diff --git a/packages/components/CHANGELOG.md b/packages/components/CHANGELOG.md
index 11650effa74028..398eb53faaa541 100644
--- a/packages/components/CHANGELOG.md
+++ b/packages/components/CHANGELOG.md
@@ -13,6 +13,7 @@
 -   `CustomSelectControlV2`: prevent keyboard event propagation in legacy wrapper. ([#62907](https://github.com/WordPress/gutenberg/pull/62907))
 -   `CustomSelectControlV2`: fix item styles ([#62825](https://github.com/WordPress/gutenberg/pull/62825))
 -   `CustomSelectControlV2`: add root element wrapper. ([#62803](https://github.com/WordPress/gutenberg/pull/62803))
+-   `CustomSelectControlV2`: tweak item inline padding based on size ([#62850](https://github.com/WordPress/gutenberg/pull/62850)).
 -   `CustomSelectControlV2`: fix popover styles. ([#62821](https://github.com/WordPress/gutenberg/pull/62821))
 -   `CustomSelectControlV2`: fix trigger text alignment in RTL languages ([#62869](https://github.com/WordPress/gutenberg/pull/62869)).
 -   `CustomSelectControlV2`: allow wrapping item hint to new line ([#62848](https://github.com/WordPress/gutenberg/pull/62848)).
diff --git a/packages/components/src/custom-select-control-v2/custom-select.tsx b/packages/components/src/custom-select-control-v2/custom-select.tsx
index c03e047c882e45..027423319bece1 100644
--- a/packages/components/src/custom-select-control-v2/custom-select.tsx
+++ b/packages/components/src/custom-select-control-v2/custom-select.tsx
@@ -107,6 +107,8 @@ function _CustomSelect(
 			[ isLegacy ]
 		);
 
+	const contextValue = useMemo( () => ( { store, size } ), [ store, size ] );
+
 	return (
 		// Where should `restProps` be forwarded to?
 		<div className={ className }>
@@ -134,7 +136,7 @@ function _CustomSelect(
 					slide={ false }
 					onKeyDown={ onSelectPopoverKeyDown }
 				>
-					<CustomSelectContext.Provider value={ { store } }>
+					<CustomSelectContext.Provider value={ contextValue }>
 						{ children }
 					</CustomSelectContext.Provider>
 				</Styled.SelectPopover>
diff --git a/packages/components/src/custom-select-control-v2/item.tsx b/packages/components/src/custom-select-control-v2/item.tsx
index bd60f974cc43a6..ade187bb603e98 100644
--- a/packages/components/src/custom-select-control-v2/item.tsx
+++ b/packages/components/src/custom-select-control-v2/item.tsx
@@ -17,7 +17,11 @@ export function CustomSelectItem( {
 }: WordPressComponentProps< CustomSelectItemProps, 'div', false > ) {
 	const customSelectContext = useContext( CustomSelectContext );
 	return (
-		<Styled.SelectItem store={ customSelectContext?.store } { ...props }>
+		<Styled.SelectItem
+			store={ customSelectContext?.store }
+			size={ customSelectContext?.size ?? 'default' }
+			{ ...props }
+		>
 			{ children ?? props.value }
 			<Styled.SelectedItemCheck>
 				<Icon icon={ check } />
diff --git a/packages/components/src/custom-select-control-v2/styles.ts b/packages/components/src/custom-select-control-v2/styles.ts
index d432ac5e06ab62..59d22a45915500 100644
--- a/packages/components/src/custom-select-control-v2/styles.ts
+++ b/packages/components/src/custom-select-control-v2/styles.ts
@@ -13,7 +13,59 @@ import { space } from '../utils/space';
 import { chevronIconSize } from '../select-control/styles/select-control-styles';
 import type { CustomSelectButtonSize } from './types';
 
-const ITEM_PADDING = space( 2 );
+const INLINE_PADDING = {
+	compact: 8, // space(2)
+	small: 8, // space(2)
+	default: 16, // space(4)
+};
+
+const getSelectSize = (
+	size: NonNullable< CustomSelectButtonSize[ 'size' ] >,
+	heightProperty: 'minHeight' | 'height'
+) => {
+	const sizes = {
+		compact: {
+			[ heightProperty ]: 32,
+			paddingInlineStart: INLINE_PADDING.compact,
+			paddingInlineEnd: INLINE_PADDING.compact + chevronIconSize,
+		},
+		default: {
+			[ heightProperty ]: 40,
+			paddingInlineStart: INLINE_PADDING.default,
+			paddingInlineEnd: INLINE_PADDING.default + chevronIconSize,
+		},
+		small: {
+			[ heightProperty ]: 24,
+			paddingInlineStart: INLINE_PADDING.small,
+			paddingInlineEnd: INLINE_PADDING.small + chevronIconSize,
+		},
+	};
+
+	return sizes[ size ] || sizes.default;
+};
+
+const getSelectItemSize = (
+	size: NonNullable< CustomSelectButtonSize[ 'size' ] >
+) => {
+	// Used to visually align the checkmark with the chevron
+	const checkmarkCorrection = 6;
+	const sizes = {
+		compact: {
+			paddingInlineStart: INLINE_PADDING.compact,
+			paddingInlineEnd: INLINE_PADDING.compact - checkmarkCorrection,
+		},
+		default: {
+			paddingInlineStart: INLINE_PADDING.default,
+			paddingInlineEnd: INLINE_PADDING.default - checkmarkCorrection,
+		},
+		small: {
+			paddingInlineStart: INLINE_PADDING.small,
+			paddingInlineEnd: INLINE_PADDING.small - checkmarkCorrection,
+		},
+	};
+
+	return sizes[ size ] || sizes.default;
+};
 
