diff --git a/services/surfaceflinger/FrontEnd/LayerSnapshot.h b/services/surfaceflinger/FrontEnd/LayerSnapshot.h
index 80a51ea..1b6fdae 100644
--- a/services/surfaceflinger/FrontEnd/LayerSnapshot.h
+++ b/services/surfaceflinger/FrontEnd/LayerSnapshot.h
@@ -122,6 +122,8 @@
         ReachableByRelativeParent
     };
     Reachablilty reachablilty;
+    // True when the surfaceDamage is recognized as a small area update.
+    bool isSmallDirty = false;
 
     static bool isOpaqueFormat(PixelFormat format);
     static bool isTransformValid(const ui::Transform& t);
diff --git a/services/surfaceflinger/Layer.cpp b/services/surfaceflinger/Layer.cpp
index 73b1ca8..f75f9f6 100644
--- a/services/surfaceflinger/Layer.cpp
+++ b/services/surfaceflinger/Layer.cpp
@@ -3369,7 +3369,7 @@
     mDrawingState.surfaceDamageRegion = surfaceDamage;
     mDrawingState.modified = true;
     setTransactionFlags(eTransactionNeeded);
-    setIsSmallDirty();
+    setIsSmallDirty(surfaceDamage, getTransform());
     return true;
 }
 
@@ -4416,7 +4416,9 @@
     mLastLatchTime = latchTime;
 }
 
-void Layer::setIsSmallDirty() {
+void Layer::setIsSmallDirty(const Region& damageRegion,
+                            const ui::Transform& layerToDisplayTransform) {
+    mSmallDirty = false;
     if (!mFlinger->mScheduler->supportSmallDirtyDetection()) {
         return;
     }
@@ -4425,17 +4427,26 @@
         mWindowType != WindowInfo::Type::BASE_APPLICATION) {
         return;
     }
-    Rect bounds = mDrawingState.surfaceDamageRegion.getBounds();
+
+    Rect bounds = damageRegion.getBounds();
     if (!bounds.isValid()) {
         return;
     }
 
+    // Transform to screen space.
+    bounds = layerToDisplayTransform.transform(bounds);
+
     // If the damage region is a small dirty, this could give the hint for the layer history that
     // it could suppress the heuristic rate when calculating.
     mSmallDirty = mFlinger->mScheduler->isSmallDirtyArea(mOwnerAppId,
                                                          bounds.getWidth() * bounds.getHeight());
 }
 
+void Layer::setIsSmallDirty(frontend::LayerSnapshot* snapshot) {
+    setIsSmallDirty(snapshot->surfaceDamage, snapshot->localTransform);
+    snapshot->isSmallDirty = mSmallDirty;
+}
+
 } // namespace android
 
 #if defined(__gl_h_)
diff --git a/services/surfaceflinger/Layer.h b/services/surfaceflinger/Layer.h
index f67da2a..c042395 100644
--- a/services/surfaceflinger/Layer.h
+++ b/services/surfaceflinger/Layer.h
@@ -937,7 +937,8 @@
     const sp<SurfaceFlinger> mFlinger;
 
     // Check if the damage region is a small dirty.
-    void setIsSmallDirty();
+    void setIsSmallDirty(const Region& damageRegion, const ui::Transform& layerToDisplayTransform);
+    void setIsSmallDirty(frontend::LayerSnapshot* snapshot);
 
 protected:
     // For unit tests
diff --git a/services/surfaceflinger/SurfaceFlinger.cpp b/services/surfaceflinger/SurfaceFlinger.cpp
index b13c0e8..181a9bf 100644
--- a/services/surfaceflinger/SurfaceFlinger.cpp
+++ b/services/surfaceflinger/SurfaceFlinger.cpp
@@ -2211,8 +2211,29 @@
             continue;
         }
 
