diff --git a/test/functional/rpc_misc.py b/test/functional/rpc_misc.py
index 3c7cce2f168..f8384e5b413 100755
--- a/test/functional/rpc_misc.py
+++ b/test/functional/rpc_misc.py
@@ -30,6 +30,13 @@ class RpcMiscTest(BitcoinTestFramework):
             lambda: node.echo(arg9='trigger_internal_bug'),
         )
 
+        self.log.info("test max arg size")
+        ARG_SZ_COMMON = 131071  # Common limit, used previously in the test framework, serves as a regression test
+        ARG_SZ_LARGE = 8 * 1024 * 1024  # A large size, which should be rare to hit in practice
+        for arg_sz in [0, 1, 100, ARG_SZ_COMMON, ARG_SZ_LARGE]:
+            arg_string = 'a' * arg_sz
+            assert_equal([arg_string, arg_string], node.echo(arg_string, arg_string))
+
         self.log.info("test getmemoryinfo")
         memory = node.getmemoryinfo()['locked']
         assert_greater_than(memory['used'], 0)
diff --git a/test/functional/test_framework/test_node.py b/test/functional/test_framework/test_node.py
index 3b0814635aa..be9116dec1c 100755
--- a/test/functional/test_framework/test_node.py
+++ b/test/functional/test_framework/test_node.py
@@ -46,7 +46,12 @@ BITCOIND_PROC_WAIT_TIMEOUT = 60
 # The size of the blocks xor key
 # from InitBlocksdirXorKey::xor_key.size()
 NUM_XOR_BYTES = 8
-CLI_MAX_ARG_SIZE = 131071 # many systems have a 128kb limit per arg (MAX_ARG_STRLEN)
+# Many systems have a 128kB limit for a command size. Depending on the
+# platform, this limit may be larger or smaller. Moreover, when using the
+# 'bitcoin' command, it may internally insert more args, which must be
+# accounted for. There is no need to pick the largest possible value here
+# anyway and it should be fine to set it to 1kB in tests.
+TEST_CLI_MAX_ARG_SIZE = 1024
 
 # The null blocks key (all 0s)
 NULL_BLK_XOR_KEY = bytes([0] * NUM_XOR_BYTES)
@@ -928,10 +933,14 @@ class TestNodeCLI():
         if clicommand is not None:
             p_args += [clicommand]
         p_args += pos_args + named_args
-        max_arg_size = max(len(arg) for arg in p_args)
+
+        # TEST_CLI_MAX_ARG_SIZE is set low enough that checking the string
+        # length is enough and encoding to bytes is not needed before
+        # calculating the sum.
+        sum_arg_size = sum(len(arg) for arg in p_args)
         stdin_data = self.input
-        if max_arg_size > CLI_MAX_ARG_SIZE:
-            self.log.debug(f"Cli: Command size {max_arg_size} too large, using stdin")
+        if sum_arg_size >= TEST_CLI_MAX_ARG_SIZE:
+            self.log.debug(f"Cli: Command size {sum_arg_size} too large, using stdin")
             rpc_args = "\n".join([arg for arg in p_args[base_arg_pos:]])
             if stdin_data is not None:
                 stdin_data += "\n" + rpc_args