diff --git a/pkg/executor/build.go b/pkg/executor/build.go
index 5e10d16b54..9931cae572 100644
--- a/pkg/executor/build.go
+++ b/pkg/executor/build.go
@@ -18,7 +18,6 @@ package executor
 
 import (
 	"bytes"
-	"encoding/json"
 	"fmt"
 	"io"
 	"io/ioutil"
@@ -85,23 +84,6 @@ func newStageBuilder(opts *config.KanikoOptions, stage config.KanikoStage) (*sta
 	}, nil
 }
 
-// key will return a string representation of the build at the cmd
-func (s *stageBuilder) key(cmd string) (string, error) {
-	fsKey, err := s.snapshotter.Key()
-	if err != nil {
-		return "", err
-	}
-	c := bytes.NewBuffer([]byte{})
-	enc := json.NewEncoder(c)
-	enc.Encode(s.cf)
-	cf, err := util.SHA256(c)
-	if err != nil {
-		return "", err
-	}
-	logrus.Debugf("%s\n%s\n%s\n%s\n", s.baseImageDigest, fsKey, cf, cmd)
-	return util.SHA256(bytes.NewReader([]byte(s.baseImageDigest + fsKey + cf + cmd)))
-}
-
 // extractCachedLayer will extract the cached layer and append it to the config file
 func (s *stageBuilder) extractCachedLayer(layer v1.Image, createdBy string) error {
 	logrus.Infof("Found cached layer, extracting to filesystem")
@@ -138,6 +120,14 @@ func (s *stageBuilder) build(opts *config.KanikoOptions) error {
 	if err := s.snapshotter.Init(); err != nil {
 		return err
 	}
+
+	// Set the initial cache key to be the base image digest, the build args and the SrcContext.
+	compositeKey := NewCompositeCache(s.baseImageDigest)
+	if err := compositeKey.AddDir(opts.SrcContext); err != nil {
+		return err
+	}
+	compositeKey.AddKey(opts.BuildArgs...)
+
 	args := dockerfile.NewBuildArgs(opts.BuildArgs)
 	for index, cmd := range s.stage.Commands {
 		finalCmd := index == len(s.stage.Commands)-1
@@ -148,13 +138,18 @@ func (s *stageBuilder) build(opts *config.KanikoOptions) error {
 		if command == nil {
 			continue
 		}
+
+		// Add the next command to the cache key.
+		compositeKey.AddKey(command.String())
 		logrus.Info(command.String())
-		cacheKey, err := s.key(command.String())
+
+		ck, err := compositeKey.Hash()
 		if err != nil {
-			return errors.Wrap(err, "getting key")
+			return err
 		}
+
 		if command.CacheCommand() && opts.Cache {
-			image, err := cache.RetrieveLayer(opts, cacheKey)
+			image, err := cache.RetrieveLayer(opts, ck)
 			if err == nil {
 				if err := s.extractCachedLayer(image, command.String()); err != nil {
 					return errors.Wrap(err, "extracting cached layer")
@@ -213,7 +208,7 @@ func (s *stageBuilder) build(opts *config.KanikoOptions) error {
 		}
 		// Push layer to cache now along with new config file
 		if command.CacheCommand() && opts.Cache {
-			if err := pushLayerToCache(opts, cacheKey, layer, command.String()); err != nil {
+			if err := pushLayerToCache(opts, ck, layer, command.String()); err != nil {
 				return err
 			}
 		}
diff --git a/pkg/executor/composite_cache.go b/pkg/executor/composite_cache.go
new file mode 100644
index 0000000000..a944eb5591
--- /dev/null
+++ b/pkg/executor/composite_cache.go
@@ -0,0 +1,74 @@
+/*
+Copyright 2018 Google LLC
+
+Licensed under the Apache License, Version 2.0 (the "License");
+you may not use this file except in compliance with the License.
+You may obtain a copy of the License at
+
+    http://www.apache.org/licenses/LICENSE-2.0
+
+Unless required by applicable law or agreed to in writing, software
+distributed under the License is distributed on an "AS IS" BASIS,
+WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+See the License for the specific language governing permissions and
+limitations under the License.
+*/
+
+package executor
+
+import (
+	"crypto/sha256"
+	"os"
+	"path/filepath"
+	"strings"
+
+	"github.com/GoogleContainerTools/kaniko/pkg/util"
+)
+
+// NewCompositeCache returns an initialized composite cache object.
+func NewCompositeCache(initial ...string) *CompositeCache {
+	c := CompositeCache{
+		keys: initial,
+	}
+	return &c
+}
+
+// CompositeCache is a type that generates a cache key from a series of keys.
+type CompositeCache struct {
+	keys []string
+}
+
+// AddKey adds the specified key to the sequence.
+func (s *CompositeCache) AddKey(k ...string) {
+	s.keys = append(s.keys, k...)
+}
+
+// AddDir adds the contents of a directory to the composite key.
+func (s *CompositeCache) AddDir(p string) error {
+	sha := sha256.New()
+	if err := filepath.Walk(p, func(path string, fi os.FileInfo, err error) error {
+		fileHash, err := util.CacheHasher()(path)
+		if err != nil {
+			return err
+		}
+		if _, err := sha.Write([]byte(fileHash)); err != nil {
+			return err
+		}
+		return nil
+	}); err != nil {
+		return err
+	}
+
+	s.AddKey(string(sha.Sum(nil)))
+	return nil
+}
+
+// Key returns the human readable composite key as a string.
+func (s *CompositeCache) Key() string {
+	return strings.Join(s.keys, "-")
+}
+
+// Hash returns the composite key in a string SHA256 format.
+func (s *CompositeCache) Hash() (string, error) {
+	return util.SHA256(strings.NewReader(s.Key()))
+}