diff --git a/src/t_list.c b/src/t_list.c
index c705f8e81f7..1740b8d0269 100644
--- a/src/t_list.c
+++ b/src/t_list.c
@@ -604,12 +604,16 @@ void lsetCommand(client *c) {
 
     if ((getLongFromObjectOrReply(c, c->argv[2], &index, NULL) != C_OK)) return;
 
-    listTypeTryConversionAppend(o, c->argv, 3, 3, NULL, NULL);
+    int old_encoding = o->encoding;
     if (listTypeReplaceAtIndex(o, index, value)) {
-        /* We might replace a big item with a small one or vice versa, but we've
-         * already handled the growing case in listTypeTryConversionAppend()
-         * above, so here we just need to try the conversion for shrinking. */
-        listTypeTryConversion(o, LIST_CONV_SHRINKING, NULL, NULL);
+        /* LSET replaces an existing element, so conversion decisions must be
+         * based on the final list state rather than treating the new value as
+         * an appended element. A listpack may need to grow into a quicklist,
+         * while a quicklist may shrink into a listpack. */
+        if (old_encoding == OBJ_ENCODING_LISTPACK)
+            listTypeTryConversion(o, LIST_CONV_GROWING, NULL, NULL);
+        else
+            listTypeTryConversion(o, LIST_CONV_SHRINKING, NULL, NULL);
         signalModifiedKey(c, c->db, c->argv[1]);
         notifyKeyspaceEvent(NOTIFY_LIST, "lset", c->argv[1], c->db->id);
         server.dirty++;
diff --git a/tests/unit/type/list.tcl b/tests/unit/type/list.tcl
index 375737de24a..ba6b3bc24c5 100644
--- a/tests/unit/type/list.tcl
+++ b/tests/unit/type/list.tcl
@@ -2100,6 +2100,26 @@ foreach {pop} {BLPOP BLMPOP_RIGHT} {
 }
 
     foreach {max_lp_size large} "3 $largevalue(listpack) -1 $largevalue(quicklist)" {
+        test "List LSET keeps listpack encoding when replacement stays within limits - $max_lp_size" {
+            set origin_conf [config_get_set list-max-listpack-size $max_lp_size]
+
+            create_listpack lst "a b c"
+            r LSET lst 0 x
+            assert_encoding listpack lst
+
+            r config set list-max-listpack-size $origin_conf
+        }
+
+        test "List LSET converts listpack when replacement exceeds safety limit - $max_lp_size" {
+            set origin_conf [config_get_set list-max-listpack-size $max_lp_size]
+
+            create_listpack lst "a"
+            r LSET lst 0 [string repeat x 9000]
+            assert_encoding quicklist lst
+
+            r config set list-max-listpack-size $origin_conf
+        }
+
         test "List listpack -> quicklist encoding conversion" {
             set origin_conf [config_get_set list-max-listpack-size $max_lp_size]
 
@@ -2113,10 +2133,15 @@ foreach {pop} {BLPOP BLMPOP_RIGHT} {
             r LINSERT lst after b $large
             assert_encoding quicklist lst
 
-            # LSET
+            # LSET replaces an element, so it does not exceed count limits.
+            # Size-based limits can still force conversion for large values.
             create_listpack lst "a b c"
             r LSET lst 0 $large
-            assert_encoding quicklist lst
+            if {$max_lp_size == 3} {
+                assert_encoding listpack lst
+            } else {
+                assert_encoding quicklist lst
+            }
 
             # LMOVE
             create_quicklist lsrc{t} "a b c $large"