-        if (!snapshot->changes.any(Changes::FrameRate | Changes::Buffer | Changes::Animation) &&
-            (snapshot->clientChanges & layer_state_t::eDefaultFrameRateCompatibilityChanged) == 0) {
+        const bool updateSmallDirty = mScheduler->supportSmallDirtyDetection() &&
+                ((snapshot->clientChanges & layer_state_t::eSurfaceDamageRegionChanged) ||
+                 snapshot->changes.any(Changes::Geometry));
+
+        const bool hasChanges =
+                snapshot->changes.any(Changes::FrameRate | Changes::Buffer | Changes::Animation) ||
+                (snapshot->clientChanges & layer_state_t::eDefaultFrameRateCompatibilityChanged) !=
+                        0;
+
+        if (!updateSmallDirty && !hasChanges) {
+            continue;
+        }
+
+        auto it = mLegacyLayers.find(snapshot->sequence);
+        LOG_ALWAYS_FATAL_IF(it == mLegacyLayers.end(), "Couldn't find layer object for %s",
+                            snapshot->getDebugString().c_str());
+
+        if (updateSmallDirty) {
+            // Update small dirty flag while surface damage region or geometry changed
+            it->second->setIsSmallDirty(snapshot.get());
+        }
+
+        if (!hasChanges) {
             continue;
         }
 
@@ -2222,12 +2243,9 @@
                 .transform = snapshot->geomLayerTransform,
                 .setFrameRateVote = snapshot->frameRate,
                 .frameRateSelectionPriority = snapshot->frameRateSelectionPriority,
+                .isSmallDirty = snapshot->isSmallDirty,
         };
 
-        auto it = mLegacyLayers.find(snapshot->sequence);
-        LOG_ALWAYS_FATAL_IF(it == mLegacyLayers.end(), "Couldnt find layer object for %s",
-                            snapshot->getDebugString().c_str());
-
         if (snapshot->clientChanges & layer_state_t::eDefaultFrameRateCompatibilityChanged) {
             mScheduler->setDefaultFrameRateCompatibility(snapshot->sequence,
                                                          snapshot->defaultFrameRateCompatibility);
@@ -8492,15 +8510,6 @@
 void SurfaceFlinger::onActiveDisplaySizeChanged(const DisplayDevice& activeDisplay) {
     mScheduler->onActiveDisplayAreaChanged(activeDisplay.getWidth() * activeDisplay.getHeight());
     getRenderEngine().onActiveDisplaySizeChanged(activeDisplay.getSize());
-
-    // Notify layers to update small dirty flag.
-    if (mScheduler->supportSmallDirtyDetection()) {
-        mCurrentState.traverse([&](Layer* layer) {
-            if (layer->getLayerStack() == activeDisplay.getLayerStack()) {
-                layer->setIsSmallDirty();
-            }
-        });
-    }
 }
 
 sp<DisplayDevice> SurfaceFlinger::getActivatableDisplay() const {
diff --git a/services/surfaceflinger/tests/unittests/LayerHierarchyTest.h b/services/surfaceflinger/tests/unittests/LayerHierarchyTest.h
index 7f3171f..48f8923 100644
--- a/services/surfaceflinger/tests/unittests/LayerHierarchyTest.h
+++ b/services/surfaceflinger/tests/unittests/LayerHierarchyTest.h
@@ -421,6 +421,17 @@
         mLifecycleManager.applyTransactions(transactions);
     }
 
+    void setDamageRegion(uint32_t id, const Region& damageRegion) {
+        std::vector<TransactionState> transactions;
+        transactions.emplace_back();
+        transactions.back().states.push_back({});
+
+        transactions.back().states.front().state.what = layer_state_t::eSurfaceDamageRegionChanged;
+        transactions.back().states.front().layerId = id;
+        transactions.back().states.front().state.surfaceDamageRegion = damageRegion;
+        mLifecycleManager.applyTransactions(transactions);
+    }
+
     void setDataspace(uint32_t id, ui::Dataspace dataspace) {
         std::vector<TransactionState> transactions;
         transactions.emplace_back();
@@ -432,6 +443,19 @@
         mLifecycleManager.applyTransactions(transactions);
     }
 
