diff --git a/Lib/test/test_bz2.py b/Lib/test/test_bz2.py
index f4e81db..912fac1 100644
--- a/Lib/test/test_bz2.py
+++ b/Lib/test/test_bz2.py
@@ -47,6 +47,7 @@
         ]
     TEXT = b''.join(TEXT_LINES)
     DATA = b'BZh91AY&SY.\xc8N\x18\x00\x01>_\x80\x00\x10@\x02\xff\xf0\x01\x07n\x00?\xe7\xff\xe00\x01\x99\xaa\x00\xc0\x03F\x86\x8c#&\x83F\x9a\x03\x06\xa6\xd0\xa6\x93M\x0fQ\xa7\xa8\x06\x804hh\x12$\x11\xa4i4\xf14S\xd2<Q\xb5\x0fH\xd3\xd4\xdd\xd5\x87\xbb\xf8\x94\r\x8f\xafI\x12\xe1\xc9\xf8/E\x00pu\x89\x12]\xc9\xbbDL\nQ\x0e\t1\x12\xdf\xa0\xc0\x97\xac2O9\x89\x13\x94\x0e\x1c7\x0ed\x95I\x0c\xaaJ\xa4\x18L\x10\x05#\x9c\xaf\xba\xbc/\x97\x8a#C\xc8\xe1\x8cW\xf9\xe2\xd0\xd6M\xa7\x8bXa<e\x84t\xcbL\xb3\xa7\xd9\xcd\xd1\xcb\x84.\xaf\xb3\xab\xab\xad`n}\xa0lh\tE,\x8eZ\x15\x17VH>\x88\xe5\xcd9gd6\x0b\n\xe9\x9b\xd5\x8a\x99\xf7\x08.K\x8ev\xfb\xf7xw\xbb\xdf\xa1\x92\xf1\xdd|/";\xa2\xba\x9f\xd5\xb1#A\xb6\xf6\xb3o\xc9\xc5y\\\xebO\xe7\x85\x9a\xbc\xb6f8\x952\xd5\xd7"%\x89>V,\xf7\xa6z\xe2\x9f\xa3\xdf\x11\x11"\xd6E)I\xa9\x13^\xca\xf3r\xd0\x03U\x922\xf26\xec\xb6\xed\x8b\xc3U\x13\x9d\xc5\x170\xa4\xfa^\x92\xacDF\x8a\x97\xd6\x19\xfe\xdd\xb8\xbd\x1a\x9a\x19\xa3\x80ankR\x8b\xe5\xd83]\xa9\xc6\x08\x82f\xf6\xb9"6l$\xb8j@\xc0\x8a\xb0l1..\xbak\x83ls\x15\xbc\xf4\xc1\x13\xbe\xf8E\xb8\x9d\r\xa8\x9dk\x84\xd3n\xfa\xacQ\x07\xb1%y\xaav\xb4\x08\xe0z\x1b\x16\xf5\x04\xe9\xcc\xb9\x08z\x1en7.G\xfc]\xc9\x14\xe1B@\xbb!8`'
+    EMPTY_DATA = b'BZh9\x17rE8P\x90\x00\x00\x00\x00'
 
     def setUp(self):
         self.filename = TESTFN
@@ -584,6 +585,12 @@
         data += bz2c.flush()
         self.assertEqual(self.decompress(data), self.TEXT)
 
+    def testCompressEmptyString(self):
+        bz2c = BZ2Compressor()
+        data = bz2c.compress(b'')
+        data += bz2c.flush()
+        self.assertEqual(data, self.EMPTY_DATA)
+
     def testCompressChunks10(self):
         bz2c = BZ2Compressor()
         n = 0
@@ -671,6 +678,10 @@
         data = bz2.compress(self.TEXT)
         self.assertEqual(self.decompress(data), self.TEXT)
 
+    def testCompressEmptyString(self):
+        text = bz2.compress(b'')
+        self.assertEqual(text, self.EMPTY_DATA)
+
     def testDecompress(self):
         text = bz2.decompress(self.DATA)
         self.assertEqual(text, self.TEXT)
@@ -679,6 +690,10 @@
         text = bz2.decompress(b"")
         self.assertEqual(text, b"")
 
