diff --git a/src/hotspot/share/gc/g1/g1Arguments.cpp b/src/hotspot/share/gc/g1/g1Arguments.cpp
index b1cf9fd304620..bd156a69fe6fc 100644
--- a/src/hotspot/share/gc/g1/g1Arguments.cpp
+++ b/src/hotspot/share/gc/g1/g1Arguments.cpp
@@ -71,6 +71,9 @@ void G1Arguments::initialize_alignments() {
 }
 
 size_t G1Arguments::conservative_max_heap_alignment() {
+  if (FLAG_IS_DEFAULT(G1HeapRegionSize)) {
+    return G1HeapRegion::max_ergonomics_size();
+  }
   return G1HeapRegion::max_region_size();
 }
 
diff --git a/src/hotspot/share/gc/g1/g1HeapRegion.cpp b/src/hotspot/share/gc/g1/g1HeapRegion.cpp
index 288ddae48fbb3..03610ab520bf5 100644
--- a/src/hotspot/share/gc/g1/g1HeapRegion.cpp
+++ b/src/hotspot/share/gc/g1/g1HeapRegion.cpp
@@ -57,6 +57,10 @@ size_t G1HeapRegion::max_region_size() {
   return G1HeapRegionBounds::max_size();
 }
 
+size_t G1HeapRegion::max_ergonomics_size() {
+  return G1HeapRegionBounds::max_ergonomics_size();
+}
+
 size_t G1HeapRegion::min_region_size_in_words() {
   return G1HeapRegionBounds::min_size() >> LogHeapWordSize;
 }
diff --git a/src/hotspot/share/gc/g1/g1HeapRegion.hpp b/src/hotspot/share/gc/g1/g1HeapRegion.hpp
index 62804b47d9300..1962d3173b776 100644
--- a/src/hotspot/share/gc/g1/g1HeapRegion.hpp
+++ b/src/hotspot/share/gc/g1/g1HeapRegion.hpp
@@ -316,6 +316,7 @@ class G1HeapRegion : public CHeapObj<mtGC> {
   }
 
   static size_t max_region_size();
+  static size_t max_ergonomics_size();
   static size_t min_region_size_in_words();
 
   // It sets up the heap region size (GrainBytes / GrainWords), as well as
diff --git a/test/hotspot/jtreg/gc/arguments/TestG1CompressedOops.java b/test/hotspot/jtreg/gc/arguments/TestG1CompressedOops.java
new file mode 100644
index 0000000000000..5a705ffe8edbb
--- /dev/null
+++ b/test/hotspot/jtreg/gc/arguments/TestG1CompressedOops.java
@@ -0,0 +1,86 @@
+/*
+ * Copyright (c) 2025, Oracle and/or its affiliates. All rights reserved.
+ * Copyright (C) 2025 THL A29 Limited, a Tencent company. All rights reserved.
+ * DO NOT ALTER OR REMOVE COPYRIGHT NOTICES OR THIS FILE HEADER.
+ *
+ * This code is free software; you can redistribute it and/or modify it
+ * under the terms of the GNU General Public License version 2 only, as
+ * published by the Free Software Foundation.
+ *
+ * This code is distributed in the hope that it will be useful, but WITHOUT
+ * ANY WARRANTY; without even the implied warranty of MERCHANTABILITY or
+ * FITNESS FOR A PARTICULAR PURPOSE.  See the GNU General Public License
+ * version 2 for more details (a copy is included in the LICENSE file that
+ * accompanied this code).
+ *
+ * You should have received a copy of the GNU General Public License version
+ * 2 along with this work; if not, write to the Free Software Foundation,
+ * Inc., 51 Franklin St, Fifth Floor, Boston, MA 02110-1301 USA.
+ *
+ * Please contact Oracle, 500 Oracle Parkway, Redwood Shores, CA 94065 USA
+ * or visit www.oracle.com if you need additional information or have any
+ * questions.
+ */
+
+package gc.arguments;
+
+/*
+ * @test TestG1CompressedOops
+ * @bug 8354145
+ * @requires vm.flagless
+ * @summary Verify that the flag UseCompressedOops is updated properly
+ * @library /test/lib
+ * @library /
+ * @run driver gc.arguments.TestG1CompressedOops
+ */
+
+import java.util.regex.Matcher;
+import java.util.regex.Pattern;
+
+import java.util.ArrayList;
+import java.util.Arrays;
+
+import jdk.test.lib.process.OutputAnalyzer;
+
+public class TestG1CompressedOops {
+
+  private static void checkG1CompressedOops(String[] flags, boolean expectedValue, int exitValue) throws Exception {
+    ArrayList<String> flagList = new ArrayList<String>();
+    flagList.addAll(Arrays.asList(flags));
+    flagList.add("-XX:+UseG1GC");
+    flagList.add("-XX:+PrintFlagsFinal");
+    flagList.add("-version");
+
+    OutputAnalyzer output = GCArguments.executeTestJava(flagList);
+    output.shouldHaveExitValue(exitValue);
+
+    if (exitValue == 0) {
+      String stdout = output.getStdout();
+      boolean flagValue = getFlagValue("UseCompressedOops", stdout);
+      if (flagValue != expectedValue) {
+        throw new RuntimeException("Wrong value for UseCompressedOops. Expected " + expectedValue + " but got " + flagValue);
+      }
+    }
+  }
+
+  private static boolean getFlagValue(String flag, String where) {
+      Matcher m = Pattern.compile(flag + "\\s+:?=\\s+\\D+").matcher(where);
+      if (!m.find()) {
+          throw new RuntimeException("Could not find value for flag " + flag + " in output string");
+      }
+      String match = m.group();
+      return match.contains("true");
+  }
+
+  public static void main(String args[]) throws Exception {
+    checkG1CompressedOops(new String[] { "-Xmx64m"   /* default is 1m */        }, true, 0);
+    checkG1CompressedOops(new String[] { "-Xmx64m",  "-XX:G1HeapRegionSize=2m"  }, true, 0);
+    checkG1CompressedOops(new String[] { "-Xmx32768m" /* 32g will turn off the usecompressedoops */  }, false, 0);
+    checkG1CompressedOops(new String[] { "-Xmx32760m" }, false, 0);
+    checkG1CompressedOops(new String[] { "-Xmx32736m", /* 32g - 32m will turn on the usecomppressedoops */ }, true, 0);
+
+    // if set G1HeapRegionSize explicitly with -Xmx32736m will turn off the UseCompressedOops
+    checkG1CompressedOops(new String[] { "-Xmx32736m", "-XX:G1HeapRegionSize=1m" }, false, 0);
+    checkG1CompressedOops(new String[] { "-Xmx32256m", "-XX:G1HeapRegionSize=512m" }, true, 0);
+  }
+}