diff --git a/archive/pc_archive.c b/archive/pc_archive.c
index 6e2a977..2e2bd12 100644
--- a/archive/pc_archive.c
+++ b/archive/pc_archive.c
@@ -23,6 +23,13 @@
  *      
  */
 
+/*
+ * This file includes all the archiving related functions. Pathnames are sorted
+ * based on extension (or first 4 chars of name if no extension) and size. A simple
+ * external merge sort is used. This sorting yields better compression ratio.
+ * 
+ * Sorting is enabled for compression levels greater than 2.
+ */
 #include <sys/types.h>
 #include <sys/stat.h>
 #include <fcntl.h>
@@ -57,14 +64,142 @@ AE_IFIFO   Named pipe (fifo)
 #define	ARC_ENTRY_OVRHEAD	500
 #define	ARC_SCRATCH_BUFF_SIZE	(64 *1024)
 #define	MMAP_SIZE		(1024 * 1024)
+#define	SORT_BUF_SIZE		(65536)
+#define	NAMELEN			4
+
+typedef struct member_entry {
+	char name[NAMELEN];
+	uint32_t file_pos; // 32-bit file position to limit memory usage.
+	uint64_t size;
+} member_entry_t;
+
+struct sort_buf {
+	member_entry_t members[SORT_BUF_SIZE]; // Use 1MB per sorted buffer
+	int pos, max;
+	struct sort_buf *next;
+};
 
 static struct arc_list_state {
 	uchar_t *pbuf;
-	uint64_t bufsiz, bufpos, arc_size;
+	uint64_t bufsiz, bufpos, arc_size, pathlist_size;
+	uint32_t fcount;
 	int fd;
+	struct sort_buf *srt, *head;
+	int srt_pos;
 } a_state;
+
 pthread_mutex_t nftw_mutex = PTHREAD_MUTEX_INITIALIZER;
 
+/*
+ * Comparison function for sorting pathname mambers. Sort by name/extension and then
+ * by size.
+ */
+static int
+compare_members(const void *a, const void *b) {
+	int rv, i;
+	member_entry_t *mem1 = (member_entry_t *)a;
+	member_entry_t *mem2 = (member_entry_t *)b;
+
+	rv = 0;
+	for (i = 0; i < NAMELEN; i++) {
+		rv = mem1->name[i] - mem2->name[i];
+		if (rv != 0)
+			return (rv);
+	}
+	if (mem1->size > mem2->size)
+		return (1);
+	else if (mem1->size < mem2->size)
+		return (-1);
+	return (0);
+}
+
+/*
+ * Tell if path entry mem1 is "less than" path entry mem2. This function
+ * is used during the merge phase.
+ */
+static int
+compare_members_lt(member_entry_t *mem1, member_entry_t *mem2) {
+	int rv, i;
+
+	rv = 0;
+	for (i = 0; i < NAMELEN; i++) {
+		rv = mem1->name[i] - mem2->name[i];
+		if (rv < 0)
+			return (1);
+		else if (rv > 0)
+			return (0);
+	}
+	if (mem1->size < mem2->size)
+		return (1);
+	return (0);
+}
+
+/*
+ * Fetch the next entry from the pathlist file. If we are doing sorting then this
+ * fetches the next entry in ascending order of the predetermined sort keys.
+ */
+int
+read_next(pc_ctx_t *pctx, char *fpath)
+{
+	short namelen;
+	ssize_t rbytes;
+
+	if (pctx->enable_archive_sort) {
+		member_entry_t *mem1, *mem2;
+		struct sort_buf *srt, *srt1, *psrt, *psrt1;
+
+		/*
+		 * Here we have a set of sorted buffers and we do the external merge phase where
+		 * we pop the buffer entry that is smallest.
+		 */
+		srt = (struct sort_buf *)pctx->archive_sort_buf;
+		if (!srt) return (0);
+		srt1 = srt;
+		psrt = srt;
+		psrt1 = psrt;
+		mem1 = &(srt->members[srt->pos]);
+		srt = srt->next;
+		while (srt) {
+			mem2 = &(srt->members[srt->pos]);
+			if (compare_members_lt(mem2, mem1)) {
+				mem1 = mem2;
+				srt1 = srt;
+				psrt1 = psrt;
+			}
+			psrt =  srt;
+			srt = srt->next;
+		}
+
+		if (lseek(pctx->archive_members_fd, mem1->file_pos, SEEK_SET) == (off_t)-1) {
+			log_msg(LOG_ERR, 1, "Error seeking in archive members file.");
+			return (-1);
+		}
+		srt1->pos++;
+		if (srt1->pos > srt1->max) {
+			if (srt1 == pctx->archive_sort_buf) {
+				pctx->archive_sort_buf = srt1->next;
+				free(srt1);
+			} else {
+				psrt1->next = srt1->next;
+				free(srt1);
+			}
+		}
+	}
+	if ((rbytes = Read(pctx->archive_members_fd, &namelen, sizeof(namelen))) != 0) {
+		if (rbytes < 2) {
+			log_msg(LOG_ERR, 1, "Error reading archive members file.");
+			return (-1);
+		}
+		rbytes = Read(pctx->archive_members_fd, fpath, namelen);
+		if (rbytes < namelen) {
+			log_msg(LOG_ERR, 1, "Error reading archive members file.");
+			return (-1);
+		}
+		fpath[namelen] = '\0';
+	}
+	return (rbytes);
+}
+
 /*
  * Build list of pathnames in a temp file.
  */
@@ -74,12 +209,18 @@ add_pathname(const char *fpath, const struct stat *sb,
 {
 	short len;
 	uchar_t *buf;
+	const char *basename;
 
