diff --git a/doc/source/conf.py b/doc/source/conf.py
index b93008a..1b8358e 100755
--- a/doc/source/conf.py
+++ b/doc/source/conf.py
@@ -22,7 +22,7 @@ sys.path.insert(0, os.path.abspath('../..'))
 # extensions coming with Sphinx (named 'sphinx.ext.*') or your custom ones.
 extensions = [
     'sphinx.ext.autodoc',
-    #'sphinx.ext.intersphinx',
+    # 'sphinx.ext.intersphinx',
     'oslosphinx'
 ]
 
@@ -72,4 +72,4 @@ latex_documents = [
 ]
 
 # Example configuration for intersphinx: refer to the Python standard library.
-#intersphinx_mapping = {'http://docs.python.org/': None}
+# intersphinx_mapping = {'http://docs.python.org/': None}
diff --git a/requirements.txt b/requirements.txt
index 4f6a277..7c48020 100644
--- a/requirements.txt
+++ b/requirements.txt
@@ -1 +1,2 @@
 netaddr
+configparser>=3.3.0
diff --git a/test-requirements.txt b/test-requirements.txt
index 6d5294e..eca58ee 100644
--- a/test-requirements.txt
+++ b/test-requirements.txt
@@ -4,3 +4,5 @@ oslosphinx>=2.5.0,!=3.4.0  # Apache-2.0
 sphinx>=1.2.1,!=1.3b1,<1.3  # BSD
 
