diff --git a/hadoop-hdds/container-service/src/main/java/org/apache/hadoop/ozone/container/keyvalue/KeyValueHandler.java b/hadoop-hdds/container-service/src/main/java/org/apache/hadoop/ozone/container/keyvalue/KeyValueHandler.java
index 8e1080dc48d1..e86620f172ed 100644
--- a/hadoop-hdds/container-service/src/main/java/org/apache/hadoop/ozone/container/keyvalue/KeyValueHandler.java
+++ b/hadoop-hdds/container-service/src/main/java/org/apache/hadoop/ozone/container/keyvalue/KeyValueHandler.java
@@ -1539,7 +1539,10 @@ private void deleteInternal(Container container, boolean force)
     }
     // Avoid holding write locks for disk operations
     sendICR(container);
+    long bytesUsed = container.getContainerData().getBytesUsed();
+    HddsVolume volume = container.getContainerData().getVolume();
     container.delete();
+    volume.decrementUsedSpace(bytesUsed);
   }
 
   private void triggerVolumeScanAndThrowException(Container container,
diff --git a/hadoop-hdds/container-service/src/test/java/org/apache/hadoop/ozone/container/keyvalue/TestKeyValueHandler.java b/hadoop-hdds/container-service/src/test/java/org/apache/hadoop/ozone/container/keyvalue/TestKeyValueHandler.java
index 76e696e91dd5..ee52de8b21f1 100644
--- a/hadoop-hdds/container-service/src/test/java/org/apache/hadoop/ozone/container/keyvalue/TestKeyValueHandler.java
+++ b/hadoop-hdds/container-service/src/test/java/org/apache/hadoop/ozone/container/keyvalue/TestKeyValueHandler.java
@@ -25,6 +25,7 @@
 import static org.junit.jupiter.api.Assertions.assertEquals;
 import static org.junit.jupiter.api.Assertions.assertNotNull;
 import static org.junit.jupiter.api.Assertions.assertNull;
+import static org.mockito.ArgumentMatchers.eq;
 import static org.mockito.Mockito.any;
 import static org.mockito.Mockito.doCallRealMethod;
 import static org.mockito.Mockito.mock;
@@ -432,6 +433,60 @@ public void testDeleteContainer() throws IOException {
     }
   }
 
+  /**
+   * Tests that deleting a container decrements the cached used space of its volume.
+   */
+  @Test
+  public void testDeleteDecrementsVolumeUsedSpace() throws IOException {
+    final long containerID = 1;
+    final String clusterId = UUID.randomUUID().toString();
+    final String datanodeId = UUID.randomUUID().toString();
+    final ContainerSet containerSet = newContainerSet();
+    final MutableVolumeSet volumeSet = mock(MutableVolumeSet.class);
+    final HddsVolume hddsVolume = mock(HddsVolume.class);
+    when(hddsVolume.getDeletedContainerDir()).thenReturn(new File(""));
+
+    final ConfigurationSource conf = new OzoneConfiguration();
+    final ContainerMetrics metrics = ContainerMetrics.create(conf);
+    final AtomicInteger icrReceived = new AtomicInteger(0);
+    final long containerBytesUsed = 1024 * 1024;
+
+    // We're testing KeyValueHandler in this test, all the other objects are mocked
+    final KeyValueHandler kvHandler = new KeyValueHandler(conf,
+        datanodeId, containerSet, volumeSet, metrics,
+        c -> icrReceived.incrementAndGet());
+    kvHandler.setClusterID(clusterId);
+
+    // Setup ContainerData and Container mocks
+    KeyValueContainerData containerData = mock(KeyValueContainerData.class);
+    when(containerData.getContainerID()).thenReturn(containerID);
+    when(containerData.getVolume()).thenReturn(hddsVolume);
+    when(containerData.getBytesUsed()).thenReturn(containerBytesUsed);
+    when(containerData.getState()).thenReturn(ContainerProtos.ContainerDataProto.State.CLOSED);
+    when(containerData.isOpen()).thenReturn(false);
+    when(containerData.getLayoutVersion()).thenReturn(ContainerLayoutVersion.FILE_PER_BLOCK);
+    when(containerData.getDbFile()).thenReturn(new File(tempDir.toFile(), "dummy.db"));
+    when(containerData.getContainerPath()).thenReturn(tempDir.toString());
+    when(containerData.getMetadataPath()).thenReturn(tempDir.toString());
+
+    KeyValueContainer container = mock(KeyValueContainer.class);
+    when(container.getContainerData()).thenReturn(containerData);
+    when(container.hasBlocks()).thenReturn(true);
+
+    containerSet.addContainer(container);
+    assertNotNull(containerSet.getContainer(containerID));
+
+    // This is the method we're testing. It should decrement used space in the volume when deleting this container
+    kvHandler.deleteContainer(container, true);
+    assertNull(containerSet.getContainer(containerID));
+
+    // Verify ICR was sent (once for delete)
+    assertEquals(1, icrReceived.get(), "ICR should be sent for delete");
+    verify(container, times(1)).delete();
+    // Verify decrementUsedSpace was called with the correct amount
+    verify(hddsVolume, times(1)).decrementUsedSpace(eq(containerBytesUsed));
+  }
+
   @Test
   public void testDeleteContainerTimeout() throws IOException {
     final String testDir = tempDir.toString();