diff --git a/CHANGELOG.md b/CHANGELOG.md
index 9f013cedd82dc..a49ba7907c79d 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -5,6 +5,7 @@ The format is based on [Keep a Changelog](https://keepachangelog.com/en/1.0.0/),
 
 ## [Unreleased 2.x]
 ### Added
+- Add useCompoundFile index setting ([#13478](https://github.com/opensearch-project/OpenSearch/pull/13478))
 - Constant Keyword Field ([#12285](https://github.com/opensearch-project/OpenSearch/pull/12285))
 - Convert ingest processor supports ip type ([#12818](https://github.com/opensearch-project/OpenSearch/pull/12818))
 - Add a counter to node stat api to track shard going from idle to non-idle ([#12768](https://github.com/opensearch-project/OpenSearch/pull/12768))
diff --git a/server/src/main/java/org/opensearch/common/settings/IndexScopedSettings.java b/server/src/main/java/org/opensearch/common/settings/IndexScopedSettings.java
index c6c312d6b6eea..980c432774f6e 100644
--- a/server/src/main/java/org/opensearch/common/settings/IndexScopedSettings.java
+++ b/server/src/main/java/org/opensearch/common/settings/IndexScopedSettings.java
@@ -198,6 +198,7 @@ public final class IndexScopedSettings extends AbstractScopedSettings {
                 EngineConfig.INDEX_CODEC_SETTING,
                 EngineConfig.INDEX_CODEC_COMPRESSION_LEVEL_SETTING,
                 EngineConfig.INDEX_OPTIMIZE_AUTO_GENERATED_IDS,
+                EngineConfig.INDEX_USE_COMPOUND_FILE,
                 IndexMetadata.SETTING_WAIT_FOR_ACTIVE_SHARDS,
                 IndexSettings.DEFAULT_PIPELINE,
                 IndexSettings.FINAL_PIPELINE,
diff --git a/server/src/main/java/org/opensearch/index/engine/EngineConfig.java b/server/src/main/java/org/opensearch/index/engine/EngineConfig.java
index 8106b65bddeec..fe2ce470cda03 100644
--- a/server/src/main/java/org/opensearch/index/engine/EngineConfig.java
+++ b/server/src/main/java/org/opensearch/index/engine/EngineConfig.java
@@ -236,6 +236,12 @@ private static void doValidateCodecSettings(final String codec) {
         Property.Dynamic
     );
 
+    public static final Setting<Boolean> INDEX_USE_COMPOUND_FILE = Setting.boolSetting(
+        "index.use_compound_file",
+        true,
+        Property.IndexScope
+    );
+
     private final TranslogConfig translogConfig;
 
     private final TranslogFactory translogFactory;
@@ -494,6 +500,10 @@ public boolean isReadOnlyReplica() {
         return indexSettings.isSegRepEnabledOrRemoteNode() && isReadOnlyReplica;
     }
 
+    public boolean useCompoundFile() {
+        return indexSettings.getValue(INDEX_USE_COMPOUND_FILE);
+    }
+
     /**
      * Returns the underlying startedPrimarySupplier.
      * @return the primary mode supplier.
diff --git a/server/src/main/java/org/opensearch/index/engine/InternalEngine.java b/server/src/main/java/org/opensearch/index/engine/InternalEngine.java
index 7bacec22fc850..59165b936aec8 100644
--- a/server/src/main/java/org/opensearch/index/engine/InternalEngine.java
+++ b/server/src/main/java/org/opensearch/index/engine/InternalEngine.java
@@ -2341,7 +2341,7 @@ private IndexWriterConfig getIndexWriterConfig() {
         iwc.setSimilarity(engineConfig.getSimilarity());
         iwc.setRAMBufferSizeMB(engineConfig.getIndexingBufferSize().getMbFrac());
         iwc.setCodec(engineConfig.getCodec());
-        iwc.setUseCompoundFile(true); // always use compound on flush - reduces # of file-handles on refresh
+        iwc.setUseCompoundFile(engineConfig.useCompoundFile());
         if (config().getIndexSort() != null) {
             iwc.setIndexSort(config().getIndexSort());
         }
diff --git a/server/src/test/java/org/opensearch/index/engine/EngineConfigTests.java b/server/src/test/java/org/opensearch/index/engine/EngineConfigTests.java
index 9197b959a54f1..f42188d55bca3 100644
--- a/server/src/test/java/org/opensearch/index/engine/EngineConfigTests.java
+++ b/server/src/test/java/org/opensearch/index/engine/EngineConfigTests.java
@@ -32,6 +32,13 @@ public void setUp() throws Exception {
         defaultIndexSettings = IndexSettingsModule.newIndexSettings("test", defaultIndexMetadata.getSettings());
     }
 