 hacking>=0.10.2
+pytest>=2.8.0
+mock>=1.3.0
diff --git a/tests/test_inventory.py b/tests/test_inventory.py
new file mode 100644
index 0000000..c9061cc
--- /dev/null
+++ b/tests/test_inventory.py
@@ -0,0 +1,209 @@
+# Copyright 2016 Mirantis, Inc.
+#
+# Licensed under the Apache License, Version 2.0 (the "License"); you may
+# not use this file except in compliance with the License. You may obtain
+# a copy of the License at
+#
+# http://www.apache.org/licenses/LICENSE-2.0
+#
+# Unless required by applicable law or agreed to in writing, software
+# distributed under the License is distributed on an "AS IS" BASIS, WITHOUT
+# WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied. See the
+# License for the specific language governing permissions and limitations
+# under the License.
+
+import unittest
+
+from collections import OrderedDict
+import sys
+
+path = "./utils/kargo"
+if path not in sys.path:
+    sys.path.append(path)
+
+import inventory
+
+
+class TestInventory(unittest.TestCase):
+    def setUp(self):
+        super(TestInventory, self).setUp()
+        self.data = ['10.90.3.2', '10.90.3.3', '10.90.3.4']
+        self.inv = inventory.KargoInventory()
+
+    def test_get_ip_from_opts(self):
+        optstring = "ansible_ssh_host=10.90.3.2 ip=10.90.3.2"
+        expected = "10.90.3.2"
+        result = self.inv.get_ip_from_opts(optstring)
+        self.assertEqual(expected, result)
+
+    def test_get_ip_from_opts_invalid(self):
+        optstring = "notanaddr=value something random!chars:D"
+        self.assertRaisesRegexp(ValueError, "IP parameter not found",
+                                self.inv.get_ip_from_opts, optstring)
+
+    def test_ensure_required_groups(self):
+        groups = ['group1', 'group2']
+        self.inv.ensure_required_groups(groups)
+        for group in groups:
+            self.assertTrue(group in self.inv.config.sections())
+
+    def test_get_host_id(self):
+        hostnames = ['node99', 'no99de01', '01node01', 'node1.domain',
+                     'node3.xyz123.aaa']
+        expected = [99, 1, 1, 1, 3]
+        for hostname, expected in zip(hostnames, expected):
+            result = self.inv.get_host_id(hostname)
+            self.assertEqual(expected, result)
+
+    def test_get_host_id_invalid(self):
+        bad_hostnames = ['node', 'no99de', '01node', 'node.111111']
+        for hostname in bad_hostnames:
+            self.assertRaisesRegexp(ValueError, "Host name must end in an",
+                                    self.inv.get_host_id, hostname)
+
+    def test_build_hostnames_add_one(self):
+        changed_hosts = ['10.90.0.2']
+        expected = OrderedDict([('node1',
+                               'ansible_ssh_host=10.90.0.2 ip=10.90.0.2')])
+        result = self.inv.build_hostnames(changed_hosts)
+        self.assertEqual(expected, result)
+
+    def test_build_hostnames_add_duplicate(self):
+        changed_hosts = ['10.90.0.2']
+        expected = OrderedDict([('node1',
+                               'ansible_ssh_host=10.90.0.2 ip=10.90.0.2')])
+        self.inv.config['all'] = expected
+        result = self.inv.build_hostnames(changed_hosts)
+        self.assertEqual(expected, result)
+
+    def test_build_hostnames_add_two(self):
+        changed_hosts = ['10.90.0.2', '10.90.0.3']
+        expected = OrderedDict([
+            ('node1', 'ansible_ssh_host=10.90.0.2 ip=10.90.0.2'),
+            ('node2', 'ansible_ssh_host=10.90.0.3 ip=10.90.0.3')])
+        self.inv.config['all'] = OrderedDict()
+        result = self.inv.build_hostnames(changed_hosts)
+        self.assertEqual(expected, result)
+
+    def test_build_hostnames_delete_first(self):
+        changed_hosts = ['-10.90.0.2']
+        existing_hosts = OrderedDict([
+            ('node1', 'ansible_ssh_host=10.90.0.2 ip=10.90.0.2'),
+            ('node2', 'ansible_ssh_host=10.90.0.3 ip=10.90.0.3')])
+        self.inv.config['all'] = existing_hosts
+        expected = OrderedDict([
+            ('node2', 'ansible_ssh_host=10.90.0.3 ip=10.90.0.3')])
+        result = self.inv.build_hostnames(changed_hosts)
+        self.assertEqual(expected, result)
+
+    def test_exists_hostname_positive(self):
+        hostname = 'node1'
+        expected = True
+        existing_hosts = OrderedDict([
