diff --git a/backend/app/core/config.py b/backend/app/core/config.py
index 9a4adec..a08e6ad 100644
--- a/backend/app/core/config.py
+++ b/backend/app/core/config.py
@@ -24,6 +24,10 @@ class Settings(BaseSettings):
     # Cookie settings
     cookie_domain: str = "localhost"
 
+    # Build sandbox settings
+    sandbox_root: str = "/var/lib/debate/sandbox"
+    iso_output_root: str = "/var/lib/debate/builds"
+
     @property
     def allowed_hosts_list(self) -> list[str]:
         """Parse allowed hosts as a list."""
diff --git a/backend/app/services/__init__.py b/backend/app/services/__init__.py
new file mode 100644
index 0000000..0ed1342
--- /dev/null
+++ b/backend/app/services/__init__.py
@@ -0,0 +1,5 @@
+"""Services package for business logic."""
+
+from backend.app.services.sandbox import BuildSandbox, SandboxConfig
+
+__all__ = ["BuildSandbox", "SandboxConfig"]
diff --git a/backend/app/services/sandbox.py b/backend/app/services/sandbox.py
new file mode 100644
index 0000000..78f23e7
--- /dev/null
+++ b/backend/app/services/sandbox.py
@@ -0,0 +1,129 @@
+"""
+systemd-nspawn sandbox for isolated ISO builds.
+
+Security measures:
+- --private-network: No network access (packages pre-cached in base)
+- --read-only: Immutable root filesystem
+- --tmpfs: Writable temp directories only
+- --capability: Minimal capabilities for mkarchiso
+- Resource limits: 8GB RAM, 4 cores (from CONTEXT.md)
+"""
+
+import asyncio
+import shutil
+from dataclasses import dataclass
+from pathlib import Path
+
+from backend.app.core.config import settings
+
+
+@dataclass
+class SandboxConfig:
+    """Configuration for sandbox execution."""
+
+    memory_limit: str = "8G"
+    cpu_quota: str = "400%"  # 4 cores
+    timeout_seconds: int = 1200  # 20 minutes (with 15min warning)
+    warning_seconds: int = 900  # 15 minutes
+
+
+class BuildSandbox:
+    """Manages systemd-nspawn sandboxed build environments."""
+
+    def __init__(
+        self,
+        sandbox_root: Path | None = None,
+        config: SandboxConfig | None = None,
+    ):
+        self.sandbox_root = sandbox_root or Path(settings.sandbox_root)
+        self.base_path = self.sandbox_root / "base"
+        self.builds_path = self.sandbox_root / "builds"
+        self.config = config or SandboxConfig()
+
+    async def create_build_container(self, build_id: str) -> Path:
+        """
+        Create isolated container for a specific build.
+        Uses overlay filesystem on base for efficiency.
+        """
+        container_path = self.builds_path / build_id
+        if container_path.exists():
+            shutil.rmtree(container_path)
+        container_path.mkdir(parents=True)
+
+        # Copy base (in production, use overlayfs for efficiency)
+        # For now, simple copy is acceptable
+        proc = await asyncio.create_subprocess_exec(
+            "cp",
+            "-a",
+            str(self.base_path) + "/.",
+            str(container_path),
+            stdout=asyncio.subprocess.PIPE,
+            stderr=asyncio.subprocess.PIPE,
+        )
+        await proc.wait()
+
+        return container_path
+
+    async def run_build(
+        self,
+        container_path: Path,
+        profile_path: Path,
+        output_path: Path,
+        source_date_epoch: int,
+    ) -> tuple[int, str, str]:
+        """
+        Execute archiso build in sandboxed container.