 	if (tflag == FTW_DP) return (0);
 	if (tflag == FTW_DNR || tflag == FTW_NS) {
 		log_msg(LOG_WARN, 0, "Cannot access %s\n", fpath);
 		return (0);
 	}
+
+	/*
+	 * Pathname entries are pushed into a memory buffer till buffer is full. The
+	 * buffer is then flushed to disk. This is for decent performance.
+	 */
 	a_state.arc_size += (sb->st_size + ARC_ENTRY_OVRHEAD);
 	len = strlen(fpath);
 	if (a_state.bufpos + len + 14 > a_state.bufsiz) {
@@ -89,12 +230,92 @@ add_pathname(const char *fpath, const struct stat *sb,
 			return (-1);
 		}
 		a_state.bufpos = 0;
+		a_state.pathlist_size += wrtn;
 	}
+
+	/*
+	 * If we are sorting path entries then sort per buffer and then merge when iterating
+	 * through all the path entries.
+	 */
+	if (a_state.srt) {
+		member_entry_t *member;
+		int i;
+		char *dot;
+
+		basename = &fpath[ftwbuf->base];
+		if (a_state.srt_pos == SORT_BUF_SIZE) {
+			struct sort_buf *srt;
+
+			/*
+			 * Sort Buffer is full so sort it. Sorting is done by file extension and size.
+			 * If file has no extension then first 4 chars of the filename are used.
+			 */
+			srt = (struct sort_buf *)malloc(sizeof (struct sort_buf));
+			if (srt == NULL) {
+				log_msg(LOG_WARN, 0, "Out of memory for sort buffer. Continuing without sorting.");
+				a_state.srt = a_state.head;
+				while (a_state.srt) {
+					struct sort_buf *srt;
+					srt = a_state.srt->next;
+					free(a_state.srt);
+					a_state.srt = srt;
+					goto cont;
+				}
+			} else {
+				log_msg(LOG_INFO, 0, "Sorting ...");
+				a_state.srt->max = a_state.srt_pos - 1;
+				qsort(a_state.srt->members, SORT_BUF_SIZE, sizeof (member_entry_t), compare_members);
+				srt->next = NULL;
+				srt->pos = 0;
+				a_state.srt->next = srt;
+				a_state.srt = srt;
+				a_state.srt_pos = 0;
+			}
+		}
+
+		/*
+		 * The total size of path list file that can be handled when sorting is 4GB to
+		 * limit memory usage. If total accumulated path entries exceed 4GB in bytes,
+		 * we abort sorting. This is large enough to handle all practical scenarios
+		 * except in the case of millions of pathname entries each having PATH_MAX length!
+		 */
+		if (a_state.pathlist_size + a_state.bufpos >= UINT_MAX) {
+			log_msg(LOG_WARN, 0, "Too many pathnames. Continuing without sorting.");
+			a_state.srt = a_state.head;
+			while (a_state.srt) {
+				struct sort_buf *srt;
+				srt = a_state.srt->next;
+				free(a_state.srt);
+				a_state.srt = srt;
+				goto cont;
+			}
+		}
+		member = &(a_state.srt->members[a_state.srt_pos++]);
+		member->size = sb->st_size;
+		member->file_pos = a_state.pathlist_size + a_state.bufpos;
+		dot = strrchr(basename, '.');
+
+		// Small NAMELEN so these loops will be unrolled by compiler.
+		for (i = 0; i < NAMELEN; i++) member->name[i] = 0;
+		i = 0;
+		if (!dot) {
+			while (basename[i] != '\0' && i < NAMELEN) {
+				member->name[i] = basename[i]; i++;
+			}
+		} else {
+			dot++;
+			while (dot[i] != '\0' && i < NAMELEN) {
+				member->name[i] = dot[i]; i++;
+			}
+		}
+	}
+cont:
 	buf = a_state.pbuf + a_state.bufpos;
 	*((short *)buf) = len;
 	buf += 2;
 	memcpy(buf, fpath, len);
 	a_state.bufpos += (len + 2);
+	a_state.fcount++;
 	return (0);
 }
 
