge_sequence_generator.cc
index cf73ba3..dd801d6 100644
--- a/payload_generator/merge_sequence_generator.cc
+++ b/payload_generator/merge_sequence_generator.cc
@@ -16,12 +16,77 @@
 
 #include "update_engine/payload_generator/merge_sequence_generator.h"
 
+#include "update_engine/payload_generator/extent_utils.h"
+
 namespace chromeos_update_engine {
 
+CowMergeOperation CreateCowMergeOperation(const Extent& src_extent,
+                                          const Extent& dst_extent) {
+  CowMergeOperation ret;
+  ret.set_type(CowMergeOperation::COW_COPY);
+  *ret.mutable_src_extent() = src_extent;
+  *ret.mutable_dst_extent() = dst_extent;
+  return ret;
+}
+
+std::ostream& operator<<(std::ostream& os,
+                         const CowMergeOperation& merge_operation) {
+  os << "CowMergeOperation src extent: "
+     << ExtentsToString({merge_operation.src_extent()})
+     << ", dst extent: " << ExtentsToString({merge_operation.dst_extent()});
+  return os;
+}
+
+// The OTA generation guarantees that all blocks in the dst extent will be
+// written only once. So we can use it to order the CowMergeOperation.
+bool operator<(const CowMergeOperation& op1, const CowMergeOperation& op2) {
+  return op1.dst_extent().start_block() < op2.dst_extent().start_block();
+}
+
+bool operator==(const CowMergeOperation& op1, const CowMergeOperation& op2) {
+  return op1.type() == op2.type() && op1.src_extent() == op2.src_extent() &&
+         op1.dst_extent() == op2.dst_extent();
+}
+
 std::unique_ptr<MergeSequenceGenerator> MergeSequenceGenerator::Create(
     const std::vector<AnnotatedOperation>& aops) {
+  std::vector<CowMergeOperation> sequence;
+  for (const auto& aop : aops) {
+    // Only handle SOURCE_COPY now for the cow size optimization.
+    if (aop.op.type() != InstallOperation::SOURCE_COPY) {
+      continue;
+    }
+    if (aop.op.dst_extents().size() != 1) {
+      std::vector<Extent> out_extents;
+      ExtentsToVector(aop.op.dst_extents(), &out_extents);
+      LOG(ERROR) << "The dst extents for source_copy expects to be contiguous,"
+                 << " dst extents: " << ExtentsToString(out_extents);
+      return nullptr;
+    }
+
+    // Split the source extents.
+    size_t used_blocks = 0;
+    for (const auto& src_extent : aop.op.src_extents()) {
+      // The dst_extent in the merge sequence will be a subset of
+      // InstallOperation's dst_extent. This will simplify the OTA -> COW
+      // conversion when we install the payload.
+      Extent dst_extent =
+          ExtentForRange(aop.op.dst_extents(0).start_block() + used_blocks,
+                         src_extent.num_blocks());
+      sequence.emplace_back(CreateCowMergeOperation(src_extent, dst_extent));
+      used_blocks += src_extent.num_blocks();
+    }
+
+    if (used_blocks != aop.op.dst_extents(0).num_blocks()) {
+      LOG(ERROR) << "Number of blocks in src extents doesn't equal to the"
+                 << " ones in the dst extents, src blocks " << used_blocks
+                 << ", dst blocks " << aop.op.dst_extents(0).num_blocks();
+      return nullptr;
+    }
+  }
+
   return std::unique_ptr<MergeSequenceGenerator>(
-      new MergeSequenceGenerator({}));
+      new MergeSequenceGenerator(sequence));
 }
 
 bool MergeSequenceGenerator::FindDependency(
@@ -37,6 +102,21 @@
 
 bool MergeSequenceGenerator::ValidateSequence(
     const std::vector<CowMergeOperation>& sequence) {
+  LOG(INFO) << "Validating merge sequence";
+  ExtentRanges visited;
+  for (const auto& op : sequence) {
+    if (visited.OverlapsWithExtent(op.src_extent())) {
+      LOG(ERROR) << "Transfer violates the merge sequence " << op
+                 << "Visited extent ranges: ";
+      visited.Dump();
+      return false;
+    }
+
+    CHECK(!visited.OverlapsWithExtent(op.dst_extent()))
+        << "dst extent should write only once.";
+    visited.AddExtent(op.dst_extent());
+  }
+
   return true;
 }
 
diff --git a/payload_generator/merge_sequence_generator.h b/payload_generator/merge_sequence_generator.h
index bfc04d9..bc0158e 100644
--- a/payload_generator/merge_sequence_generator.h
+++ b/payload_generator/merge_sequence_generator.h
@@ -29,6 +29,16 @@
 #include "update_engine/update_metadata.pb.h"
 
 namespace chromeos_update_engine {
+// Constructs CowMergeOperation from src & dst extents
+CowMergeOperation CreateCowMergeOperation(const Extent& src_extent,
+                                          const Extent& dst_extent);
+
+// Comparator for CowMergeOperation.
+bool operator<(const CowMergeOperation& op1, const CowMergeOperation& op2);
+bool operator==(const CowMergeOperation& op1, const CowMergeOperation& op2);
+
+std::ostream& operator<<(std::ostream& os,
+                         const CowMergeOperation& merge_operation);
 
