diff --git a/packages/components/CHANGELOG.md b/packages/components/CHANGELOG.md
index 6cbb61df763f14..f03de3256a42d2 100644
--- a/packages/components/CHANGELOG.md
+++ b/packages/components/CHANGELOG.md
@@ -2,6 +2,10 @@
 
 ## Unreleased
 
+### Enhancements
+
+-   `Menu` and othr menu items: change default size to be 32px tall rather than 40px to improve menu density. ([#73429](https://github.com/WordPress/gutenberg/pull/73429)).
+
 ### Bug Fixes
 
 -   `Notice`: Fix notice component spacing issue when actions are present. ([#69430](https://github.com/WordPress/gutenberg/pull/69430))
diff --git a/packages/components/src/button/style.scss b/packages/components/src/button/style.scss
index 6225ae50f02465..378fa63f2498d8 100644
--- a/packages/components/src/button/style.scss
+++ b/packages/components/src/button/style.scss
@@ -29,7 +29,7 @@
 	height: $button-size;
 	align-items: center;
 	box-sizing: border-box;
-	padding: 6px 12px;
+	padding: 4px 12px; // Allows 32px min-height.
 	border-radius: $radius-small;
 	color: $components-color-foreground;
 
diff --git a/packages/components/src/dropdown-menu/index.tsx b/packages/components/src/dropdown-menu/index.tsx
index 195595fb9dc0de..0a3155ece9a079 100644
--- a/packages/components/src/dropdown-menu/index.tsx
+++ b/packages/components/src/dropdown-menu/index.tsx
@@ -164,7 +164,7 @@ function UnconnectedDropdownMenu( dropdownMenuProps: DropdownMenuProps ) {
 						{ controlSets?.flatMap( ( controlSet, indexOfSet ) =>
 							controlSet.map( ( control, indexOfControl ) => (
 								<Button
-									__next40pxDefaultSize
+									size="compact"
 									key={ [
 										indexOfSet,
 										indexOfControl,
diff --git a/packages/components/src/dropdown-menu/style.scss b/packages/components/src/dropdown-menu/style.scss
index 8cf5c66fdfce6a..718f532770a7b2 100644
--- a/packages/components/src/dropdown-menu/style.scss
+++ b/packages/components/src/dropdown-menu/style.scss
@@ -57,7 +57,7 @@
 
 	.components-menu-item__button,
 	.components-menu-item__button.components-button {
-		min-height: $button-size-next-default-40px;
+		min-height: $grid-unit-40;
 		height: auto;
 		text-align: left;
 		padding-left: $grid-unit-10;
diff --git a/packages/components/src/menu-item/index.tsx b/packages/components/src/menu-item/index.tsx
index 6c83b16b493dd7..980cab50f80699 100644
--- a/packages/components/src/menu-item/index.tsx
+++ b/packages/components/src/menu-item/index.tsx
@@ -56,7 +56,7 @@ function UnforwardedMenuItem(
 
 	return (
 		<Button
-			__next40pxDefaultSize
+			size="compact"
 			ref={ ref }
 			// Make sure aria-checked matches spec https://www.w3.org/TR/wai-aria-1.1/#aria-checked
 			aria-checked={
diff --git a/packages/components/src/menu-item/test/__snapshots__/index.js.snap b/packages/components/src/menu-item/test/__snapshots__/index.js.snap
index 07dc49b034e5ee..d252f03d9146a5 100644
--- a/packages/components/src/menu-item/test/__snapshots__/index.js.snap
+++ b/packages/components/src/menu-item/test/__snapshots__/index.js.snap
@@ -3,7 +3,7 @@
 exports[`MenuItem should match snapshot when all props provided 1`] = `
 <button
   aria-checked="true"
-  class="components-button components-menu-item__button my-class is-next-40px-default-size"
+  class="components-button components-menu-item__button my-class is-compact"
   role="menuitemcheckbox"
   type="button"
 >
@@ -35,7 +35,7 @@ exports[`MenuItem should match snapshot when all props provided 1`] = `
 
 exports[`MenuItem should match snapshot when info is provided 1`] = `
 <button
-  class="components-button components-menu-item__button is-next-40px-default-size"
+  class="components-button components-menu-item__button is-compact"
   role="menuitem"
   type="button"
 >
@@ -62,7 +62,7 @@ exports[`MenuItem should match snapshot when info is provided 1`] = `
 
 exports[`MenuItem should match snapshot when isSelected and role are optionally provided 1`] = `
 <button
-  class="components-button components-menu-item__button my-class is-next-40px-default-size"
+  class="components-button components-menu-item__button my-class is-compact"
   role="menuitem"
   type="button"
 >
@@ -94,7 +94,7 @@ exports[`MenuItem should match snapshot when isSelected and role are optionally
 
 exports[`MenuItem should match snapshot when only label provided 1`] = `
 <button
-  class="components-button components-menu-item__button is-next-40px-default-size"
+  class="components-button components-menu-item__button is-compact"
   role="menuitem"
   type="button"
 >
diff --git a/packages/components/src/menu/styles.ts b/packages/components/src/menu/styles.ts
index 1235d6ae7ec1b4..43190af7c1df07 100644
--- a/packages/components/src/menu/styles.ts
+++ b/packages/components/src/menu/styles.ts
@@ -25,7 +25,7 @@ const ANIMATION_PARAMS = {
 };
 
 const CONTENT_WRAPPER_PADDING = space( 1 );
-const ITEM_PADDING_BLOCK = space( 2 );
+const ITEM_PADDING_BLOCK = space( 1 );
 const ITEM_PADDING_INLINE = space( 3 );
 
 // TODO:
@@ -152,7 +152,7 @@ const baseItem = css`
 	all: unset;
 
 	position: relative;
-	min-height: ${ space( 10 ) };
+	min-height: ${ space( 8 ) };
 	box-sizing: border-box;
 
 	/* Occupy the width of all grid columns (ie. full width) */