+    public void testEngineConfig_DefaultValueFoUseCompoundFile() {
+        EngineConfig config = new EngineConfig.Builder().indexSettings(defaultIndexSettings)
+            .retentionLeasesSupplier(() -> RetentionLeases.EMPTY)
+            .build();
+        assertTrue(config.useCompoundFile());
+    }
+
     public void testEngineConfig_DefaultValueForReadOnlyEngine() {
         EngineConfig config = new EngineConfig.Builder().indexSettings(defaultIndexSettings)
             .retentionLeasesSupplier(() -> RetentionLeases.EMPTY)
diff --git a/server/src/test/java/org/opensearch/index/engine/InternalEngineTests.java b/server/src/test/java/org/opensearch/index/engine/InternalEngineTests.java
index 74aef54987842..54a562642d4ab 100644
--- a/server/src/test/java/org/opensearch/index/engine/InternalEngineTests.java
+++ b/server/src/test/java/org/opensearch/index/engine/InternalEngineTests.java
@@ -342,6 +342,58 @@ public void testVerboseSegments() throws Exception {
         }
     }
 
+    public void testSegmentsWithUseCompoundFileFlag_true() throws IOException {
+        try (Store store = createStore(); Engine engine = createEngine(defaultSettings, store, createTempDir(), new TieredMergePolicy())) {
+            ParsedDocument doc = testParsedDocument("1", null, testDocument(), B_1, null);
+            Engine.Index index = indexForDoc(doc);
+            engine.index(index);
+            engine.flush();
+            final List<Segment> segments = engine.segments(false);
+            assertThat(segments, hasSize(1));
+            assertTrue(segments.get(0).compound);
+            boolean cfeCompoundFileFound = false;
+            boolean cfsCompoundFileFound = false;
+            for (final String fileName : store.readLastCommittedSegmentsInfo().files(true)) {
+                if (fileName.endsWith(".cfe")) {
+                    cfeCompoundFileFound = true;
+                }
+                if (fileName.endsWith(".cfs")) {
+                    cfsCompoundFileFound = true;
+                }
+            }
+            Assert.assertTrue(cfeCompoundFileFound);
+            Assert.assertTrue(cfsCompoundFileFound);
+        }
+    }
+
+    public void testSegmentsWithUseCompoundFileFlag_false() throws IOException {
+        final IndexSettings indexSettings = IndexSettingsModule.newIndexSettings(
+            "test",
+            Settings.builder().put(defaultSettings.getSettings()).put(EngineConfig.INDEX_USE_COMPOUND_FILE.getKey(), false).build()
+        );
+        try (Store store = createStore(); Engine engine = createEngine(indexSettings, store, createTempDir(), new TieredMergePolicy())) {
+            ParsedDocument doc = testParsedDocument("1", null, testDocument(), B_1, null);
+            Engine.Index index = indexForDoc(doc);
+            engine.index(index);
+            engine.flush();
+            final List<Segment> segments = engine.segments(false);
+            assertThat(segments, hasSize(1));
+            assertFalse(segments.get(0).compound);
+            boolean cfeCompoundFileFound = false;
+            boolean cfsCompoundFileFound = false;
+            for (final String fileName : store.readLastCommittedSegmentsInfo().files(true)) {
+                if (fileName.endsWith(".cfe")) {
+                    cfeCompoundFileFound = true;
+                }
+                if (fileName.endsWith(".cfs")) {
+                    cfsCompoundFileFound = true;
+                }
+            }
+            Assert.assertFalse(cfeCompoundFileFound);
+            Assert.assertFalse(cfsCompoundFileFound);
+        }
+    }
+
     public void testSegmentsWithMergeFlag() throws Exception {
         try (Store store = createStore(); Engine engine = createEngine(defaultSettings, store, createTempDir(), new TieredMergePolicy())) {
             ParsedDocument doc = testParsedDocument("1", null, testDocument(), B_1, null);