diff --git a/java/compression/src/test/java/org/apache/arrow/compression/TestArrowReaderWriterWithCompression.java b/java/compression/src/test/java/org/apache/arrow/compression/TestArrowReaderWriterWithCompression.java
index 878e1917a2e4a..3196f093bbc8f 100644
--- a/java/compression/src/test/java/org/apache/arrow/compression/TestArrowReaderWriterWithCompression.java
+++ b/java/compression/src/test/java/org/apache/arrow/compression/TestArrowReaderWriterWithCompression.java
@@ -18,7 +18,11 @@
 package org.apache.arrow.compression;
 
 import java.io.ByteArrayOutputStream;
+import java.io.File;
+import java.io.FileOutputStream;
 import java.nio.channels.Channels;
+import java.nio.channels.FileChannel;
+import java.nio.channels.SeekableByteChannel;
 import java.nio.charset.StandardCharsets;
 import java.util.ArrayList;
 import java.util.HashMap;
@@ -62,7 +66,7 @@ public void init() {
     allocator = new RootAllocator(Long.MAX_VALUE);
 
     dictionaryVector1 = (VarCharVector)
-        FieldType.nullable(new ArrowType.Utf8()).createNewSingleVector("D1", allocator, null);
+        FieldType.nullable(new ArrowType.Utf8()).createNewSingleVector("f1", allocator, null);
 
     setVector(dictionaryVector1,
         "foo".getBytes(StandardCharsets.UTF_8),
@@ -78,9 +82,7 @@ public void terminate() throws Exception {
     dictionaryVector1.close();
     allocator.close();
   }
-
-
-
+  
   @Test
   public void testArrowFileZstdRoundTrip() throws Exception {
     // Prepare sample data
@@ -117,7 +119,6 @@ public void testArrowFileZstdRoundTrip() throws Exception {
            new ArrowFileReader(new ByteArrayReadableSeekableByteChannel(out.toByteArray()),
              allocator, NoCompressionCodec.Factory.INSTANCE)) {
       Assert.assertEquals(1, reader.getRecordBlocks().size());
-
       Exception exception = Assert.assertThrows(IllegalArgumentException.class, () -> reader.loadNextBatch());
       String expectedMessage = "Please add arrow-compression module to use CommonsCompressionFactory for ZSTD";
       Assert.assertEquals(expectedMessage, exception.getMessage());
@@ -170,9 +171,8 @@ public void testArrowFileZstdRoundTripWithDictionary() throws Exception {
     try (ArrowFileReader reader =
            new ArrowFileReader(new ByteArrayReadableSeekableByteChannel(out.toByteArray()),
              allocator, NoCompressionCodec.Factory.INSTANCE)) {
-      Assert.assertEquals(1, reader.getRecordBlocks().size());
-      Exception exception = Assert.assertThrows(IllegalArgumentException.class, () -> reader.loadNextBatch());
       String expectedMessage = "Please add arrow-compression module to use CommonsCompressionFactory for ZSTD";
+      Exception exception = Assert.assertThrows(IllegalArgumentException.class, () -> reader.loadNextBatch());
       Assert.assertEquals(expectedMessage, exception.getMessage());
     }
   }
@@ -196,34 +196,38 @@ public void testArrowStreamZstdRoundTrip() throws Exception {
     fields.add(encodedVector1.getField());
 
     VectorSchemaRoot root = VectorSchemaRoot.create(new Schema(fields), allocator);
-    final int rowCount = 10;
+    final int rowCount = 3;
     GenerateSampleData.generateTestData(root.getVector(0), rowCount);
     root.setRowCount(rowCount);
 
     // Write an in-memory compressed arrow file
     ByteArrayOutputStream out = new ByteArrayOutputStream();
+    File tempFile = File.createTempFile("dictionary_compression", ".arrow");
+    FileOutputStream fileOut = new FileOutputStream(tempFile);
     try (final ArrowStreamWriter writer =
-             new ArrowStreamWriter(root, provider, Channels.newChannel(out), IpcOption.DEFAULT,
-                 CommonsCompressionFactory.INSTANCE, CompressionUtil.CodecType.ZSTD, Optional.of(7))) {
+             new ArrowStreamWriter(root, provider, Channels.newChannel(fileOut), IpcOption.DEFAULT,
+                 CommonsCompressionFactory.INSTANCE, CompressionUtil.CodecType.ZSTD,
+                 Optional.of(7))) {
       writer.start();
       writer.writeBatch();
       writer.end();
     }
 
