diff --git a/include/sway/layers.h b/include/sway/layers.h
index 73fb7cb8..22054be1 100644
--- a/include/sway/layers.h
+++ b/include/sway/layers.h
@@ -21,4 +21,7 @@ struct sway_layer_surface {
 	struct wlr_box geo;
 };
 
+struct sway_output;
+void arrange_layers(struct sway_output *output);
+
 #endif
diff --git a/include/sway/output.h b/include/sway/output.h
index 769d44d0..44d009d1 100644
--- a/include/sway/output.h
+++ b/include/sway/output.h
@@ -4,6 +4,7 @@
 #include <wayland-server.h>
 #include <wlr/types/wlr_box.h>
 #include <wlr/types/wlr_output.h>
+#include <unistd.h>
 
 struct sway_server;
 struct sway_container;
@@ -18,7 +19,10 @@ struct sway_output {
 	struct wlr_box usable_area;
 
 	struct wl_listener frame;
-	struct wl_listener output_destroy;
+	struct wl_listener destroy;
+	struct wl_listener mode;
+
+	pid_t bg_pid;
 };
 
 #endif
diff --git a/sway/commands/output.c b/sway/commands/output.c
index e747eb4e..35bc8099 100644
--- a/sway/commands/output.c
+++ b/sway/commands/output.c
@@ -188,7 +188,7 @@ static struct cmd_results *cmd_output_background(struct output_config *output,
 		}
 
 		wordexp_t p;
-		char *src = join_args(argv + *i - 1, j);
+		char *src = join_args(argv + *i, j);
 		if (wordexp(src, &p, 0) != 0 || p.we_wordv[0] == NULL) {
 			return cmd_results_new(CMD_INVALID, "output",
 				"Invalid syntax (%s).", src);
diff --git a/sway/config/output.c b/sway/config/output.c
index 69e883f1..c4168b4f 100644
--- a/sway/config/output.c
+++ b/sway/config/output.c
@@ -1,9 +1,12 @@
 #define _XOPEN_SOURCE 700
+#include <assert.h>
 #include <stdbool.h>
 #include <string.h>
-#include <assert.h>
+#include <signal.h>
+#include <sys/wait.h>
 #include <wlr/types/wlr_output.h>
 #include <wlr/types/wlr_output_layout.h>
+#include <unistd.h>
 #include "sway/config.h"
 #include "sway/output.h"
 #include "log.h"
@@ -107,6 +110,16 @@ static void set_mode(struct wlr_output *output, int width, int height,
 	}
 }
 
+void terminate_swaybg(pid_t pid) {
+	int ret = kill(pid, SIGTERM);
+	if (ret != 0) {
+		wlr_log(L_ERROR, "Unable to terminate swaybg [pid: %d]", pid);
+	} else {
+		int status;
+		waitpid(pid, &status, 0);
+	}
+}
+
 void apply_output_config(struct output_config *oc, swayc_t *output) {
 	assert(output->type == C_OUTPUT);
 
@@ -160,12 +173,12 @@ void apply_output_config(struct output_config *oc, swayc_t *output) {
 	}
 
 	if (oc && oc->background) {
-		// TODO swaybg
-		/*if (output->bg_pid != 0) {
-			terminate_swaybg(output->bg_pid);
+		if (output->sway_output->bg_pid != 0) {
+			terminate_swaybg(output->sway_output->bg_pid);
 		}
 
-		wlr_log(L_DEBUG, "Setting background for output %d to %s", output_i, oc->background);
+		wlr_log(L_DEBUG, "Setting background for output %d to %s",
+				output_i, oc->background);
 
 		size_t bufsize = 12;
 		char output_id[bufsize];
@@ -173,17 +186,17 @@ void apply_output_config(struct output_config *oc, swayc_t *output) {
 		output_id[bufsize-1] = 0;
 
 		char *const cmd[] = {
-			"swaybg",
+			"./swaybg/swaybg",
 			output_id,
 			oc->background,
 			oc->background_option,
 			NULL,
 		};
 
