diff --git a/packages/transactions/src/contract-abi.ts b/packages/transactions/src/contract-abi.ts
index 3bc014277..9fc2a6dd9 100644
--- a/packages/transactions/src/contract-abi.ts
+++ b/packages/transactions/src/contract-abi.ts
@@ -1,22 +1,23 @@
-import { cloneDeep } from './utils';
+import { hexToBytes, utf8ToBytes } from '@stacks/common';
 import {
+  ClarityType,
   ClarityValue,
-  uintCV,
-  intCV,
-  contractPrincipalCV,
-  standardPrincipalCV,
-  noneCV,
   bufferCV,
+  bufferCVFromString,
+  contractPrincipalCV,
   falseCV,
-  trueCV,
-  ClarityType,
   getCVTypeString,
-  bufferCVFromString,
+  intCV,
+  noneCV,
+  someCV,
+  standardPrincipalCV,
+  trueCV,
+  uintCV,
 } from './clarity';
-import { ContractCallPayload } from './payload';
-import { NotImplementedError } from './errors';
 import { stringAsciiCV, stringUtf8CV } from './clarity/types/stringCV';
-import { utf8ToBytes } from '@stacks/common';
+import { NotImplementedError } from './errors';
+import { ContractCallPayload } from './payload';
+import { cloneDeep } from './utils';
 
 // From https://github.com/blockstack/stacks-blockchain-sidecar/blob/master/src/event-stream/contract-abi.ts
 
@@ -138,58 +139,76 @@ export function getTypeUnion(val: ClarityAbiType): ClarityAbiTypeUnion {
   }
 }
 
-function encodeClarityValue(type: ClarityAbiType, val: string): ClarityValue;
-function encodeClarityValue(type: ClarityAbiTypeUnion, val: string): ClarityValue;
-function encodeClarityValue(
-  input: ClarityAbiTypeUnion | ClarityAbiType,
-  val: string
+/**
+ * Convert a string to a Clarity value based on the ABI type.
+ *
+ * Currently does NOT support some nested Clarity ABI types:
+ * - ClarityAbiTypeResponse
+ * - ClarityAbiTypeTuple
+ * - ClarityAbiTypeList
+ */
+export function encodeAbiClarityValue(
+  value: string,
+  type: ClarityAbiType | ClarityAbiTypeUnion
 ): ClarityValue {
-  let union: ClarityAbiTypeUnion;
-  if ((input as ClarityAbiTypeUnion).id !== undefined) {
-    union = input as ClarityAbiTypeUnion;
-  } else {
-    union = getTypeUnion(input as ClarityAbiType);
-  }
+  const union = (type as ClarityAbiTypeUnion).id
+    ? (type as ClarityAbiTypeUnion)
+    : getTypeUnion(type as ClarityAbiType);
   switch (union.id) {
     case ClarityAbiTypeId.ClarityAbiTypeUInt128:
-      return uintCV(val);
+      return uintCV(value);
     case ClarityAbiTypeId.ClarityAbiTypeInt128:
-      return intCV(val);
+      return intCV(value);
     case ClarityAbiTypeId.ClarityAbiTypeBool:
-      if (val === 'false' || val === '0') return falseCV();
-      else if (val === 'true' || val === '1') return trueCV();
-      else throw new Error(`Unexpected Clarity bool value: ${JSON.stringify(val)}`);
+      if (value === 'false' || value === '0') return falseCV();
+      else if (value === 'true' || value === '1') return trueCV();
+      else throw new Error(`Unexpected Clarity bool value: ${JSON.stringify(value)}`);
     case ClarityAbiTypeId.ClarityAbiTypePrincipal:
-      if (val.includes('.')) {
-        const [addr, name] = val.split('.');
+      if (value.includes('.')) {
+        const [addr, name] = value.split('.');
         return contractPrincipalCV(addr, name);
       } else {
-        return standardPrincipalCV(val);
+        return standardPrincipalCV(value);
       }
     case ClarityAbiTypeId.ClarityAbiTypeTraitReference:
-      const [addr, name] = val.split('.');
+      const [addr, name] = value.split('.');
       return contractPrincipalCV(addr, name);
     case ClarityAbiTypeId.ClarityAbiTypeNone:
       return noneCV();
     case ClarityAbiTypeId.ClarityAbiTypeBuffer:
-      return bufferCV(utf8ToBytes(val));
+      return bufferCV(hexToBytes(value));
     case ClarityAbiTypeId.ClarityAbiTypeStringAscii:
-      return stringAsciiCV(val);
+      return stringAsciiCV(value);
     case ClarityAbiTypeId.ClarityAbiTypeStringUtf8:
-      return stringUtf8CV(val);
-    case ClarityAbiTypeId.ClarityAbiTypeResponse:
-      throw new NotImplementedError(`Unsupported encoding for Clarity type: ${union.id}`);
+      return stringUtf8CV(value);
     case ClarityAbiTypeId.ClarityAbiTypeOptional:
-      throw new NotImplementedError(`Unsupported encoding for Clarity type: ${union.id}`);
+      return someCV(encodeAbiClarityValue(value, union.type.optional));
+    case ClarityAbiTypeId.ClarityAbiTypeResponse:
     case ClarityAbiTypeId.ClarityAbiTypeTuple:
-      throw new NotImplementedError(`Unsupported encoding for Clarity type: ${union.id}`);
     case ClarityAbiTypeId.ClarityAbiTypeList:
       throw new NotImplementedError(`Unsupported encoding for Clarity type: ${union.id}`);
     default:
       throw new Error(`Unexpected Clarity type ID: ${JSON.stringify(union)}`);
   }
 }
-export { encodeClarityValue };
+
+/** @deprecated due to a breaking bug for the buffer encoding case, this was fixed and renamed to {@link clarityAbiStringToCV} */
+export function encodeClarityValue(type: ClarityAbiType, value: string): ClarityValue;
+export function encodeClarityValue(type: ClarityAbiTypeUnion, value: string): ClarityValue;
+export function encodeClarityValue(
+  type: ClarityAbiTypeUnion | ClarityAbiType,
+  value: string
+): ClarityValue {
+  const union = (type as ClarityAbiTypeUnion).id
+    ? (type as ClarityAbiTypeUnion)
+    : getTypeUnion(type as ClarityAbiType);
+
+  if (union.id === ClarityAbiTypeId.ClarityAbiTypeBuffer) {
+    return bufferCV(utf8ToBytes(value)); // legacy behavior
+  }
+
+  return encodeAbiClarityValue(value, union);
+}
 
