diff --git a/nixos/modules/services/system/nix-daemon.nix b/nixos/modules/services/system/nix-daemon.nix
index ef740b9ba8d94..5798f30ca7b45 100644
--- a/nixos/modules/services/system/nix-daemon.nix
+++ b/nixos/modules/services/system/nix-daemon.nix
@@ -62,6 +62,101 @@ in
       ];
     })
     (lib.mkRemovedOptionModule [ "nix" "daemonNiceLevel" ] "Consider nix.daemonCPUSchedPolicy instead.")
+    {
+      # Unprivileged Nix daemon
+      config = lib.mkIf (cfg.daemonUser != "root") {
+        assertions = [
+          {
+            message = ''
+              The Nix daemon cannot run as the root group when not running as the root user.
+            '';
+            assertion = cfg.daemonGroup != "root";
+          }
+          {
+            message = ''
+              Nix must have the `local-overlay-store` experimental feature when not running as the root user.
+            '';
+            assertion = lib.elem "local-overlay-store" cfg.settings.experimental-features;
+          }
+          {
+            message = ''
+              Nix must have the `auto-allocate-uids` experimental feature when not running as the root user.
+            '';
+            assertion = lib.elem "auto-allocate-uids" cfg.settings.experimental-features;
+          }
+        ];
+
+        nix.settings = {
+          sandbox = true;
+
+          auto-allocate-uids = true;
+
+          # No such group would exist within the sandbox, so chowning to it would fail
+          build-users-group = "";
+
+          # Default settings from Nix, we need to specify them here to use them in nix code though
+          start-id = lib.mkDefault (832 * 1024 * 1024);
+          id-count = lib.mkDefault (128 * 65536);
+        };
+
+        systemd.services.nix-daemon = {
+          # Nix assumes it should use `daemon` if it isn't root, so we have to set `NIX_REMOTE` anyway
+          environment.NIX_REMOTE = "local?use-roots-daemon=true";
+          serviceConfig = {
+            User = cfg.daemonUser;
+            Group = cfg.daemonGroup;
+
+            # Empty string needed to disable old Exec
+            ExecStart = [
+              ""
+              "${nixPackage}/libexec/nix-nswrapper ${toString cfg.settings.start-id} ${toString cfg.settings.id-count} ${nixPackage}/bin/nix-daemon --daemon"
+            ];
+          };
+        };
+
+        # We can't remount rw while unprivileged
+        boot.nixStoreMountOpts = [
+          "nodev"
+          "nosuid"
+        ];
+
+        users.users."${cfg.daemonUser}" = {
+          subUidRanges = [
+            {
+              startUid = cfg.settings.start-id;
+              count = cfg.settings.id-count;
+            }
+          ];
+          subGidRanges = [
+            {
+              startGid = cfg.settings.start-id;
+              count = cfg.settings.id-count;
+            }
+          ];
+        };
+
+        systemd.tmpfiles.rules = [
+          "d /nix/store                 0755 ${config.nix.daemonUser} ${config.nix.daemonGroup} - -"
+          "Z /nix/var                   0755 ${config.nix.daemonUser} ${config.nix.daemonGroup} - -"
+          "d /nix/var/nix/builds        0755 ${config.nix.daemonUser} ${config.nix.daemonGroup} - 7d"
+          "d /nix/var/nix/daemon-socket 0755 ${config.nix.daemonUser} ${config.nix.daemonGroup} - -"
+        ];
+
+        systemd.services.nix-roots-daemon = {
+          serviceConfig.ExecStart = "${config.nix.package.out}/bin/nix --extra-experimental-features nix-command store roots-daemon";
+        };
+        systemd.sockets.nix-roots-daemon = {
+          wantedBy = [
+            "nix-daemon.service"
+          ];
+          listenStreams = [ "/nix/var/nix/gc-roots-socket/socket" ];
+          unitConfig = {
+            ConditionPathIsReadWrite = "/nix/var/nix/gc-roots-socket";
+            RequiresMountsFor = "/nix/store";
+          };
+        };
+      };
+    }
   ];
 