-		output->bg_pid = fork();
-		if (output->bg_pid == 0) {
+		output->sway_output->bg_pid = fork();
+		if (output->sway_output->bg_pid == 0) {
 			execvp(cmd[0], cmd);
-		}*/
+		}
 	}
 }
 
diff --git a/sway/desktop/layer_shell.c b/sway/desktop/layer_shell.c
index 3cf171bd..a2506d21 100644
--- a/sway/desktop/layer_shell.c
+++ b/sway/desktop/layer_shell.c
@@ -1,40 +1,261 @@
+#include <stdbool.h>
 #include <stdlib.h>
+#include <string.h>
 #include <wayland-server.h>
+#include <wlr/types/wlr_box.h>
+#include <wlr/types/wlr_layer_shell.h>
+#include <wlr/types/wlr_output.h>
 #include <wlr/util/log.h>
 #include "sway/layers.h"
+#include "sway/layout.h"
 #include "sway/output.h"
 #include "sway/server.h"
 
-static void arrange_layers(struct sway_output *output) {
-	// TODO
+static void apply_exclusive(struct wlr_box *usable_area,
+		uint32_t anchor, int32_t exclusive,
+		int32_t margin_top, int32_t margin_right,
+		int32_t margin_bottom, int32_t margin_left) {
+	if (exclusive <= 0) {
+		return;
+	}
+	struct {
+		uint32_t anchors;
+		int *positive_axis;
+		int *negative_axis;
+		int margin;
+	} edges[] = {
+		{
+			.anchors =
+				ZWLR_LAYER_SURFACE_V1_ANCHOR_LEFT |
+				ZWLR_LAYER_SURFACE_V1_ANCHOR_RIGHT |
+				ZWLR_LAYER_SURFACE_V1_ANCHOR_TOP,
+			.positive_axis = &usable_area->y,
+			.negative_axis = &usable_area->height,
+			.margin = margin_top,
+		},
+		{
+			.anchors =
+				ZWLR_LAYER_SURFACE_V1_ANCHOR_LEFT |
+				ZWLR_LAYER_SURFACE_V1_ANCHOR_RIGHT |
+				ZWLR_LAYER_SURFACE_V1_ANCHOR_BOTTOM,
+			.positive_axis = NULL,
+			.negative_axis = &usable_area->height,
+			.margin = margin_bottom,
+		},
+		{
+			.anchors =
+				ZWLR_LAYER_SURFACE_V1_ANCHOR_LEFT |
+				ZWLR_LAYER_SURFACE_V1_ANCHOR_TOP |
+				ZWLR_LAYER_SURFACE_V1_ANCHOR_BOTTOM,
+			.positive_axis = &usable_area->x,
+			.negative_axis = &usable_area->width,
+			.margin = margin_left,
+		},
+		{
+			.anchors =
+				ZWLR_LAYER_SURFACE_V1_ANCHOR_RIGHT |
+				ZWLR_LAYER_SURFACE_V1_ANCHOR_TOP |
+				ZWLR_LAYER_SURFACE_V1_ANCHOR_BOTTOM,
+			.positive_axis = NULL,
+			.negative_axis = &usable_area->width,
+			.margin = margin_right,
+		},
+	};
+	for (size_t i = 0; i < sizeof(edges) / sizeof(edges[0]); ++i) {
+		if ((anchor & edges[i].anchors) == edges[i].anchors) {
+			if (edges[i].positive_axis) {
+				*edges[i].positive_axis += exclusive + edges[i].margin;
+			}
+			if (edges[i].negative_axis) {
+				*edges[i].negative_axis -= exclusive + edges[i].margin;
+			}
+		}
+	}
+}
+
+static void arrange_layer(struct sway_output *output, struct wl_list *list,
+		struct wlr_box *usable_area, bool exclusive) {
+	struct sway_layer_surface *sway_layer;
+	struct wlr_box full_area = { 0 };
+	wlr_output_effective_resolution(output->wlr_output,
+			&full_area.width, &full_area.height);
+	wl_list_for_each(sway_layer, list, link) {
+		struct wlr_layer_surface *layer = sway_layer->layer_surface;
+		struct wlr_layer_surface_state *state = &layer->current;
+		if (exclusive != (state->exclusive_zone > 0)) {
+			continue;
+		}
+		struct wlr_box bounds;
+		if (state->exclusive_zone == -1) {
+			bounds = full_area;
+		} else {
+			bounds = *usable_area;
+		}
+		struct wlr_box box = {
+			.width = state->desired_width,
+			.height = state->desired_height
+		};
+		// Horizontal axis
+		const uint32_t both_horiz = ZWLR_LAYER_SURFACE_V1_ANCHOR_LEFT
+			| ZWLR_LAYER_SURFACE_V1_ANCHOR_RIGHT;
+		if ((state->anchor & both_horiz) && box.width == 0) {
+			box.x = bounds.x;
+			box.width = bounds.width;
