diff --git a/ansible/roles/xroad-ss/tasks/ubuntu.yml b/ansible/roles/xroad-ss/tasks/ubuntu.yml
index bbf84f179a..98f4a4f0b1 100644
--- a/ansible/roles/xroad-ss/tasks/ubuntu.yml
+++ b/ansible/roles/xroad-ss/tasks/ubuntu.yml
@@ -28,6 +28,7 @@
   with_items:
     - { question: "xroad-common/username",           value: "{{ xroad_ui_user }}" }
     - { question: "xroad-common/database-host",      value: "{{ database_host }}" }
+    - { question: "xroad-common/proxy-memory",       value: "d" }
     - { question: "xroad-common/admin-subject",      value: "/CN={{ inventory_hostname }}" }
     - { question: "xroad-common/admin-altsubject",   value: "IP:{{ ansible_default_ipv4.address }},DNS:{{ inventory_hostname }}" }
     - { question: "xroad-common/service-subject",    value: "/CN={{ inventory_hostname }}" }
diff --git a/src/packages/src/xroad/common/base/usr/share/xroad/scripts/_setup_memory.sh b/src/packages/src/xroad/common/base/usr/share/xroad/scripts/_setup_memory.sh
new file mode 100755
index 0000000000..9467d24876
--- /dev/null
+++ b/src/packages/src/xroad/common/base/usr/share/xroad/scripts/_setup_memory.sh
@@ -0,0 +1,166 @@
+#!/bin/bash
+
+die () {
+  echo >&2 "$@"
+  exit 1
+}
+
+function to_megabytes() {
+  if [[ $1 =~ ^([0-9]+)m$ ]]; then
+    echo "${BASH_REMATCH[1]}"
+  elif [[ $1 =~ ^([0-9]+)g$ ]]; then
+    echo "${BASH_REMATCH[1]} * 1024" | bc
+  else
+    echo ""
+  fi
+}
+
+get_params_line() {
+  grep --color=never "^${1}=" "/etc/xroad/services/local.properties"
+}
+
+apply_memory_config(){
+  local -r params_file="/etc/xroad/services/local.properties"
+  local -r params="$(get_params_line "$1")"
+
+  local -r xms="-Xms$2"
+  local -r xmx="-Xmx$3"
+
+  if [ -z "$params" ]; then
+    echo "$1=$xms $xmx" >> "$params_file"
+  else
+    local pattern="-Xms[0-9]+[mg]"
+    if [[ "$params" =~ $pattern ]]; then
+      sed -i -E "/^$1=/s/$pattern/$xms/" "$params_file"
+    else
+      sed -i "s/^$1=.*/\0 $xms/" "$params_file"
+    fi
+
+    local pattern="-Xmx[0-9]+[mg]"
+    if [[ "$params" =~ $pattern ]]; then
+      sed -i -E "/^$1=/s/$pattern/$xmx/" "$params_file"
+    else
+      sed -i "s/^$1=.*/\0 $xmx/" "$params_file"
+    fi
+  fi
+
+  local -r updated_params="$(get_params_line "$1")"
+
+  if [ "$params" == "$updated_params" ]; then
+    echo "No changes for config line: $updated_params"
+  else
+    echo "Updated config line: $updated_params"
+  fi
+
+}
+
+function to_gigabytes_str() {
+  local mb=$1
+  local gb=""
+  if [[ $1 =~ ^([0-9]+)g$ ]]; then
+   gb="${BASH_REMATCH[1]}"
+  elif [[ $1 =~ ^([0-9]+)m$ ]]; then
+   mb="${BASH_REMATCH[1]}"
+  fi
+
+  if [[ -z "$gb" && "$mb" -lt "1024" ]]; then
+    echo "${mb}m"
+  elif [[ -z "$gb" && "$mb" -ge "1024" ]]; then
+    gb=$(($mb / 1024))
+    echo "${gb}g"
+  else
+    echo "${gb}g"
+  fi
+}
+
+function find_xms() {
+  if [[ "$1" =~ -Xms([0-9]+[mg]) ]]; then
+      echo "${BASH_REMATCH[1]}"
+    else
+      echo ""
+    fi
+}
+
+function find_xmx() {
+  if [[ "$1" =~ -Xmx([0-9]+[mg]) ]]; then
+    echo "${BASH_REMATCH[1]}"
+  else
+    echo ""
+  fi
+}
+
+function apply_percentile() {
+  if [ "$1" -gt "1000" ]; then
+    die "First argument must be less than or equal to 1000"
+  fi
+  echo $2*$1/1000 | bc
+}
+
+#Returns total memory in megabytes