+
+        Returns:
+            Tuple of (return_code, stdout, stderr)
+        """
+        output_path.mkdir(parents=True, exist_ok=True)
+
+        nspawn_cmd = [
+            "systemd-nspawn",
+            f"--directory={container_path}",
+            "--private-network",  # No network access
+            "--read-only",  # Immutable root
+            "--tmpfs=/tmp:mode=1777",
+            "--tmpfs=/var/tmp:mode=1777",
+            f"--bind={profile_path}:/build/profile:ro",
+            f"--bind={output_path}:/build/output",
+            f"--setenv=SOURCE_DATE_EPOCH={source_date_epoch}",
+            "--setenv=LC_ALL=C",
+            "--setenv=TZ=UTC",
+            "--capability=CAP_SYS_ADMIN",  # Required for mkarchiso
+            "--console=pipe",
+            "--quiet",
+            "--",
+            "mkarchiso",
+            "-v",
+            "-r",  # Remove work directory after build
+            "-w",
+            "/tmp/archiso-work",
+            "-o",
+            "/build/output",
+            "/build/profile",
+        ]
+
+        proc = await asyncio.create_subprocess_exec(
+            *nspawn_cmd,
+            stdout=asyncio.subprocess.PIPE,
+            stderr=asyncio.subprocess.PIPE,
+        )
+
+        try:
+            stdout, stderr = await asyncio.wait_for(
+                proc.communicate(),
+                timeout=self.config.timeout_seconds,
+            )
+            return_code = proc.returncode if proc.returncode is not None else -1
+            return return_code, stdout.decode(), stderr.decode()
+        except TimeoutError:
+            proc.kill()
+            timeout_msg = f"Build timed out after {self.config.timeout_seconds} seconds"
+            return -1, "", timeout_msg
+
+    async def cleanup_container(self, container_path: Path) -> None:
+        """Remove container after build."""
+        if container_path.exists():
+            shutil.rmtree(container_path)
diff --git a/scripts/setup-sandbox.sh b/scripts/setup-sandbox.sh
new file mode 100755
index 0000000..e6dc89f
--- /dev/null
+++ b/scripts/setup-sandbox.sh
@@ -0,0 +1,55 @@
+#!/bin/bash
+# Initialize sandbox environment for ISO builds
+# Run once to create base container image
+
+set -euo pipefail
+
+SANDBOX_ROOT="${SANDBOX_ROOT:-/var/lib/debate/sandbox}"
+SANDBOX_BASE="${SANDBOX_ROOT}/base"
+ALLOWED_MIRRORS=(
+    "https://geo.mirror.pkgbuild.com/\$repo/os/\$arch"
+    "https://mirror.cachyos.org/repo/\$arch/\$repo"
+)
+
+log() {
+    echo "[$(date '+%Y-%m-%d %H:%M:%S')] $1"
+}
+
+# Check prerequisites
+if ! command -v pacstrap &> /dev/null; then
+    log "ERROR: pacstrap not found. Install arch-install-scripts package."
+    exit 1
+fi
+
+if ! command -v systemd-nspawn &> /dev/null; then
+    log "ERROR: systemd-nspawn not found. Install systemd-container package."
+    exit 1
+fi
+
+# Create sandbox directories
+log "Creating sandbox directories..."
+mkdir -p "$SANDBOX_ROOT"/{base,builds,cache}
+
+# Bootstrap base Arch environment
+if [ ! -d "$SANDBOX_BASE/usr" ]; then
+    log "Bootstrapping base Arch Linux environment..."
+    pacstrap -c -G -M "$SANDBOX_BASE" base archiso
+
+    # Configure mirrors (whitelist only)
+    log "Configuring mirrors..."
+    MIRRORLIST="$SANDBOX_BASE/etc/pacman.d/mirrorlist"
+    : > "$MIRRORLIST"
+    for mirror in "${ALLOWED_MIRRORS[@]}"; do
+        echo "Server = $mirror" >> "$MIRRORLIST"
+    done
+
+    # Set fixed locale for determinism
+    echo "en_US.UTF-8 UTF-8" > "$SANDBOX_BASE/etc/locale.gen"
+    systemd-nspawn -D "$SANDBOX_BASE" locale-gen
+
+    log "Base environment created at $SANDBOX_BASE"
+else
+    log "Base environment already exists at $SANDBOX_BASE"
+fi
+
+log "Sandbox setup complete"