diff --git a/pkg/cidata/cidata.TEMPLATE.d/boot/40-install-containerd.sh b/pkg/cidata/cidata.TEMPLATE.d/boot/40-install-containerd.sh
index 9ad9f2e2160..aba50ffc793 100644
--- a/pkg/cidata/cidata.TEMPLATE.d/boot/40-install-containerd.sh
+++ b/pkg/cidata/cidata.TEMPLATE.d/boot/40-install-containerd.sh
@@ -33,14 +33,27 @@ fi
 
 rm -rf "${tmp_extract_nerdctl}"
 
+: "${CONTAINERD_NAMESPACE:=default}"
+# Overridable in .bashrc
+: "${CONTAINERD_SNAPSHOTTER:=overlayfs}"
+
 if [ "${LIMA_CIDATA_CONTAINERD_SYSTEM}" = 1 ]; then
-	mkdir -p /etc/containerd
+	mkdir -p /etc/containerd /etc/buildkit
 	cat >"/etc/containerd/config.toml" <<EOF
   version = 2
   [proxy_plugins]
     [proxy_plugins."stargz"]
       type = "snapshot"
       address = "/run/containerd-stargz-grpc/containerd-stargz-grpc.sock"
+EOF
+	cat >"/etc/buildkit/buildkitd.toml" <<EOF
+[worker.oci]
+  enabled = false
+
+[worker.containerd]
+  enabled = true
+  namespace = "${CONTAINERD_NAMESPACE}"
+  snapshotter = "${CONTAINERD_SNAPSHOTTER}"
 EOF
 	systemctl enable --now containerd buildkit stargz-snapshotter
 fi
@@ -72,7 +85,9 @@ EOF
 		fi
 		sudo -iu "${LIMA_CIDATA_USER}" "XDG_RUNTIME_DIR=/run/user/${LIMA_CIDATA_UID}" systemctl --user enable --now dbus
 		sudo -iu "${LIMA_CIDATA_USER}" "XDG_RUNTIME_DIR=/run/user/${LIMA_CIDATA_UID}" "PATH=${PATH}" containerd-rootless-setuptool.sh install
-		sudo -iu "${LIMA_CIDATA_USER}" "XDG_RUNTIME_DIR=/run/user/${LIMA_CIDATA_UID}" "PATH=${PATH}" containerd-rootless-setuptool.sh install-buildkit
+		sudo -iu "${LIMA_CIDATA_USER}" "XDG_RUNTIME_DIR=/run/user/${LIMA_CIDATA_UID}" "PATH=${PATH}" \
+			"CONTAINERD_NAMESPACE=${CONTAINERD_NAMESPACE}" "CONTAINERD_SNAPSHOTTER=${CONTAINERD_SNAPSHOTTER}" \
+			containerd-rootless-setuptool.sh install-buildkit-containerd
 
 		# $CONTAINERD_SNAPSHOTTER is configured in 20-rootless-base.sh, when the guest kernel is < 5.13, or the instance was created with Lima < 0.9.0.
 		if [ "$(sudo -iu "${LIMA_CIDATA_USER}" sh -ec 'echo $CONTAINERD_SNAPSHOTTER')" = "fuse-overlayfs" ]; then
diff --git a/pkg/limayaml/defaults.go b/pkg/limayaml/defaults.go
index 21509338fe9..a3840cc2dc3 100644
--- a/pkg/limayaml/defaults.go
+++ b/pkg/limayaml/defaults.go
@@ -22,7 +22,7 @@ import (
 )
 
 func defaultContainerdArchives() []File {
-	const nerdctlVersion = "0.17.1"
+	const nerdctlVersion = "0.18.0"
 	location := func(goarch string) string {
 		return "https://github.com/containerd/nerdctl/releases/download/v" + nerdctlVersion + "/nerdctl-full-" + nerdctlVersion + "-linux-" + goarch + ".tar.gz"
 	}
@@ -30,12 +30,12 @@ func defaultContainerdArchives() []File {
 		{
 			Location: location("amd64"),
 			Arch:     X8664,
-			Digest:   "sha256:046ac1c3d007b9b64880cb15a78ea1e0be345d31f51ff282be783a9c203f299d",
+			Digest:   "sha256:62573b9e3bca6794502ad04ae77a2b12ec80aeaa21e8b9bbc5562f3e6348eb66",
 		},
 		{
 			Location: location("arm64"),
 			Arch:     AARCH64,
-			Digest:   "sha256:b773a0db178af9d0963b7c84df88ee434e0c1986fe7491dc1de3231e071e3921",
+			Digest:   "sha256:6e3ca13479f0128e0ea3813bfba6a7ecc04707840f49ee248a64bfb2126bab4c",
 		},
 	}
 }