diff --git a/include/sys/sa_impl.h b/include/sys/sa_impl.h
index 744c8dcb7dfb..6eb0c96188fa 100644
--- a/include/sys/sa_impl.h
+++ b/include/sys/sa_impl.h
@@ -272,7 +272,6 @@ int sa_add_impl(sa_handle_t *, sa_attr_type_t,
     uint32_t, sa_data_locator_t, void *, dmu_tx_t *);
 
 void sa_register_update_callback_locked(objset_t *, sa_update_cb_t *);
-int sa_size_locked(sa_handle_t *, sa_attr_type_t, int *);
 
 void sa_default_locator(void **, uint32_t *, uint32_t, boolean_t, void *);
 int sa_attr_size(sa_os_t *, sa_idx_tab_t *, sa_attr_type_t,
diff --git a/module/zfs/sa.c b/module/zfs/sa.c
index cd90bc553b3e..9229873fc6c5 100644
--- a/module/zfs/sa.c
+++ b/module/zfs/sa.c
@@ -1501,6 +1501,42 @@ sa_lookup(sa_handle_t *hdl, sa_attr_type_t attr, void *buf, uint32_t buflen)
 	return (error);
 }
 
+/*
+ * Return size of an attribute
+ */
+
+static int
+sa_size_locked(sa_handle_t *hdl, sa_attr_type_t attr, int *size)
+{
+	sa_bulk_attr_t bulk;
+	int error;
+
+	bulk.sa_data = NULL;
+	bulk.sa_attr = attr;
+	bulk.sa_data_func = NULL;
+
+	ASSERT(hdl);
+	ASSERT(MUTEX_HELD(&hdl->sa_lock));
+	if ((error = sa_attr_op(hdl, &bulk, 1, SA_LOOKUP, NULL)) != 0) {
+		return (error);
+	}
+	*size = bulk.sa_size;
+
+	return (0);
+}
+
+int
+sa_size(sa_handle_t *hdl, sa_attr_type_t attr, int *size)
+{
+	int error;
+
+	mutex_enter(&hdl->sa_lock);
+	error = sa_size_locked(hdl, attr, size);
+	mutex_exit(&hdl->sa_lock);
+
+	return (error);
+}
+
 #ifdef _KERNEL
 int
 sa_lookup_uio(sa_handle_t *hdl, sa_attr_type_t attr, zfs_uio_t *uio)
@@ -1623,6 +1659,19 @@ sa_add_projid(sa_handle_t *hdl, dmu_tx_t *tx, uint64_t projid)
 	if (err != 0 && err != ENOENT)
 		goto out;
 
+	char *dxattr_obj = NULL;
+	int dxattr_size = 0;
+	err = sa_size_locked(hdl, SA_ZPL_DXATTR(zfsvfs), &dxattr_size);
+	if (err != 0 && err != ENOENT)
+		goto out;
+	if (dxattr_size != 0) {
+		dxattr_obj = vmem_alloc(dxattr_size, KM_SLEEP);
+		err = sa_lookup_locked(hdl, SA_ZPL_DXATTR(zfsvfs), dxattr_obj,
+		    dxattr_size);
+		if (err != 0 && err != ENOENT)
+			goto out;
+	}
+
 	zp->z_projid = projid;
 	zp->z_pflags |= ZFS_PROJID;
 	links = ZTONLNK(zp);
@@ -1674,6 +1723,11 @@ sa_add_projid(sa_handle_t *hdl, dmu_tx_t *tx, uint64_t projid)
 		zp->z_pflags &= ~ZFS_BONUS_SCANSTAMP;
 	}
 