+            ('node1', 'ansible_ssh_host=10.90.0.2 ip=10.90.0.2'),
+            ('node2', 'ansible_ssh_host=10.90.0.3 ip=10.90.0.3')])
+        result = self.inv.exists_hostname(existing_hosts, hostname)
+        self.assertEqual(expected, result)
+
+    def test_exists_hostname_negative(self):
+        hostname = 'node99'
+        expected = False
+        existing_hosts = OrderedDict([
+            ('node1', 'ansible_ssh_host=10.90.0.2 ip=10.90.0.2'),
+            ('node2', 'ansible_ssh_host=10.90.0.3 ip=10.90.0.3')])
+        result = self.inv.exists_hostname(existing_hosts, hostname)
+        self.assertEqual(expected, result)
+
+    def test_exists_ip_positive(self):
+        ip = '10.90.0.2'
+        expected = True
+        existing_hosts = OrderedDict([
+            ('node1', 'ansible_ssh_host=10.90.0.2 ip=10.90.0.2'),
+            ('node2', 'ansible_ssh_host=10.90.0.3 ip=10.90.0.3')])
+        result = self.inv.exists_ip(existing_hosts, ip)
+        self.assertEqual(expected, result)
+
+    def test_exists_ip_negative(self):
+        ip = '10.90.0.200'
+        expected = False
+        existing_hosts = OrderedDict([
+            ('node1', 'ansible_ssh_host=10.90.0.2 ip=10.90.0.2'),
+            ('node2', 'ansible_ssh_host=10.90.0.3 ip=10.90.0.3')])
+        result = self.inv.exists_ip(existing_hosts, ip)
+        self.assertEqual(expected, result)
+
+    def test_delete_host_by_ip_positive(self):
+        ip = '10.90.0.2'
+        expected = OrderedDict([
+            ('node2', 'ansible_ssh_host=10.90.0.3 ip=10.90.0.3')])
+        existing_hosts = OrderedDict([
+            ('node1', 'ansible_ssh_host=10.90.0.2 ip=10.90.0.2'),
+            ('node2', 'ansible_ssh_host=10.90.0.3 ip=10.90.0.3')])
+        self.inv.delete_host_by_ip(existing_hosts, ip)
+        self.assertEqual(expected, existing_hosts)
+
+    def test_delete_host_by_ip_negative(self):
+        ip = '10.90.0.200'
+        existing_hosts = OrderedDict([
+            ('node1', 'ansible_ssh_host=10.90.0.2 ip=10.90.0.2'),
+            ('node2', 'ansible_ssh_host=10.90.0.3 ip=10.90.0.3')])
+        self.assertRaisesRegexp(ValueError, "Unable to find host",
+                                self.inv.delete_host_by_ip, existing_hosts, ip)
+
+    def test_purge_invalid_hosts(self):
+        proper_hostnames = ['node1', 'node2']
+        bad_host = 'doesnotbelong2'
+        existing_hosts = OrderedDict([
+            ('node1', 'ansible_ssh_host=10.90.0.2 ip=10.90.0.2'),
+            ('node2', 'ansible_ssh_host=10.90.0.3 ip=10.90.0.3'),
+            ('doesnotbelong2', 'whateveropts=ilike')])
+        self.inv.config['all'] = existing_hosts
+        self.inv.purge_invalid_hosts(proper_hostnames)
+        self.assertTrue(bad_host not in self.inv.config['all'].keys())
+
+    def test_add_host_to_group(self):
+        group = 'etcd'
+        host = 'node1'
+        opts = 'ip=10.90.0.2'
+
+        self.inv.add_host_to_group(group, host, opts)
+        self.assertEqual(self.inv.config[group].get(host), opts)
+
+    def test_set_kube_master(self):
+        group = 'kube-master'
+        host = 'node1'
+
+        self.inv.set_kube_master([host])
+        self.assertTrue(host in self.inv.config[group])
+
+    def test_set_all(self):
+        group = 'all'
+        hosts = OrderedDict([
+            ('node1', 'opt1'),
+            ('node2', 'opt2')])
+
+        self.inv.set_all(hosts)
+        for host, opt in hosts.items():
+            self.assertEqual(self.inv.config[group].get(host), opt)
+
+    def test_set_k8s_cluster(self):
+        group = 'k8s-cluster:children'
+        expected_hosts = ['kube-node', 'kube-master']
+
+        self.inv.set_k8s_cluster()
+        for host in expected_hosts:
+            self.assertTrue(host in self.inv.config[group])
+
+    def test_set_kube_node(self):
+        group = 'kube-node'
+        host = 'node1'
+
+        self.inv.set_kube_node([host])
+        self.assertTrue(host in self.inv.config[group])
+
+    def test_set_etcd(self):
+        group = 'etcd'
+        host = 'node1'
+
+        self.inv.set_etcd([host])
+        self.assertTrue(host in self.inv.config[group])
diff --git a/tox.ini b/tox.ini
index c448871..0718d18 100644
--- a/tox.ini
+++ b/tox.ini
@@ -1,12 +1,17 @@
 [tox]
 minversion = 1.6
 skipsdist = True
-envlist = bashate,pep8
+envlist = bashate, pep8, py27
 