+function get_total_memory() {
+  local total_memory=""
+
+  if [ -f /sys/fs/cgroup/memory.max ]; then
+    # cgroup v2
+    memory_limit=$(cat /sys/fs/cgroup/memory.max)
+  elif [ -f /sys/fs/cgroup/memory/memory.limit_in_bytes ]; then
+    # cgroup v1
+    memory_limit=$(cat /sys/fs/cgroup/memory/memory.limit_in_bytes)
+  fi
+
+  if [[ -z "$memory_limit" || "$memory_limit" == "max" ]]; then
+    total_memory=$(free --mega | awk '/Mem:/ {print $2}')
+  else
+    total_memory=$(($memory_limit / 1024 / 1024))
+  fi
+
+  echo "$total_memory"
+}
+
+#Returns used memory in megabytes
+function get_used_memory() {
+  echo "$(free --mega | awk '/Mem:/ {print $3}')"
+}
+
+#Calculates memory based on total memory and given percentiles
+#Arguments:
+#1. Total memory
+#2. Minimum allowed memory in megabytes
+#3. Maximum allowed memory in megabytes
+#4. global array variable: memory_config. Percentiles list for getting memory based on total memory.
+#For example: ("4000:125" "8000:500") means if total memory is less than 4000 then result is 1/8 of total memory, if less than 8000 then half of total memory.
+#should be listed in ascending order based on total memory part.
+memory_config=()
+calculate_recommended_memory() {
+  local -r total_mem="$1"
+  local -r min_val=$(to_megabytes "$2")
+  local -r max_val=$(to_megabytes "$3")
+
+  local result="$max_val"
+
+  for pair in "${memory_config[@]}"; do
+
+    IFS=':' read -ra config <<< "$pair"
+    local limit=$(to_megabytes "${config[0]}")
+    if [[ "$total_mem" -lt "$limit" ]]; then
+      result=$(apply_percentile "${config[1]}" "$total_mem")
+      break
+    fi
+  done
+
+  if [[ "$result" -gt "$max_val" ]]; then
+    result="$max_val"
+  fi
+
+  if [[ "$result" -lt "$min_val" ]]; then
+      result="$min_val"
+  fi
+
+  if [[ "$result" -ge "2048" ]]; then
+    #round it up to nearest gb
+    result=$(echo "scale=0; (($result+512)/1024)" | bc)
+    echo "${result}g"
+  else
+    echo "${result}m"
+  fi
+}
diff --git a/src/packages/src/xroad/common/proxy/etc/xroad/services/proxy.conf b/src/packages/src/xroad/common/proxy/etc/xroad/services/proxy.conf
index aa3d2c08fb..6af2d25c2d 100644
--- a/src/packages/src/xroad/common/proxy/etc/xroad/services/proxy.conf
+++ b/src/packages/src/xroad/common/proxy/etc/xroad/services/proxy.conf
@@ -19,7 +19,7 @@ done
 
 CP="/usr/share/xroad/jlib/proxy.jar"
 
-XROAD_PROXY_PARAMS=" -Xms100m -Xmx512m -XX:MaxMetaspaceSize=140m \
+XROAD_PROXY_PARAMS=" $(/usr/share/xroad/scripts/proxy_memory_helper.sh 'get-default') -XX:MaxMetaspaceSize=140m \
 -Djavax.net.ssl.sessionCacheSize=10000 \
 -Dlogback.configurationFile=/etc/xroad/conf.d/proxy-logback.xml \
 -Dxroad.proxy.clientHandlers=${CLIENT_HANDLERS#?} \
diff --git a/src/packages/src/xroad/common/proxy/usr/share/xroad/scripts/proxy_memory_helper.sh b/src/packages/src/xroad/common/proxy/usr/share/xroad/scripts/proxy_memory_helper.sh
new file mode 100755
index 0000000000..bb6d262c10
--- /dev/null
+++ b/src/packages/src/xroad/common/proxy/usr/share/xroad/scripts/proxy_memory_helper.sh
@@ -0,0 +1,139 @@
+#!/bin/bash
+
+source /usr/share/xroad/scripts/_setup_memory.sh
+
+usage()
+{
+cat << EOF
+usage: $0 <action>
+
+Check and update memory settings for proxy service.
