diff --git a/core/io/stream_peer_gzip.cpp b/core/io/stream_peer_gzip.cpp
index 514bcf59b8e..ed247eaffbc 100644
--- a/core/io/stream_peer_gzip.cpp
+++ b/core/io/stream_peer_gzip.cpp
@@ -195,12 +195,12 @@ int StreamPeerGZIP::get_available_bytes() const {
 Error StreamPeerGZIP::finish() {
 	ERR_FAIL_COND_V(!ctx || !compressing, ERR_UNAVAILABLE);
 	// Ensure we have enough space in temporary buffer.
-	if (buffer.size() < 1024) {
-		buffer.resize(1024); // 1024 should be more than enough.
+	if (buffer.size() < get_available_bytes()) {
+		buffer.resize(get_available_bytes()); // get_available_bytes() is what we can store in RingBuffer.
 	}
 	int consumed = 0;
 	int to_write = 0;
-	Error err = _process(buffer.ptrw(), 1024, nullptr, 0, consumed, to_write, true); // compress
+	Error err = _process(buffer.ptrw(), buffer.size(), nullptr, 0, consumed, to_write, true); // compress
 	if (err != OK) {
 		return err;
 	}
diff --git a/doc/classes/StreamPeerGZIP.xml b/doc/classes/StreamPeerGZIP.xml
index e3f8441d195..01ca7d9077c 100644
--- a/doc/classes/StreamPeerGZIP.xml
+++ b/doc/classes/StreamPeerGZIP.xml
@@ -19,7 +19,8 @@
 		<method name="finish">
 			<return type="int" enum="Error" />
 			<description>
-				Finalizes the stream, compressing or decompressing any buffered chunk left.
+				Finalizes the stream, compressing any buffered chunk left.
+				You must call it only when you are compressing.
 			</description>
 		</method>
 		<method name="start_compression">
diff --git a/tests/core/io/test_stream_peer_gzip.h b/tests/core/io/test_stream_peer_gzip.h
new file mode 100644
index 00000000000..9918ddefe93
--- /dev/null
+++ b/tests/core/io/test_stream_peer_gzip.h
@@ -0,0 +1,198 @@
+/**************************************************************************/
+/*  test_stream_peer_gzip.h                                               */
+/**************************************************************************/
+/*                         This file is part of:                          */
+/*                             GODOT ENGINE                               */
+/*                        https://godotengine.org                         */
+/**************************************************************************/
+/* Copyright (c) 2014-present Godot Engine contributors (see AUTHORS.md). */
+/* Copyright (c) 2007-2014 Juan Linietsky, Ariel Manzur.                  */
+/*                                                                        */
+/* Permission is hereby granted, free of charge, to any person obtaining  */
+/* a copy of this software and associated documentation files (the        */
+/* "Software"), to deal in the Software without restriction, including    */
+/* without limitation the rights to use, copy, modify, merge, publish,    */
+/* distribute, sublicense, and/or sell copies of the Software, and to     */
+/* permit persons to whom the Software is furnished to do so, subject to  */
+/* the following conditions:                                              */
+/*                                                                        */
+/* The above copyright notice and this permission notice shall be         */
+/* included in all copies or substantial portions of the Software.        */
+/*                                                                        */
