diff --git a/src/smpclient/transport/udp.py b/src/smpclient/transport/udp.py
index 9e4e568..af38d93 100644
--- a/src/smpclient/transport/udp.py
+++ b/src/smpclient/transport/udp.py
@@ -137,7 +137,8 @@ def max_unencoded_size(self) -> int:
         """Maximum UDP payload size (MSS) to avoid fragmentation.
 
         Subtracts IPv4/IPv6 and UDP header overhead from MTU per RFC 8085 section 3.2.
-        The IP version is auto-detected after connection.
+        The IP version is auto-detected after connection.  Once the server's MCUmgr
+        parameters are known, the payload is also capped at its advertised buffer.
         """
         overhead = IPV6_UDP_OVERHEAD if self._is_ipv6 else IPV4_UDP_OVERHEAD
-        return self._mtu - overhead
+        return min(self._mtu - overhead, self._smp_server_transport_buffer_size or self._mtu)
diff --git a/tests/test_smp_udp_transport.py b/tests/test_smp_udp_transport.py
index 6096b59..845fb70 100644
--- a/tests/test_smp_udp_transport.py
+++ b/tests/test_smp_udp_transport.py
@@ -132,6 +132,17 @@ def test_max_unencoded_size_custom_mtu() -> None:
     assert t.max_unencoded_size == 484
 
 
+@pytest.mark.parametrize(
+    "buf_size, expected",
+    [(384, 384), (1472, 1472), (2048, 1472)],
+)
+def test_max_unencoded_size_capped_by_server_buffer(buf_size: int, expected: int) -> None:
+    """Zephyr copies each datagram into one `buf_size` buffer, so neither bound may be exceeded."""
+    t = SMPUDPTransport(mtu=1500)
+    t.initialize(buf_size)
+    assert t.max_unencoded_size == expected
+
+
 @pytest.mark.asyncio
 async def test_ipv4_detection_real_socket() -> None:
     """Test IPv4 auto-detection with real socket connection."""