 // This class takes a list of CowMergeOperations; and sorts them so that no
 // read after write will happen by following the sequence. When there is a
@@ -48,6 +58,7 @@
   bool Generate(std::vector<CowMergeOperation>* sequence) const;
 
  private:
+  friend class MergeSequenceGeneratorTest;
   explicit MergeSequenceGenerator(std::vector<CowMergeOperation> transfers)
       : operations_(std::move(transfers)) {}
 
diff --git a/payload_generator/merge_sequence_generator_unittest.cc b/payload_generator/merge_sequence_generator_unittest.cc
new file mode 100644
index 0000000..83cf78f
--- /dev/null
+++ b/payload_generator/merge_sequence_generator_unittest.cc
@@ -0,0 +1,97 @@
+//
+// Copyright (C) 2020 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.
+//
+
+#include <string>
+#include <vector>
+
+#include <gtest/gtest.h>
+
+#include "update_engine/common/test_utils.h"
+#include "update_engine/payload_consumer/payload_constants.h"
+#include "update_engine/payload_generator/extent_utils.h"
+#include "update_engine/payload_generator/merge_sequence_generator.h"
+
+using chromeos_update_engine::test_utils::FillWithData;
+using std::string;
+using std::vector;
+
+namespace chromeos_update_engine {
+class MergeSequenceGeneratorTest : public ::testing::Test {
+ protected:
+  void VerifyTransfers(MergeSequenceGenerator* generator,
+                       const std::vector<CowMergeOperation>& expected) {
+    ASSERT_EQ(expected, generator->operations_);
+  }
+};
+
+TEST_F(MergeSequenceGeneratorTest, Create) {
+  std::vector<AnnotatedOperation> aops{{"file1", {}}, {"file2", {}}};
+  aops[0].op.set_type(InstallOperation::SOURCE_COPY);
+  *aops[0].op.add_src_extents() = ExtentForRange(10, 10);
+  *aops[0].op.add_dst_extents() = ExtentForRange(30, 10);
+
+  aops[1].op.set_type(InstallOperation::SOURCE_COPY);
+  *aops[1].op.add_src_extents() = ExtentForRange(20, 10);
+  *aops[1].op.add_dst_extents() = ExtentForRange(40, 10);
+
+  auto generator = MergeSequenceGenerator::Create(aops);
+  ASSERT_TRUE(generator);
+  std::vector<CowMergeOperation> expected = {
+      CreateCowMergeOperation(ExtentForRange(10, 10), ExtentForRange(30, 10)),
+      CreateCowMergeOperation(ExtentForRange(20, 10), ExtentForRange(40, 10))};
+  VerifyTransfers(generator.get(), expected);
+
+  *aops[1].op.add_src_extents() = ExtentForRange(30, 5);
+  *aops[1].op.add_dst_extents() = ExtentForRange(50, 5);
+  generator = MergeSequenceGenerator::Create(aops);
+  ASSERT_FALSE(generator);
+}
+
+TEST_F(MergeSequenceGeneratorTest, Create_SplitSource) {
+  InstallOperation op;
+  op.set_type(InstallOperation::SOURCE_COPY);
+  *(op.add_src_extents()) = ExtentForRange(2, 3);
+  *(op.add_src_extents()) = ExtentForRange(6, 1);
+  *(op.add_src_extents()) = ExtentForRange(8, 4);
+  *(op.add_dst_extents()) = ExtentForRange(10, 8);
+
+  AnnotatedOperation aop{"file1", op};
+  auto generator = MergeSequenceGenerator::Create({aop});
+  ASSERT_TRUE(generator);
+  std::vector<CowMergeOperation> expected = {
+      CreateCowMergeOperation(ExtentForRange(2, 3), ExtentForRange(10, 3)),
+      CreateCowMergeOperation(ExtentForRange(6, 1), ExtentForRange(13, 1)),
+      CreateCowMergeOperation(ExtentForRange(8, 4), ExtentForRange(14, 4))};
+  VerifyTransfers(generator.get(), expected);
+}
+
+TEST_F(MergeSequenceGeneratorTest, ValidateSequence) {
+  std::vector<CowMergeOperation> transfers = {
+      CreateCowMergeOperation(ExtentForRange(10, 10), ExtentForRange(15, 10)),
+      CreateCowMergeOperation(ExtentForRange(30, 10), ExtentForRange(40, 10)),
+  };
+
+  // Self overlapping
+  ASSERT_TRUE(MergeSequenceGenerator::ValidateSequence(transfers));
+
+  transfers = {
+      CreateCowMergeOperation(ExtentForRange(30, 10), ExtentForRange(20, 10)),
+      CreateCowMergeOperation(ExtentForRange(15, 10), ExtentForRange(10, 10)),
+  };
+  ASSERT_FALSE(MergeSequenceGenerator::ValidateSequence(transfers));
+}
+
+}  // namespace chromeos_update_engine