+/* THE SOFTWARE IS PROVIDED "AS IS", WITHOUT WARRANTY OF ANY KIND,        */
+/* EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO THE WARRANTIES OF     */
+/* MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT. */
+/* IN NO EVENT SHALL THE AUTHORS OR COPYRIGHT HOLDERS BE LIABLE FOR ANY   */
+/* CLAIM, DAMAGES OR OTHER LIABILITY, WHETHER IN AN ACTION OF CONTRACT,   */
+/* TORT OR OTHERWISE, ARISING FROM, OUT OF OR IN CONNECTION WITH THE      */
+/* SOFTWARE OR THE USE OR OTHER DEALINGS IN THE SOFTWARE.                 */
+/**************************************************************************/
+
+#ifndef TEST_STREAM_PEER_GZIP_H
+#define TEST_STREAM_PEER_GZIP_H
+
+#include "core/io/stream_peer_gzip.h"
+#include "tests/test_macros.h"
+
+namespace TestStreamPeerGZIP {
+
+const String hello = "Hello World!!!";
+
+TEST_CASE("[StreamPeerGZIP] Initialization") {
+	Ref<StreamPeerGZIP> spgz;
+	spgz.instantiate();
+	CHECK_EQ(spgz->get_available_bytes(), 0);
+}
+
+TEST_CASE("[StreamPeerGZIP] Compress/Decompress") {
+	Ref<StreamPeerGZIP> spgz;
+	spgz.instantiate();
+
+	bool is_deflate = false;
+
+	SUBCASE("GZIP") {
+		is_deflate = false;
+	}
+
+	SUBCASE("DEFLATE") {
+		is_deflate = true;
+	}
+
+	CHECK_EQ(spgz->start_compression(is_deflate), Error::OK);
+	CHECK_EQ(spgz->put_data(hello.to_ascii_buffer().ptr(), hello.to_ascii_buffer().size()), Error::OK);
+	CHECK_EQ(spgz->finish(), Error::OK);
+
+	Vector<uint8_t> hello_compressed;
+	int hello_compressed_size = spgz->get_available_bytes();
+	hello_compressed.resize(hello_compressed_size);
+	CHECK_EQ(spgz->get_data(hello_compressed.ptrw(), hello_compressed_size), Error::OK);
+
+	spgz->clear();
+
+	CHECK_EQ(spgz->start_decompression(is_deflate), Error::OK);
+	CHECK_EQ(spgz->put_data(hello_compressed.ptr(), hello_compressed.size()), Error::OK);
+
+	Vector<uint8_t> hello_decompressed;
+	int hello_decompressed_size = spgz->get_available_bytes();
+	hello_decompressed.resize(hello_decompressed_size);
+	CHECK_EQ(spgz->get_data(hello_decompressed.ptrw(), hello_decompressed_size), Error::OK);
+	CHECK_EQ(hello_decompressed, hello.to_ascii_buffer());
+}
+
+TEST_CASE("[StreamPeerGZIP] Compress/Decompress big chunks of data") { // GH-97201
+	Ref<StreamPeerGZIP> spgz;
+	spgz.instantiate();
+	CHECK_EQ(spgz->start_compression(false), Error::OK);
+
+	Vector<uint8_t> big_data;
+	big_data.resize(2500);
+	// Filling it with random data because the issue is related to the size of the data when it's compress.
+	// Random data results in bigger compressed data size.
+	for (int i = 0; i < big_data.size(); i++) {
+		big_data.write[i] = Math::random(48, 122);
+	}
+	CHECK_EQ(spgz->put_data(big_data.ptr(), big_data.size()), Error::OK);
+	CHECK_EQ(spgz->finish(), Error::OK);
+
+	Vector<uint8_t> big_data_compressed;
+	int big_data_compressed_size = spgz->get_available_bytes();
+	big_data_compressed.resize(big_data_compressed_size);
+	CHECK_EQ(spgz->get_data(big_data_compressed.ptrw(), big_data_compressed_size), Error::OK);
+
+	spgz->clear();
+
+	CHECK_EQ(spgz->start_decompression(false), Error::OK);
+	CHECK_EQ(spgz->put_data(big_data_compressed.ptr(), big_data_compressed.size()), Error::OK);
+
+	Vector<uint8_t> big_data_decompressed;
+	int big_data_decompressed_size = spgz->get_available_bytes();
