diff --git a/generate_test_payloads/cros_generate_test_payloads.py b/generate_test_payloads/cros_generate_test_payloads.py
index 99de657..e968dcd 100755
--- a/generate_test_payloads/cros_generate_test_payloads.py
+++ b/generate_test_payloads/cros_generate_test_payloads.py
@@ -386,12 +386,10 @@
     if latest_image_dir:
       options.base = extractor.UnzipImage(latest_image_dir)
     else:
-      logging.info('Config specified but no previous images found. '
-                   'Using target.')
-      options.base = options.target
+      logging.warning('No previous image.zip found in local archive.')
 
-  elif not options.base:
-    logging.info('Base image not specified. Using target as base image.')
+  if not options.base:
+    logging.info('Using target image as base image.')
     options.base = options.target
 
   if not os.path.isfile(options.base):
diff --git a/lib/image_extractor.py b/lib/image_extractor.py
index 8621202..10c8304 100644
--- a/lib/image_extractor.py
+++ b/lib/image_extractor.py
@@ -35,6 +35,8 @@
         directory may be being populated with the results of this version
         while we're running so we shouldn't use it as the last image archived.
     """
+    logging.info('Searching for previously generated images in %s ... ',
+                 self.archive)
     if os.path.exists(self.archive):
       my_re = re.compile(r'R\d+-(\d+)\.(\d+)\.(\d+).*')
       filelist = []
@@ -42,36 +44,49 @@
       for filename in os.listdir(self.archive):
         lv = distutils.version.LooseVersion(filename)
         if my_re.match(filename):
-          if lv < target_lv:
+          zip_image = os.path.join(self.archive, filename, 'image.zip')
+          if lv < target_lv and os.path.exists(zip_image):
             filelist.append(lv)
           elif not filename.startswith(target_version):
-            logging.error('Version in archive dir is too new: %s' % filename)
+            logging.error('Version in archive dir is too new: %s', filename)
       if filelist:
         return os.path.join(self.archive, str(max(filelist)))
 
+    logging.warn('Could not find a previously generated image on this host.')
     return None
 
   def UnzipImage(self, image_dir):
-    """Unzips the image.zip from the image_dir and returns the image."""
-    # We include the dirname of the image here so that we don't have to
-    # re-unzip the same one each time.
-    local_path = os.path.join(self.SRC_ARCHIVE_DIR,
-                              os.path.basename(image_dir))
-    image_to_return = os.path.abspath(os.path.join(local_path,
-                                                   self.IMAGE_TO_EXTRACT))
-    # We only unzip it if we don't have it.
-    if not os.path.exists(image_to_return):
-      # We don't want to keep test self.SRC_ARCHIVE_DIRs around.
-      if os.path.exists(self.SRC_ARCHIVE_DIR):
-        logging.info('Removing old archive from %s', self.SRC_ARCHIVE_DIR)
-        shutil.rmtree(self.SRC_ARCHIVE_DIR)
+    """Unzips the image.zip from the image_dir and returns the image.
 
-      logging.info('Creating directory %s to store image for testing.',
-                   local_path)
-      os.makedirs(local_path)
+    This method unzips the image under SRC_ARCHIVE_DIR along with its version
+    string. In order to save time, if it is attempting
+    to re-unzip the same image with the same version string, it uses the
+    cached image in SRC_ARCHIVE_DIR. It determines the version string based
+    on the basename of the image_dir.
+
+    Returns: the path to the image.bin file after it has been unzipped.
+    Raises: MissingImageZipException if there is nothing to unzip within
+      the image_dir.
+    """
+    version_string = os.path.basename(image_dir)
+    cached_dir = os.path.join(ImageExtractor.SRC_ARCHIVE_DIR, version_string)
+    cached_image = os.path.abspath(os.path.join(
+        cached_dir, ImageExtractor.IMAGE_TO_EXTRACT))
+    # If we previously unzipped the image, we're done.
+    if os.path.exists(cached_image):
+      logging.info('Re-using image with version %s that we previously '
+                   'unzipped to %s.', version_string, cached_image)
+    else:
+      # Cached image for version not found. Unzipping image from archive.
+      if os.path.exists(ImageExtractor.SRC_ARCHIVE_DIR):
+        logging.info('Removing previously archived images from %s',
+                     ImageExtractor.SRC_ARCHIVE_DIR)
+        shutil.rmtree(ImageExtractor.SRC_ARCHIVE_DIR)
+
+      os.makedirs(cached_dir)
       zip_path = os.path.join(image_dir, 'image.zip')
-      logging.info('Unzipping image from %s', zip_path)
-      chromite_build_lib.RunCommand(['unzip', '-d', local_path, zip_path],
+      logging.info('Unzipping image from %s to %s', zip_path, cached_dir)
+      chromite_build_lib.RunCommand(['unzip', '-d', cached_dir, zip_path],
                                     print_cmd=False)
 
