diff --git a/aws_lambda_powertools/event_handler/api_gateway.py b/aws_lambda_powertools/event_handler/api_gateway.py
index 72b86111ac9..ec9b6b0011c 100644
--- a/aws_lambda_powertools/event_handler/api_gateway.py
+++ b/aws_lambda_powertools/event_handler/api_gateway.py
@@ -785,12 +785,23 @@ def _add_cors(self, event: ResponseEventT, cors: CORSConfig):
         if origin is not None:
             cors_headers = cors.to_dict(origin)
             # Keep any Vary value the route already set, and add Origin to it
-            existing_vary = self.response.headers.get("Vary")
-            if isinstance(existing_vary, list):
-                existing_vary = ", ".join(existing_vary)
-            if existing_vary and "Vary" in cors_headers:
-                cors_headers["Vary"] = f"{existing_vary}, Origin"
+            vary = cors_headers.pop("Vary", None)
             self.response.headers.update(cors_headers)
+            if vary:
+                self._add_vary(vary)
+
+    def _add_vary(self, field: str):
+        """Add a request header name to the Vary response header, keeping any value already set"""
+        existing_vary = self.response.headers.get("Vary")
+        if isinstance(existing_vary, list):
+            existing_vary = ", ".join(existing_vary)
+        if not existing_vary:
+            self.response.headers["Vary"] = field
+            return
+        values = {value.strip().lower() for value in existing_vary.split(",")}
+        # "*" already covers every request header
+        if field.lower() not in values and "*" not in values:
+            self.response.headers["Vary"] = f"{existing_vary}, {field}"
 
     def _add_cache_control(self, cache_control: str):
         """Set the specified cache control headers for 200 http responses. For non-200 `no-cache` is used."""
@@ -857,6 +868,10 @@ def _route(self, event: ResponseEventT, cors: CORSConfig | None):
             self._add_cors(event, cors or CORSConfig())
         if self.route.cache_control:
             self._add_cache_control(self.route.cache_control)
+        compression = self.response.compress if self.response.compress is not None else self.route.compress
+        if compression:
+            # The body depends on Accept-Encoding, so shared caches must not reuse it across encodings
+            self._add_vary("Accept-Encoding")
         if self._has_compression_enabled(
             route_compression=self.route.compress,
             response_compression=self.response.compress,
diff --git a/tests/functional/event_handler/required_dependencies/test_api_gateway.py b/tests/functional/event_handler/required_dependencies/test_api_gateway.py
index 2f21174bd97..4f8d49d2a10 100644
--- a/tests/functional/event_handler/required_dependencies/test_api_gateway.py
+++ b/tests/functional/event_handler/required_dependencies/test_api_gateway.py
@@ -621,6 +621,48 @@ def return_text() -> Response:
     assert result["body"] == expected_value
 
 
+@pytest.mark.parametrize(
+    "route_compress, response_compress, response_headers, accept_encoding, expected_vary",
+    [
+        pytest.param(True, None, None, "gzip", ["Accept-Encoding"], id="compressed response"),
+        pytest.param(True, None, None, "deflate", ["Accept-Encoding"], id="uncompressed response of a compress route"),
+        pytest.param(False, True, None, "gzip", ["Accept-Encoding"], id="compress enabled on the response"),
+        pytest.param(True, None, {"Vary": "Origin"}, "gzip", ["Origin, Accept-Encoding"], id="existing Vary kept"),
+        pytest.param(True, None, {"Vary": "accept-encoding"}, "gzip", ["accept-encoding"], id="not added twice"),
+        pytest.param(True, None, {"Vary": "*"}, "gzip", ["*"], id="wildcard Vary kept as is"),
+        pytest.param(
+            True,
+            None,
+            {"Vary": ["Accept", "Accept-Language"]},
+            "gzip",
+            ["Accept, Accept-Language, Accept-Encoding"],
+            id="existing Vary list kept",
+        ),
+        pytest.param(False, None, None, "gzip", None, id="compression not enabled"),
+        pytest.param(True, False, None, "gzip", None, id="compression disabled on the response"),
+    ],
+)
+def test_compress_sets_vary_accept_encoding(
+    route_compress: bool,
+    response_compress: bool | None,
+    response_headers: dict | None,
+    accept_encoding: str,
+    expected_vary: list[str] | None,
+):
+    # GIVEN a route whose body depends on the request Accept-Encoding when compression is enabled
+    app = ApiGatewayResolver()
+
+    @app.get("/my/path", compress=route_compress)
+    def return_text() -> Response:
+        return Response(200, content_types.TEXT_PLAIN, "Foo", headers=response_headers, compress=response_compress)
+
+    # WHEN calling the event handler
+    result = app({"path": "/my/path", "httpMethod": "GET", "headers": {"Accept-Encoding": accept_encoding}}, None)
+
+    # THEN Vary names Accept-Encoding whenever compression can change the body, so caches keep encodings apart
+    assert result["multiValueHeaders"].get("Vary") == expected_vary
+
+
 @pytest.mark.parametrize(
     "accept_encoding, expected_compressed",
     [