diff --git a/include/sys/vdev_impl.h b/include/sys/vdev_impl.h
index d22abfbc25..470eaa763d 100644
--- a/include/sys/vdev_impl.h
+++ b/include/sys/vdev_impl.h
@@ -641,6 +641,7 @@ extern int vdev_obsolete_counts_are_precise(vdev_t *vd, boolean_t *are_precise);
  */
 int vdev_checkpoint_sm_object(vdev_t *vd, uint64_t *sm_obj);
 void vdev_metaslab_group_create(vdev_t *vd);
+uint64_t vdev_best_ashift(uint64_t logical, uint64_t a, uint64_t b);
 
 /*
  * Vdev ashift optimization tunables
diff --git a/man/man4/zfs.4 b/man/man4/zfs.4
index cc55ee32ba..cecaf7e7f0 100644
--- a/man/man4/zfs.4
+++ b/man/man4/zfs.4
@@ -347,9 +347,12 @@ When a vdev is added, target this number of metaslabs per top-level vdev.
 .It Sy zfs_vdev_default_ms_shift Ns = Ns Sy 29 Po 512 MiB Pc Pq int
 Default limit for metaslab size.
 .
-.It Sy zfs_vdev_max_auto_ashift Ns = Ns Sy ASHIFT_MAX Po 16 Pc Pq ulong
+.It Sy zfs_vdev_max_auto_ashift Ns = Ns Sy 14 Pq ulong
 Maximum ashift used when optimizing for logical \[->] physical sector size on new
 top-level vdevs.
+May be increased up to
+.Sy ASHIFT_MAX Po 16 Pc ,
+but this may negatively impact pool space efficiency.
 .
 .It Sy zfs_vdev_min_auto_ashift Ns = Ns Sy ASHIFT_MIN Po 9 Pc Pq ulong
 Minimum ashift used when creating new top-level vdevs.
diff --git a/module/os/freebsd/zfs/vdev_geom.c b/module/os/freebsd/zfs/vdev_geom.c
index f3b4846f4e..fef6a1b88e 100644
--- a/module/os/freebsd/zfs/vdev_geom.c
+++ b/module/os/freebsd/zfs/vdev_geom.c
@@ -955,8 +955,7 @@ skip_open:
 	*logical_ashift = highbit(MAX(pp->sectorsize, SPA_MINBLOCKSIZE)) - 1;
 	*physical_ashift = 0;
 	if (pp->stripesize && pp->stripesize > (1 << *logical_ashift) &&
-	    ISP2(pp->stripesize) && pp->stripesize <= (1 << ASHIFT_MAX) &&
-	    pp->stripeoffset == 0)
+	    ISP2(pp->stripesize) && pp->stripeoffset == 0)
 		*physical_ashift = highbit(pp->stripesize) - 1;
 
 	/*
diff --git a/module/zfs/vdev.c b/module/zfs/vdev.c
index ea0245610f..048616c253 100644
--- a/module/zfs/vdev.c
+++ b/module/zfs/vdev.c
@@ -136,7 +136,15 @@ int zfs_vdev_standard_sm_blksz = (1 << 17);
  */
 int zfs_nocacheflush = 0;
 
-uint64_t zfs_vdev_max_auto_ashift = ASHIFT_MAX;
+/*
+ * Maximum and minimum ashift values that can be automatically set based on
+ * vdev's physical ashift (disk's physical sector size).  While ASHIFT_MAX
+ * is higher than the maximum value, it is intentionally limited here to not
+ * excessively impact pool space efficiency.  Higher ashift values may still
+ * be forced by vdev logical ashift or by user via ashift property, but won't
+ * be set automatically as a performance optimization.
+ */
+uint64_t zfs_vdev_max_auto_ashift = 14;
 uint64_t zfs_vdev_min_auto_ashift = ASHIFT_MIN;
 