+
+OPTIONS:
+   action  Action to execute, supported values:
+       status - display current state: total memory, used memory, current memory configuration for proxy
+       get-default - displays default memory configuration for proxy service
+       get-recommended - displays recommended memory configuration for proxy service based on total memory
+       apply-default - applies default memory configuration for proxy service
+       apply-recommended - applies recommended memory configuration for proxy service based on total memory
+       apply - applies custom memory config, requires 2 arguments: min and max memory, for example: $0 apply 512m 5g
+
+EOF
+}
+
+default_xms="100m"
+default_xmx="512m"
+
+verify_config(){
+  local -r xms=$(to_megabytes "$1")
+  local -r xmx=$(to_megabytes "$2")
+
+  if [ -z "$xms" ]; then
+    die "Invalid first argument. Must be in <number><m|g> format, for example 128m"
+  fi
+
+  if [ -z "$xmx" ]; then
+    die "Invalid second argument. Must be in <number><m|g> format, for example 3g"
+  fi
+
+  if [ "$xms" -ge "$xmx" ]; then
+    die "First argument should be smaller than second"
+  fi
+}
+
+find_used_by_proxy(){
+  echo "$(ps -u xroad -o %mem,args | awk '/ProxyMain/ {print $1}')%"
+}
+
+get_current_xms(){
+  local -r ps_args="$(ps -u xroad -o args | grep ProxyMain)"
+  local -r local_params="$(get_params_line 'XROAD_PROXY_PARAMS')"
+
+  local xms=$(find_xms "$local_params")
+
+  if [ -z "$xms" ]; then
+      xms=$(find_xms "$ps_args")
+  fi
+
+  echo "$xms"
+}
+
+get_current_xmx(){
+  local -r ps_args="$(ps -u xroad -o args | grep ProxyMain)"
+  local -r local_params="$(get_params_line 'XROAD_PROXY_PARAMS')"
+
+  local xmx=$(find_xmx "$local_params")
+
+  if [ -z "$xmx" ]; then
+      xmx=$(find_xmx "$ps_args")
+  fi
+
+  echo "$xmx"
+}
+
+get_recommended_xms(){
+  local -r total_mem=$(get_total_memory)
+
+  memory_config=("4g:49" "8g:63" "16g:125")
+  echo $(calculate_recommended_memory "$total_mem" "100m" "2g")
+}
+
+get_recommended_xmx(){
+  local -r total_mem=$(get_total_memory)
+
+  memory_config=("4g:125" "8g:250" "16g:500" "31g:52")
+  echo $(calculate_recommended_memory "$total_mem" "512m" "16g")
+}
+
+display_status(){
+  local -r total_memory=$(get_total_memory)
+  local -r used_memory=$(get_used_memory)
+  local -r used_by_proxy=$(find_used_by_proxy)
+  local -r current_xms=$(get_current_xms)
+  local -r current_xmx=$(get_current_xmx)
+  local -r recommended_xms=$(get_recommended_xms)
+  local -r recommended_xmx=$(get_recommended_xmx)
+
+  local -r total_memory_str=$(to_gigabytes_str "$total_memory")
+  local -r used_memory_str=$(($used_memory * 100 / total_memory))
+
+cat << EOF
+Status:
+  Total memory: ${total_memory_str}
+  Used: ${used_memory_str}%
+  Used by proxy service: ${used_by_proxy}
+
+  Current proxy service memory config: ${current_xms} - ${current_xmx}
+