   ###### interface
@@ -88,6 +183,24 @@ in
         '';
       };
 
+      daemonUser = lib.mkOption {
+        type = lib.types.str;
+        default = "root";
+        description = ''
+          User to use to run the Nix daemon.
+          If this is not "root" then the Nix daemon will set several settings to preserve functionality.
+          When setting this option, you must also set `nix.daemonGroup`.
+        '';
+      };
+
+      daemonGroup = lib.mkOption {
+        type = lib.types.str;
+        default = "root";
+        description = ''
+          Group to use to run the Nix daemon.
+        '';
+      };
+
       daemonCPUSchedPolicy = lib.mkOption {
         type = lib.types.enum [
           "other"
@@ -192,7 +305,8 @@ in
 
     systemd.packages = [ nixPackage ];
 
-    systemd.tmpfiles.packages = [ nixPackage ];
+    # The upstream Nix tmpfiles.d file assumes the daemon runs as root
+    systemd.tmpfiles.packages = lib.mkIf (cfg.daemonUser == "root") [ nixPackage ];
 
     systemd.sockets.nix-daemon.wantedBy = [ "sockets.target" ];
 
@@ -200,7 +314,9 @@ in
       path = [
         nixPackage
         config.programs.ssh.package
-      ];
+      ]
+      # For running "newuidmap"
+      ++ lib.optional (cfg.daemonUser != "root") "/run/wrappers";
 
       environment =
         cfg.envVars
diff --git a/nixos/tests/all-tests.nix b/nixos/tests/all-tests.nix
index a4c56e474fba1..bff977f16733b 100644
--- a/nixos/tests/all-tests.nix
+++ b/nixos/tests/all-tests.nix
@@ -1099,6 +1099,7 @@ in
   nix-channel = pkgs.callPackage ../modules/config/nix-channel/test.nix { };
   nix-config = runTest ./nix-config.nix;
   nix-daemon-firewall = runTest ./nix-daemon-firewall.nix;
+  nix-daemon-unprivileged = runTest ./nix-daemon-unprivileged.nix;
   nix-ld = runTest ./nix-ld.nix;
   nix-misc = handleTest ./nix/misc.nix { };
   nix-required-mounts = runTest ./nix-required-mounts;
diff --git a/nixos/tests/nix-daemon-unprivileged.nix b/nixos/tests/nix-daemon-unprivileged.nix
new file mode 100644
index 0000000000000..34aa3d8b83ce0
--- /dev/null
+++ b/nixos/tests/nix-daemon-unprivileged.nix
@@ -0,0 +1,38 @@
+{ lib, pkgs, ... }:
+{
+  name = "nix-daemon-unprivileged";
+  meta.maintainers = with lib.maintainers; [ artemist ];
+
+  nodes.machine = {
+    users.groups.nix-daemon = { };
+    users.users.nix-daemon = {
+      isSystemUser = true;
+      group = "nix-daemon";
+    };
+
+    nix = {
+      package = pkgs.nixVersions.git;
+      daemonUser = "nix-daemon";
+      daemonGroup = "nix-daemon";
+      settings.experimental-features = [
+        "local-overlay-store"
+        "auto-allocate-uids"
+      ];
+    };
+
+    # Easiest way to get a file onto the machine
+    environment.etc."test.nix".text = ''
+      derivation {
+        name = "test";
+        builder = "/bin/sh";
+        args = [ "-c" "echo succeeded > $out" ];
+        system = "${pkgs.stdenv.hostPlatform.system}";
+      }
+    '';
+  };
+  testScript = ''
+    start_all()
+    machine.wait_for_unit("sockets.target")
+    machine.succeed("NIX_REMOTE=daemon nix-build /etc/test.nix")
+  '';
+}