diff --git a/hydra-module.nix b/hydra-module.nix
index 3639d490..81d13a10 100644
--- a/hydra-module.nix
+++ b/hydra-module.nix
@@ -230,6 +230,7 @@ in
           hydra_logo ${cfg.logo}
         ''}
         gc_roots_dir ${cfg.gcRootsDir}
+        use-substitutes ${if cfg.useSubstitutes then "1" else "0"}
       '';
 
     environment.systemPackages = [ cfg.package ];
@@ -325,7 +326,7 @@ in
           IN_SYSTEMD = "1"; # to get log severity levels
         };
         serviceConfig =
-          { ExecStart = "@${cfg.package}/bin/hydra-queue-runner hydra-queue-runner -v --option build-use-substitutes ${if cfg.useSubstitutes then "true" else "false"}";
+          { ExecStart = "@${cfg.package}/bin/hydra-queue-runner hydra-queue-runner -v";
             ExecStopPost = "${cfg.package}/bin/hydra-queue-runner --unlock";
             User = "hydra-queue-runner";
             Restart = "always";
diff --git a/src/hydra-queue-runner/build-remote.cc b/src/hydra-queue-runner/build-remote.cc
index 58e26176..130f9780 100644
--- a/src/hydra-queue-runner/build-remote.cc
+++ b/src/hydra-queue-runner/build-remote.cc
@@ -202,7 +202,7 @@ void State::buildRemote(ref<Store> destStore,
            a no-op for regular stores, but for the binary cache store,
            this will copy the inputs to the binary cache from the local
            store. */
-        destStore->buildPaths(basicDrv.inputSrcs);
+        copyClosure(ref<Store>(localStore), destStore, basicDrv.inputSrcs);
 
         /* Copy the input closure. */
         if (/* machine->sshName != "localhost" */ true) {
diff --git a/src/hydra-queue-runner/hydra-queue-runner.cc b/src/hydra-queue-runner/hydra-queue-runner.cc
index 27d2a023..fe08ab06 100644
--- a/src/hydra-queue-runner/hydra-queue-runner.cc
+++ b/src/hydra-queue-runner/hydra-queue-runner.cc
@@ -71,12 +71,6 @@ MaintainCount State::startDbUpdate()
 }
 
 
-ref<Store> State::getLocalStore()
-{
-    return ref<Store>(_localStore);
-}
-
-
 ref<Store> State::getDestStore()
 {
     return ref<Store>(_destStore);
@@ -797,14 +791,20 @@ void State::run(BuildID buildOne)
     if (!lock)
         throw Error("hydra-queue-runner is already running");
 
-    _localStore = openStore();
+    localStore = openStore();
 
     if (hydraConfig["store_uri"] == "") {
-        _destStore = _localStore;
+        _destStore = localStore;
     } else {
         _destStore = openStoreAt(hydraConfig["store_uri"]);
     }
 
+    auto isTrue = [](const std::string & s) {
+        return s == "1" || s == "true";
+    };
+
+    useSubstitutes = isTrue(hydraConfig["use-substitutes"]);
+
     {
         auto conn(dbPool.get());
         clearBusy(*conn, 0);
diff --git a/src/hydra-queue-runner/queue-monitor.cc b/src/hydra-queue-runner/queue-monitor.cc
index 3b3fb997..86c6bf2e 100644
--- a/src/hydra-queue-runner/queue-monitor.cc
+++ b/src/hydra-queue-runner/queue-monitor.cc
@@ -29,13 +29,12 @@ void State::queueMonitorLoop()
     receiver buildsBumped(*conn, "builds_bumped");
     receiver jobsetSharesChanged(*conn, "jobset_shares_changed");
 
-    auto localStore = getLocalStore();
     auto destStore = getDestStore();
 
     unsigned int lastBuildId = 0;
 
     while (true) {
-        bool done = getQueuedBuilds(*conn, localStore, destStore, lastBuildId);
+        bool done = getQueuedBuilds(*conn, destStore, lastBuildId);
 
         /* Sleep until we get notification from the database about an
            event. */
@@ -69,7 +68,7 @@ struct PreviousFailure : public std::exception {
 };
 
