diff --git a/app/max_blob_size.go b/app/max_blob_size.go
new file mode 100644
index 0000000000..0208a8ecc7
--- /dev/null
+++ b/app/max_blob_size.go
@@ -0,0 +1,29 @@
+package app
+
+import (
+	"github.com/celestiaorg/celestia-app/pkg/appconsts"
+	sdk "github.com/cosmos/cosmos-sdk/types"
+)
+
+// MaxBlobSize returns an upper bound for the maximum blob size that can fit in
+// a single data square. Since the returned value is an upper bound, it is
+// possible that slightly smaller blob may not fit due to shares that aren't
+// occupied by the blob (i.e. the PFB tx shares).
+func (app *App) MaxBlobSize(ctx sdk.Context) int {
+	maxSquareSize := app.GovSquareSizeUpperBound(ctx)
+	maxShares := maxSquareSize * maxSquareSize
+	maxShareBytes := maxShares * appconsts.ContinuationSparseShareContentSize
+
+	// TODO(rootulp): get MaxBytes consensus params from core
+	maxBlockBytes := appconsts.DefaultMaxBytes
+
+	return min(maxShareBytes, maxBlockBytes)
+}
+
+// min returns the smaller of a and b.
+func min(a, b int) int {
+	if a < b {
+		return a
+	}
+	return b
+}
diff --git a/app/test/max_blob_size_test.go b/app/test/max_blob_size_test.go
new file mode 100644
index 0000000000..7f7b120c9d
--- /dev/null
+++ b/app/test/max_blob_size_test.go
@@ -0,0 +1,55 @@
+package app_test
+
+import (
+	"testing"
+
+	"github.com/celestiaorg/celestia-app/app"
+	"github.com/celestiaorg/celestia-app/app/encoding"
+	testutil "github.com/celestiaorg/celestia-app/test/util"
+	sdk "github.com/cosmos/cosmos-sdk/types"
+	"github.com/stretchr/testify/require"
+	abci "github.com/tendermint/tendermint/abci/types"
+	tmrand "github.com/tendermint/tendermint/libs/rand"
+	core "github.com/tendermint/tendermint/proto/tendermint/types"
+	tmproto "github.com/tendermint/tendermint/proto/tendermint/types"
+	coretypes "github.com/tendermint/tendermint/types"
+)
+
+// TestMaxBlobSize verifies that a blob size of MaxBlobSize can not fit in a
+// block.
+func TestMaxBlobSize(t *testing.T) {
+	if testing.Short() {
+		t.Skip("skipping TestMaxBlobSize in short mode.")
+	}
+	encConf := encoding.MakeConfig(app.ModuleEncodingRegisters...)
+	accounts := make([]string, 1)
+	for i := range accounts {
+		accounts[i] = tmrand.Str(20)
+	}
+
+	cparams := app.DefaultConsensusParams()
+	testApp, kr := testutil.SetupTestAppWithGenesisValSet(cparams, accounts...)
+	ctx := sdk.NewContext(testApp.CommitMultiStore(), tmproto.Header{}, false, nil)
+
+	maxBlobSize := testApp.MaxBlobSize(ctx)
+	txs := testutil.RandBlobTxsWithAccounts(
+		t,
+		testApp,
+		encConf.TxConfig.TxEncoder(),
+		kr,
+		maxBlobSize,
+		1,
+		false,
+		testutil.ChainID,
+		accounts,
+	)
+	resp := testApp.PrepareProposal(abci.RequestPrepareProposal{
+		BlockData: &core.Data{
+			Txs: coretypes.Txs(txs).ToSliceOfBytes(),
+		},
+		ChainId: testutil.ChainID,
+	})
+
+	// Verify that the blob tx wasn't included in the block.
+	require.Empty(t, 0, resp.BlockData.Txs)
+}