diff --git a/projects/clr/hipamd/src/hip_memory.cpp b/projects/clr/hipamd/src/hip_memory.cpp
index 31326ba766..791ee384ed 100644
--- a/projects/clr/hipamd/src/hip_memory.cpp
+++ b/projects/clr/hipamd/src/hip_memory.cpp
@@ -314,8 +314,11 @@ hipError_t ihipMalloc(void** ptr, size_t sizeBytes, unsigned int flags)
   const auto& dev_info = amdContext->devices()[0]->info();
   hip::getCurrentDevice()->SetActiveStatus();
 
-  if ((!useHostDevice && (dev_info.maxMemAllocSize_ < sizeBytes)) ||
-      (useHostDevice && (dev_info.maxPhysicalMemAllocSize_ < sizeBytes))) {
+  if (dev_info.maxPhysicalMemAllocSize_ < sizeBytes) {
+    return hipErrorOutOfMemory;
+  }
+  // PAL allocates from system memory if needed
+  if (IS_LINUX && !useHostDevice && (dev_info.maxMemAllocSize_ < sizeBytes)) {
     return hipErrorOutOfMemory;
   }