Index: lib/Frontend/CompilerInstance.cpp
===================================================================
--- lib/Frontend/CompilerInstance.cpp
+++ lib/Frontend/CompilerInstance.cpp
@@ -302,8 +302,8 @@
 
 void CompilerInstance::createFileManager() {
   if (!hasVirtualFileSystem()) {
-    // TODO: choose the virtual file system based on the CompilerInvocation.
-    setVirtualFileSystem(vfs::getRealFileSystem());
+    setVirtualFileSystem(
+        createVFSFromCompilerInvocation(getInvocation(), getDiagnostics()));
   }
   FileMgr = new FileManager(getFileSystemOpts(), VirtualFileSystem);
 }
Index: unittests/Frontend/CMakeLists.txt
===================================================================
--- unittests/Frontend/CMakeLists.txt
+++ unittests/Frontend/CMakeLists.txt
@@ -4,6 +4,7 @@
 
 add_clang_unittest(FrontendTests
   ASTUnitTest.cpp
+  CompilerInstanceTest.cpp
   FrontendActionTest.cpp
   CodeGenActionTest.cpp
   PCHPreambleTest.cpp
Index: unittests/Frontend/CompilerInstanceTest.cpp
===================================================================
--- /dev/null
+++ unittests/Frontend/CompilerInstanceTest.cpp
@@ -0,0 +1,82 @@
+//===- unittests/Frontend/CompilerInstanceTest.cpp - ASTUnit tests --------===//
+//
+//                     The LLVM Compiler Infrastructure
+//
+// This file is distributed under the University of Illinois Open Source
+// License. See LICENSE.TXT for details.
+//
+//===----------------------------------------------------------------------===//
+
+#include <fstream>
+
+#include "clang/Frontend/ASTUnit.h"
+#include "clang/Frontend/CompilerInstance.h"
+#include "clang/Frontend/CompilerInvocation.h"
+#include "clang/Frontend/PCHContainerOperations.h"
+#include "llvm/Support/FileSystem.h"
+#include "llvm/Support/Path.h"
+#include "llvm/Support/ToolOutputFile.h"
+#include "gtest/gtest.h"
+
+using namespace llvm;
+using namespace clang;
+
+namespace {
+
+TEST(CompilerInstance, VFSOverlay) {
+  llvm::SmallString<256> CurrentPath;
+  llvm::sys::fs::current_path(CurrentPath);
+
+  int VFSFD;
+  llvm::SmallString<256> VFSFileName;
+  ASSERT_FALSE(
+      llvm::sys::fs::createTemporaryFile("vfs", "yaml", VFSFD, VFSFileName));
+  tool_output_file VFSFile(VFSFileName, VFSFD);
+
+  llvm::sys::fs::make_absolute(CurrentPath, VFSFileName);
+
+  VFSFile.os() << "{ 'version': 0, 'roots': [\n"
+                  "  { 'name': '"
+               << CurrentPath
+               << "',\n"
+                  "    'type': 'directory',\n"
+                  "    'contents': [\n"
+                  "      { 'name': 'virtual.file', 'type': 'file',\n"
+                  "        'external-contents': '"
+               << VFSFileName << "'\n"
+                                 "      }\n"
+                                 "    ]\n"
+                                 "  }\n"
+                                 "]}\n";
+  VFSFile.os().flush();
+
+  int FD;
+  llvm::SmallString<256> InputFileName;
+  ASSERT_FALSE(
+      llvm::sys::fs::createTemporaryFile("vfs", "cpp", FD, InputFileName));
+  tool_output_file input_file(InputFileName, FD);
+  input_file.os() << "";
+
+  std::string VFSArg = "-ivfsoverlay" + VFSFileName.str().str();
+
+  const char *Args[] = {"clang", VFSArg.c_str(), "-xc++",
+                        InputFileName.c_str()};
+
+  IntrusiveRefCntPtr<DiagnosticsEngine> Diags =
+      CompilerInstance::createDiagnostics(new DiagnosticOptions());
+
+  std::shared_ptr<CompilerInvocation> CInvok =
+      createInvocationFromCommandLine(Args, Diags);
+
+  if (!CInvok)
+    FAIL() << "could not create compiler invocation";
+  CompilerInstance Instance;
+  Instance.setDiagnostics(Diags.get());
+  Instance.setInvocation(CInvok);
+  Instance.createFileManager();
+
+  ASSERT_TRUE(Instance.getFileManager().getFile("virtual.file"));
+  ASSERT_FALSE(Instance.getFileManager().getFile("virtual.file2"));
+}
+
+} // anonymous namespace