+	big_data_decompressed.resize(big_data_decompressed_size);
+	CHECK_EQ(spgz->get_data(big_data_decompressed.ptrw(), big_data_decompressed_size), Error::OK);
+	CHECK_EQ(big_data_decompressed, big_data);
+}
+
+TEST_CASE("[StreamPeerGZIP] Can't start twice") {
+	Ref<StreamPeerGZIP> spgz;
+	spgz.instantiate();
+	CHECK_EQ(spgz->start_compression(false), Error::OK);
+
+	ERR_PRINT_OFF;
+	CHECK_EQ(spgz->start_compression(false), Error::ERR_ALREADY_IN_USE);
+	CHECK_EQ(spgz->start_decompression(false), Error::ERR_ALREADY_IN_USE);
+	ERR_PRINT_ON;
+}
+
+TEST_CASE("[StreamPeerGZIP] Can't start with a buffer size equal or less than zero") {
+	Ref<StreamPeerGZIP> spgz;
+	spgz.instantiate();
+
+	ERR_PRINT_OFF;
+	CHECK_EQ(spgz->start_compression(false, 0), Error::ERR_INVALID_PARAMETER);
+	CHECK_EQ(spgz->start_compression(false, -1), Error::ERR_INVALID_PARAMETER);
+	CHECK_EQ(spgz->start_decompression(false, 0), Error::ERR_INVALID_PARAMETER);
+	CHECK_EQ(spgz->start_decompression(false, -1), Error::ERR_INVALID_PARAMETER);
+	ERR_PRINT_ON;
+}
+
+TEST_CASE("[StreamPeerGZIP] Can't put/get data with a buffer size less than zero") {
+	Ref<StreamPeerGZIP> spgz;
+	spgz.instantiate();
+	CHECK_EQ(spgz->start_compression(false), Error::OK);
+
+	ERR_PRINT_OFF;
+	CHECK_EQ(spgz->put_data(hello.to_ascii_buffer().ptr(), -1), Error::ERR_INVALID_PARAMETER);
+
+	Vector<uint8_t> hello_compressed;
+	hello_compressed.resize(5);
+	CHECK_EQ(spgz->get_data(hello_compressed.ptrw(), -1), Error::ERR_INVALID_PARAMETER);
+	ERR_PRINT_ON;
+}
+
+TEST_CASE("[StreamPeerGZIP] Needs to be started before use") {
+	Ref<StreamPeerGZIP> spgz;
+	spgz.instantiate();
+
+	ERR_PRINT_OFF;
+	CHECK_EQ(spgz->put_data(hello.to_ascii_buffer().ptr(), hello.to_ascii_buffer().size()), Error::ERR_UNCONFIGURED);
+	ERR_PRINT_ON;
+}
+
+TEST_CASE("[StreamPeerGZIP] Can't be finished after clear or if it's decompressing") {
+	Ref<StreamPeerGZIP> spgz;
+	spgz.instantiate();
+
+	CHECK_EQ(spgz->start_compression(false), Error::OK);
+	spgz->clear();
+	ERR_PRINT_OFF;
+	CHECK_EQ(spgz->finish(), Error::ERR_UNAVAILABLE);
+	ERR_PRINT_ON;
+
+	spgz->clear();
+	CHECK_EQ(spgz->start_decompression(false), Error::OK);
+	ERR_PRINT_OFF;
+	CHECK_EQ(spgz->finish(), Error::ERR_UNAVAILABLE);
+	ERR_PRINT_ON;
+}
+
+TEST_CASE("[StreamPeerGZIP] Fails to get if nothing was compress/decompress") {
+	Ref<StreamPeerGZIP> spgz;
+	spgz.instantiate();
+
+	SUBCASE("Compression") {
+		CHECK_EQ(spgz->start_compression(false), Error::OK);
+	}
+
+	SUBCASE("Decompression") {
+		CHECK_EQ(spgz->start_decompression(false), Error::OK);
+	}
+
+	ERR_PRINT_OFF;
+	Vector<uint8_t> hello_compressed;
+	hello_compressed.resize(5);
+	CHECK_EQ(spgz->get_data(hello_compressed.ptrw(), hello_compressed.size()), Error::ERR_UNAVAILABLE);
+	ERR_PRINT_ON;
+}
+
+} // namespace TestStreamPeerGZIP
+
+#endif // TEST_STREAM_PEER_GZIP_H
diff --git a/tests/test_main.cpp b/tests/test_main.cpp
index 465484d6058..569c0dac183 100644
--- a/tests/test_main.cpp
+++ b/tests/test_main.cpp
@@ -55,6 +55,7 @@
 #include "tests/core/io/test_resource.h"
 #include "tests/core/io/test_stream_peer.h"
 #include "tests/core/io/test_stream_peer_buffer.h"
+#include "tests/core/io/test_stream_peer_gzip.h"
 #include "tests/core/io/test_xml_parser.h"
 #include "tests/core/math/test_aabb.h"
 #include "tests/core/math/test_astar.h"