+  Default config: ${default_xms} - ${default_xmx}
+  (Apply default config with '$0 apply-default')
+
+  Recommended config based on total memory: ${recommended_xms} - ${recommended_xmx}
+  (Apply recommended config with '$0 apply-recommended')
+
+EOF
+
+}
+
+if [[ -z "$1" || "$1" == "status" ]]; then
+  display_status
+elif [ "$1" == "get-current" ]; then
+  echo  "$(get_current_xms) $(get_current_xmx)"
+elif [ "$1" == "get-default" ]; then
+  echo "-Xms$default_xms -Xmx$default_xmx"
+elif [ "$1" == "get-recommended" ]; then
+  echo  "-Xms$(get_recommended_xms) -Xmx$(get_recommended_xmx)"
+elif [ "$1" == "apply-default" ]; then
+  apply_memory_config "XROAD_PROXY_PARAMS" "$default_xms" "$default_xmx"
+elif [ "$1" == "apply-recommended" ]; then
+  apply_memory_config "XROAD_PROXY_PARAMS" "$(get_recommended_xms)" "$(get_recommended_xmx)"
+elif [ "$1" == "apply" ]; then
+  verify_config "$2" "$3"
+  apply_memory_config "XROAD_PROXY_PARAMS" "$2" "$3"
+elif [ "$1" == "help" ]; then
+  usage
+else
+    die "Unknown action. Use 'help' to get available actions"
+fi
+
+
diff --git a/src/packages/src/xroad/redhat/SPECS/xroad-base.spec b/src/packages/src/xroad/redhat/SPECS/xroad-base.spec
index db366e9b3a..467ba9536b 100644
--- a/src/packages/src/xroad/redhat/SPECS/xroad-base.spec
+++ b/src/packages/src/xroad/redhat/SPECS/xroad-base.spec
@@ -95,6 +95,7 @@ rm -rf %{buildroot}
 /usr/share/xroad/scripts/_backup_restore_common.sh
 /usr/share/xroad/scripts/serverconf_migrations/add_acl.xsl
 /usr/share/xroad/scripts/_setup_db.sh
+/usr/share/xroad/scripts/_setup_memory.sh
 /usr/share/xroad/scripts/xroad-base.sh
 /usr/share/xroad/db/liquibase-core.jar
 /usr/share/xroad/db/liquibase-core-*.jar
diff --git a/src/packages/src/xroad/redhat/SPECS/xroad-proxy.spec b/src/packages/src/xroad/redhat/SPECS/xroad-proxy.spec
index 6c70dcb4b6..7099f53603 100644
--- a/src/packages/src/xroad/redhat/SPECS/xroad-proxy.spec
+++ b/src/packages/src/xroad/redhat/SPECS/xroad-proxy.spec
@@ -112,6 +112,7 @@ rm -rf %{buildroot}
 /usr/share/xroad/scripts/autobackup_xroad_proxy_configuration.sh
 /usr/share/xroad/scripts/get_security_server_id.sh
 /usr/share/xroad/scripts/read_db_properties.sh
+/usr/share/xroad/scripts/proxy_memory_helper.sh
 %doc /usr/share/doc/%{name}/LICENSE.txt
 %doc /usr/share/doc/%{name}/3RD-PARTY-NOTICES.txt
 %doc /usr/share/doc/%{name}/CHANGELOG.md
diff --git a/src/packages/src/xroad/ubuntu/generic/xroad-proxy.postinst b/src/packages/src/xroad/ubuntu/generic/xroad-proxy.postinst
index 62973da135..796f1cfa5e 100644
--- a/src/packages/src/xroad/ubuntu/generic/xroad-proxy.postinst
+++ b/src/packages/src/xroad/ubuntu/generic/xroad-proxy.postinst
@@ -24,6 +24,14 @@ function migrate_conf_value {
     fi
 }
 
+function handle_error() {
+   ERR=$(</tmp/memory.err)
+   db_subst xroad-common/proxy-memory-error ERR "$(printf %s "$ERR" | debconf-escape -e)"