+		} else if ((state->anchor & ZWLR_LAYER_SURFACE_V1_ANCHOR_LEFT)) {
+			box.x = bounds.x;
+		} else if ((state->anchor & ZWLR_LAYER_SURFACE_V1_ANCHOR_RIGHT)) {
+			box.x = bounds.x + (bounds.width - box.width);
+		} else {
+			box.x = bounds.x + ((bounds.width / 2) - (box.width / 2));
+		}
+		// Vertical axis
+		const uint32_t both_vert = ZWLR_LAYER_SURFACE_V1_ANCHOR_TOP
+			| ZWLR_LAYER_SURFACE_V1_ANCHOR_BOTTOM;
+		if ((state->anchor & both_vert) && box.height == 0) {
+			box.y = bounds.y;
+			box.height = bounds.height;
+		} else if ((state->anchor & ZWLR_LAYER_SURFACE_V1_ANCHOR_TOP)) {
+			box.y = bounds.y;
+		} else if ((state->anchor & ZWLR_LAYER_SURFACE_V1_ANCHOR_BOTTOM)) {
+			box.y = bounds.y + (bounds.height - box.height);
+		} else {
+			box.y = bounds.y + ((bounds.height / 2) - (box.height / 2));
+		}
+		// Margin
+		if ((state->anchor & both_horiz) == both_horiz) {
+			box.x += state->margin.left;
+			box.width -= state->margin.left + state->margin.right;
+		} else if ((state->anchor & ZWLR_LAYER_SURFACE_V1_ANCHOR_LEFT)) {
+			box.x += state->margin.left;
+		} else if ((state->anchor & ZWLR_LAYER_SURFACE_V1_ANCHOR_RIGHT)) {
+			box.x -= state->margin.right;
+		}
+		if ((state->anchor & both_vert) == both_vert) {
+			box.y += state->margin.top;
+			box.height -= state->margin.top + state->margin.bottom;
+		} else if ((state->anchor & ZWLR_LAYER_SURFACE_V1_ANCHOR_TOP)) {
+			box.y += state->margin.top;
+		} else if ((state->anchor & ZWLR_LAYER_SURFACE_V1_ANCHOR_BOTTOM)) {
+			box.y -= state->margin.bottom;
+		}
+		if (box.width < 0 || box.height < 0) {
+			// TODO: Bubble up a protocol error?
+			wlr_layer_surface_close(layer);
+			continue;
+		}
+		// Apply
+		sway_layer->geo = box;
+		apply_exclusive(usable_area, state->anchor, state->exclusive_zone,
+				state->margin.top, state->margin.right,
+				state->margin.bottom, state->margin.left);
+		wlr_layer_surface_configure(layer, box.width, box.height);
+	}
+}
+
+void arrange_layers(struct sway_output *output) {
+	struct wlr_box usable_area = { 0 };
+	wlr_output_effective_resolution(output->wlr_output,
+			&usable_area.width, &usable_area.height);
+	struct wlr_box usable_area_before = output->usable_area;
+
+	// Arrange exclusive surfaces from top->bottom
+	arrange_layer(output, &output->layers[ZWLR_LAYER_SHELL_V1_LAYER_OVERLAY],
+			&usable_area, true);
+	arrange_layer(output, &output->layers[ZWLR_LAYER_SHELL_V1_LAYER_TOP],
+			&usable_area, true);
+	arrange_layer(output, &output->layers[ZWLR_LAYER_SHELL_V1_LAYER_BOTTOM],
+			&usable_area, true);
+	arrange_layer(output, &output->layers[ZWLR_LAYER_SHELL_V1_LAYER_BACKGROUND],
+			&usable_area, true);
+	memcpy(&output->usable_area, &usable_area, sizeof(struct wlr_box));
+
+	if (memcmp(&usable_area_before,
+			&usable_area, sizeof(struct wlr_box)) != 0) {
+		wlr_log(L_DEBUG, "arrange");
+		arrange_windows(output->swayc, -1, -1);
+	}
+
+	// Arrange non-exlusive surfaces from top->bottom
+	usable_area.x = usable_area.y = 0;
+	wlr_output_effective_resolution(output->wlr_output,
+			&usable_area.width, &usable_area.height);
+	arrange_layer(output, &output->layers[ZWLR_LAYER_SHELL_V1_LAYER_OVERLAY],
+			&usable_area, false);
+	arrange_layer(output, &output->layers[ZWLR_LAYER_SHELL_V1_LAYER_TOP],
+			&usable_area, false);
+	arrange_layer(output, &output->layers[ZWLR_LAYER_SHELL_V1_LAYER_BOTTOM],
+			&usable_area, false);
+	arrange_layer(output, &output->layers[ZWLR_LAYER_SHELL_V1_LAYER_BACKGROUND],
+			&usable_area, false);
 }
 