 export function getTypeString(val: ClarityAbiType): string {
   if (isClarityAbiPrimitive(val)) {
diff --git a/packages/transactions/tests/contract-abi.test.ts b/packages/transactions/tests/contract-abi.test.ts
new file mode 100644
index 000000000..859bf4e20
--- /dev/null
+++ b/packages/transactions/tests/contract-abi.test.ts
@@ -0,0 +1,71 @@
+import { utf8ToBytes } from '@stacks/common';
+import { Cl, encodeAbiClarityValue, encodeClarityValue } from '../src';
+
+const TEST_CASES = [
+  {
+    type: { optional: 'principal' },
+    value: 'ST000000000000000000002AMW42H',
+    expected: Cl.some(Cl.address('ST000000000000000000002AMW42H')),
+  },
+  {
+    type: { optional: 'uint128' },
+    value: '1000',
+    expected: Cl.some(Cl.uint(1000n)),
+  },
+  {
+    type: 'trait_reference',
+    value: 'ST000000000000000000002AMW42H.trait',
+    expected: Cl.address('ST000000000000000000002AMW42H.trait'),
+  },
+  {
+    type: 'bool',
+    value: 'true',
+    expected: Cl.bool(true),
+  },
+  {
+    type: 'bool',
+    value: 'false',
+    expected: Cl.bool(false),
+  },
+  {
+    type: 'int128',
+    value: '-42',
+    expected: Cl.int(-42n),
+  },
+  {
+    type: 'uint128',
+    value: '17',
+    expected: Cl.uint(17n),
+  },
+  {
+    type: { buffer: { length: 10 } },
+    value: 'beef',
+    expected: Cl.buffer(utf8ToBytes('beef')), // legacy behavior
+  },
+  {
+    type: 'principal',
+    value: 'ST1J28031BYDX19TYXSNDG9Q4HDB2TBDAM921Y7MS',
+    expected: Cl.principal('ST1J28031BYDX19TYXSNDG9Q4HDB2TBDAM921Y7MS'),
+  },
+  {
+    type: 'principal',
+    value: 'ST1J28031BYDX19TYXSNDG9Q4HDB2TBDAM921Y7MS.contract-name',
+    expected: Cl.contractPrincipal('ST1J28031BYDX19TYXSNDG9Q4HDB2TBDAM921Y7MS', 'contract-name'),
+  },
+] as const;
+
+test.each(TEST_CASES)(encodeClarityValue.name, ({ type, value, expected }) => {
+  const result = encodeClarityValue(type, value);
+  expect(result).toEqual(expected);
+});
+
+test(encodeAbiClarityValue.name, () => {
+  // buffer is expected to be hex
+  const result = encodeAbiClarityValue('beef', { buffer: { length: 10 } });
+  expect(result).toEqual(Cl.bufferFromHex('beef'));
+
+  TEST_CASES.filter((tc: any) => !tc.type.buffer).forEach(({ type, value, expected }) => {
+    const result = encodeAbiClarityValue(value, type);
+    expect(result).toEqual(expected);
+  });
+});