-    // Read the in-memory compressed arrow file with CommonsCompressionFactory provided
-    try (ArrowStreamReader reader =
-             new ArrowStreamReader(new ByteArrayReadableSeekableByteChannel(out.toByteArray()),
-                 allocator, CommonsCompressionFactory.INSTANCE)) {
+    // Read the on-disk compressed arrow file with CommonsCompressionFactory provided
+    try (SeekableByteChannel channel = FileChannel.open(tempFile.toPath());
+        ArrowStreamReader reader =
+             new ArrowStreamReader(channel, allocator, CommonsCompressionFactory.INSTANCE)) {
+      org.apache.arrow.vector.types.pojo.Schema schema = reader.getVectorSchemaRoot().getSchema();
       Assert.assertTrue(reader.loadNextBatch());
       Assert.assertTrue(root.equals(reader.getVectorSchemaRoot()));
       Assert.assertFalse(reader.loadNextBatch());
-    }
 
-    // Read the in-memory compressed arrow file without CompressionFactory provided
-    try (ArrowStreamReader reader =
-             new ArrowStreamReader(new ByteArrayReadableSeekableByteChannel(out.toByteArray()),
-                 allocator, NoCompressionCodec.Factory.INSTANCE)) {
+    }
 
+    // Read the on-disk compressed arrow file without CompressionFactory provided
+    try (SeekableByteChannel channel = FileChannel.open(tempFile.toPath());
+        ArrowStreamReader reader =
+             new ArrowStreamReader(channel, allocator, NoCompressionCodec.Factory.INSTANCE)) {
       Exception exception = Assert.assertThrows(IllegalArgumentException.class, () -> reader.loadNextBatch());
       String expectedMessage = "Please add arrow-compression module to use CommonsCompressionFactory for ZSTD";
       Assert.assertEquals(expectedMessage, exception.getMessage());
diff --git a/java/vector/src/main/java/org/apache/arrow/vector/ipc/ArrowReader.java b/java/vector/src/main/java/org/apache/arrow/vector/ipc/ArrowReader.java
index 04c57d7e82fef..01f4e925c69b3 100644
--- a/java/vector/src/main/java/org/apache/arrow/vector/ipc/ArrowReader.java
+++ b/java/vector/src/main/java/org/apache/arrow/vector/ipc/ArrowReader.java
@@ -251,7 +251,7 @@ private void load(ArrowDictionaryBatch dictionaryBatch, FieldVector vector) {
     VectorSchemaRoot root = new VectorSchemaRoot(
         Collections.singletonList(vector.getField()),
         Collections.singletonList(vector), 0);
-    VectorLoader loader = new VectorLoader(root);
+    VectorLoader loader = new VectorLoader(root, this.compressionFactory);
     try {
       loader.load(dictionaryBatch.getDictionary());
     } finally {
diff --git a/java/vector/src/main/java/org/apache/arrow/vector/ipc/ArrowWriter.java b/java/vector/src/main/java/org/apache/arrow/vector/ipc/ArrowWriter.java
index a33c55de53f23..9953428031372 100644
--- a/java/vector/src/main/java/org/apache/arrow/vector/ipc/ArrowWriter.java
+++ b/java/vector/src/main/java/org/apache/arrow/vector/ipc/ArrowWriter.java
@@ -66,6 +66,12 @@ public abstract class ArrowWriter implements AutoCloseable {
 
   protected IpcOption option;
 
+  private CompressionCodec.Factory compressionFactory;
+
+  private CompressionUtil.CodecType codecType;
+
+  private Optional<Integer> compressionLevel;
+
   protected ArrowWriter(VectorSchemaRoot root, DictionaryProvider provider, WritableByteChannel out) {
     this(root, provider, out, IpcOption.DEFAULT);
   }
@@ -99,6 +105,10 @@ protected ArrowWriter(VectorSchemaRoot root, DictionaryProvider provider, Writab
     this.option = option;
     this.dictionaryProvider = provider;
 
+    this.compressionFactory = compressionFactory;
+    this.codecType = codecType;
+    this.compressionLevel = compressionLevel;
+
     List<Field> fields = new ArrayList<>(root.getSchema().getFields().size());
 
     MetadataV4UnionChecker.checkForUnion(root.getSchema().getFields().iterator(), option.metadataVersion);
@@ -133,7 +143,11 @@ protected void writeDictionaryBatch(Dictionary dictionary) throws IOException {
         Collections.singletonList(vector.getField()),
         Collections.singletonList(vector),
         count);
-    VectorUnloader unloader = new VectorUnloader(dictRoot);
+    VectorUnloader unloader = new VectorUnloader(dictRoot, /*includeNullCount*/ true,
+        this.compressionLevel.isPresent() ?
+            this.compressionFactory.createCodec(this.codecType, this.compressionLevel.get()) :
+            this.compressionFactory.createCodec(this.codecType),
+        /*alignBuffers*/ true);
     ArrowRecordBatch batch = unloader.getRecordBatch();
     ArrowDictionaryBatch dictionaryBatch = new ArrowDictionaryBatch(id, batch, false);
     try {