diff --git a/src/core/ext/transport/cronet/transport/cronet_transport.c b/src/core/ext/transport/cronet/transport/cronet_transport.c
index fabfaf8a270..fa2bdb8cf29 100644
--- a/src/core/ext/transport/cronet/transport/cronet_transport.c
+++ b/src/core/ext/transport/cronet/transport/cronet_transport.c
@@ -128,6 +128,7 @@ struct read_state {
   int received_bytes;
   int remaining_bytes;
   int length_field;
+  bool compressed;
   char grpc_header_bytes[GRPC_HEADER_SIZE_IN_BYTES];
   char *payload_field;
   bool read_stream_closed;
@@ -503,6 +504,7 @@ static void on_response_headers_received(
      is closed */
     GPR_ASSERT(s->state.rs.length_field_received == false);
     s->state.rs.read_buffer = s->state.rs.grpc_header_bytes;
+    s->state.rs.compressed = false;
     s->state.rs.received_bytes = 0;
     s->state.rs.remaining_bytes = GRPC_HEADER_SIZE_IN_BYTES;
     CRONET_LOG(GPR_DEBUG, "bidirectional_stream_read(%p)", s->cbs);
@@ -634,7 +636,7 @@ static void on_response_trailers_received(
 */
 static void create_grpc_frame(grpc_slice_buffer *write_slice_buffer,
                               char **pp_write_buffer,
-                              size_t *p_write_buffer_size) {
+                              size_t *p_write_buffer_size, uint32_t flags) {
   grpc_slice slice = grpc_slice_buffer_take_first(write_slice_buffer);
   size_t length = GRPC_SLICE_LENGTH(slice);
   *p_write_buffer_size = length + GRPC_HEADER_SIZE_IN_BYTES;
@@ -643,7 +645,7 @@ static void create_grpc_frame(grpc_slice_buffer *write_slice_buffer,
   *pp_write_buffer = write_buffer;
   uint8_t *p = (uint8_t *)write_buffer;
   /* Append 5 byte header */
-  *p++ = 0;
+  *p++ = (flags & GRPC_WRITE_INTERNAL_COMPRESS) ? 1 : 0;
   *p++ = (uint8_t)(length >> 24);
   *p++ = (uint8_t)(length >> 16);
   *p++ = (uint8_t)(length >> 8);
@@ -721,14 +723,26 @@ static void convert_metadata_to_cronet_headers(
   *p_num_headers = (size_t)num_headers;
 }
 
-static int parse_grpc_header(const uint8_t *data) {
+static bool parse_grpc_header(const uint8_t *data,
+                              int *length,
+                              bool *compressed) {
+  const uint8_t c = *data;
   const uint8_t *p = data + 1;
-  int length = 0;
-  length |= ((uint8_t)*p++) << 24;
-  length |= ((uint8_t)*p++) << 16;
-  length |= ((uint8_t)*p++) << 8;
-  length |= ((uint8_t)*p++);
-  return length;
+  *length = 0;
+  *length |= ((uint8_t)*p++) << 24;
+  *length |= ((uint8_t)*p++) << 16;
+  *length |= ((uint8_t)*p++) << 8;
+  *length |= ((uint8_t)*p++);
+  switch (c) {
+    case 0:
+      *compressed = false;
+      return true;
+    case 1:
+      *compressed = true;
+      return true;
+    default:
+      return false;
+  }
 }
 
 static bool header_has_authority(grpc_linked_mdelem *head) {
@@ -948,12 +962,6 @@ static enum e_op_result execute_stream_op(grpc_exec_ctx *exec_ctx,
       grpc_slice_buffer_init(&write_slice_buffer);
       grpc_byte_stream_next(NULL, stream_op->send_message, &slice,
                             stream_op->send_message->length, NULL);
-      /* Check that compression flag is OFF. We don't support compression yet.
