diff --git a/drivers/gpu/drm/amd/display/dc/core/dc.c b/drivers/gpu/drm/amd/display/dc/core/dc.c
index 89e8e3e11862..1efc67befad4 100644
--- a/drivers/gpu/drm/amd/display/dc/core/dc.c
+++ b/drivers/gpu/drm/amd/display/dc/core/dc.c
@@ -3156,11 +3156,11 @@ void dc_lock_memory_clock_frequency(struct dc *dc)
 			core_link_enable_stream(dc->current_state, &dc->current_state->res_ctx.pipe_ctx[i]);
 }
 
-bool dc_is_plane_eligible_for_idle_optimizaitons(struct dc *dc, struct dc_plane_state *plane)
+bool dc_is_plane_eligible_for_idle_optimizations(struct dc *dc, struct dc_plane_state *plane,
+		struct dc_cursor_attributes *cursor_attr)
 {
-	if (dc->hwss.does_plane_fit_in_mall && dc->hwss.does_plane_fit_in_mall(dc, plane))
+	if (dc->hwss.does_plane_fit_in_mall && dc->hwss.does_plane_fit_in_mall(dc, plane, cursor_attr))
 		return true;
-
 	return false;
 }
 
diff --git a/drivers/gpu/drm/amd/display/dc/dc.h b/drivers/gpu/drm/amd/display/dc/dc.h
index 28e0b6ac1f50..e21d4602e427 100644
--- a/drivers/gpu/drm/amd/display/dc/dc.h
+++ b/drivers/gpu/drm/amd/display/dc/dc.h
@@ -1272,8 +1272,8 @@ enum dc_status dc_set_clock(struct dc *dc, enum dc_clock_type clock_type, uint32
 void dc_get_clock(struct dc *dc, enum dc_clock_type clock_type, struct dc_clock_config *clock_cfg);
 #if defined(CONFIG_DRM_AMD_DC_DCN)
 
-bool dc_is_plane_eligible_for_idle_optimizations(struct dc *dc,
-						 struct dc_plane_state *plane);
+bool dc_is_plane_eligible_for_idle_optimizations(struct dc *dc, struct dc_plane_state *plane,
+				struct dc_cursor_attributes *cursor_attr);
 
 void dc_allow_idle_optimizations(struct dc *dc, bool allow);
 
diff --git a/drivers/gpu/drm/amd/display/dc/dcn30/dcn30_hwseq.c b/drivers/gpu/drm/amd/display/dc/dcn30/dcn30_hwseq.c
index e5cc8f8c363f..5c546b06f551 100644
--- a/drivers/gpu/drm/amd/display/dc/dcn30/dcn30_hwseq.c
+++ b/drivers/gpu/drm/amd/display/dc/dcn30/dcn30_hwseq.c
@@ -814,17 +814,38 @@ bool dcn30_apply_idle_power_optimizations(struct dc *dc, bool enable)
 	return true;
 }
 
-bool dcn30_does_plane_fit_in_mall(struct dc *dc, struct dc_plane_state *plane)
+bool dcn30_does_plane_fit_in_mall(struct dc *dc, struct dc_plane_state *plane, struct dc_cursor_attributes *cursor_attr)
 {
 	// add meta size?
 	unsigned int surface_size = plane->plane_size.surface_pitch * plane->plane_size.surface_size.height *
 			(plane->format >= SURFACE_PIXEL_FORMAT_GRPH_ARGB16161616 ? 8 : 4);
 	unsigned int mall_size = dc->caps.mall_size_total;
+	unsigned int cursor_size = 0;
 
 	if (dc->debug.mall_size_override)
 		mall_size = 1024 * 1024 * dc->debug.mall_size_override;
 