+	if (dxattr_obj) {
+		SA_ADD_BULK_ATTR(attrs, count, SA_ZPL_DXATTR(zfsvfs),
+		    NULL, dxattr_obj, dxattr_size);
+	}
+
 	VERIFY(dmu_set_bonustype(db, DMU_OT_SA, tx) == 0);
 	VERIFY(sa_replace_all_by_template_locked(hdl, attrs, count, tx) == 0);
 	if (znode_acl.z_acl_extern_obj) {
@@ -1688,6 +1742,8 @@ sa_add_projid(sa_handle_t *hdl, dmu_tx_t *tx, uint64_t projid)
 	mutex_exit(&hdl->sa_lock);
 	kmem_free(attrs, sizeof (sa_bulk_attr_t) * ZPL_END);
 	kmem_free(bulk, sizeof (sa_bulk_attr_t) * ZPL_END);
+	if (dxattr_obj)
+		vmem_free(dxattr_obj, dxattr_size);
 	return (err);
 }
 #endif
@@ -2059,32 +2115,6 @@ sa_update(sa_handle_t *hdl, sa_attr_type_t type,
 	return (error);
 }
 
-/*
- * Return size of an attribute
- */
-
-int
-sa_size(sa_handle_t *hdl, sa_attr_type_t attr, int *size)
-{
-	sa_bulk_attr_t bulk;
-	int error;
-
-	bulk.sa_data = NULL;
-	bulk.sa_attr = attr;
-	bulk.sa_data_func = NULL;
-
-	ASSERT(hdl);
-	mutex_enter(&hdl->sa_lock);
-	if ((error = sa_attr_op(hdl, &bulk, 1, SA_LOOKUP, NULL)) != 0) {
-		mutex_exit(&hdl->sa_lock);
-		return (error);
-	}
-	*size = bulk.sa_size;
-
-	mutex_exit(&hdl->sa_lock);
-	return (0);
-}
-
 int
 sa_bulk_lookup_locked(sa_handle_t *hdl, sa_bulk_attr_t *attrs, int count)
 {
diff --git a/tests/runfiles/linux.run b/tests/runfiles/linux.run
index bd6cc56f3589..5817e649003c 100644
--- a/tests/runfiles/linux.run
+++ b/tests/runfiles/linux.run
@@ -201,7 +201,7 @@ tests = ['tmpfile_001_pos', 'tmpfile_002_pos', 'tmpfile_003_pos',
 tags = ['functional', 'tmpfile']
 
 [tests/functional/upgrade:Linux]
-tests = ['upgrade_projectquota_001_pos']
+tests = ['upgrade_projectquota_001_pos', 'upgrade_projectquota_002_pos']
 tags = ['functional', 'upgrade']
 
