diff --git a/drivers/gpu/drm/amd/display/amdgpu_dm/amdgpu_dm_connector.c b/drivers/gpu/drm/amd/display/amdgpu_dm/amdgpu_dm_connector.c
index fd5bb9004f6c..31e9f029a707 100644
--- a/drivers/gpu/drm/amd/display/amdgpu_dm/amdgpu_dm_connector.c
+++ b/drivers/gpu/drm/amd/display/amdgpu_dm/amdgpu_dm_connector.c
@@ -1267,6 +1267,12 @@ static void apply_dsc_policy_for_stream(struct amdgpu_dm_connector *aconnector,
 	link_bandwidth_kbps = dc_link_bandwidth_kbps(aconnector->dc_link,
 							dc_link_get_link_cap(aconnector->dc_link));
 
+	if (aconnector->dc_link->ep_type == DISPLAY_ENDPOINT_USB4_DPIA &&
+	    aconnector->dc_link->dpia_bw_alloc_config.bw_alloc_enabled) {
+		dsc_options.max_target_bpp_limit_override_x16 = 8 * 16;
+		dsc_options.force_dsc_when_not_needed = true;
+	}
+
 	/* Set DSC policy according to dsc_clock_en */
 	dc_dsc_policy_set_enable_dsc_when_not_needed(
 		aconnector->dsc_settings.dsc_force_enable == DSC_CLK_FORCE_ENABLE);