diff --git a/subsys/nrf_compress/lzma/armthumb.c b/subsys/nrf_compress/lzma/armthumb.c
index 33b8ce52abd6..4e25b4689f7b 100644
--- a/subsys/nrf_compress/lzma/armthumb.c
+++ b/subsys/nrf_compress/lzma/armthumb.c
@@ -7,17 +7,21 @@
 ///
 //  Authors:    Igor Pavlov
 //              Lasse Collin
+//  With changes by Nordic Semiconductor ASA
 //
 ///////////////////////////////////////////////////////////////////////////////
 
 #include <stdio.h>
 #include "armthumb.h"
 
-void arm_thumb_filter(uint8_t *buf, uint32_t buf_size, uint32_t pos, bool compress)
+void arm_thumb_filter(uint8_t *buf, uint32_t buf_size, uint32_t pos, bool compress,
+		      bool *end_part_match)
 {
 	uint32_t i = 0;
+	uint32_t last_update_address = 0;
 
 	while ((i + 4) <= buf_size) {
+
 		if ((buf[i + 1] & 0xF8) == 0xF0 && (buf[i + 3] & 0xF8) == 0xF8) {
 			uint32_t dest;
 			uint32_t src = (((uint32_t)(buf[i + 1]) & 7) << 19)
@@ -26,6 +30,7 @@ void arm_thumb_filter(uint8_t *buf, uint32_t buf_size, uint32_t pos, bool compre
 			| (uint32_t)(buf[i + 2]);
 
 			src <<= 1;
+			last_update_address = i;
 
 			if (compress) {
 				dest = pos + (uint32_t)(i) + 4 + src;
@@ -38,9 +43,18 @@ void arm_thumb_filter(uint8_t *buf, uint32_t buf_size, uint32_t pos, bool compre
 			buf[i + 0] = (dest >> 11);
 			buf[i + 3] = 0xF8 | ((dest >> 8) & 0x7);
 			buf[i + 2] = (dest);
+
 			i += 2;
 		}
 
 		i += 2;
 	}
+
+	if (i == (buf_size - 2)) {
+		if (i > last_update_address && (buf[i + 1] & 0xF8) == 0xF0) {
+			*end_part_match = true;
+		} else {
+			*end_part_match = false;
+		}
+	}
 }
diff --git a/subsys/nrf_compress/lzma/armthumb.h b/subsys/nrf_compress/lzma/armthumb.h
index fa08f329c990..dd5d8ed20613 100644
--- a/subsys/nrf_compress/lzma/armthumb.h
+++ b/subsys/nrf_compress/lzma/armthumb.h
@@ -16,6 +16,7 @@
 #include <stdint.h>
 #include <stdbool.h>
 
-void arm_thumb_filter(uint8_t *buf, uint32_t buf_size, uint32_t pos, bool compress);
+void arm_thumb_filter(uint8_t *buf, uint32_t buf_size, uint32_t pos, bool compress,
+		      bool *end_part_match);
 
 #endif
diff --git a/subsys/nrf_compress/src/arm_thumb.c b/subsys/nrf_compress/src/arm_thumb.c
index bf786fa23aa1..6786c554f6ae 100644
--- a/subsys/nrf_compress/src/arm_thumb.c
+++ b/subsys/nrf_compress/src/arm_thumb.c
@@ -16,12 +16,18 @@ LOG_MODULE_REGISTER(nrf_compress_arm_thumb, CONFIG_NRF_COMPRESS_LOG_LEVEL);
 BUILD_ASSERT((CONFIG_NRF_COMPRESS_CHUNK_SIZE % 4) == 0,
 	     "CONFIG_NRF_COMPRESS_CHUNK_SIZE must be multiple of 4");
 
-static uint8_t output_buffer[CONFIG_NRF_COMPRESS_CHUNK_SIZE];
+/* Requires 2 extra bytes to allow checking cross-chunk 16-bit aligned ARM thumb instructions */
+#define EXTRA_BUFFER_SIZE 2
+
+static uint8_t output_buffer[CONFIG_NRF_COMPRESS_CHUNK_SIZE + EXTRA_BUFFER_SIZE];
+static uint8_t temp_extra_buffer[EXTRA_BUFFER_SIZE];
 static uint32_t data_position = 0;
+static bool has_extra_buffer_data;
 
 static int arm_thumb_init(void *inst)
 {
 	data_position = 0;
+	has_extra_buffer_data = false;
 
 	return 0;
 }
@@ -38,6 +44,7 @@ static int arm_thumb_deinit(void *inst)
 static int arm_thumb_reset(void *inst)
 {
 	data_position = 0;
+	has_extra_buffer_data = false;
 	memset(output_buffer, 0x00, sizeof(output_buffer));
 
 	return 0;
@@ -52,17 +59,47 @@ static int arm_thumb_decompress(void *inst, const uint8_t *input, size_t input_s
 				bool last_part, uint32_t *offset, uint8_t **output,
 				size_t *output_size)
 {
+	bool end_part_match = false;
+	bool extra_buffer_used = false;
+
 	if (input_size > CONFIG_NRF_COMPRESS_CHUNK_SIZE) {
 		return -EINVAL;
 	}
 
-	memcpy(output_buffer, input, input_size);
-	arm_thumb_filter(output_buffer, input_size, data_position, false);
+	if (has_extra_buffer_data == true) {
+		/* Copy bytes from temporary holding buffer */
+		memcpy(output_buffer, temp_extra_buffer, sizeof(temp_extra_buffer));
+		memcpy(&output_buffer[sizeof(temp_extra_buffer)], input, input_size);
+		end_part_match = true;
+		extra_buffer_used = true;
+		has_extra_buffer_data = false;
+		input_size += sizeof(temp_extra_buffer);
+	} else {
+		memcpy(output_buffer, input, input_size);
+	}
+
+	arm_thumb_filter(output_buffer, input_size, data_position, false, &end_part_match);
 	data_position += input_size;
 	*offset = input_size;
+
+	if (extra_buffer_used) {
+		*offset -= sizeof(temp_extra_buffer);
+	}
+
 	*output = output_buffer;
 	*output_size = input_size;
 
+	if (end_part_match == true && !last_part) {
+		/* Partial match at end of input, need to cut the final 2 bytes off and stash
+		 * them
+		 */
+		memcpy(temp_extra_buffer, &output_buffer[(input_size - sizeof(temp_extra_buffer))],
+		       sizeof(temp_extra_buffer));
+		has_extra_buffer_data = true;
+		*output_size -= sizeof(temp_extra_buffer);
+		data_position -= sizeof(temp_extra_buffer);
+	}
+
 	return 0;
 }