 void
@@ -1845,6 +1853,24 @@ vdev_set_deflate_ratio(vdev_t *vd)
 	}
 }
 
+/*
+ * Choose the best of two ashifts, preferring one between logical ashift
+ * (absolute minimum) and administrator defined maximum, otherwise take
+ * the biggest of the two.
+ */
+uint64_t
+vdev_best_ashift(uint64_t logical, uint64_t a, uint64_t b)
+{
+	if (a > logical && a <= zfs_vdev_max_auto_ashift) {
+		if (b <= logical || b > zfs_vdev_max_auto_ashift)
+			return (a);
+		else
+			return (MAX(a, b));
+	} else if (b <= logical || b > zfs_vdev_max_auto_ashift)
+		return (MAX(a, b));
+	return (b);
+}
+
 /*
  * Maximize performance by inflating the configured ashift for top level
  * vdevs to be as close to the physical ashift as possible while maintaining
@@ -1856,7 +1882,8 @@ vdev_ashift_optimize(vdev_t *vd)
 {
 	ASSERT(vd == vd->vdev_top);
 
-	if (vd->vdev_ashift < vd->vdev_physical_ashift) {
+	if (vd->vdev_ashift < vd->vdev_physical_ashift &&
+	    vd->vdev_physical_ashift <= zfs_vdev_max_auto_ashift) {
 		vd->vdev_ashift = MIN(
 		    MAX(zfs_vdev_max_auto_ashift, vd->vdev_ashift),
 		    MAX(zfs_vdev_min_auto_ashift,
@@ -4463,7 +4490,10 @@ vdev_get_stats_ex(vdev_t *vd, vdev_stat_t *vs, vdev_stat_ex_t *vsx)
 		vs->vs_configured_ashift = vd->vdev_top != NULL
 		    ? vd->vdev_top->vdev_ashift : vd->vdev_ashift;
 		vs->vs_logical_ashift = vd->vdev_logical_ashift;
-		vs->vs_physical_ashift = vd->vdev_physical_ashift;
+		if (vd->vdev_physical_ashift <= ASHIFT_MAX)
+			vs->vs_physical_ashift = vd->vdev_physical_ashift;
+		else
+			vs->vs_physical_ashift = 0;
 
 		/*
 		 * Report fragmentation and rebuild progress for top-level,
diff --git a/module/zfs/vdev_draid.c b/module/zfs/vdev_draid.c
index 24034d9d93..24ea5d2cbe 100644
--- a/module/zfs/vdev_draid.c
+++ b/module/zfs/vdev_draid.c
@@ -1496,8 +1496,14 @@ vdev_draid_calculate_asize(vdev_t *vd, uint64_t *asizep, uint64_t *max_asizep,
 		asize = MIN(asize - 1, cvd->vdev_asize - 1) + 1;
 		max_asize = MIN(max_asize - 1, cvd->vdev_max_asize - 1) + 1;
 		logical_ashift = MAX(logical_ashift, cvd->vdev_ashift);
-		physical_ashift = MAX(physical_ashift,
-		    cvd->vdev_physical_ashift);
+	}
+	for (int c = 0; c < vd->vdev_children; c++) {
+		vdev_t *cvd = vd->vdev_child[c];
+
+		if (cvd->vdev_ops == &vdev_draid_spare_ops)
+			continue;
+		physical_ashift = vdev_best_ashift(logical_ashift,
+		    physical_ashift, cvd->vdev_physical_ashift);
 	}
 
 	*asizep = asize;
diff --git a/module/zfs/vdev_mirror.c b/module/zfs/vdev_mirror.c
index 3879de6804..f9a01c9f53 100644
--- a/module/zfs/vdev_mirror.c
+++ b/module/zfs/vdev_mirror.c
@@ -409,8 +409,14 @@ vdev_mirror_open(vdev_t *vd, uint64_t *asize, uint64_t *max_asize,
 		*asize = MIN(*asize - 1, cvd->vdev_asize - 1) + 1;
 		*max_asize = MIN(*max_asize - 1, cvd->vdev_max_asize - 1) + 1;
 		*logical_ashift = MAX(*logical_ashift, cvd->vdev_ashift);
-		*physical_ashift = MAX(*physical_ashift,
-		    cvd->vdev_physical_ashift);
+	}
+	for (int c = 0; c < vd->vdev_children; c++) {
+		vdev_t *cvd = vd->vdev_child[c];
+
+		if (cvd->vdev_open_error)
+			continue;
+		*physical_ashift = vdev_best_ashift(*logical_ashift,
+		    *physical_ashift, cvd->vdev_physical_ashift);
 	}
 