@@ -112,6 +333,25 @@ setup_archiver(pc_ctx_t *pctx, struct stat *sbuf)
 	struct archive *arc;
 	struct fn_list *fn;
 
+	/*
+	 * If sorting is enabled create the initial sort buffer.
+	 */
+	if (pctx->enable_archive_sort) {
+		struct sort_buf *srt;
+		srt = (struct sort_buf *)malloc(sizeof (struct sort_buf));
+		if (srt == NULL) {
+			log_msg(LOG_ERR, 0, "Out of memory.");
+			return (-1);
+		}
+		srt->next = NULL;
+		srt->pos = 0;
+		pctx->archive_sort_buf = srt;
+	}
+
+	/*
+	 * Create a temporary file to hold the generated list of pathnames to be archived.
+	 * Storing in a file saves memory usage and allows scalability.
+	 */
 	tmpfile = pctx->archive_members_file;
 	tmp = get_temp_dir();
 	strcpy(tmpfile, tmp);
@@ -132,19 +372,30 @@ setup_archiver(pc_ctx_t *pctx, struct stat *sbuf)
 	}
 
 	/*
-	 * nftw requires using global state variable. So we lock to be mt-safe.
-	 * This means only one directory tree scan can happen at a time.
+	 * Use nftw() to scan all the directory hierarchies provided on the command
+	 * line and generate a consolidated list of pathnames to be archived. By
+	 * doing this we can sort the pathnames and estimate the total archive size.
+	 * Total archive size is needed by the subsequent compression stages.
 	 */
 	log_msg(LOG_INFO, 0, "Scanning files.");
 	sbuf->st_size = 0;
 	pctx->archive_size = 0;
+	pctx->archive_members_count = 0;
+
+	/*
+	 * nftw requires using global state variable. So we lock to be mt-safe.
+	 * This means only one directory tree scan can happen at a time.
+	 */
 	pthread_mutex_lock(&nftw_mutex);
 	fn = pctx->fn;
 	a_state.pbuf = pbuf;
 	a_state.bufsiz = pctx->chunksize;
 	a_state.bufpos = 0;
-	a_state.arc_size = 0;
 	a_state.fd = fd;
+	a_state.srt = pctx->archive_sort_buf;
+	a_state.srt_pos = 0;
+	a_state.head = a_state.srt;
+	a_state.pathlist_size = 0;
 
 	while (fn) {
 		struct stat sb;
@@ -155,6 +406,8 @@ setup_archiver(pc_ctx_t *pctx, struct stat *sbuf)
 			continue;
 		}
 
