Index: cloud-init-0.7.9/cloudinit/config/cc_disk_setup.py
===================================================================
--- cloud-init-0.7.9.orig/cloudinit/config/cc_disk_setup.py
+++ cloud-init-0.7.9/cloudinit/config/cc_disk_setup.py
@@ -910,12 +910,23 @@ def mkfs(fs_cfg):
                         "must be set.", label)
 
     # Create the commands
+    shell = False
     if fs_cmd:
         fs_cmd = fs_cfg['cmd'] % {
             'label': label,
             'filesystem': fs_type,
             'device': device,
         }
+        shell = True
+
+        if overwrite:
+            LOG.warning(
+                "fs_setup:overwrite ignored because cmd was specified: %s",
+                fs_cmd)
+        if fs_opts:
+            LOG.warning(
+                "fs_setup:extra_opts ignored because cmd was specified: %s",
+                fs_cmd)
     else:
         # Find the mkfs command
         mkfs_cmd = util.which("mkfs.%s" % fs_type)
@@ -936,14 +947,14 @@ def mkfs(fs_cfg):
         if overwrite or device_type(device) == "disk":
             fs_cmd.append(lookup_force_flag(fs_type))
 
-    # Add the extends FS options
-    if fs_opts:
-        fs_cmd.extend(fs_opts)
+        # Add the extends FS options
+        if fs_opts:
+            fs_cmd.extend(fs_opts)
 
     LOG.debug("Creating file system %s on %s", label, device)
-    LOG.debug("     Using cmd: %s", " ".join(fs_cmd))
+    LOG.debug("     Using cmd: %s", str(fs_cmd))
     try:
-        util.subp(fs_cmd)
+        util.subp(fs_cmd, shell=shell)
     except Exception as e:
         raise Exception("Failed to exec of '%s':\n%s" % (fs_cmd, e))
 
Index: cloud-init-0.7.9/doc/examples/cloud-config-disk-setup.txt
===================================================================
--- cloud-init-0.7.9.orig/doc/examples/cloud-config-disk-setup.txt
+++ cloud-init-0.7.9/doc/examples/cloud-config-disk-setup.txt
@@ -155,11 +155,11 @@ fs_setup:
      filesystem: 'ext3'
      device: 'ephemeral0'
      partition: 'auto'
-   - label:  mylabl2
+   - label: mylabl2
      filesystem: 'ext4'
      device: '/dev/xvda1'
-   - special:
-     cmd: mkfs -t %(FILESYSTEM)s -L %(LABEL)s %(DEVICE)s
+   - cmd: mkfs -t %(filesystem)s -L %(label)s %(device)s
+     label: mylabl3
      filesystem: 'btrfs'
      device: '/dev/xvdh'
 
Index: cloud-init-0.7.9/tests/unittests/test_handler/test_handler_disk_setup.py
===================================================================
--- cloud-init-0.7.9.orig/tests/unittests/test_handler/test_handler_disk_setup.py
+++ cloud-init-0.7.9/tests/unittests/test_handler/test_handler_disk_setup.py
@@ -17,6 +17,10 @@ class TestIsDiskUsed(TestCase):
         self.check_fs = self.patches.enter_context(
             mock.patch('{0}.check_fs'.format(mod_name)))
 
+    def tearDown(self):
+        super(TestIsDiskUsed, self).tearDown()
+        self.patches.close()
+
     def test_multiple_child_nodes_returns_true(self):
         self.enumerate_disk.return_value = (mock.MagicMock() for _ in range(2))
         self.check_fs.return_value = (mock.MagicMock(), None, mock.MagicMock())
@@ -103,4 +107,57 @@ class TestGetPartitionMbrLayout(TestCase
             ',{0},83\n,,82'.format(expected_partition_size),
             cc_disk_setup.get_partition_mbr_layout(disk_size, [33, [66, 82]]))
 
+
+@mock.patch('cloudinit.config.cc_disk_setup.find_device_node',
+            return_value=('/dev/xdb1', False))
+@mock.patch('cloudinit.config.cc_disk_setup.device_type', return_value=None)
+@mock.patch('cloudinit.config.cc_disk_setup.util.subp', return_value=('', ''))
+class TestMkfsCommandHandling(TestCase):
+
+    def test_with_cmd(self, subp, *args):
+        """mkfs honors cmd and logs warnings when extra_opts or overwrite are
+        provided."""
+        with self.assertLogs(
+                'cloudinit.config.cc_disk_setup') as logs:
+            cc_disk_setup.mkfs({
+                'cmd': 'mkfs -t %(filesystem)s -L %(label)s %(device)s',
+                'filesystem': 'ext4',
+                'device': '/dev/xdb1',
+                'label': 'with_cmd',
+                'extra_opts': ['should', 'generate', 'warning'],
+                'overwrite': 'should generate warning too'
+            })
+
+        self.assertIn(
+            'WARNING:cloudinit.config.cc_disk_setup:fs_setup:extra_opts ' +
+            'ignored because cmd was specified: mkfs -t ext4 -L with_cmd ' +
+            '/dev/xdb1',
+            logs.output)
+        self.assertIn(
+            'WARNING:cloudinit.config.cc_disk_setup:fs_setup:overwrite ' +
+            'ignored because cmd was specified: mkfs -t ext4 -L with_cmd ' +
+            '/dev/xdb1',
+            logs.output)
+
+        subp.assert_called_once_with(
+            'mkfs -t ext4 -L with_cmd /dev/xdb1', shell=True)
+
+    @mock.patch('cloudinit.config.cc_disk_setup.util.which')
+    def test_overwrite_and_extra_opts_without_cmd(self, m_which, subp, *args):
+        """mkfs observes extra_opts and overwrite settings when cmd is not
+        present."""
+        m_which.side_effect = lambda p: {'mkfs.ext4': '/sbin/mkfs.ext4'}[p]
+        cc_disk_setup.mkfs({
+            'filesystem': 'ext4',
+            'device': '/dev/xdb1',
+            'label': 'without_cmd',
+            'extra_opts': ['are', 'added'],
+            'overwrite': True
+        })
+
+        subp.assert_called_once_with(
+            ['/sbin/mkfs.ext4', '/dev/xdb1',
+             '-L', 'without_cmd', '-F', 'are', 'added'],
+            shell=False)
+
 # vi: ts=4 expandtab