diff --git a/src/node/blockstorage.cpp b/src/node/blockstorage.cpp
--- a/src/node/blockstorage.cpp
+++ b/src/node/blockstorage.cpp
@@ -600,9 +600,22 @@
 
     bool finalize_undo = false;
     if (!fKnown) {
-        while (m_blockfile_info[nFile].nSize + nAddSize >=
-               (gArgs.GetBoolArg("-fastprune", false) ? 0x10000 /* 64kb */
-                                                      : MAX_BLOCKFILE_SIZE)) {
+        unsigned int max_blockfile_size{MAX_BLOCKFILE_SIZE};
+        // Use smaller blockfiles in test-only -fastprune mode - but avoid
+        // the possibility of having a block not fit into the block file.
+        if (gArgs.GetBoolArg("-fastprune", false)) {
+            max_blockfile_size = 0x10000; // 64kiB
+            if (nAddSize >= max_blockfile_size) {
+                // dynamically adjust the blockfile size to be larger than the
+                // added size
+                max_blockfile_size = nAddSize + 1;
+            }
+        }
+        // TODO: we will also need to dynamically adjust the blockfile size
+        //   or raise MAX_BLOCKFILE_SIZE when we reach block sizes larger than
+        //   128 MiB
+        assert(nAddSize < max_blockfile_size);
+        while (m_blockfile_info[nFile].nSize + nAddSize >= max_blockfile_size) {
             // when the undo file is keeping up with the block file, we want to
             // flush it explicitly when it is lagging behind (more blocks arrive
             // than are being connected), we let the undo block write case
diff --git a/test/functional/feature_fastprune.py b/test/functional/feature_fastprune.py
new file mode 100644
--- /dev/null
+++ b/test/functional/feature_fastprune.py
@@ -0,0 +1,28 @@
+# Copyright (c) 2023 The Bitcoin Core developers
+# Distributed under the MIT software license, see the accompanying
+# file COPYING or http://www.opensource.org/licenses/mit-license.php.
+"""Test fastprune mode."""
+from test_framework.test_framework import BitcoinTestFramework
+from test_framework.txtools import pad_tx
+from test_framework.util import assert_equal
+from test_framework.wallet import MiniWallet
+
+
+class FeatureFastpruneTest(BitcoinTestFramework):
+    def set_test_params(self):
+        self.num_nodes = 1
+        self.extra_args = [["-fastprune"]]
+
+    def run_test(self):
+        self.log.info("ensure that large blocks don't crash or freeze in -fastprune")
+        wallet = MiniWallet(self.nodes[0])
+        tx = wallet.create_self_transfer()["tx"]
+        pad_tx(tx, 0x10001)
+        self.generateblock(
+            self.nodes[0], output="raw(55)", transactions=[tx.serialize().hex()]
+        )
+        assert_equal(self.nodes[0].getblockcount(), 201)
+
+
+if __name__ == "__main__":
+    FeatureFastpruneTest().main()