diff --git a/ironic_python_agent_builder/__init__.py b/ironic_python_agent_builder/__init__.py
index 615f207..31a216c 100644
--- a/ironic_python_agent_builder/__init__.py
+++ b/ironic_python_agent_builder/__init__.py
@@ -80,7 +80,7 @@ def main():
         os.environ['DIB_REPOREF_requirements'] = args.branch
     if args.lzma:
         os.environ['DIB_IPA_COMPRESS_CMD'] = \
-            'xz --format=lzma --compress --stdout'
+            'xz --format=lzma --compress --stdout -9'
     # Enable checksum generation by default
     if 'DIB_CHECKSUM' not in os.environ:
         os.environ['DIB_CHECKSUM'] = 'sha256'
diff --git a/releasenotes/notes/lzma-compression-level-1ca346ba8d5b905a.yaml b/releasenotes/notes/lzma-compression-level-1ca346ba8d5b905a.yaml
new file mode 100644
index 0000000..8361e03
--- /dev/null
+++ b/releasenotes/notes/lzma-compression-level-1ca346ba8d5b905a.yaml
@@ -0,0 +1,4 @@
+---
+features:
+  - |
+    Changes lzma compression level to 9 for smaller images.