--- squashfs-tools/Makefile
+++ squashfs-tools/Makefile
@@ -150,6 +150,11 @@
 endif
 
 ifeq ($(XZ_SUPPORT),1)
+# freetz specific locations
+ifdef XZ_DIR
+INCLUDEDIR += -I$(XZ_DIR)/src/liblzma/api
+LIBS += -L$(XZ_DIR)
+endif
 CFLAGS += -DXZ_SUPPORT
 MKSQUASHFS_OBJS += xz_wrapper.o
 UNSQUASHFS_OBJS += xz_wrapper.o