 	if (numerrors == vd->vdev_children) {
diff --git a/module/zfs/vdev_raidz.c b/module/zfs/vdev_raidz.c
index b4daf642ed..5a44983e55 100644
--- a/module/zfs/vdev_raidz.c
+++ b/module/zfs/vdev_raidz.c
@@ -1527,8 +1527,14 @@ vdev_raidz_open(vdev_t *vd, uint64_t *asize, uint64_t *max_asize,
 		*asize = MIN(*asize - 1, cvd->vdev_asize - 1) + 1;
 		*max_asize = MIN(*max_asize - 1, cvd->vdev_max_asize - 1) + 1;
 		*logical_ashift = MAX(*logical_ashift, cvd->vdev_ashift);
-		*physical_ashift = MAX(*physical_ashift,
-		    cvd->vdev_physical_ashift);
+	}
+	for (c = 0; c < vd->vdev_children; c++) {
+		vdev_t *cvd = vd->vdev_child[c];
+
+		if (cvd->vdev_open_error != 0)
+			continue;
+		*physical_ashift = vdev_best_ashift(*logical_ashift,
+		    *physical_ashift, cvd->vdev_physical_ashift);
 	}
 
 	*asize *= vd->vdev_children;
diff --git a/tests/zfs-tests/include/tunables.cfg b/tests/zfs-tests/include/tunables.cfg
index d6a2fe5db7..80e7bcb3bd 100644
--- a/tests/zfs-tests/include/tunables.cfg
+++ b/tests/zfs-tests/include/tunables.cfg
@@ -81,7 +81,9 @@ TRIM_TXG_BATCH			trim.txg_batch			zfs_trim_txg_batch
 TXG_HISTORY			txg.history			zfs_txg_history
 TXG_TIMEOUT			txg.timeout			zfs_txg_timeout
 UNLINK_SUSPEND_PROGRESS		UNSUPPORTED			zfs_unlink_suspend_progress
+VDEV_FILE_LOGICAL_ASHIFT	vdev.file.logical_ashift	vdev_file_logical_ashift
 VDEV_FILE_PHYSICAL_ASHIFT	vdev.file.physical_ashift	vdev_file_physical_ashift
+VDEV_MAX_AUTO_ASHIFT		vdev.max_auto_ashift		zfs_vdev_max_auto_ashift
 VDEV_MIN_MS_COUNT		vdev.min_ms_count		zfs_vdev_min_ms_count
 VDEV_VALIDATE_SKIP		vdev.validate_skip		vdev_validate_skip
 VOL_INHIBIT_DEV			UNSUPPORTED			zvol_inhibit_dev
diff --git a/tests/zfs-tests/tests/functional/cli_root/zpool_add/add-o_ashift.ksh b/tests/zfs-tests/tests/functional/cli_root/zpool_add/add-o_ashift.ksh
index 8d5ce5efa5..0166e84baa 100755
--- a/tests/zfs-tests/tests/functional/cli_root/zpool_add/add-o_ashift.ksh
+++ b/tests/zfs-tests/tests/functional/cli_root/zpool_add/add-o_ashift.ksh
@@ -57,7 +57,9 @@ disk2=$TEST_BASE_DIR/disk2
 log_must mkfile $SIZE $disk1
 log_must mkfile $SIZE $disk2
 
+logical_ashift=$(get_tunable VDEV_FILE_LOGICAL_ASHIFT)
 orig_ashift=$(get_tunable VDEV_FILE_PHYSICAL_ASHIFT)
+max_auto_ashift=$(get_tunable VDEV_MAX_AUTO_ASHIFT)
 
 typeset ashifts=("9" "10" "11" "12" "13" "14" "15" "16")
 for ashift in ${ashifts[@]}
@@ -77,7 +79,8 @@ do
 	log_must zpool create $TESTPOOL $disk1
 	log_must set_tunable64 VDEV_FILE_PHYSICAL_ASHIFT $ashift
 	log_must zpool add $TESTPOOL $disk2
-	log_must verify_ashift $disk2 $ashift
+	exp=$(( (ashift <= max_auto_ashift) ? ashift : logical_ashift ))
+	log_must verify_ashift $disk2 $exp
 
 	# clean things for the next run
 	log_must set_tunable64 VDEV_FILE_PHYSICAL_ASHIFT $orig_ashift