diff --git a/.bazelrc b/.bazelrc
index f77abf6d4ea..28b0301895d 100644
--- a/.bazelrc
+++ b/.bazelrc
@@ -6,6 +6,11 @@
 # curl -sSL https://raw.githubusercontent.com/envoyproxy/envoy/master/.bazelrc > envoy.bazelrc
 import %workspace%/envoy.bazelrc
 
+# Istio override: increase JVM heap to 4GB for ARM64 builds (envoy.bazelrc sets 3GB)
+# The 3GB limit causes memory pressure during large downloads which breaks gRPC remote cache connections
+# See: https://github.com/istio/proxy/pull/6726
+startup --host_jvm_args=-Xmx4g
+
 # Overrides workspace_status_command
 build --workspace_status_command=bazel/bazel_get_workspace_status
 build:remote --remote_timeout=7200
@@ -26,6 +31,9 @@ build:remote-ci --action_env=PATH=/usr/local/google-cloud-sdk/bin:/usr/sbin:/usr
 # relevant for CI
 build:remote-ci --discard_analysis_cache --nokeep_state_after_build --notrack_incremental_state
 
+# Apply memory optimization flags to all remote cache builds
+build:remote --discard_analysis_cache --nokeep_state_after_build --notrack_incremental_state
+
 # Enable path normalization by default.
 # See: https://github.com/envoyproxy/envoy/pull/6519
 build --define path_normalization_by_default=true