diff --git a/src/libstore/local-overlay-store.cc b/src/libstore/local-overlay-store.cc
index da0c8e3d5..9e530ed9b 100644
--- a/src/libstore/local-overlay-store.cc
+++ b/src/libstore/local-overlay-store.cc
@@ -190,7 +190,23 @@ void LocalOverlayStore::deleteGCPath(const Path & path, uint64_t & bytesFreed)
 
 void LocalOverlayStore::optimiseStore()
 {
-    warn("not implemented");
+    Activity act(*logger, actOptimiseStore);
+
+    // Note for LocalOverlayStore, queryAllValidPaths only returns paths in upper layer
+    auto paths = queryAllValidPaths();
+
+    act.progress(0, paths.size());
+
+    uint64_t done = 0;
+
+    for (auto & path : paths) {
+        if (lowerStore->isValidPath(path)) {
+            // Deduplicate store path
+            deletePath(toUpperPath(path));
+        }
+        done++;
+        act.progress(done, paths.size());
+    }
 }
 
 bool LocalOverlayStore::verifyStore(bool checkContents, RepairFlag repair)
diff --git a/tests/overlay-local-store/optimise-inner.sh b/tests/overlay-local-store/optimise-inner.sh
index c60c742a2..2b778b311 100755
--- a/tests/overlay-local-store/optimise-inner.sh
+++ b/tests/overlay-local-store/optimise-inner.sh
@@ -45,8 +45,7 @@ overlayInode=$(stat -c %i "$overlayPath")
 nix-store --store "$storeB" --optimise
 remountOverlayfs
 
+# Check path only exists in lower store
 stat "$lowerPath"
 stat "$overlayPath"
 expect 1 stat "$upperPath"
-
-#expect 1 stat $(toRealPath "$storeA/nix/store" "$path")