diff --git a/playbooks/inventory/group_vars/hosts.yml b/playbooks/inventory/group_vars/hosts.yml
index a4fba209e5..207752dbec 100644
--- a/playbooks/inventory/group_vars/hosts.yml
+++ b/playbooks/inventory/group_vars/hosts.yml
@@ -40,6 +40,7 @@ openstack_repo_git_url: "http://{{ internal_lb_vip_address }}:{{ repo_server_por
 
 
 ## LXC options
+lxc_container_domain: "openstack.local"
 lxc_container_caches:
   - url: "https://rpc-repo.rackspace.com/container_images/rpc-trusty-container.tgz"
     name: "trusty.tgz"
diff --git a/playbooks/lxc-containers-create.yml b/playbooks/lxc-containers-create.yml
index 7ef0a661be..e518348a19 100644
--- a/playbooks/lxc-containers-create.yml
+++ b/playbooks/lxc-containers-create.yml
@@ -30,6 +30,29 @@
         delay: 1
       tags:
         - lxc-container-wait-for-ssh
+    - name: Create domain config
+      lineinfile:
+        dest: "/etc/hosts"
+        regexp: "^127.0.1.1"
+        line: "127.0.1.1 {{ inventory_hostname | replace('_', '-') }}.{{ lxc_container_domain }} {{ inventory_hostname | replace('_', '-') }}"
+        owner: "root"
+        group: "root"
+        mode: "0644"
+      tags:
+        - lxc-container-hostname
+    - name: Create hostname
+      copy:
+        dest: "/etc/hostname"
+        content: "{{ inventory_hostname | replace('_', '-') }}"
+        owner: "root"
+        group: "root"
+        mode: "0644"
+      tags:
+        - lxc-container-hostname
+    - name: Setup hostname
+      command: hostname -F /etc/hostname
+      tags:
+        - lxc-container-hostname
   vars:
     is_metal: "{{ properties.is_metal|default(false) }}"
     lxc_container_release: "{{ properties.container_release|default('trusty') }}"
diff --git a/releasenotes/notes/RFC-1034-and-1035-container-update-6e880e4b45e11cf0.yaml b/releasenotes/notes/RFC-1034-and-1035-container-update-6e880e4b45e11cf0.yaml
new file mode 100644
index 0000000000..ee1204571c
--- /dev/null
+++ b/releasenotes/notes/RFC-1034-and-1035-container-update-6e880e4b45e11cf0.yaml
@@ -0,0 +1,15 @@
+---
+features:
+  - LXC containers will now have a proper RFC1034/5 hostname set during post
+    build tasks. A localhost entry for 127.0.1.1 will be created by converting
+    all of the "_" in the ``inventory_hostname`` to "-". Containers will be
+    created with a default domain of *openstack.local*.
+    This domain name can be customized to meet your deployment needs by
+    setting the option ``lxc_container_domain``.
+upgrade:
+  - LXC containers will now have a proper RFC1034/5 hostname set during post
+    build tasks. A localhost entry for 127.0.1.1 will be created by converting
+    all of the "_" in the ``inventory_hostname`` to "-". Containers will be
+    created with a default domain of *openstack.local*.
+    This domain name can be customized to meet your deployment needs by
+    setting the option ``lxc_container_domain``.