diff --git a/CHANGELOG.md b/CHANGELOG.md
index a0662719..e7772486 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -1,6 +1,7 @@
 # Changelog
 
 ## Unreleased
+- Change the default large payload externalization threshold (`LargePayloadStorageOptions.ThresholdBytes`) from 900,000 bytes to 256 KiB (262,144 bytes)
 
 
 ## v1.25.0-preview.2
diff --git a/src/Extensions/AzureBlobPayloads/Options/LargePayloadStorageOptions.cs b/src/Extensions/AzureBlobPayloads/Options/LargePayloadStorageOptions.cs
index e855f11a..6abcbdf2 100644
--- a/src/Extensions/AzureBlobPayloads/Options/LargePayloadStorageOptions.cs
+++ b/src/Extensions/AzureBlobPayloads/Options/LargePayloadStorageOptions.cs
@@ -26,7 +26,7 @@ namespace Microsoft.DurableTask;
 /// </summary>
 public sealed class LargePayloadStorageOptions
 {
-    int thresholdBytes = 900_000;
+    int thresholdBytes = 256 * 1024;
 
     /// <summary>
     /// Initializes a new instance of the <see cref="LargePayloadStorageOptions"/> class.
@@ -60,7 +60,7 @@ public LargePayloadStorageOptions(Uri accountUri, TokenCredential credential)
     }
 
     /// <summary>
-    /// Gets or sets the threshold in bytes at which payloads are externalized. Default is 900_000 bytes.
+    /// Gets or sets the threshold in bytes at which payloads are externalized. Default is 256 KiB (262,144 bytes).
     /// Value must not exceed 1 MiB (1,048,576 bytes).
     /// </summary>
     public int ThresholdBytes
diff --git a/test/Grpc.IntegrationTests/LargePayloadStorageOptionsTests.cs b/test/Grpc.IntegrationTests/LargePayloadStorageOptionsTests.cs
index 6e369fe1..11a9c24c 100644
--- a/test/Grpc.IntegrationTests/LargePayloadStorageOptionsTests.cs
+++ b/test/Grpc.IntegrationTests/LargePayloadStorageOptionsTests.cs
@@ -29,13 +29,13 @@ public void ThresholdBytes_ExceedsOneMiB_ThrowsArgumentOutOfRange()
     }
 
     [Fact]
-    public void ThresholdBytes_DefaultValue_Is900000()
+    public void ThresholdBytes_DefaultValue_Is256KiB()
     {
         // Arrange & Act
         LargePayloadStorageOptions options = new();
 
         // Assert
-        Assert.Equal(900_000, options.ThresholdBytes);
+        Assert.Equal(256 * 1024, options.ThresholdBytes);
     }
 
     [Fact]