diff --git a/arch/x86/xen/enlighten.c b/arch/x86/xen/enlighten.c
index 53282dc7d5ac..23b91bf9b663 100644
--- a/arch/x86/xen/enlighten.c
+++ b/arch/x86/xen/enlighten.c
@@ -470,7 +470,7 @@ int __init arch_xen_unpopulated_init(struct resource **res)
 		 * driver to know how much of the physmap is unpopulated and
 		 * set an accurate initial memory target.
 		 */
-		xen_released_pages += xen_extra_mem[i].n_pfns;
+		xen_unpopulated_pages += xen_extra_mem[i].n_pfns;
 		/* Zero so region is not also added to the balloon driver. */
 		xen_extra_mem[i].n_pfns = 0;
 	}
diff --git a/drivers/xen/balloon.c b/drivers/xen/balloon.c
index 49c3f9926394..8c44a25a7d2b 100644
--- a/drivers/xen/balloon.c
+++ b/drivers/xen/balloon.c
@@ -724,6 +724,7 @@ static int __init balloon_add_regions(void)
 static int __init balloon_init(void)
 {
 	struct task_struct *task;
+	unsigned long current_pages;
 	int rc;
 
 	if (!xen_domain())
@@ -731,12 +732,18 @@ static int __init balloon_init(void)
 
 	pr_info("Initialising balloon driver\n");
 
-	if (xen_released_pages >= get_num_physpages()) {
-		WARN(1, "Released pages underflow current target");
-		return -ERANGE;
+	if (xen_pv_domain()) {
+		if (xen_released_pages >= xen_start_info->nr_pages)
+			goto underflow;
+		current_pages = min(xen_start_info->nr_pages -
+		                    xen_released_pages, max_pfn);
+	} else {
+		if (xen_unpopulated_pages >= get_num_physpages())
+			goto underflow;
+		current_pages = get_num_physpages() - xen_unpopulated_pages;
 	}
 
-	balloon_stats.current_pages = get_num_physpages() - xen_released_pages;
+	balloon_stats.current_pages = current_pages;
 	balloon_stats.target_pages  = balloon_stats.current_pages;
 	balloon_stats.balloon_low   = 0;
 	balloon_stats.balloon_high  = 0;
@@ -767,6 +774,10 @@ static int __init balloon_init(void)
 	xen_balloon_init();
 
 	return 0;
+
+ underflow:
+	WARN(1, "Released pages underflow current target");
+	return -ERANGE;
 }
 subsys_initcall(balloon_init);
 
diff --git a/drivers/xen/unpopulated-alloc.c b/drivers/xen/unpopulated-alloc.c
index d6fc2aefe264..1dc0b495c8e5 100644
--- a/drivers/xen/unpopulated-alloc.c
+++ b/drivers/xen/unpopulated-alloc.c
@@ -18,6 +18,9 @@ static unsigned int list_count;
 
 static struct resource *target_resource;
 
+/* Pages to subtract from the memory count when setting balloon target. */
+unsigned long xen_unpopulated_pages __initdata;
+
 /*
  * If arch is not happy with system "iomem_resource" being used for
  * the region allocation it can provide it's own view by creating specific
diff --git a/include/xen/xen.h b/include/xen/xen.h
index 61854e3f2837..f280c5dcf923 100644
--- a/include/xen/xen.h
+++ b/include/xen/xen.h
@@ -69,11 +69,13 @@ extern u64 xen_saved_max_mem_size;
 #endif
 
 #ifdef CONFIG_XEN_UNPOPULATED_ALLOC
+extern unsigned long xen_unpopulated_pages;
 int xen_alloc_unpopulated_pages(unsigned int nr_pages, struct page **pages);
 void xen_free_unpopulated_pages(unsigned int nr_pages, struct page **pages);
 #include <linux/ioport.h>
 int arch_xen_unpopulated_init(struct resource **res);
 #else
+#define xen_unpopulated_pages 0UL
 #include <xen/balloon.h>
 static inline int xen_alloc_unpopulated_pages(unsigned int nr_pages,
 		struct page **pages)