 static void handle_output_destroy(struct wl_listener *listener, void *data) {
-	// TODO
+	struct sway_layer_surface *sway_layer =
+		wl_container_of(listener, sway_layer, output_destroy);
+	sway_layer->layer_surface->output = NULL;
+	wl_list_remove(&sway_layer->output_destroy.link);
+	wl_list_remove(&sway_layer->output_mode.link);
+	wlr_layer_surface_close(sway_layer->layer_surface);
 }
 
 static void handle_output_mode(struct wl_listener *listener, void *data) {
-	// TODO
+	struct wlr_output *output = data;
+	arrange_layers((struct sway_output *)output->data);
 }
 
 static void handle_output_transform(struct wl_listener *listener, void *data) {
-	// TODO
+	struct wlr_output *output = data;
+	arrange_layers((struct sway_output *)output->data);
 }
 
 static void handle_surface_commit(struct wl_listener *listener, void *data) {
-	// TODO
+	struct sway_layer_surface *layer =
+		wl_container_of(listener, layer, surface_commit);
+	struct wlr_layer_surface *layer_surface = layer->layer_surface;
+	struct wlr_output *wlr_output = layer_surface->output;
+	if (wlr_output != NULL) {
+		struct sway_output *output = wlr_output->data;
+		struct wlr_box old_geo = layer->geo;
+		arrange_layers(output);
+		if (memcmp(&old_geo, &layer->geo, sizeof(struct wlr_box)) != 0) {
+			// TODO DAMAGE apply whole surface from previous and new geos
+		} else {
+			// TODO DAMAGE from surface damage
+		}
+	}
+}
+
+static void unmap(struct wlr_layer_surface *layer_surface) {
+	// TODO DAMAGE
 }
 
 static void handle_destroy(struct wl_listener *listener, void *data) {
-	// TODO
+	struct sway_layer_surface *sway_layer = wl_container_of(
+			listener, sway_layer, destroy);
+	if (sway_layer->layer_surface->mapped) {
+		unmap(sway_layer->layer_surface);
+	}
+	wl_list_remove(&sway_layer->link);
+	wl_list_remove(&sway_layer->destroy.link);
+	wl_list_remove(&sway_layer->map.link);
+	wl_list_remove(&sway_layer->unmap.link);
+	wl_list_remove(&sway_layer->surface_commit.link);
+	wl_list_remove(&sway_layer->output_destroy.link);
+	wl_list_remove(&sway_layer->output_mode.link);
+	wl_list_remove(&sway_layer->output_transform.link);
+	struct sway_output *output = sway_layer->layer_surface->output->data;
+	arrange_layers(output);
+	free(sway_layer);
 }
 
 static void handle_map(struct wl_listener *listener, void *data) {
-	// TODO
+	// TODO DAMAGE
 }
 