+    def testDecompressToEmptyString(self):
+        text = bz2.decompress(self.EMPTY_DATA)
+        self.assertEqual(text, b'')
+
     def testDecompressIncomplete(self):
         self.assertRaises(ValueError, bz2.decompress, self.DATA[:-10])
 
diff --git a/Misc/ACKS b/Misc/ACKS
index 36aed17..8dbdc4d 100644
--- a/Misc/ACKS
+++ b/Misc/ACKS
@@ -884,6 +884,7 @@
 R. M. Oudkerk
 Russel Owen
 Joonas Paalasmaa
+Martin Packman
 Shriphani Palakodety
 Ondrej Palkovsky
 Mike Pall
diff --git a/Misc/NEWS b/Misc/NEWS
index fdc3139..eff20ee 100644
--- a/Misc/NEWS
+++ b/Misc/NEWS
@@ -123,6 +123,9 @@
 Library
 -------
 
+- Issue #16828: Fix error incorrectly raised by bz2.compress(''). Initial patch
+  by Martin Packman.
+
 - Issue #16541: tk_setPalette() now works with keyword arguments.
 
 - Issue #16820: In configparser, `parser.popitem()` no longer raises ValueError.
diff --git a/Modules/_bz2module.c b/Modules/_bz2module.c
index 5cac8e6..4eee5a2 100644
--- a/Modules/_bz2module.c
+++ b/Modules/_bz2module.c
@@ -145,34 +145,24 @@
     result = PyBytes_FromStringAndSize(NULL, SMALLCHUNK);
     if (result == NULL)
         return NULL;
+
     c->bzs.next_in = data;
-    /* On a 64-bit system, len might not fit in avail_in (an unsigned int).
-       Do compression in chunks of no more than UINT_MAX bytes each. */
-    c->bzs.avail_in = MIN(len, UINT_MAX);
-    len -= c->bzs.avail_in;
+    c->bzs.avail_in = 0;
     c->bzs.next_out = PyBytes_AS_STRING(result);
     c->bzs.avail_out = PyBytes_GET_SIZE(result);
     for (;;) {
         char *this_out;
         int bzerror;
 
-        Py_BEGIN_ALLOW_THREADS
-        this_out = c->bzs.next_out;
-        bzerror = BZ2_bzCompress(&c->bzs, action);
-        data_size += c->bzs.next_out - this_out;
-        Py_END_ALLOW_THREADS
-        if (catch_bz2_error(bzerror))
-            goto error;
-
+        /* On a 64-bit system, len might not fit in avail_in (an unsigned int).
+           Do compression in chunks of no more than UINT_MAX bytes each. */
         if (c->bzs.avail_in == 0 && len > 0) {
             c->bzs.avail_in = MIN(len, UINT_MAX);
             len -= c->bzs.avail_in;
         }
 
-        /* In regular compression mode, stop when input data is exhausted.
-           In flushing mode, stop when all buffered data has been flushed. */
-        if ((action == BZ_RUN && c->bzs.avail_in == 0) ||
-            (action == BZ_FINISH && bzerror == BZ_STREAM_END))
+        /* In regular compression mode, stop when input data is exhausted. */
+        if (action == BZ_RUN && c->bzs.avail_in == 0)
             break;
 
         if (c->bzs.avail_out == 0) {
@@ -185,6 +175,18 @@
             }
             c->bzs.avail_out = MIN(buffer_left, UINT_MAX);
         }
+
+        Py_BEGIN_ALLOW_THREADS
+        this_out = c->bzs.next_out;
+        bzerror = BZ2_bzCompress(&c->bzs, action);
+        data_size += c->bzs.next_out - this_out;
+        Py_END_ALLOW_THREADS
+        if (catch_bz2_error(bzerror))
+            goto error;
+
+        /* In flushing mode, stop when all buffered data has been flushed. */
+        if (action == BZ_FINISH && bzerror == BZ_STREAM_END)
+            break;
     }
     if (data_size != PyBytes_GET_SIZE(result))
         if (_PyBytes_Resize(&result, data_size) < 0)