-	return (surface_size + dc->caps.cursor_cache_size) < mall_size;
+	if (cursor_attr) {
+		cursor_size = dc->caps.max_cursor_size * dc->caps.max_cursor_size;
+
+		switch (cursor_attr->color_format) {
+		case CURSOR_MODE_MONO:
+			cursor_size /= 2;
+			break;
+		case CURSOR_MODE_COLOR_1BIT_AND:
+		case CURSOR_MODE_COLOR_PRE_MULTIPLIED_ALPHA:
+		case CURSOR_MODE_COLOR_UN_PRE_MULTIPLIED_ALPHA:
+			cursor_size *= 4;
+			break;
+
+		case CURSOR_MODE_COLOR_64BIT_FP_PRE_MULTIPLIED:
+		case CURSOR_MODE_COLOR_64BIT_FP_UN_PRE_MULTIPLIED:
+			cursor_size *= 8;
+			break;
+		}
+	}
+
+	return (surface_size + cursor_size) < mall_size;
 }
 
 void dcn30_hardware_release(struct dc *dc)
diff --git a/drivers/gpu/drm/amd/display/dc/dcn30/dcn30_hwseq.h b/drivers/gpu/drm/amd/display/dc/dcn30/dcn30_hwseq.h
index 1103f6356e90..3b7d4812e311 100644
--- a/drivers/gpu/drm/amd/display/dc/dcn30/dcn30_hwseq.h
+++ b/drivers/gpu/drm/amd/display/dc/dcn30/dcn30_hwseq.h
@@ -65,7 +65,8 @@ void dcn30_set_avmute(struct pipe_ctx *pipe_ctx, bool enable);
 void dcn30_update_info_frame(struct pipe_ctx *pipe_ctx);
 void dcn30_program_dmdata_engine(struct pipe_ctx *pipe_ctx);
 
-bool dcn30_does_plane_fit_in_mall(struct dc *dc, struct dc_plane_state *plane);
+bool dcn30_does_plane_fit_in_mall(struct dc *dc, struct dc_plane_state *plane,
+		struct dc_cursor_attributes *cursor_attr);
 
 bool dcn30_apply_idle_power_optimizations(struct dc *dc, bool enable);
 
diff --git a/drivers/gpu/drm/amd/display/dc/dcn302/dcn302_resource.c b/drivers/gpu/drm/amd/display/dc/dcn302/dcn302_resource.c
index 22ba0be88faf..b96b32a37178 100644
--- a/drivers/gpu/drm/amd/display/dc/dcn302/dcn302_resource.c
+++ b/drivers/gpu/drm/amd/display/dc/dcn302/dcn302_resource.c
@@ -1317,6 +1317,7 @@ static bool dcn302_resource_construct(
 	dc->caps.min_horizontal_blanking_period = 80;
 	dc->caps.dmdata_alloc_size = 2048;
 
+	dc->caps.cursor_cache_size = dc->caps.max_cursor_size * dc->caps.max_cursor_size * 8;
 	dc->caps.max_slave_planes = 1;
 	dc->caps.post_blend_color_processing = true;
 	dc->caps.force_dp_tps4_for_cp2520 = true;
diff --git a/drivers/gpu/drm/amd/display/dc/inc/hw_sequencer.h b/drivers/gpu/drm/amd/display/dc/inc/hw_sequencer.h
index 48378beb71c0..0586ab2ffd6a 100644
--- a/drivers/gpu/drm/amd/display/dc/inc/hw_sequencer.h
+++ b/drivers/gpu/drm/amd/display/dc/inc/hw_sequencer.h
@@ -218,7 +218,8 @@ struct hw_sequencer_funcs {
 	/* Idle Optimization Related */
 	bool (*apply_idle_power_optimizations)(struct dc *dc, bool enable);
 
-	bool (*does_plane_fit_in_mall)(struct dc *dc, struct dc_plane_state *plane);
+	bool (*does_plane_fit_in_mall)(struct dc *dc, struct dc_plane_state *plane,
+			struct dc_cursor_attributes *cursor_attr);
 
 	bool (*is_abm_supported)(struct dc *dc,
 			struct dc_state *context, struct dc_stream_state *stream);