diff --git a/jetstream/kv.go b/jetstream/kv.go
index c16c57146..779f811d6 100644
--- a/jetstream/kv.go
+++ b/jetstream/kv.go
@@ -92,6 +92,10 @@ type (
 		RePublish    *RePublish
 		Mirror       *StreamSource
 		Sources      []*StreamSource
+
+		// Enable underlying stream compression.
+		// NOTE: Compression is supported for nats-server 2.10.0+
+		Compression bool
 	}
 
 	KeyValueLister interface {
@@ -123,6 +127,9 @@ type (
 
 		// Bytes returns the size in bytes of the bucket
 		Bytes() uint64
+
+		// IsCompressed indicates if the data is compressed on disk
+		IsCompressed() bool
 	}
 
 	// KeyWatcher is what is returned when doing a watch.
@@ -322,6 +329,10 @@ func (js *jetStream) CreateKeyValue(ctx context.Context, cfg KeyValueConfig) (Ke
 	if cfg.TTL > 0 && cfg.TTL < duplicateWindow {
 		duplicateWindow = cfg.TTL
 	}
+	var compression StoreCompression
+	if cfg.Compression {
+		compression = S2Compression
+	}
 	scfg := StreamConfig{
 		Name:              fmt.Sprintf(kvBucketNameTmpl, cfg.Bucket),
 		Description:       cfg.Description,
@@ -339,6 +350,7 @@ func (js *jetStream) CreateKeyValue(ctx context.Context, cfg KeyValueConfig) (Ke
 		MaxConsumers:      -1,
 		AllowDirect:       true,
 		RePublish:         cfg.RePublish,
+		Compression:       compression,
 	}
 	if cfg.Mirror != nil {
 		// Copy in case we need to make changes so we do not change caller's version.
@@ -479,6 +491,9 @@ func (s *KeyValueBucketStatus) StreamInfo() *StreamInfo { return s.nfo }
 // Bytes is the size of the stream
 func (s *KeyValueBucketStatus) Bytes() uint64 { return s.nfo.State.Bytes }
 
+// IsCompressed indicates if the data is compressed on disk
+func (s *KeyValueBucketStatus) IsCompressed() bool { return s.nfo.Config.Compression != NoCompression }
+
 type kvLister struct {
 	kvs     chan KeyValueStatus
 	kvNames chan string
diff --git a/jetstream/test/kv_test.go b/jetstream/test/kv_test.go
index 788a31896..b3f7d4f25 100644
--- a/jetstream/test/kv_test.go
+++ b/jetstream/test/kv_test.go
@@ -1356,3 +1356,38 @@ func expectErr(t *testing.T, err error, expected ...error) {
 	}
 	t.Fatalf("Expected one of %+v, got '%v'", expected, err)
 }
+
+func TestKeyValueCompression(t *testing.T) {
+	s := RunBasicJetStreamServer()
+	defer shutdownJSServerAndRemoveStorage(t, s)
+
+	nc, js := jsClient(t, s)
+	defer nc.Close()
+	ctx := context.Background()
+
+	kvCompressed, err := js.CreateKeyValue(ctx, jetstream.KeyValueConfig{
+		Bucket:      "A",
+		Compression: true,
+	})
+	if err != nil {
+		t.Fatalf("Error creating kv: %v", err)
+	}
+
+	status, err := kvCompressed.Status(ctx)
+	if err != nil {
+		t.Fatalf("Error getting bucket status: %v", err)
+	}
+
+	if !status.IsCompressed() {
+		t.Fatalf("Expected bucket to be compressed")
+	}
+
+	kvStream, err := js.Stream(ctx, "KV_A")
+	if err != nil {
+		t.Fatalf("Error getting stream info: %v", err)
+	}
+
+	if kvStream.CachedInfo().Config.Compression != jetstream.S2Compression {
+		t.Fatalf("Expected stream to be compressed with S2")
+	}
+}
diff --git a/kv.go b/kv.go
index ed4edc391..aa86d5aeb 100644
--- a/kv.go
+++ b/kv.go
@@ -95,6 +95,9 @@ type KeyValueStatus interface {
 
 	// Bytes returns the size in bytes of the bucket
 	Bytes() uint64
+
+	// IsCompressed indicates if the data is compressed on disk
+	IsCompressed() bool
 }
 
 // KeyWatcher is what is returned when doing a watch.
@@ -249,6 +252,10 @@ type KeyValueConfig struct {
 	RePublish    *RePublish
 	Mirror       *StreamSource
 	Sources      []*StreamSource
+
+	// Enable underlying stream compression.
+	// NOTE: Compression is supported for nats-server 2.10.0+
+	Compression bool
 }
 
 // Used to watch all keys.
@@ -405,6 +412,10 @@ func (js *js) CreateKeyValue(cfg *KeyValueConfig) (KeyValue, error) {
 	if cfg.TTL > 0 && cfg.TTL < duplicateWindow {
 		duplicateWindow = cfg.TTL
 	}
+	var compression StoreCompression
+	if cfg.Compression {
+		compression = S2Compression
+	}
 	scfg := &StreamConfig{
 		Name:              fmt.Sprintf(kvBucketNameTmpl, cfg.Bucket),
 		Description:       cfg.Description,
@@ -422,6 +433,7 @@ func (js *js) CreateKeyValue(cfg *KeyValueConfig) (KeyValue, error) {
 		MaxConsumers:      -1,
 		AllowDirect:       true,
 		RePublish:         cfg.RePublish,
+		Compression:       compression,
 	}
 	if cfg.Mirror != nil {
 		// Copy in case we need to make changes so we do not change caller's version.
@@ -1040,6 +1052,9 @@ func (s *KeyValueBucketStatus) StreamInfo() *StreamInfo { return s.nfo }
 // Bytes is the size of the stream
 func (s *KeyValueBucketStatus) Bytes() uint64 { return s.nfo.State.Bytes }
 
+// IsCompressed indicates if the data is compressed on disk
+func (s *KeyValueBucketStatus) IsCompressed() bool { return s.nfo.Config.Compression != NoCompression }
+
 // Status retrieves the status and configuration of a bucket
 func (kv *kvs) Status() (KeyValueStatus, error) {
 	nfo, err := kv.js.StreamInfo(kv.stream)
diff --git a/test/kv_test.go b/test/kv_test.go
index afa937de5..92f0ff7da 100644
--- a/test/kv_test.go
+++ b/test/kv_test.go
@@ -1395,3 +1395,37 @@ func TestKeyValueSourcing(t *testing.T) {
 		t.Fatalf("Got error getting keyB from C: %v", err)
 	}
 }
+
+func TestKeyValueCompression(t *testing.T) {
+	s := RunBasicJetStreamServer()
+	defer shutdownJSServerAndRemoveStorage(t, s)
+
+	nc, js := jsClient(t, s)
+	defer nc.Close()
+
+	kv, err := js.CreateKeyValue(&nats.KeyValueConfig{
+		Bucket:      "A",
+		Compression: true,
+	})
+	if err != nil {
+		t.Fatalf("Error creating kv: %v", err)
+	}
+
+	status, err := kv.Status()
+	if err != nil {
+		t.Fatalf("Error getting bucket status: %v", err)
+	}
+
+	if !status.IsCompressed() {
+		t.Fatalf("Expected bucket to be compressed")
+	}
+
+	kvStream, err := js.StreamInfo("KV_A")
+	if err != nil {
+		t.Fatalf("Error getting stream info: %v", err)
+	}
+
+	if kvStream.Config.Compression != nats.S2Compression {
+		t.Fatalf("Expected stream to be compressed with S2")
+	}
+}