diff --git a/file.c b/file.c
index a7f37940..9a8b0f6c 100644
--- a/file.c
+++ b/file.c
@@ -1895,13 +1895,6 @@ void file_write_install_inf(char *dir)
   if(config.net.realhostname) {
     file_write_str(f, key_hostname, config.net.realhostname);
   }
-  else {
-    char buf[256];
-    if(!gethostname(buf, sizeof buf)) {
-      log_debug("hostname = \"%s\"\n", buf);
-      if(*buf && strcmp(buf, "(none)")) file_write_str(f, key_hostname, buf);
-    }
-  }
 
   LXRC_WAIT
 
diff --git a/install.c b/install.c
index 586c6e3a..f4dfc09d 100644
--- a/install.c
+++ b/install.c
@@ -1113,6 +1113,9 @@ int inst_start_install()
     if(inst_choose_source()) err = 1;
   }
 
+  /* if the user specified a hostname, set it */
+  util_set_hostname(config.net.realhostname);
+
   if(! err && config.rescue) {
     /* get rid of repo */
     url_umount(config.url.install);
diff --git a/linuxrc.c b/linuxrc.c
index a368282e..0fa27cf7 100644
--- a/linuxrc.c
+++ b/linuxrc.c
@@ -383,6 +383,9 @@ void lxrc_change_root()
     if(config.net.sshpassword) setenv("SSHPASSWORD", config.net.sshpassword, 1);
     if(config.net.sshpassword_enc) setenv("SSHPASSWORDENC", config.net.sshpassword_enc, 1);
 
+    /* change hostname from 'install' to 'rescue' unless we've had something better */
+    if(!config.net.realhostname) util_set_hostname("rescue");
+
     lxrc_run_console("/mounts/initrd/scripts/prepare_rescue");
 
     LXRC_WAIT
@@ -773,6 +776,7 @@ void lxrc_init()
   config.net.ipv6 = 1;
   config.net.setup = NS_DHCP;	/* unless we are told otherwise just go for dhcp */
   config.net.nameservers = 1;
+  config.net.sethostname = 1;	/* let wicked set hostname */
 
   config.explode_win = 1;
   config.color = 2;
@@ -855,6 +859,8 @@ void lxrc_init()
   config.initrd_has_ldso = 1;
 #endif
 
+  util_set_hostname("install");
+
   // read config from initrd:
   //   - /linuxrc.config
   //   - /etc/linuxrc.d/*
diff --git a/linuxrc_hostname.md b/linuxrc_hostname.md
new file mode 100644
index 00000000..76beecfe
--- /dev/null
+++ b/linuxrc_hostname.md
@@ -0,0 +1,31 @@
+#hostname setting in installation/rescue system
+
+There are 3 cases:
+
+1. no hostname is set
+
+2. hostname is set via dhcp (either from HOSTNAME or FQDN)
+
+3. hostname is set via `hostname` boot option
+
+linuxrc defaults to `install`, which may be overridden by dhcp (2) or user
+(3). (3) takes precedence over (2).
+
+##installation system
+
+When yast is started, the value from (3) is passed to yast via
+`/etc/install.inf::Hostname` and ends up in `/etc/hostname` of the installed system.
+
+When linuxrc doesn't set `/etc/install.inf::Hostname` yast generates a
+default `/etc/hostname` entry of the form `linux-XXXX` (+ `.suse` in sle12).
+`XXXX` is some random part.
+
+There is no `/etc/hostname` file in the installation environment.
+
+##rescue system
+
+linuxrc changes the hostname to `rescue`, which may be overridden by user (3).
+
+This value is put into `/etc/hostname` of the rescue system. The value there may later
+be overridden by dhcp (2).
+
diff --git a/linuxrc_yast_interface.txt b/linuxrc_yast_interface.txt
index d8557fe0..b240527b 100644
--- a/linuxrc_yast_interface.txt
+++ b/linuxrc_yast_interface.txt
@@ -127,7 +127,7 @@ Device: %s
 # else the entry is missing
 ProxyURL: %s
 
-# the hostname as set by dhcp or by 'hostname=foo' boot option
+# the hostname as set by 'hostname=foo' boot option
 # entry is missing if unset
 Hostname: %s
 
diff --git a/util.c b/util.c
index 284707ea..26128933 100644
--- a/util.c
+++ b/util.c
@@ -5443,3 +5443,17 @@ char *util_get_caller(int skip)
   return buf;
 }
 
+
+/*
+ * Convenience function:
+ * Set hostname and log this.
+ */
+void util_set_hostname(char *hostname)
+{
+  if(!hostname) return;
+
+  sethostname(hostname, strlen(hostname));
+
+  log_info("set hostname: %s\n", hostname);
+}
+
diff --git a/util.h b/util.h
index d77bed95..21e6ab0f 100644
--- a/util.h
+++ b/util.h
@@ -155,3 +155,4 @@ void util_log(unsigned level, char *format, ...);
 int util_run(char *cmd, unsigned log_stdout);
 void util_perror(unsigned level, char *msg);
 char *util_get_caller(int skip);
+void util_set_hostname(char *hostname);