diff --git a/android/config.go b/android/config.go
index 43eeb9751..d1db87b24 100644
--- a/android/config.go
+++ b/android/config.go
@@ -208,6 +208,7 @@ func TestConfig(buildDir string, env map[string]string) Config {
 			AAPTPreferredConfig:         stringPtr("xhdpi"),
 			AAPTCharacteristics:         stringPtr("nosdcard"),
 			AAPTPrebuiltDPI:             []string{"xhdpi", "xxhdpi"},
+			UncompressPrivAppDex:        boolPtr(true),
 		},
 
 		buildDir:     buildDir,
diff --git a/java/app.go b/java/app.go
index 8d41b570f..ad672ead4 100644
--- a/java/app.go
+++ b/java/app.go
@@ -188,17 +188,18 @@ func (a *AndroidApp) shouldUncompressDex(ctx android.ModuleContext) bool {
 		return true
 	}
 
-	if ctx.Config().UnbundledBuild() {
-		return false
-	}
-
-	// Uncompress dex in APKs of privileged apps, and modules used by privileged apps.
+	// Uncompress dex in APKs of privileged apps, and modules used by privileged apps
+	// (even for unbundled builds, they may be preinstalled as prebuilts).
 	if ctx.Config().UncompressPrivAppDex() &&
 		(Bool(a.appProperties.Privileged) ||
 			inList(ctx.ModuleName(), ctx.Config().ModulesLoadedByPrivilegedModules())) {
 		return true
 	}
 
+	if ctx.Config().UnbundledBuild() {
+		return false
+	}
+
 	// Uncompress if the dex files is preopted on /system.
 	if !a.dexpreopter.dexpreoptDisabled(ctx) && (ctx.Host() || !odexOnSystemOther(ctx, a.dexpreopter.installPath)) {
 		return true
diff --git a/java/app_test.go b/java/app_test.go
index d2685107e..2bd44ad4a 100644
--- a/java/app_test.go
+++ b/java/app_test.go
@@ -24,6 +24,8 @@ import (
 	"sort"
 	"strings"
 	"testing"
+
+	"github.com/google/blueprint/proptools"
 )
 
 var (
@@ -1063,3 +1065,86 @@ func TestEmbedNotice(t *testing.T) {
 		t.Errorf("mergeNotices shouldn't have run for baz")
 	}
 }
+
+func TestUncompressDex(t *testing.T) {
+	testCases := []struct {
+		name string
+		bp   string
+
+		uncompressedPlatform  bool
+		uncompressedUnbundled bool
+	}{
+		{
+			name: "normal",
+			bp: `
+				android_app {
+					name: "foo",
+					srcs: ["a.java"],
+				}
+			`,
+			uncompressedPlatform:  true,
+			uncompressedUnbundled: false,
+		},
+		{
+			name: "use_embedded_dex",
+			bp: `
+				android_app {
+					name: "foo",
+					use_embedded_dex: true,
+					srcs: ["a.java"],
+				}
+			`,
+			uncompressedPlatform:  true,
+			uncompressedUnbundled: true,
+		},
+		{
+			name: "privileged",
+			bp: `
+				android_app {
+					name: "foo",
+					privileged: true,
+					srcs: ["a.java"],
+				}
+			`,
+			uncompressedPlatform:  true,
+			uncompressedUnbundled: true,
+		},
+	}
+
+	test := func(t *testing.T, bp string, want bool, unbundled bool) {
+		t.Helper()
+
+		config := testConfig(nil)
+		if unbundled {
+			config.TestProductVariables.Unbundled_build = proptools.BoolPtr(true)
+		}
+
+		ctx := testAppContext(config, bp, nil)
+
+		run(t, ctx, config)
+
+		foo := ctx.ModuleForTests("foo", "android_common")
+		dex := foo.Rule("r8")
+		uncompressedInDexJar := strings.Contains(dex.Args["zipFlags"], "-L 0")
+		aligned := foo.MaybeRule("zipalign").Rule != nil
+
+		if uncompressedInDexJar != want {
+			t.Errorf("want uncompressed in dex %v, got %v", want, uncompressedInDexJar)
+		}
+
+		if aligned != want {
+			t.Errorf("want aligned %v, got %v", want, aligned)
+		}
+	}
+
+	for _, tt := range testCases {
+		t.Run(tt.name, func(t *testing.T) {
+			t.Run("platform", func(t *testing.T) {
+				test(t, tt.bp, tt.uncompressedPlatform, false)
+			})
+			t.Run("unbundled", func(t *testing.T) {
+				test(t, tt.bp, tt.uncompressedUnbundled, true)
+			})
+		})
+	}
+}