 [tests/functional/user_namespace:Linux]
diff --git a/tests/test-runner/bin/zts-report.py.in b/tests/test-runner/bin/zts-report.py.in
index de06c7c6e2c1..8c0a89804f0a 100755
--- a/tests/test-runner/bin/zts-report.py.in
+++ b/tests/test-runner/bin/zts-report.py.in
@@ -254,6 +254,7 @@ maybe = {
     'tmpfile/setup': ['SKIP', tmpfile_reason],
     'trim/setup': ['SKIP', trim_reason],
     'upgrade/upgrade_projectquota_001_pos': ['SKIP', project_id_reason],
+    'upgrade/upgrade_projectquota_002_pos': ['SKIP', project_id_reason],
     'user_namespace/setup': ['SKIP', user_ns_reason],
     'userquota/setup': ['SKIP', exec_reason],
     'vdev_zaps/vdev_zaps_004_pos': ['FAIL', known_reason],
diff --git a/tests/zfs-tests/tests/Makefile.am b/tests/zfs-tests/tests/Makefile.am
index 73a6f00b5006..3a85e33b1579 100644
--- a/tests/zfs-tests/tests/Makefile.am
+++ b/tests/zfs-tests/tests/Makefile.am
@@ -2023,6 +2023,7 @@ nobase_dist_datadir_zfs_tests_tests_SCRIPTS += \
 	functional/upgrade/cleanup.ksh \
 	functional/upgrade/setup.ksh \
 	functional/upgrade/upgrade_projectquota_001_pos.ksh \
+	functional/upgrade/upgrade_projectquota_002_pos.ksh \
 	functional/upgrade/upgrade_readonly_pool.ksh \
 	functional/upgrade/upgrade_userobj_001_pos.ksh \
 	functional/user_namespace/cleanup.ksh \
diff --git a/tests/zfs-tests/tests/functional/upgrade/upgrade_projectquota_002_pos.ksh b/tests/zfs-tests/tests/functional/upgrade/upgrade_projectquota_002_pos.ksh
new file mode 100755
index 000000000000..fe837435190c
--- /dev/null
+++ b/tests/zfs-tests/tests/functional/upgrade/upgrade_projectquota_002_pos.ksh
@@ -0,0 +1,80 @@
+#!/bin/ksh -p
+#
+# CDDL HEADER START
+#
+# The contents of this file are subject to the terms of the
+# Common Development and Distribution License (the "License").
+# You may not use this file except in compliance with the License.
+#
+# You can obtain a copy of the license at usr/src/OPENSOLARIS.LICENSE
+# or https://opensource.org/licenses/CDDL-1.0.
+# See the License for the specific language governing permissions
+# and limitations under the License.
+#
+# When distributing Covered Code, include this CDDL HEADER in each
+# file and include the License file at usr/src/OPENSOLARIS.LICENSE.
+# If applicable, add the following below this CDDL HEADER, with the
+# fields enclosed by brackets "[]" replaced with your own identifying
+# information: Portions Copyright [yyyy] [name of copyright owner]
+#
+# CDDL HEADER END
+#
+
+#
+# Copyright (c) 2024 by Nutanix. All rights reserved.
+#
+
+. $STF_SUITE/tests/functional/upgrade/upgrade_common.kshlib
+
+#
+# DESCRIPTION:
+#
+# Check DXATTR is intact after sa re-layout by setting projid on old file/dir after upgrade
+#
+# STRATEGY:
+# 1. Create a pool with all features disabled
+# 2. Create a dataset for testing
+# 3. Set DXATTR on file and directory
+# 4. upgrade zpool to support all features
+# 5. set project id on file and directory to trigger sa re-layout for projid
+# 6. verify DXATTR on file and directory are intact
+#
+
+TESTFS=$TESTPOOL/testfs
+TESTFSDIR=$TESTDIR/testfs
+
+verify_runnable "global"
+
+log_assert "Check DXATTR is intact after sa re-layout by setting projid on old file/dir after upgrade"
+log_onexit cleanup_upgrade
+
+log_must zpool create -d -m $TESTDIR $TESTPOOL $TMPDEV
+
+log_must zfs create -o xattr=sa $TESTFS
+log_must mkdir $TESTFSDIR/dir
+log_must touch $TESTFSDIR/file
+log_must set_xattr test test $TESTFSDIR/dir
+log_must set_xattr test test $TESTFSDIR/file
+
+dirino=$(stat -c '%i' $TESTFSDIR/dir)
+fileino=$(stat -c '%i' $TESTFSDIR/file)
+log_must zpool sync $TESTPOOL
+log_must zdb -ddddd $TESTFS $dirino
+log_must zdb -ddddd $TESTFS $fileino
+
+log_mustnot chattr -p 100 $TESTFSDIR/dir
+log_mustnot chattr -p 100 $TESTFSDIR/file
+
+log_must zpool upgrade $TESTPOOL
+
+log_must chattr -p 100 $TESTFSDIR/dir
+log_must chattr -p 100 $TESTFSDIR/file
+log_must zpool sync $TESTPOOL
+log_must zfs umount $TESTFS
+log_must zfs mount $TESTFS
+log_must zdb -ddddd $TESTFS $dirino
+log_must zdb -ddddd $TESTFS $fileino
+log_must get_xattr test $TESTFSDIR/dir
+log_must get_xattr test $TESTFSDIR/file
+
+log_pass "Check DXATTR is intact after sa re-layout by setting projid on old file/dir after upgrade"