+    void setMatrix(uint32_t id, float dsdx, float dtdx, float dtdy, float dsdy) {
+        layer_state_t::matrix22_t matrix{dsdx, dtdx, dtdy, dsdy};
+
+        std::vector<TransactionState> transactions;
+        transactions.emplace_back();
+        transactions.back().states.push_back({});
+
+        transactions.back().states.front().state.what = layer_state_t::eMatrixChanged;
+        transactions.back().states.front().layerId = id;
+        transactions.back().states.front().state.matrix = matrix;
+        mLifecycleManager.applyTransactions(transactions);
+    }
+
     void setShadowRadius(uint32_t id, float shadowRadius) {
         std::vector<TransactionState> transactions;
         transactions.emplace_back();
diff --git a/services/surfaceflinger/tests/unittests/LayerHistoryIntegrationTest.cpp b/services/surfaceflinger/tests/unittests/LayerHistoryIntegrationTest.cpp
index a462082..631adf1 100644
--- a/services/surfaceflinger/tests/unittests/LayerHistoryIntegrationTest.cpp
+++ b/services/surfaceflinger/tests/unittests/LayerHistoryIntegrationTest.cpp
@@ -866,6 +866,104 @@
     }
 }
 
+class SmallAreaDetectionTest : public LayerHistoryIntegrationTest {
+protected:
+    static constexpr int32_t DISPLAY_WIDTH = 100;
+    static constexpr int32_t DISPLAY_HEIGHT = 100;
+
+    static constexpr int32_t kAppId1 = 10100;
+    static constexpr int32_t kAppId2 = 10101;
+
+    static constexpr float kThreshold1 = 0.05f;
+    static constexpr float kThreshold2 = 0.07f;
+
+    SmallAreaDetectionTest() : LayerHistoryIntegrationTest() {
+        std::vector<std::pair<int32_t, float>> mappings;
+        mappings.reserve(2);
+        mappings.push_back(std::make_pair(kAppId1, kThreshold1));
+        mappings.push_back(std::make_pair(kAppId2, kThreshold2));
+
+        mFlinger.enableNewFrontEnd();
+
+        mScheduler->onActiveDisplayAreaChanged(DISPLAY_WIDTH * DISPLAY_HEIGHT);
+        mScheduler->updateSmallAreaDetection(mappings);
+    }
+
+    auto createLegacyAndFrontedEndLayer(uint32_t sequence) {
+        std::string layerName = "test layer:" + std::to_string(sequence);
+
+        LayerCreationArgs args = LayerCreationArgs{mFlinger.flinger(),
+                                                   nullptr,
+                                                   layerName,
+                                                   0,
+                                                   {},
+                                                   std::make_optional<uint32_t>(sequence)};
+        args.ownerUid = kAppId1;
+        args.metadata.setInt32(gui::METADATA_WINDOW_TYPE, 2); // APPLICATION
+        const auto layer = sp<Layer>::make(args);
+        mFlinger.injectLegacyLayer(layer);
+        createRootLayer(sequence);
+        return layer;
+    }
+};
+
+TEST_F(SmallAreaDetectionTest, SmallDirtyLayer) {
+    auto layer = createLegacyAndFrontedEndLayer(1);
+
+    nsecs_t time = systemTime();
+
+    EXPECT_EQ(1u, layerCount());
+    EXPECT_EQ(0u, activeLayerCount());
+    EXPECT_EQ(0, frequentLayerCount(time));
+
+    uint32_t sequence = static_cast<uint32_t>(layer->sequence);
+    setBuffer(sequence);
+    setDamageRegion(sequence, Region(Rect(10, 10)));
+    updateLayerSnapshotsAndLayerHistory(time);
+
+    ASSERT_EQ(true, mFlinger.mutableLayerSnapshotBuilder().getSnapshot(1)->isSmallDirty);
+}
+
+TEST_F(SmallAreaDetectionTest, NotSmallDirtyLayer) {
+    auto layer = createLegacyAndFrontedEndLayer(1);
+
+    nsecs_t time = systemTime();
+
+    EXPECT_EQ(1u, layerCount());
+    EXPECT_EQ(0u, activeLayerCount());
+    EXPECT_EQ(0, frequentLayerCount(time));
+
+    uint32_t sequence = static_cast<uint32_t>(layer->sequence);
+    setBuffer(sequence);
+    setDamageRegion(sequence, Region(Rect(50, 50)));
+    updateLayerSnapshotsAndLayerHistory(time);
+
+    ASSERT_EQ(false, mFlinger.mutableLayerSnapshotBuilder().getSnapshot(1)->isSmallDirty);
+}
+
+TEST_F(SmallAreaDetectionTest, smallDirtyLayerWithMatrix) {
+    auto layer = createLegacyAndFrontedEndLayer(1);
+
+    nsecs_t time = systemTime();
+
+    EXPECT_EQ(1u, layerCount());
+    EXPECT_EQ(0u, activeLayerCount());
+    EXPECT_EQ(0, frequentLayerCount(time));
+
+    // Original damage region is a small dirty.
+    uint32_t sequence = static_cast<uint32_t>(layer->sequence);
+    setBuffer(sequence);
+    setDamageRegion(sequence, Region(Rect(20, 20)));
+    updateLayerSnapshotsAndLayerHistory(time);
+    ASSERT_EQ(true, mFlinger.mutableLayerSnapshotBuilder().getSnapshot(1)->isSmallDirty);
+
+    setMatrix(sequence, 2.0f, 0, 0, 2.0f);
+    updateLayerSnapshotsAndLayerHistory(time);
+
+    // Verify if the small dirty is scaled.
+    ASSERT_EQ(false, mFlinger.mutableLayerSnapshotBuilder().getSnapshot(1)->isSmallDirty);
+}
+
 INSTANTIATE_TEST_CASE_P(LeapYearTests, LayerHistoryIntegrationTestParameterized,
                         ::testing::Values(1s, 2s, 3s, 4s, 5s));
 
