diff --git a/Config.in b/Config.in
index 8de6e1aa87..7b03c7a245 100644
--- a/Config.in
+++ b/Config.in
@@ -681,6 +681,17 @@ menuconfig TARGET_OPTIONS
 
 		  Most people will answer N.
 
+	config USE_MIPS16
+		bool "Build packages with MIPS16 instructions" if TARGET_OPTIONS
+		depends on HAS_MIPS16
+		help
+		   If your target CPU does support the MIPS16 instruction set
+		   and you want to use it for packages, enable this option.
+		   MIPS16 produces smaller binaries thus reducing pressure on
+		   caches and TLB.
+
+		   Most people will answer N.
+
 source "toolchain/Config.in"
 
 source "target/imagebuilder/Config.in"
diff --git a/rules.mk b/rules.mk
index 59ab50b922..56129917e4 100644
--- a/rules.mk
+++ b/rules.mk
@@ -63,6 +63,9 @@ endif
 ifneq ($(filter -mips%r2,$(TARGET_OPTIMIZATION)),)
   ARCH_SUFFIX:=_r2
 endif
+ifdef CONFIG_USE_MIPS16
+   TARGET_OPTIMIZATION+= -minterlink-mips16 -mips16
+endif
 ifneq ($(findstring -mips16,$(TARGET_OPTIMIZATION)),)
   TARGET_ASFLAGS_OVERRIDE:=-mno-mips16
   ARCH_SUFFIX:= $(ARCH_SUFFIX)_m16
diff --git a/scripts/metadata.pl b/scripts/metadata.pl
index b04cd8cc3d..6249127e3d 100755
--- a/scripts/metadata.pl
+++ b/scripts/metadata.pl
@@ -174,6 +174,7 @@ sub target_config_features(@) {
 		/ramdisk/ and $ret .= "\tselect USES_INITRAMFS\n";
 		/powerpc64/ and $ret .= "\tselect powerpc64\n";
 		/nommu/ and $ret .= "\tselect NOMMU\n";
+		/mips16/ and $ret .= "\tselect HAS_MIPS16\n";
 	}
 	return $ret;
 }
diff --git a/target/Config.in b/target/Config.in
index 31f3ced51d..79a91b1afb 100644
--- a/target/Config.in
+++ b/target/Config.in
@@ -66,6 +66,10 @@ config PROFILE_KCONFIG
 config NOMMU
 	bool
 
+config HAS_MIPS16
+	depends (mips || mipsel || mips64 || mips64el)
+	bool
+
 # Architecture selection
 
 config arm