diff --git a/illumos-utils/src/zfs.rs b/illumos-utils/src/zfs.rs
index 76ec405422..d9220ed264 100644
--- a/illumos-utils/src/zfs.rs
+++ b/illumos-utils/src/zfs.rs
@@ -144,6 +144,12 @@ pub struct EncryptionDetails {
     pub epoch: u64,
 }
 
+#[derive(Debug, Default)]
+pub struct SizeDetails {
+    pub quota: Option<usize>,
+    pub compression: Option<&'static str>,
+}
+
 #[cfg_attr(any(test, feature = "testing"), mockall::automock, allow(dead_code))]
 impl Zfs {
     /// Lists all datasets within a pool or existing dataset.
@@ -192,10 +198,16 @@ impl Zfs {
         zoned: bool,
         do_format: bool,
         encryption_details: Option<EncryptionDetails>,
-        quota: Option<usize>,
+        size_details: Option<SizeDetails>,
     ) -> Result<(), EnsureFilesystemError> {
         let (exists, mounted) = Self::dataset_exists(name, &mountpoint)?;
         if exists {
+            if let Some(SizeDetails { quota, compression }) = size_details {
+                // apply quota and compression mode (in case they've changed across
+                // sled-agent versions since creation)
+                Self::apply_properties(name, &mountpoint, quota, compression)?;
+            }
+
             if encryption_details.is_none() {
                 // If the dataset exists, we're done. Unencrypted datasets are
                 // automatically mounted.
@@ -238,6 +250,7 @@ impl Zfs {
                 &epoch,
             ]);
         }
+
         cmd.args(&["-o", &format!("mountpoint={}", mountpoint), name]);
         execute(cmd).map_err(|err| EnsureFilesystemError {
             name: name.to_string(),
@@ -245,14 +258,38 @@ impl Zfs {
             err: err.into(),
         })?;
 
-        // Apply any quota.
+        if let Some(SizeDetails { quota, compression }) = size_details {
+            // Apply any quota and compression mode.
+            Self::apply_properties(name, &mountpoint, quota, compression)?;
+        }
+
+        Ok(())
+    }
+
+    fn apply_properties(
+        name: &str,
+        mountpoint: &Mountpoint,
+        quota: Option<usize>,
+        compression: Option<&'static str>,
+    ) -> Result<(), EnsureFilesystemError> {
         if let Some(quota) = quota {
             if let Err(err) =
                 Self::set_value(name, "quota", &format!("{quota}"))
             {
                 return Err(EnsureFilesystemError {
                     name: name.to_string(),
-                    mountpoint,
+                    mountpoint: mountpoint.clone(),
+                    // Take the execution error from the SetValueError
+                    err: err.err.into(),
+                });
+            }
+        }
+        if let Some(compression) = compression {
+            if let Err(err) = Self::set_value(name, "compression", compression)
+            {
+                return Err(EnsureFilesystemError {
+                    name: name.to_string(),
+                    mountpoint: mountpoint.clone(),
                     // Take the execution error from the SetValueError
                     err: err.err.into(),
                 });
diff --git a/sled-agent/src/storage_manager.rs b/sled-agent/src/storage_manager.rs
index 27591156d2..b186b1c95f 100644
--- a/sled-agent/src/storage_manager.rs
+++ b/sled-agent/src/storage_manager.rs
@@ -368,14 +368,14 @@ impl StorageWorker {
         let fs_name = &dataset_name.full();
         let do_format = true;
         let encryption_details = None;
-        let quota = None;
+        let size_details = None;
         Zfs::ensure_filesystem(
             &dataset_name.full(),
             Mountpoint::Path(Utf8PathBuf::from("/data")),
             zoned,
             do_format,
             encryption_details,
-            quota,
+            size_details,
         )?;
         // Ensure the dataset has a usable UUID.
         if let Ok(id_str) = Zfs::get_oxide_value(&fs_name, "uuid") {
diff --git a/sled-hardware/src/disk.rs b/sled-hardware/src/disk.rs
index f19b0592fd..5ff555cd84 100644
--- a/sled-hardware/src/disk.rs
+++ b/sled-hardware/src/disk.rs
@@ -9,6 +9,7 @@ use illumos_utils::zfs::DestroyDatasetErrorVariant;
 use illumos_utils::zfs::EncryptionDetails;
 use illumos_utils::zfs::Keypath;
 use illumos_utils::zfs::Mountpoint;
+use illumos_utils::zfs::SizeDetails;
 use illumos_utils::zfs::Zfs;
 use illumos_utils::zpool::Zpool;
 use illumos_utils::zpool::ZpoolKind;
@@ -225,11 +226,13 @@ struct ExpectedDataset {
     quota: Option<usize>,
     // Identifies if the dataset should be deleted on boot
     wipe: bool,
+    // Optional compression mode
+    compression: Option<&'static str>,
 }
 
 impl ExpectedDataset {
     const fn new(name: &'static str) -> Self {
-        ExpectedDataset { name, quota: None, wipe: false }
+        ExpectedDataset { name, quota: None, wipe: false, compression: None }
     }
 
     const fn quota(mut self, quota: usize) -> Self {
@@ -241,6 +244,11 @@ impl ExpectedDataset {
         self.wipe = true;
         self
     }
+
+    const fn compression(mut self, compression: &'static str) -> Self {
+        self.compression = Some(compression);
+        self
+    }
 }
 
 pub const INSTALL_DATASET: &'static str = "install";
@@ -251,6 +259,10 @@ pub const DEBUG_DATASET: &'static str = "debug";
 // TODO-correctness: This value of 100GiB is a pretty wild guess, and should be
 // tuned as needed.
 pub const DEBUG_DATASET_QUOTA: usize = 100 * (1 << 30);
+// ditto.
+pub const DUMP_DATASET_QUOTA: usize = 100 * (1 << 30);
+// passed to zfs create -o compression=
+pub const DUMP_DATASET_COMPRESSION: &'static str = "gzip-9";
 
 // U.2 datasets live under the encrypted dataset and inherit encryption
 pub const ZONE_DATASET: &'static str = "crypt/zone";
@@ -264,7 +276,9 @@ static U2_EXPECTED_DATASETS: [ExpectedDataset; U2_EXPECTED_DATASET_COUNT] = [
     // Stores filesystems for zones
     ExpectedDataset::new(ZONE_DATASET).wipe(),
     // For storing full kernel RAM dumps
-    ExpectedDataset::new(DUMP_DATASET),
+    ExpectedDataset::new(DUMP_DATASET)
+        .quota(DUMP_DATASET_QUOTA)
+        .compression(DUMP_DATASET_COMPRESSION),
 ];
 
 const M2_EXPECTED_DATASET_COUNT: usize = 5;
@@ -562,13 +576,17 @@ impl Disk {
             }
 
             let encryption_details = None;
+            let size_details = Some(SizeDetails {
+                quota: dataset.quota,
+                compression: dataset.compression,
+            });
             Zfs::ensure_filesystem(
                 name,
                 Mountpoint::Path(mountpoint),
                 zoned,
                 do_format,
                 encryption_details,
-                dataset.quota,
+                size_details,
             )?;
 
             if dataset.wipe {