 export const SelectLabel = styled( Ariakit.SelectLabel )`
 	font-size: 11px;
@@ -26,38 +78,14 @@ export const SelectLabel = styled( Ariakit.SelectLabel )`
 export const Select = styled( Ariakit.Select, {
 	// Do not forward `hasCustomRenderProp` to the underlying Ariakit.Select component
 	shouldForwardProp: ( prop ) => prop !== 'hasCustomRenderProp',
-} )( ( {
-	size,
-	hasCustomRenderProp,
-}: {
-	size: NonNullable< CustomSelectButtonSize[ 'size' ] >;
-	hasCustomRenderProp: boolean;
-} ) => {
-	const heightProperty = hasCustomRenderProp ? 'minHeight' : 'height';
-
-	const getSize = () => {
-		const sizes = {
-			compact: {
-				[ heightProperty ]: 32,
-				paddingInlineStart: 8,
-				paddingInlineEnd: 8 + chevronIconSize,
-			},
-			default: {
-				[ heightProperty ]: 40,
-				paddingInlineStart: 16,
-				paddingInlineEnd: 16 + chevronIconSize,
-			},
-			small: {
-				[ heightProperty ]: 24,
-				paddingInlineStart: 8,
-				paddingInlineEnd: 8 + chevronIconSize,
-			},
-		};
-
-		return sizes[ size ] || sizes.default;
-	};
-
-	return css`
+} )(
+	( {
+		size,
+		hasCustomRenderProp,
+	}: {
+		size: NonNullable< CustomSelectButtonSize[ 'size' ] >;
+		hasCustomRenderProp: boolean;
+	} ) => css`
 		display: block;
 		background-color: ${ COLORS.theme.background };
 		border: none;
@@ -73,10 +101,10 @@ export const Select = styled( Ariakit.Select, {
 			outline: none; // handled by InputBase component
 		}
 
-		${ getSize() }
+		${ getSelectSize( size, hasCustomRenderProp ? 'minHeight' : 'height' ) }
 		${ ! hasCustomRenderProp && truncateStyles }
-	`;
-} );
+	`
+);
 
 export const SelectPopover = styled( Ariakit.SelectPopover )`
 	display: flex;
@@ -101,31 +129,39 @@ export const SelectPopover = styled( Ariakit.SelectPopover )`
 	}
 `;
 
-export const SelectItem = styled( Ariakit.SelectItem )`
-	cursor: default;
-	display: flex;
-	align-items: center;
-	justify-content: space-between;
-	padding: ${ ITEM_PADDING };
-	font-size: ${ CONFIG.fontSize };
-	// TODO: reassess line-height for non-legacy v2
-	line-height: 28px;
-	scroll-margin: ${ space( 1 ) };
-	user-select: none;
-
-	&[aria-disabled='true'] {
-		cursor: not-allowed;
-	}
+export const SelectItem = styled( Ariakit.SelectItem )(
+	( {
+		size,
+	}: {
+		size: NonNullable< CustomSelectButtonSize[ 'size' ] >;
+	} ) => css`
+		cursor: default;
+		display: flex;
+		align-items: center;
+		justify-content: space-between;
+		font-size: ${ CONFIG.fontSize };
+		// TODO: reassess line-height for non-legacy v2
+		line-height: 28px;
+		padding-block: ${ space( 2 ) };
+		scroll-margin: ${ space( 1 ) };
+		user-select: none;
 
-	&[data-active-item] {
-		background-color: ${ COLORS.theme.gray[ 300 ] };
-	}
-`;
+		&[aria-disabled='true'] {
+			cursor: not-allowed;
+		}
+
+		&[data-active-item] {
+			background-color: ${ COLORS.theme.gray[ 300 ] };
+		}
+
+		${ getSelectItemSize( size ) }
+	`
+);
 
 export const SelectedItemCheck = styled( Ariakit.SelectItemCheck )`
 	display: flex;
 	align-items: center;
-	margin-inline-start: ${ ITEM_PADDING };
+	margin-inline-start: ${ space( 2 ) };
 	font-size: 24px; // Size of checkmark icon
 `;
 
diff --git a/packages/components/src/custom-select-control-v2/types.ts b/packages/components/src/custom-select-control-v2/types.ts
index c37db0690c5bc1..317c363ec3549a 100644
--- a/packages/components/src/custom-select-control-v2/types.ts
+++ b/packages/components/src/custom-select-control-v2/types.ts
@@ -12,8 +12,6 @@ export type CustomSelectStore = {
 	store: Ariakit.SelectStore;
 };
 
-export type CustomSelectContext = CustomSelectStore | undefined;
-
 type CustomSelectSize< Size = 'compact' | 'default' > = {
 	/**
 	 * The size of the control.
@@ -27,6 +25,10 @@ export type CustomSelectButtonSize = CustomSelectSize<
 	'compact' | 'default' | 'small'
 >;
 
+export type CustomSelectContext =
+	| ( CustomSelectStore & CustomSelectButtonSize )
+	| undefined;
+
 export type CustomSelectButtonProps = {
 	/**
 	 * An optional default value for the control when used in uncontrolled mode.