-    return image_to_return
+    return cached_image
diff --git a/lib/image_extractor_unittest.py b/lib/image_extractor_unittest.py
index 6e95f0d..e4d0b3f 100755
--- a/lib/image_extractor_unittest.py
+++ b/lib/image_extractor_unittest.py
@@ -46,6 +46,14 @@
   def tearDown(self):
     shutil.rmtree(self.work_dir)
 
+  @staticmethod
+  def _TouchImageZip(directory):
+    if not os.path.exists(directory):
+      os.makedirs(directory)
+
+    with open(os.path.join(directory, 'image.zip'), 'w') as f:
+      f.write('oogabooga')
+
   def CreateFakeArchiveDir(self, number_of_entries, add_build_number=False):
     """Creates a fake archive dir with specified number of entries."""
     # Create local board directory e.g. /var/archive/x86-generic-full.
@@ -57,6 +65,7 @@
     for i in range(number_of_entries):
       new_dir = os.path.join(self.archive_dir, version_s % i)
       os.makedirs(new_dir)
+      ImageExtractorTest._TouchImageZip(new_dir)
 
   def testGetLatestImageWithNoEntries(self):
     """Should return None if the directory has no entries."""
@@ -111,15 +120,16 @@
   def testUnzipImageArchiveAlready(self):
     """Ensure we create a new archive and delete the old one."""
     old_entry = os.path.join(self.src_archive, 'R16-158.0.0-a1')
-    new_entry = os.path.join(self.src_archive, 'R16-158.0.1-a1')
     os.makedirs(old_entry)
+    new_entry = os.path.join(self.src_archive, 'R16-158.0.1-a1')
+    archived_image_dir = os.path.join(self.archive_dir, 'R16-158.0.1-a1')
+    ImageExtractorTest._TouchImageZip(archived_image_dir)
 
     self.mox.StubOutWithMock(chromite_build_lib, 'RunCommand')
     chromite_build_lib.RunCommand(mox.In('unzip'), print_cmd=False)
 
     self.mox.ReplayAll()
-    self.test_extractor.UnzipImage(os.path.join(self.archive_dir,
-                                                'R16-158.0.1-a1'))
+    self.test_extractor.UnzipImage(archived_image_dir)
     self.mox.VerifyAll()
     self.assertFalse(os.path.exists(old_entry))
     self.assertTrue(os.path.exists(new_entry))
@@ -127,13 +137,14 @@
   def testUnzipImageNoArchive(self):
     """Ensure we create a new archive with none before."""
     new_entry = os.path.join(self.src_archive, 'R16-158.0.1-a1')
+    archived_image_dir = os.path.join(self.archive_dir, 'R16-158.0.1-a1')
+    ImageExtractorTest._TouchImageZip(archived_image_dir)
 
     self.mox.StubOutWithMock(chromite_build_lib, 'RunCommand')
     chromite_build_lib.RunCommand(mox.In('unzip'), print_cmd=False)
 
     self.mox.ReplayAll()
-    self.test_extractor.UnzipImage(os.path.join(self.archive_dir,
-                                                'R16-158.0.1-a1'))
+    self.test_extractor.UnzipImage(archived_image_dir)
     self.mox.VerifyAll()
     self.assertTrue(os.path.exists(new_entry))