diff --git a/tests/unit/compiler/venom/test_literals_codesize.py b/tests/unit/compiler/venom/test_literals_codesize.py
index 53a519b70f..c659bc791d 100644
--- a/tests/unit/compiler/venom/test_literals_codesize.py
+++ b/tests/unit/compiler/venom/test_literals_codesize.py
@@ -22,10 +22,14 @@ def test_literal_codesize_ff_inversion(orig_value):
 
     assert bb.instructions[0].opcode == "not"
     assert evm_not(bb.instructions[0].operands[0].value) == orig_value
+    assert bb.instructions[1].opcode == "stop"
 
 
-should_not_invert = [1, 0xFE << 248 | (2**248 - 1)] + [
-    ((2**255 - 1) >> i) << i for i in range(0, 3 * 8)
+should_not_invert = [
+    # goes from one since the first one can be optimized with
+    # combination of two optimizations
+    ((2**255 - 1) >> i) << i
+    for i in range(1, 3 * 8)
 ]
 
 
@@ -42,6 +46,7 @@ def test_literal_codesize_no_inversion(orig_value):
 
     assert bb.instructions[0].opcode == "store"
     assert bb.instructions[0].operands[0].value == orig_value
+    assert bb.instructions[1].opcode == "stop"
 
 
 should_shl = (
@@ -65,6 +70,7 @@ def test_literal_codesize_shl(orig_value):
     assert bb.instructions[0].opcode == "shl"
     op0, op1 = bb.instructions[0].operands
     assert op0.value << op1.value == orig_value
+    assert bb.instructions[1].opcode == "stop"
 
 
 should_not_shl = [1 << i for i in range(0, 3 * 8)] + [
@@ -86,3 +92,47 @@ def test_literal_codesize_no_shl(orig_value):
 
     assert bb.instructions[0].opcode == "store"
     assert bb.instructions[0].operands[0].value == orig_value
+    assert bb.instructions[1].opcode == "stop"
+
+
+should_do_both = [(2**256 - 1) ^ (1 << i) for i in range(4 * 8, 256)]
+
+
+@pytest.mark.parametrize("orig_value", should_do_both)
+def test_literal_codesize_both(orig_value):
+    ctx = IRContext()
+    fn = ctx.create_function("_global")
+    bb = fn.get_basic_block()
+
+    bb.append_instruction("store", IRLiteral(orig_value))
+    bb.append_instruction("stop")
+
+    ac = IRAnalysesCache(fn)
+    ReduceLiteralsCodesize(ac, fn).run_pass()
+
+    assert bb.instructions[0].opcode == "shl"
+    op0, op1 = bb.instructions[0].operands
+    assert evm_not(op0.value << op1.value) == orig_value
+    assert bb.instructions[1].opcode == "not"
+    assert bb.instructions[1].operands[0] == bb.instructions[0].output
+    assert bb.instructions[2].opcode == "stop"
+
+
+should_not_do_any = [(2**256 - 1) ^ (1 << i) ^ 1 ^ 2**255 for i in range(4 * 8, 255)]
+
+
+@pytest.mark.parametrize("orig_value", should_not_do_any)
+def test_literal_codesize_nothing(orig_value):
+    ctx = IRContext()
+    fn = ctx.create_function("_global")
+    bb = fn.get_basic_block()
+
+    bb.append_instruction("store", IRLiteral(orig_value))
+    bb.append_instruction("stop")
+
+    ac = IRAnalysesCache(fn)
+    ReduceLiteralsCodesize(ac, fn).run_pass()
+
+    assert bb.instructions[0].opcode == "store"
+    assert bb.instructions[0].operands[0].value == orig_value
+    assert bb.instructions[1].opcode == "stop"
diff --git a/vyper/venom/passes/literals_codesize.py b/vyper/venom/passes/literals_codesize.py
index 5bdc1f0986..808433f418 100644
--- a/vyper/venom/passes/literals_codesize.py
+++ b/vyper/venom/passes/literals_codesize.py
@@ -1,5 +1,5 @@
 from vyper.utils import evm_not
-from vyper.venom.basicblock import IRLiteral
+from vyper.venom.basicblock import IRBasicBlock, IRInstruction, IRLiteral
 from vyper.venom.passes.base_pass import IRPass
 
 # not takes 1 byte1, so it makes sense to use it when we can save at least
@@ -16,7 +16,7 @@ def run_pass(self):
         for bb in self.function.get_basic_blocks():
             self._process_bb(bb)
 
-    def _process_bb(self, bb):
+    def _process_bb(self, bb: IRBasicBlock):
         i = 0
         while i < len(bb.instructions):
             inst = bb.instructions[i]
@@ -38,18 +38,38 @@ def _process_bb(self, bb):
             ix = len(binz) - binz.rfind("1")
             shl_benefit = ix - SHL_THRESHOLD * 8
 
-            if not_benefit <= 0 and shl_benefit <= 0:
+            # calculate amount of bits saved by both optimizations put together
+            negated = evm_not(val)
+            negated_binz = bin(negated)[2:]
+            negated_ix = len(negated_binz) - negated_binz.rfind("1")
+            not_then_shl_size = (
+                (len(hex(negated)) - 2) * 4 - negated_ix + 1 + NOT_THRESHOLD * 8 + SHL_THRESHOLD * 8
+            )
+            not_the_shl_benefit = (len(hex(val)) - 2) * 4 - not_then_shl_size
+
+            if not_benefit <= 0 and shl_benefit <= 0 and not_the_shl_benefit <= 0:
                 # no optimization can be done here
                 continue
-
-            if not_benefit >= shl_benefit:
-                assert not_benefit > 0  # implied by previous conditions
+            if not_the_shl_benefit > not_benefit and not_the_shl_benefit > shl_benefit:
+                negated_ix -= 1
+                # sanity check
+                assert (negated >> negated_ix) << negated_ix == negated, negated
+                assert (negated >> negated_ix) & 1 == 1, negated
+                index = bb.instructions.index(inst)
+                var = bb.parent.get_next_variable()
+                new_inst = IRInstruction(
+                    "shl", [IRLiteral(negated >> negated_ix), IRLiteral(negated_ix)], output=var
+                )
+                bb.insert_instruction(new_inst, index)
+                inst.opcode = "not"
+                inst.operands = [var]
+                continue
+            elif not_benefit >= shl_benefit:
                 # transform things like 0xffff...01 to (not 0xfe)
                 inst.opcode = "not"
                 op.value = evm_not(val)
                 continue
             else:
-                assert shl_benefit > 0  # implied by previous conditions
                 # transform things like 0x123400....000 to 0x1234 << ...
                 ix -= 1
                 # sanity check