 [testenv]
+whitelist_externals = py.test
+usedevelop = True
 deps =
     -r{toxinidir}/requirements.txt
     -r{toxinidir}/test-requirements.txt
+setenv = VIRTUAL_ENV={envdir}
+passenv = http_proxy HTTP_PROXY https_proxy HTTPS_PROXY no_proxy NO_PROXY
+commands = py.test -vv #{posargs:tests}
 
 [testenv:doc8]
 commands = doc8 doc
@@ -38,7 +43,7 @@ commands = bash -c "find {toxinidir} -type f -name '*.sh' -not -path '*/.tox/*'
 usedevelop = False
 whitelist_externals = bash
 commands =
-    bash -c "find {toxinidir} -type f name '*.py' -print0 | xargs -0 flake8"
+    bash -c "find {toxinidir}/* -type f -name '*.py' -print0 | xargs -0 flake8"
 
 [testenv:venv]
 commands = {posargs}
diff --git a/utils/jenkins/kargo_deploy.sh b/utils/jenkins/kargo_deploy.sh
index 8c05342..6da8a6a 100755
--- a/utils/jenkins/kargo_deploy.sh
+++ b/utils/jenkins/kargo_deploy.sh
@@ -98,15 +98,13 @@ for slaveip in ${SLAVE_IPS[@]}; do
     # Add VM label:
     ssh $SSH_OPTIONS $ADMIN_USER@$slaveip "echo $VM_LABEL > /home/${ADMIN_USER}/vm_label"
 
-    deploy_args+=" node${current_slave}[ansible_ssh_host=${slaveip},ip=${slaveip}]"
+    inventory_args+=" ${slaveip}"
     ((current_slave++))
 done
 
 echo "Setting up required dependencies..."
 ssh $SSH_OPTIONS $ADMIN_USER@$ADMIN_IP sudo apt-get update
-ssh $SSH_OPTIONS $ADMIN_USER@$ADMIN_IP sudo apt-get install -y git python-dev python3-dev python-pip gcc libssl-dev libffi-dev vim software-properties-common
-ssh $SSH_OPTIONS $ADMIN_USER@$ADMIN_IP "sudo easy_install setuptools"
-ssh $SSH_OPTIONS $ADMIN_USER@$ADMIN_IP "sudo pip install 'cryptography>=1.3.2' 'cffi>=1.6.0'"
+ssh $SSH_OPTIONS $ADMIN_USER@$ADMIN_IP sudo apt-get install -y git vim software-properties-common
 
 echo "Setting up ansible..."
 case $NODE_BASE_OS in
@@ -126,18 +124,15 @@ case $NODE_BASE_OS in
 esac
 ssh $SSH_OPTIONS $ADMIN_USER@$ADMIN_IP 'sudo sh -c "apt-get install -y ansible"'
 
-echo "Setting up kargo-cli..."
-ssh $SSH_OPTIONS $ADMIN_USER@$ADMIN_IP git clone https://github.com/kubespray/kargo-cli.git
-# Workaround for kargo prepare bug
-ssh $SSH_OPTIONS $ADMIN_USER@$ADMIN_IP "sudo sh -c 'cd kargo-cli && git checkout 4fabe51301ba805f57024d5a511c78f58b6d9aa9'"
-ssh $SSH_OPTIONS $ADMIN_USER@$ADMIN_IP "sudo sh -c 'cd kargo-cli && python setup.py install'"
-
 echo "Checking out kargo playbook..."
 ssh $SSH_OPTIONS $ADMIN_USER@$ADMIN_IP git clone $KARGO_REPO
 ssh $SSH_OPTIONS $ADMIN_USER@$ADMIN_IP "sh -c 'cd kargo && git checkout $KARGO_COMMIT'"
 
-echo "Preparing kargo node..."
-ssh $SSH_OPTIONS $ADMIN_USER@$ADMIN_IP kargo prepare -y --noclone --nodes $deploy_args
+echo "Setting up primary node for deployment..."
+scp $SSH_OPTIONS ${BASH_SOURCE%/*}/../kargo/inventory.py $ADMIN_USER@$ADMIN_IP:inventory.py
+ssh $SSH_OPTIONS $ADMIN_USER@$ADMIN_IP chmod +x inventory.py
+ssh $SSH_OPTIONS $ADMIN_USER@$ADMIN_IP env CONFIG_FILE=kargo/inventory/inventory.cfg python3 inventory.py ${SLAVE_IPS[@]}
+
 cat $WORKSPACE/id_rsa | ssh $SSH_OPTIONS $ADMIN_USER@${SLAVE_IPS[0]} "cat - > .ssh/id_rsa"
 ssh $SSH_OPTIONS $ADMIN_USER@$ADMIN_IP chmod 600 .ssh/id_rsa
 