+		a_state.arc_size = 0;
+		a_state.fcount = 0;
 		if (S_ISDIR(sb.st_mode)) {
 			err = nftw(fn->filename, add_pathname, 1024, FTW_PHYS);
 		} else {
@@ -165,6 +418,7 @@ setup_archiver(pc_ctx_t *pctx, struct stat *sbuf)
 			else
 				tflag = FTW_F;
 			add_pathname(fn->filename, &sb, tflag, NULL);
+			a_state.arc_size = sb.st_size;
 		}
 		if (a_state.bufpos > 0) {
 			ssize_t wrtn = Write(a_state.fd, a_state.pbuf, a_state.bufpos);
@@ -176,9 +430,19 @@ setup_archiver(pc_ctx_t *pctx, struct stat *sbuf)
 			a_state.bufpos = 0;
 		}
 		pctx->archive_size += a_state.arc_size;
+		pctx->archive_members_count += a_state.fcount;
 		fn = fn->next;
 	}
+
+	if (a_state.srt == NULL) {
+		pctx->enable_archive_sort = 0;
+	} else {
+		log_msg(LOG_INFO, 0, "Sorting ...");
+		a_state.srt->max = a_state.srt_pos - 1;
+		qsort(a_state.srt->members, a_state.srt_pos, sizeof (member_entry_t), compare_members);
+	}
 	pthread_mutex_unlock(&nftw_mutex);
+
 	sbuf->st_size = pctx->archive_size;
 	lseek(fd, 0, SEEK_SET);
 	free(pbuf);
@@ -186,6 +450,11 @@ setup_archiver(pc_ctx_t *pctx, struct stat *sbuf)
 	sbuf->st_gid = getegid();
 	sbuf->st_mode = S_IRUSR | S_IWUSR | S_IRGRP | S_IROTH;
 
+	/*
+	 * Generate a pipe. The archiver writes to one end of the pipe and the
+	 * compression stages read from the other end. This allowed plugging in
+	 * archiving with the minimum of changes to the rest of Pcompress.
+	 */
 	if (pipe(pipefd) == -1) {
 		log_msg(LOG_ERR, 1, "Unable to create archiver pipe.\n");
 		close(fd);  unlink(tmpfile);
@@ -209,6 +478,9 @@ setup_archiver(pc_ctx_t *pctx, struct stat *sbuf)
 	return (0);
 }
 
+/*
+ * This creates a libarchive context for extracting members to disk.
+ */
 int
 setup_extractor(pc_ctx_t *pctx)
 {
@@ -326,9 +598,8 @@ static void *
 archiver_thread_func(void *dat) {
 	pc_ctx_t *pctx = (pc_ctx_t *)dat;
 	char fpath[PATH_MAX], *name;
-	ssize_t rbytes;
-	short namelen;
-	int warn;
+	int warn, rbytes;
+	uint32_t ctr;
 	struct archive_entry *entry, *spare_entry, *ent;
 	struct archive *arc, *ard;
 	struct archive_entry_linkresolver *resolver;
@@ -343,24 +614,16 @@ archiver_thread_func(void *dat) {
 		log_msg(LOG_WARN, 0, "Cannot create link resolver, hardlinks will be duplicated.");
 	}
 
+	ctr = 1;
 	ard = archive_read_disk_new();
 	archive_read_disk_set_standard_lookup(ard);
 	archive_read_disk_set_symlink_physical(ard);
 
 	/*
-	 * Read next path entry from list file.
+	 * Read next path entry from list file. read_next() also handles sorted reading.
 	 */
-	while ((rbytes = Read(pctx->archive_members_fd, &namelen, sizeof(namelen))) != 0) {
-		if (rbytes < 2) {
-			log_msg(LOG_ERR, 1, "Error reading archive members file.");
-			break;
-		}
-		rbytes = Read(pctx->archive_members_fd, fpath, namelen);
-		if (rbytes < namelen) {
-			log_msg(LOG_ERR, 1, "Error reading archive members file.");
-			break;
-		}
-		fpath[namelen] = '\0';
+	while ((rbytes = read_next(pctx, fpath)) != 0) {
+		if (rbytes == -1) break;
 		archive_entry_copy_sourcepath(entry, fpath);
 		if (archive_read_disk_entry_from_file(ard, entry, -1, NULL) != ARCHIVE_OK) {
 			log_msg(LOG_WARN, 1, "archive_read_disk_entry_from_file:\n  %s", archive_error_string(ard));
@@ -390,7 +653,8 @@ archiver_thread_func(void *dat) {
 			archive_entry_set_size(entry, 0);
 		}
 		if (pctx->verbose)
-			log_msg(LOG_INFO, 0, "%10d %s", archive_entry_size(entry), name);
+			log_msg(LOG_INFO, 0, "%5d/%5d %8d %s", ctr, pctx->archive_members_count,
+			    archive_entry_size(entry), name);
 