 static void handle_unmap(struct wl_listener *listener, void *data) {
-	// TODO
+	struct sway_layer_surface *sway_layer = wl_container_of(
+			listener, sway_layer, unmap);
+	unmap(sway_layer->layer_surface);
 }
 
 void handle_layer_shell_surface(struct wl_listener *listener, void *data) {
diff --git a/sway/desktop/output.c b/sway/desktop/output.c
index a9aa47a6..59f79a81 100644
--- a/sway/desktop/output.c
+++ b/sway/desktop/output.c
@@ -4,14 +4,17 @@
 #include <time.h>
 #include <wayland-server.h>
 #include <wlr/render/wlr_renderer.h>
+#include <wlr/types/wlr_box.h>
 #include <wlr/types/wlr_matrix.h>
 #include <wlr/types/wlr_output.h>
+#include <wlr/types/wlr_output_layout.h>
 #include <wlr/types/wlr_surface.h>
 #include <wlr/types/wlr_wl_shell.h>
 #include "log.h"
 #include "sway/container.h"
 #include "sway/input/input-manager.h"
 #include "sway/input/seat.h"
+#include "sway/layers.h"
 #include "sway/layout.h"
 #include "sway/output.h"
 #include "sway/server.h"
@@ -177,6 +180,20 @@ static void output_frame_view(swayc_t *view, void *data) {
 	}
 }
 
+static void render_layer(struct sway_output *output,
+		const struct wlr_box *output_layout_box,
+		struct timespec *when,
+		struct wl_list *layer) {
+	struct sway_layer_surface *sway_layer;
+	wl_list_for_each(sway_layer, layer, link) {
+		struct wlr_layer_surface *layer = sway_layer->layer_surface;
+		render_surface(layer->surface, output->wlr_output, when,
+				sway_layer->geo.x + output_layout_box->x,
+				sway_layer->geo.y + output_layout_box->y, 0);
+		wlr_surface_send_frame_done(layer->surface, when);
+	}
+}
+
 static void output_frame_notify(struct wl_listener *listener, void *data) {
 	struct sway_output *soutput = wl_container_of(listener, soutput, frame);
 	struct wlr_output *wlr_output = data;
@@ -189,6 +206,18 @@ static void output_frame_notify(struct wl_listener *listener, void *data) {
 	wlr_output_make_current(wlr_output, &buffer_age);
 	wlr_renderer_begin(server->renderer, wlr_output->width, wlr_output->height);
 
+	struct timespec now;
+	clock_gettime(CLOCK_MONOTONIC, &now);
+
+	struct wlr_output_layout *layout = root_container.sway_root->output_layout;
+	const struct wlr_box *output_box = wlr_output_layout_get_box(
+			layout, wlr_output);
+
+	render_layer(soutput, output_box, &now,
+			&soutput->layers[ZWLR_LAYER_SHELL_V1_LAYER_BACKGROUND]);
+	render_layer(soutput, output_box, &now,
+			&soutput->layers[ZWLR_LAYER_SHELL_V1_LAYER_BOTTOM]);
+
 	struct sway_seat *seat = input_manager_current_seat(input_manager);
 	swayc_t *focus = sway_seat_get_focus_inactive(seat, soutput->swayc);
 	swayc_t *workspace = (focus->type == C_WORKSPACE ?
@@ -210,22 +239,32 @@ static void output_frame_notify(struct wl_listener *listener, void *data) {
 		}
 	}
 
+	// TODO: Consider revising this when fullscreen windows are supported
+	render_layer(soutput, output_box, &now,
+			&soutput->layers[ZWLR_LAYER_SHELL_V1_LAYER_TOP]);
+	render_layer(soutput, output_box, &now,
+			&soutput->layers[ZWLR_LAYER_SHELL_V1_LAYER_OVERLAY]);
+
 	wlr_renderer_end(server->renderer);
 	wlr_output_swap_buffers(wlr_output, &soutput->last_frame, NULL);
 