diff --git a/utils/kargo/inventory.py b/utils/kargo/inventory.py
new file mode 100644
index 0000000..d65bb48
--- /dev/null
+++ b/utils/kargo/inventory.py
@@ -0,0 +1,184 @@
+#!/usr/bin/python
+# Usage: kargo_inventory.py ip1 [ip2 ...]
+# Examples: kargo_inventory.py 10.10.1.3 10.10.1.4 10.10.1.5
+#
+# Advanced usage:
+# Add another host after initial creation: kargo_inventory.py 10.10.1.5
+# Delete a host: kargo_inventory.py -10.10.1.3
+# Delete a host by id: kargo_inventory.py -node1
+
+from collections import OrderedDict
+try:
+    import configparser
+except ImportError:
+    import ConfigParser as configparser
+
+import os
+import re
+import sys
+
+ROLES = ['kube-master', 'all', 'k8s-cluster:children', 'kube-node', 'etcd']
+PROTECTED_NAMES = ROLES
+_boolean_states = {'1': True, 'yes': True, 'true': True, 'on': True,
+                   '0': False, 'no': False, 'false': False, 'off': False}
+
+
+def get_var_as_bool(name, default):
+    value = os.environ.get(name, '')
+    return _boolean_states.get(value.lower(), default)
+
+CONFIG_FILE = os.environ.get("CONFIG_FILE", "./inventory.cfg")
+DEBUG = get_var_as_bool("DEBUG", True)
+HOST_PREFIX = os.environ.get("HOST_PREFIX", "node")
+
+
+class KargoInventory(object):
+
+    def __init__(self, changed_hosts=None, config_file=None):
+        self.config = configparser.ConfigParser(allow_no_value=True,
+                                                delimiters=('\t', ' '))
+        if config_file:
+            self.config.read(config_file)
+
+        self.ensure_required_groups(ROLES)
+
+        if changed_hosts:
+            self.hosts = self.build_hostnames(changed_hosts)
+            self.purge_invalid_hosts(self.hosts.keys(), PROTECTED_NAMES)
+            self.set_kube_master(list(self.hosts.keys())[:2])
+            self.set_all(self.hosts)
+            self.set_k8s_cluster()
+            self.set_kube_node(self.hosts.keys())
+            self.set_etcd(list(self.hosts.keys())[:3])
+
+        if config_file:
+            with open(config_file, 'w') as f:
+                self.config.write(f)
+
+    def debug(self, msg):
+        if DEBUG:
+            print("DEBUG: {0}".format(msg))
+
+    def get_ip_from_opts(self, optstring):
+        opts = optstring.split(' ')
+        for opt in opts:
+            if '=' not in opt:
+                continue
+            k, v = opt.split('=')
+            if k == "ip":
+                return v
+        raise ValueError("IP parameter not found in options")
+
+    def ensure_required_groups(self, groups):
+        for group in groups:
+            try:
+                self.config.add_section(group)
+            except configparser.DuplicateSectionError:
+                pass
+
+    def get_host_id(self, host):
+        '''Returns integer host ID (without padding) from a given hostname.'''
+        try:
+            short_hostname = host.split('.')[0]
+            return int(re.findall("\d+$", short_hostname)[-1])
+        except IndexError:
+            raise ValueError("Host name must end in an integer")
+
+    def build_hostnames(self, changed_hosts):
+        existing_hosts = OrderedDict()
+        highest_host_id = 0
+        try:
+            for host, opts in self.config.items('all'):
+                existing_hosts[host] = opts
+                host_id = self.get_host_id(host)
+                if host_id > highest_host_id:
+                    highest_host_id = host_id
+        except configparser.NoSectionError:
+            pass
+
+        # FIXME(mattymo): Fix condition where delete then add reuses highest id
+        next_host_id = highest_host_id + 1
+
+        all_hosts = existing_hosts.copy()
+        for host in changed_hosts:
+            if host[0] == "-":
+                realhost = host[1:]
+                if self.exists_hostname(all_hosts, realhost):
+                    self.debug("Marked {0} for deletion.".format(realhost))