diff --git a/services/surfaceflinger/tests/unittests/TestableScheduler.h b/services/surfaceflinger/tests/unittests/TestableScheduler.h
index 014d07c..3d1c900 100644
--- a/services/surfaceflinger/tests/unittests/TestableScheduler.h
+++ b/services/surfaceflinger/tests/unittests/TestableScheduler.h
@@ -44,7 +44,10 @@
     TestableScheduler(std::unique_ptr<VsyncController> controller,
                       std::shared_ptr<VSyncTracker> tracker, RefreshRateSelectorPtr selectorPtr,
                       sp<VsyncModulator> modulatorPtr, ISchedulerCallback& callback)
-          : Scheduler(*this, callback, Feature::kContentDetection, std::move(modulatorPtr)) {
+          : Scheduler(*this, callback,
+                      (FeatureFlags)Feature::kContentDetection |
+                              Feature::kSmallDirtyContentDetection,
+                      std::move(modulatorPtr)) {
         const auto displayId = selectorPtr->getActiveMode().modePtr->getPhysicalDisplayId();
         registerDisplay(displayId, std::move(selectorPtr), std::move(controller),
                         std::move(tracker));
diff --git a/services/surfaceflinger/tests/unittests/TestableSurfaceFlinger.h b/services/surfaceflinger/tests/unittests/TestableSurfaceFlinger.h
index 3b39420..8f1982d 100644
--- a/services/surfaceflinger/tests/unittests/TestableSurfaceFlinger.h
+++ b/services/surfaceflinger/tests/unittests/TestableSurfaceFlinger.h
@@ -670,6 +670,11 @@
         return mFlinger->initTransactionTraceWriter();
     }
 
+    void enableNewFrontEnd() {
+        mFlinger->mLayerLifecycleManagerEnabled = true;
+        mFlinger->mLegacyFrontEndEnabled = false;
+    }
+
     ~TestableSurfaceFlinger() {
         // All these pointer and container clears help ensure that GMock does
         // not report a leaked object, since the SurfaceFlinger instance may