diff --git a/.changes/next-release/bugfix-S3TransferManager-687fcee.json b/.changes/next-release/bugfix-S3TransferManager-687fcee.json
new file mode 100644
index 000000000000..b53542d7f080
--- /dev/null
+++ b/.changes/next-release/bugfix-S3TransferManager-687fcee.json
@@ -0,0 +1,6 @@
+{
+    "type": "bugfix",
+    "category": "S3 Transfer Manager",
+    "contributor": "",
+    "description": "Set a limit on the number of concurrent upload file requests for upload directory. This fixes the OOM issue that could surface when users try to upload a directory that has millions of small files. See [#5023](https://github.com/aws/aws-sdk-java-v2/issues/5023)."
+}
diff --git a/services-custom/s3-transfer-manager/src/main/java/software/amazon/awssdk/transfer/s3/internal/DownloadDirectoryHelper.java b/services-custom/s3-transfer-manager/src/main/java/software/amazon/awssdk/transfer/s3/internal/DownloadDirectoryHelper.java
index cbf0e7e4ef38..5343cb7e87f6 100644
--- a/services-custom/s3-transfer-manager/src/main/java/software/amazon/awssdk/transfer/s3/internal/DownloadDirectoryHelper.java
+++ b/services-custom/s3-transfer-manager/src/main/java/software/amazon/awssdk/transfer/s3/internal/DownloadDirectoryHelper.java
@@ -16,7 +16,7 @@
 package software.amazon.awssdk.transfer.s3.internal;
 
 import static software.amazon.awssdk.transfer.s3.internal.TransferConfigurationOption.DEFAULT_DELIMITER;
-import static software.amazon.awssdk.transfer.s3.internal.TransferConfigurationOption.DEFAULT_DOWNLOAD_DIRECTORY_MAX_CONCURRENCY;
+import static software.amazon.awssdk.transfer.s3.internal.TransferConfigurationOption.DEFAULT_DIRECTORY_TRANSFER_MAX_CONCURRENCY;
 import static software.amazon.awssdk.transfer.s3.internal.TransferConfigurationOption.DEFAULT_PREFIX;
 
 import java.io.IOException;
@@ -110,7 +110,7 @@ private void doDownloadDirectory(CompletableFuture<CompletedDirectoryDownload> r
             new AsyncBufferingSubscriber<>(downloadSingleFile(downloadDirectoryRequest, request,
                                                               failedFileDownloads),
                                            allOfFutures,
-                                           DEFAULT_DOWNLOAD_DIRECTORY_MAX_CONCURRENCY);
+                                           DEFAULT_DIRECTORY_TRANSFER_MAX_CONCURRENCY);
         listObjectsHelper.listS3ObjectsRecursively(request)
                          .filter(downloadDirectoryRequest.filter())
                          .subscribe(asyncBufferingSubscriber);
diff --git a/services-custom/s3-transfer-manager/src/main/java/software/amazon/awssdk/transfer/s3/internal/TransferConfigurationOption.java b/services-custom/s3-transfer-manager/src/main/java/software/amazon/awssdk/transfer/s3/internal/TransferConfigurationOption.java
index d96677d71d5d..33d124eb7c13 100644
--- a/services-custom/s3-transfer-manager/src/main/java/software/amazon/awssdk/transfer/s3/internal/TransferConfigurationOption.java
+++ b/services-custom/s3-transfer-manager/src/main/java/software/amazon/awssdk/transfer/s3/internal/TransferConfigurationOption.java
@@ -37,7 +37,7 @@ public final class TransferConfigurationOption<T> extends AttributeMap.Key<T> {
 
     public static final String DEFAULT_DELIMITER = "/";
     public static final String DEFAULT_PREFIX = "";
-    public static final int DEFAULT_DOWNLOAD_DIRECTORY_MAX_CONCURRENCY = 100;
+    public static final int DEFAULT_DIRECTORY_TRANSFER_MAX_CONCURRENCY = 100;
 
     private static final int DEFAULT_UPLOAD_DIRECTORY_MAX_DEPTH = Integer.MAX_VALUE;
 