 		archive_entry_linkify(resolver, &entry, &spare_entry);
 		ent = entry;
@@ -402,6 +666,7 @@ archiver_thread_func(void *dat) {
 			spare_entry = NULL;
 		}
 		archive_entry_clear(entry);
+		ctr++;
 	}
 
 done:
@@ -429,6 +694,7 @@ extractor_thread_func(void *dat) {
 	pc_ctx_t *pctx = (pc_ctx_t *)dat;
 	char cwd[PATH_MAX], got_cwd;
 	int flags, rv;
+	uint32_t ctr;
 	struct archive_entry *entry;
 	struct archive *awd, *arc;
 
@@ -448,6 +714,7 @@ extractor_thread_func(void *dat) {
 		goto done;
 	}
 
+	ctr = 1;
 	awd = archive_write_disk_new();
 	archive_write_disk_set_options(awd, flags);
 	archive_write_disk_set_standard_lookup(awd);
@@ -477,7 +744,7 @@ extractor_thread_func(void *dat) {
 			    archive_error_string(arc));
 
 		} else if (pctx->verbose) {
-			log_msg(LOG_INFO, 0, "%10d %s", archive_entry_size(entry),
+			log_msg(LOG_INFO, 0, "%5d %8d %s", ctr, archive_entry_size(entry),
 			    archive_entry_pathname(entry));
 		}
 
@@ -485,6 +752,7 @@ extractor_thread_func(void *dat) {
 			log_msg(LOG_ERR, 0, "Fatal error aborting extraction.");
 			break;
 		}
+		ctr++;
 	}
 
 	if (got_cwd) {
diff --git a/pcompress.c b/pcompress.c
index 45769d7..c16185f 100644
--- a/pcompress.c
+++ b/pcompress.c
@@ -2716,7 +2716,7 @@ init_pc_context(pc_ctx_t *pctx, int argc, char *argv[])
 	strcpy(pctx->exec_name, pos);
 
 	pthread_mutex_lock(&opt_parse);
-	while ((opt = getopt(argc, argv, "dc:s:l:pt:MCDGEe:w:rLPS:B:Fk:av")) != -1) {
+	while ((opt = getopt(argc, argv, "dc:s:l:pt:MCDGEe:w:rLPS:B:Fk:avn")) != -1) {
 		int ovr;
 		int64_t chunksize;
 
@@ -2857,6 +2857,10 @@ init_pc_context(pc_ctx_t *pctx, int argc, char *argv[])
 			pctx->verbose = 1;
 			break;
 
+		    case 'n':
+			pctx->enable_archive_sort = -1;
+			break;
+
 		    case '?':
 		    default:
 			return (2);
@@ -2879,6 +2883,15 @@ init_pc_context(pc_ctx_t *pctx, int argc, char *argv[])
 		}
 	}
 
+	/*
+	 * Sorting of members when archiving is enabled for compression levels >2, unless
+	 * it is explicitly disabled via '-n'.
+	 */
+	if (pctx->level > 2 && pctx->enable_archive_sort != -1) {
+		pctx->enable_archive_sort = 1;
+	}
+	if (pctx->enable_archive_sort == -1) pctx->enable_archive_sort = 0;
+
 	if (pctx->rab_blk_size == -1) {
 		if (!pctx->enable_rabin_global)
 			pctx->rab_blk_size = 0;
diff --git a/pcompress.h b/pcompress.h
index 29b46e6..ed137af 100644
--- a/pcompress.h
+++ b/pcompress.h
@@ -200,9 +200,11 @@ typedef struct pc_ctx {
 	int encrypt_type;
 	int archive_mode;
 	int verbose;
+	int enable_archive_sort;
 	char archive_members_file[MAXPATHLEN];
 	int archive_members_fd, archive_data_fd;
-	void *archive_ctx;
+	uint32_t archive_members_count;
+	void *archive_ctx, *archive_sort_buf;
 	pthread_t archive_thread;
 	int uncompfd, compfd;
 	char archive_temp_file[MAXPATHLEN];