+                    all_hosts.pop(realhost)
+                elif self.exists_ip(all_hosts, realhost):
+                    self.debug("Marked {0} for deletion.".format(realhost))
+                    self.delete_host_by_ip(all_hosts, realhost)
+            elif host[0].isdigit():
+                if self.exists_hostname(all_hosts, host):
+                    self.debug("Skipping existing host {0}.".format(host))
+                    continue
+                elif self.exists_ip(all_hosts, host):
+                    self.debug("Skipping existing host {0}.".format(host))
+                    continue
+
+                next_host = "{0}{1}".format(HOST_PREFIX, next_host_id)
+                next_host_id += 1
+                all_hosts[next_host] = "ansible_ssh_host={0} ip={1}".format(
+                    host, host)
+            elif host[0].isalpha():
+                raise Exception("Adding hosts by hostname is not supported.")
+
+        return all_hosts
+
+    def exists_hostname(self, existing_hosts, hostname):
+        return hostname in existing_hosts.keys()
+
+    def exists_ip(self, existing_hosts, ip):
+        for host_opts in existing_hosts.values():
+            if ip == self.get_ip_from_opts(host_opts):
+                return True
+        return False
+
+    def delete_host_by_ip(self, existing_hosts, ip):
+        for hostname, host_opts in existing_hosts.items():
+            if ip == self.get_ip_from_opts(host_opts):
+                del existing_hosts[hostname]
+                return
+        raise ValueError("Unable to find host by IP: {0}".format(ip))
+
+    def purge_invalid_hosts(self, hostnames, protected_names=[]):
+        for role in self.config.sections():
+            for host, _ in self.config.items(role):
+                if host not in hostnames and host not in protected_names:
+                    self.debug("Host {0} removed from role {1}".format(host,
+                               role))
+                    self.config.remove_option(role, host)
+
+    def add_host_to_group(self, group, host, opts=""):
+        self.debug("adding host {0} to group {1}".format(host, group))
+        self.config.set(group, host, opts)
+
+    def set_kube_master(self, hosts):
+        for host in hosts:
+            self.add_host_to_group('kube-master', host)
+
+    def set_all(self, hosts):
+        for host, opts in hosts.items():
+            self.add_host_to_group('all', host, opts)
+
+    def set_k8s_cluster(self):
+        self.add_host_to_group('k8s-cluster:children', 'kube-node')
+        self.add_host_to_group('k8s-cluster:children', 'kube-master')
+
+    def set_kube_node(self, hosts):
+        for host in hosts:
+            self.add_host_to_group('kube-node', host)
+
+    def set_etcd(self, hosts):
+        for host in hosts:
+            self.add_host_to_group('etcd', host)
+
+
+def main(argv=None):
+    if not argv:
+        argv = sys.argv[1:]
+    KargoInventory(argv, CONFIG_FILE)
+
+if __name__ == "__main__":
+    sys.exit(main())
diff --git a/utils/packer/debian8.5/scripts/packages.sh b/utils/packer/debian8.5/scripts/packages.sh
index 15e7825..6b2fb95 100644
--- a/utils/packer/debian8.5/scripts/packages.sh
+++ b/utils/packer/debian8.5/scripts/packages.sh
@@ -50,5 +50,4 @@ python-setuptools
 apt-get -y install $PACKAGES
 
 #Installer/CCP tools
-pip install git+https://github.com/kubespray/kargo-cli.git --upgrade
 pip install git+https://git.openstack.org/openstack/fuel-ccp.git --upgrade
diff --git a/utils/packer/ubuntu16.04/scripts/packages.sh b/utils/packer/ubuntu16.04/scripts/packages.sh
index a6e5eb1..33b3860 100644
--- a/utils/packer/ubuntu16.04/scripts/packages.sh
+++ b/utils/packer/ubuntu16.04/scripts/packages.sh
@@ -25,5 +25,4 @@ ansible
 apt-get -y install $PACKAGES
 
 #Installer/CCP tools
-pip install git+https://github.com/kubespray/kargo-cli.git --upgrade
 pip install git+https://git.openstack.org/openstack/fuel-ccp.git --upgrade