diff --git a/services-custom/s3-transfer-manager/src/main/java/software/amazon/awssdk/transfer/s3/internal/UploadDirectoryHelper.java b/services-custom/s3-transfer-manager/src/main/java/software/amazon/awssdk/transfer/s3/internal/UploadDirectoryHelper.java
index 9408da5595fd..d92e0b3b6450 100644
--- a/services-custom/s3-transfer-manager/src/main/java/software/amazon/awssdk/transfer/s3/internal/UploadDirectoryHelper.java
+++ b/services-custom/s3-transfer-manager/src/main/java/software/amazon/awssdk/transfer/s3/internal/UploadDirectoryHelper.java
@@ -16,6 +16,7 @@
 package software.amazon.awssdk.transfer.s3.internal;
 
 import static software.amazon.awssdk.transfer.s3.internal.TransferConfigurationOption.DEFAULT_DELIMITER;
+import static software.amazon.awssdk.transfer.s3.internal.TransferConfigurationOption.DEFAULT_DIRECTORY_TRANSFER_MAX_CONCURRENCY;
 import static software.amazon.awssdk.transfer.s3.internal.TransferConfigurationOption.DEFAULT_PREFIX;
 
 import java.io.IOException;
@@ -24,14 +25,13 @@
 import java.nio.file.LinkOption;
 import java.nio.file.Path;
 import java.util.Collection;
-import java.util.List;
 import java.util.concurrent.CompletableFuture;
 import java.util.concurrent.CompletionException;
 import java.util.concurrent.ConcurrentLinkedQueue;
 import java.util.function.Function;
-import java.util.stream.Collectors;
 import java.util.stream.Stream;
 import software.amazon.awssdk.annotations.SdkInternalApi;
+import software.amazon.awssdk.core.async.SdkPublisher;
 import software.amazon.awssdk.core.exception.SdkClientException;
 import software.amazon.awssdk.services.s3.model.PutObjectRequest;
 import software.amazon.awssdk.transfer.s3.S3TransferManager;
@@ -90,23 +90,26 @@ private void doUploadDirectory(CompletableFuture<CompletedDirectoryUpload> retur
         validateDirectory(uploadDirectoryRequest);
 
         Collection<FailedFileUpload> failedFileUploads = new ConcurrentLinkedQueue<>();
-        List<CompletableFuture<CompletedFileUpload>> futures;
 
-        try (Stream<Path> entries = listFiles(directory, uploadDirectoryRequest)) {
-            futures = entries.map(path -> {
-                CompletableFuture<CompletedFileUpload> future = uploadSingleFile(uploadDirectoryRequest,
-                                                                                 failedFileUploads, path);
+        Stream<Path> stream = listFiles(directory, uploadDirectoryRequest);
 
-                // Forward cancellation of the return future to all individual futures.
-                CompletableFutureUtils.forwardExceptionTo(returnFuture, future);
-                return future;
-            }).collect(Collectors.toList());
-        }
+        SdkPublisher<Path> iterablePublisher = SdkPublisher.fromIterable(() -> stream.iterator())
+                                                           .doAfterOnCancel(() -> stream.close())
+                                                           .doAfterOnError(t -> stream.close())
+                                                           .doAfterOnComplete(() -> stream.close());
+
+        CompletableFuture<Void> allOfFutures = new CompletableFuture<>();
+
+        AsyncBufferingSubscriber<Path> bufferingSubscriber =
+            new AsyncBufferingSubscriber<>(path -> uploadSingleFile(uploadDirectoryRequest, failedFileUploads, path),
+                                           allOfFutures, DEFAULT_DIRECTORY_TRANSFER_MAX_CONCURRENCY);
+
+        iterablePublisher.subscribe(bufferingSubscriber);
+        CompletableFutureUtils.forwardExceptionTo(returnFuture, allOfFutures);
 
-        CompletableFuture.allOf(futures.toArray(new CompletableFuture[0]))
-                         .whenComplete((r, t) -> returnFuture.complete(CompletedDirectoryUpload.builder()
-                                                                                               .failedTransfers(failedFileUploads)
-                                                                                               .build()));
+        allOfFutures.whenComplete((r, t) -> returnFuture.complete(CompletedDirectoryUpload.builder()
+                                                                                  .failedTransfers(failedFileUploads)
+                                                                                  .build()));
     }
 
     private void validateDirectory(UploadDirectoryRequest uploadDirectoryRequest) {