-       */
-      if (stream_op->send_message->flags != 0) {
-        gpr_log(GPR_ERROR, "Compression is not supported");
-        GPR_ASSERT(stream_op->send_message->flags == 0);
-      }
       grpc_slice_buffer_add(&write_slice_buffer, slice);
       if (write_slice_buffer.count != 1) {
         /* Empty request not handled yet */
@@ -963,7 +971,7 @@ static enum e_op_result execute_stream_op(grpc_exec_ctx *exec_ctx,
       if (write_slice_buffer.count > 0) {
         size_t write_buffer_size;
         create_grpc_frame(&write_slice_buffer, &stream_state->ws.write_buffer,
-                          &write_buffer_size);
+                          &write_buffer_size, stream_op->send_message->flags);
         CRONET_LOG(GPR_DEBUG, "bidirectional_stream_write (%p, %p)", s->cbs,
                    stream_state->ws.write_buffer);
         stream_state->state_callback_received[OP_SEND_MESSAGE] = false;
@@ -1059,8 +1067,15 @@ static enum e_op_result execute_stream_op(grpc_exec_ctx *exec_ctx,
           stream_state->rs.remaining_bytes == 0) {
         /* Start a read operation for data */
         stream_state->rs.length_field_received = true;
-        stream_state->rs.length_field = stream_state->rs.remaining_bytes =
-            parse_grpc_header((const uint8_t *)stream_state->rs.read_buffer);
+        if (parse_grpc_header((const uint8_t *)stream_state->rs.read_buffer,
+                              &stream_state->rs.length_field,
+                              &stream_state->rs.compressed)) {
+          stream_state->rs.remaining_bytes = stream_state->rs.length_field;
+        } else {
+          /* Error deframing the data frame. */
+          CRONET_LOG(GPR_DEBUG, "stream deframing error");
+          GPR_ASSERT(false);
+        }
         CRONET_LOG(GPR_DEBUG, "length field = %d",
                    stream_state->rs.length_field);
         if (stream_state->rs.length_field > 0) {
@@ -1082,6 +1097,9 @@ static enum e_op_result execute_stream_op(grpc_exec_ctx *exec_ctx,
           grpc_slice_buffer_init(&stream_state->rs.read_slice_buffer);
           grpc_slice_buffer_stream_init(&stream_state->rs.sbs,
                                         &stream_state->rs.read_slice_buffer, 0);
+          if (stream_state->rs.compressed) {
+            stream_state->rs.sbs.base.flags |= GRPC_WRITE_INTERNAL_COMPRESS;
+          }
           *((grpc_byte_buffer **)stream_op->recv_message) =
               (grpc_byte_buffer *)&stream_state->rs.sbs;
           grpc_closure_sched(exec_ctx, stream_op->recv_message_ready,
@@ -1093,6 +1111,7 @@ static enum e_op_result execute_stream_op(grpc_exec_ctx *exec_ctx,
           stream_state->rs.read_buffer = stream_state->rs.grpc_header_bytes;
           stream_state->rs.remaining_bytes = GRPC_HEADER_SIZE_IN_BYTES;
           stream_state->rs.received_bytes = 0;
+          stream_state->rs.compressed = false;
           stream_state->rs.length_field_received = false;
           CRONET_LOG(GPR_DEBUG, "bidirectional_stream_read(%p)", s->cbs);
           stream_state->state_op_done[OP_READ_REQ_MADE] =
@@ -1107,6 +1126,7 @@ static enum e_op_result execute_stream_op(grpc_exec_ctx *exec_ctx,
         stream_state->rs.read_buffer = stream_state->rs.grpc_header_bytes;
         stream_state->rs.remaining_bytes = GRPC_HEADER_SIZE_IN_BYTES;
         stream_state->rs.received_bytes = 0;
+        stream_state->rs.compressed = false;
         CRONET_LOG(GPR_DEBUG, "bidirectional_stream_read(%p)", s->cbs);
         stream_state->state_op_done[OP_READ_REQ_MADE] =
             true; /* Indicates that at least one read request has been made */
@@ -1130,6 +1150,9 @@ static enum e_op_result execute_stream_op(grpc_exec_ctx *exec_ctx,
                             read_data_slice);
       grpc_slice_buffer_stream_init(&stream_state->rs.sbs,
                                     &stream_state->rs.read_slice_buffer, 0);
+      if (stream_state->rs.compressed) {
+        stream_state->rs.sbs.base.flags = GRPC_WRITE_INTERNAL_COMPRESS;
+      }
       *((grpc_byte_buffer **)stream_op->recv_message) =
           (grpc_byte_buffer *)&stream_state->rs.sbs;
       grpc_closure_sched(exec_ctx, stream_op->recv_message_ready,
@@ -1139,6 +1162,7 @@ static enum e_op_result execute_stream_op(grpc_exec_ctx *exec_ctx,
       /* Do an extra read to trigger on_succeeded() callback in case connection
          is closed */
       stream_state->rs.read_buffer = stream_state->rs.grpc_header_bytes;
+      stream_state->rs.compressed = false;
       stream_state->rs.received_bytes = 0;
       stream_state->rs.remaining_bytes = GRPC_HEADER_SIZE_IN_BYTES;
       stream_state->rs.length_field_received = false;