 
-bool State::getQueuedBuilds(Connection & conn, ref<Store> localStore,
+bool State::getQueuedBuilds(Connection & conn,
     ref<Store> destStore, unsigned int & lastBuildId)
 {
     printMsg(lvlInfo, format("checking the queue for builds > %1%...") % lastBuildId);
@@ -415,29 +414,44 @@ Step::ptr State::createStep(ref<Store> destStore,
     bool valid = true;
     PathSet outputs = step->drv.outputPaths();
     DerivationOutputs missing;
-    PathSet missingPaths;
     for (auto & i : step->drv.outputs)
         if (!destStore->isValidPath(i.second.path)) {
             valid = false;
             missing[i.first] = i.second;
-            missingPaths.insert(i.second.path);
         }
 
-    /* Try to substitute the missing paths. Note: can't use the more
-       efficient querySubstitutablePaths() here because upstream Hydra
-       servers don't allow it (they have "WantMassQuery: 0"). */
-    assert(missing.size() == missingPaths.size());
-    if (!missing.empty() && settings.useSubstitutes) {
-        SubstitutablePathInfos infos;
-        destStore->querySubstitutablePathInfos(missingPaths, infos); // FIXME
-        if (infos.size() == missingPaths.size()) {
+    /* Try to copy the missing paths from the local store or from
+       substitutes. */
+    if (!missing.empty()) {
+
+        size_t avail = 0;
+        for (auto & i : missing) {
+            if (/* localStore != destStore && */ localStore->isValidPath(i.second.path))
+                avail++;
+            else if (useSubstitutes) {
+                SubstitutablePathInfos infos;
+                localStore->querySubstitutablePathInfos({i.second.path}, infos);
+                if (infos.size() == 1)
+                    avail++;
+            }
+        }
+
+        if (missing.size() == avail) {
             valid = true;
             for (auto & i : missing) {
                 try {
-                    printMsg(lvlInfo, format("substituting output ‘%1%’ of ‘%2%’") % i.second.path % drvPath);
-
                     time_t startTime = time(0);
-                    destStore->ensurePath(i.second.path);
+
+                    if (localStore->isValidPath(i.second.path))
+                        printInfo("copying output ‘%1%’ of ‘%2%’ from local store", i.second.path, drvPath);
+                    else {
+                        printInfo("substituting output ‘%1%’ of ‘%2%’", i.second.path, drvPath);
+                        localStore->ensurePath(i.second.path);
+                        // FIXME: should copy directly from substituter to destStore.
+                    }
+
+                    copyClosure(ref<Store>(localStore), destStore, {i.second.path});
+
                     time_t stopTime = time(0);
 
                     {
@@ -448,6 +462,7 @@ Step::ptr State::createStep(ref<Store> destStore,
                     }
 
                 } catch (Error & e) {
+                    printError("while copying/substituting output ‘%s’ of ‘%s’: %s", i.second.path, drvPath, e.what());
                     valid = false;
                     break;
                 }
diff --git a/src/hydra-queue-runner/state.hh b/src/hydra-queue-runner/state.hh
index 684af317..92bba1ae 100644
--- a/src/hydra-queue-runner/state.hh
+++ b/src/hydra-queue-runner/state.hh
@@ -257,6 +257,8 @@ private:
 
     std::map<std::string, std::string> hydraConfig;
 
+    bool useSubstitutes = false;
+
     /* The queued builds. */
     typedef std::map<BuildID, Build::ptr> Builds;
     nix::Sync<Builds> builds;
@@ -374,7 +376,7 @@ private:
 
     std::atomic<time_t> lastDispatcherCheck{0};
 
-    std::shared_ptr<nix::Store> _localStore;
+    std::shared_ptr<nix::Store> localStore;
     std::shared_ptr<nix::Store> _destStore;
 
     /* Token server to prevent threads from allocating too many big
@@ -401,10 +403,6 @@ private:
 
     MaintainCount startDbUpdate();
 
-    /* Return a store object that can access derivations produced by
-       hydra-evaluator. */
-    nix::ref<nix::Store> getLocalStore();
-
     /* Return a store object to store build results. */
     nix::ref<nix::Store> getDestStore();
 
@@ -436,7 +434,7 @@ private:
     void queueMonitorLoop();
 
     /* Check the queue for new builds. */
-    bool getQueuedBuilds(Connection & conn, nix::ref<nix::Store> localStore,
+    bool getQueuedBuilds(Connection & conn,
         nix::ref<nix::Store> destStore, unsigned int & lastBuildId);
 
     /* Handle cancellation, deletion and priority bumps. */