diff --git a/cluster/addons/metrics-server/metrics-server-deployment.yaml b/cluster/addons/metrics-server/metrics-server-deployment.yaml
index b495018f195..b3b0127afb4 100644
--- a/cluster/addons/metrics-server/metrics-server-deployment.yaml
+++ b/cluster/addons/metrics-server/metrics-server-deployment.yaml
@@ -58,7 +58,7 @@ spec:
           name: https
           protocol: TCP
       - name: metrics-server-nanny
-        image: k8s.gcr.io/addon-resizer:1.8.2
+        image: k8s.gcr.io/addon-resizer:1.8.3
         resources:
           limits:
             cpu: 100m
@@ -81,15 +81,18 @@ spec:
         command:
           - /pod_nanny
           - --config-dir=/etc/config
-          - --cpu=40m
+          - --cpu={{ base_metrics_server_cpu }}
           - --extra-cpu=0.5m
-          - --memory=40Mi
-          - --extra-memory=4Mi
+          - --memory={{ base_metrics_server_memory }}
+          - --extra-memory={{ metrics_server_memory_per_node }}Mi
           - --threshold=5
           - --deployment=metrics-server-v0.2.1
           - --container=metrics-server
           - --poll-period=300000
           - --estimator=exponential
+          # Specifies the smallest cluster (defined in number of nodes)
+          # resources will be scaled to.
+          - --minClusterSize={{ metrics_server_min_cluster_size }}
       volumes:
         - name: metrics-server-config-volume
           configMap:
diff --git a/cluster/gce/gci/configure-helper.sh b/cluster/gce/gci/configure-helper.sh
index 6f8a4549c76..9248f8dafa5 100644
--- a/cluster/gce/gci/configure-helper.sh
+++ b/cluster/gce/gci/configure-helper.sh
@@ -2401,6 +2401,21 @@ EOF
   fi
   if [[ "${ENABLE_METRICS_SERVER:-}" == "true" ]]; then
     setup-addon-manifests "addons" "metrics-server"
+    base_metrics_server_cpu="40m"
+    base_metrics_server_memory="40Mi"
+    metrics_server_memory_per_node="4"
+    metrics_server_min_cluster_size="16"
+    if [[ "${ENABLE_SYSTEM_ADDON_RESOURCE_OPTIMIZATIONS:-}" == "true" ]]; then
+      base_metrics_server_cpu="5m"
+      base_metrics_server_memory="35Mi"
+      metrics_server_memory_per_node="4"
+      metrics_server_min_cluster_size="5"
+    fi
+    local -r metrics_server_yaml="${dst_dir}/metrics-server/metrics-server-deployment.yaml"
+    sed -i -e "s@{{ base_metrics_server_cpu }}@${base_metrics_server_cpu}@g" "${metrics_server_yaml}"
+    sed -i -e "s@{{ base_metrics_server_memory }}@${base_metrics_server_memory}@g" "${metrics_server_yaml}"
+    sed -i -e "s@{{ metrics_server_memory_per_node }}@${metrics_server_memory_per_node}@g" "${metrics_server_yaml}"
+    sed -i -e "s@{{ metrics_server_min_cluster_size }}@${metrics_server_min_cluster_size}@g" "${metrics_server_yaml}"
   fi
   if [[ "${ENABLE_NVIDIA_GPU_DEVICE_PLUGIN:-}" == "true" ]]; then
     setup-addon-manifests "addons" "device-plugins/nvidia-gpu"