diff --git a/src/dstack/_internal/core/backends/lambdalabs/compute.py b/src/dstack/_internal/core/backends/lambdalabs/compute.py
index 9f800790f0..ca49c1c077 100644
--- a/src/dstack/_internal/core/backends/lambdalabs/compute.py
+++ b/src/dstack/_internal/core/backends/lambdalabs/compute.py
@@ -179,13 +179,18 @@ def _setup_instance(
     ssh_private_key: str,
 ):
     setup_commands = (
-        "mkdir /home/ubuntu/.dstack && "
-        "sudo apt-get update && "
-        "sudo apt-get install -y --no-install-recommends nvidia-container-toolkit && "
-        "sudo nvidia-ctk runtime configure --runtime=docker && "
-        "sudo pkill -SIGHUP dockerd"
+        "mkdir /home/ubuntu/.dstack",
+        "sudo apt-get update",
+        "sudo apt-get install -y --no-install-recommends nvidia-container-toolkit",
+        "sudo install -d -m 0755 /etc/docker",
+        # Workaround for https://github.com/NVIDIA/nvidia-container-toolkit/issues/48
+        """echo '{"exec-opts":["native.cgroupdriver=cgroupfs"]}' | sudo tee /etc/docker/daemon.json""",
+        "sudo nvidia-ctk runtime configure --runtime=docker",
+        "sudo systemctl restart docker.service",  # `systemctl reload` (`kill -HUP`) won't work
+    )
+    _run_ssh_command(
+        hostname=hostname, ssh_private_key=ssh_private_key, command=" && ".join(setup_commands)
     )
-    _run_ssh_command(hostname=hostname, ssh_private_key=ssh_private_key, command=setup_commands)
 
 
 def _launch_runner(