-	struct timespec now;
-	clock_gettime(CLOCK_MONOTONIC, &now);
 	soutput->last_frame = now;
 }
 
 static void handle_output_destroy(struct wl_listener *listener, void *data) {
-	struct sway_output *output = wl_container_of(listener, output, output_destroy);
+	struct sway_output *output = wl_container_of(listener, output, destroy);
 	struct wlr_output *wlr_output = data;
 	wlr_log(L_DEBUG, "Output %p %s removed", wlr_output, wlr_output->name);
 
 	destroy_output(output->swayc);
 }
 
+static void handle_output_mode(struct wl_listener *listener, void *data) {
+	struct sway_output *output = wl_container_of(listener, output, mode);
+	arrange_layers(output);
+	arrange_windows(output->swayc, -1, -1);
+}
+
 void handle_new_output(struct wl_listener *listener, void *data) {
 	struct sway_server *server = wl_container_of(listener, server, new_output);
 	struct wlr_output *wlr_output = data;
@@ -260,9 +299,11 @@ void handle_new_output(struct wl_listener *listener, void *data) {
 
 	wl_signal_add(&wlr_output->events.frame, &output->frame);
 	output->frame.notify = output_frame_notify;
+	wl_signal_add(&wlr_output->events.destroy, &output->destroy);
+	output->destroy.notify = handle_output_destroy;
+	wl_signal_add(&wlr_output->events.mode, &output->mode);
+	output->mode.notify = handle_output_mode;
 
-	wl_signal_add(&wlr_output->events.destroy, &output->output_destroy);
-	output->output_destroy.notify = handle_output_destroy;
-
+	arrange_layers(output);
 	arrange_windows(&root_container, -1, -1);
 }
diff --git a/sway/desktop/xwayland.c b/sway/desktop/xwayland.c
index 6b5e03f9..f9b5242b 100644
--- a/sway/desktop/xwayland.c
+++ b/sway/desktop/xwayland.c
@@ -84,7 +84,7 @@ static void set_activated(struct sway_view *view, bool activated) {
 	wlr_xwayland_surface_activate(surface, activated);
 }
 
-static void close(struct sway_view *view) {
+static void close_view(struct sway_view *view) {
 	if (!assert_xwayland(view)) {
 		return;
 	}
@@ -203,7 +203,7 @@ void handle_xwayland_surface(struct wl_listener *listener, void *data) {
 	sway_view->iface.set_size = set_size;
 	sway_view->iface.set_position = set_position;
 	sway_view->iface.set_activated = set_activated;
-	sway_view->iface.close = close;
+	sway_view->iface.close = close_view;
 	sway_view->wlr_xwayland_surface = xsurface;
 	sway_view->sway_xwayland_surface = sway_surface;
 	sway_view->surface = xsurface->surface;
diff --git a/sway/tree/container.c b/sway/tree/container.c
index 705221d7..bbafe9ec 100644
--- a/sway/tree/container.c
+++ b/sway/tree/container.c
@@ -254,7 +254,9 @@ swayc_t *destroy_output(swayc_t *output) {
 		}
 	}
 
-	wl_list_remove(&output->sway_output->output_destroy.link);
+	wl_list_remove(&output->sway_output->frame.link);
+	wl_list_remove(&output->sway_output->destroy.link);
+	wl_list_remove(&output->sway_output->mode.link);
 
 	wlr_log(L_DEBUG, "OUTPUT: Destroying output '%s'", output->name);
 	free_swayc(output);
diff --git a/sway/tree/layout.c b/sway/tree/layout.c
index 3d04a1a7..de9e7b58 100644
--- a/sway/tree/layout.c
+++ b/sway/tree/layout.c
@@ -204,10 +204,13 @@ void arrange_windows(swayc_t *container, double width, double height) {
 	case C_WORKSPACE:
 		{
 			swayc_t *output = swayc_parent_by_type(container, C_OUTPUT);
-			container->width = output->width;
-			container->height = output->height;
-			container->x = x;
-			container->y = y;
+			struct wlr_box *area = &output->sway_output->usable_area;
+			wlr_log(L_DEBUG, "Usable area for ws: %dx%d@%d,%d",
+					area->width, area->height, area->x, area->y);
+			container->width = area->width;
+			container->height = area->height;
+			container->x = x = area->x;
+			container->y = y = area->y;
 			wlr_log(L_DEBUG, "Arranging workspace '%s' at %f, %f",
 					container->name, container->x, container->y);
 		}