+   db_input critical xroad-common/proxy-memory-error
+   db_go
+   rm -f /tmp/memory.err
+}
+
 case "$1" in
  configure|reconfigure)
   chmod 0440 /etc/sudoers.d/xroad-proxy
@@ -123,9 +131,41 @@ case "$1" in
 
   RET=""
   db_get xroad-common/database-host || RET=""
-  db_stop
   /usr/share/xroad/scripts/setup_serverconf_db.sh "$RET"
 
+  DEFAULT_XM="$(/usr/share/xroad/scripts/proxy_memory_helper.sh 'get-default')"
+  RECOMMENDED_XM="$(/usr/share/xroad/scripts/proxy_memory_helper.sh 'get-recommended')"
+
+  db_subst xroad-common/proxy-memory DEFAULT_XM "$DEFAULT_XM"
+  db_subst xroad-common/proxy-memory RECOMMENDED_XM "$RECOMMENDED_XM"
+
+  db_set xroad-common/proxy-memory "$(/usr/share/xroad/scripts/proxy_memory_helper.sh 'get-current')"
+
+  while :; do
+    # Get memory config string from the user
+    db_input high xroad-common/proxy-memory || true
+    db_go
+
+    RET=""
+    db_get xroad-common/proxy-memory || RET=""
+
+    if [[ -z "$RET" || "$RET" == "d" ]];then
+      /usr/share/xroad/scripts/proxy_memory_helper.sh 'apply-default'
+      break
+    elif [ "$RET" == "r" ];then
+      /usr/share/xroad/scripts/proxy_memory_helper.sh 'apply-recommended'
+      break
+    else
+      if ! /usr/share/xroad/scripts/proxy_memory_helper.sh 'apply' $RET 2>/tmp/memory.err; then
+        handle_error
+        continue
+      else
+        break
+      fi
+    fi
+  done
+  db_stop
+
   invoke-rc.d --quiet rsyslog try-restart || true
   invoke-rc.d --quiet xroad-confclient try-restart || true
   invoke-rc.d --quiet xroad-signer try-restart || true
diff --git a/src/packages/src/xroad/ubuntu/generic/xroad-proxy.templates b/src/packages/src/xroad/ubuntu/generic/xroad-proxy.templates
index 7bc0868491..0fff23086f 100644
--- a/src/packages/src/xroad/ubuntu/generic/xroad-proxy.templates
+++ b/src/packages/src/xroad/ubuntu/generic/xroad-proxy.templates
@@ -4,6 +4,20 @@ Default: 127.0.0.1:5432
 Description: Insert database server connection string
  This will be used by the Security Server to connect to the database host.
 
+Template: xroad-common/proxy-memory
+Type: string
+Default: d
+Description: Insert proxy server memory config string
+ This will be used to setup initial and maximum heap size for the proxy service.
+ .
+ Allowed values:
+ .
+ d - default config: ${DEFAULT_XM}
+ .
+ r - recommended config: ${RECOMMENDED_XM}
+ .
+ <initialSize> <maxSize> - custom heap size constrains, for example '128m 2g'
+
 Template: xroad-common/admin-subject
 Type: string
 Description: Insert admin interface TLS certificate subject name
@@ -50,6 +64,12 @@ Description: Error during certificate generation, please fix issues
   output was:
   ${ERR}
 
+Template: xroad-common/proxy-memory-error
+Type: error
+Description: Error applying selected memory config, please fix issues
+  output was:
+  ${ERR}
+
 Template: xroad-common/username
 Type: string
 Default: