diff --git a/packages/ui/src/base/badge/badge.stories.tsx b/packages/ui/src/base/badge/badge.stories.tsx
index 4a01bb1..934f4cb 100644
--- a/packages/ui/src/base/badge/badge.stories.tsx
+++ b/packages/ui/src/base/badge/badge.stories.tsx
@@ -209,6 +209,44 @@ export const IconOnly: Story = {
   },
 };
 
+export const IconOpticallyAlignedIconOnly: Story = {
+  argTypes: {
+    children: {
+      control: false,
+    },
+    icon: {
+      control: false,
+    },
+  },
+  args: {
+    children: undefined,
+  },
+  render: (args) => (
+    <div style={collectionStyle}>
+      <GlBadge {...args} variant="success" icon="issue-open-m" aria-label="Open" />
+      <GlBadge {...args} variant="info" icon="issue-close" aria-label="Closed" />
+      <GlBadge {...args} variant="danger" icon="status_failed" iconOpticallyAligned aria-label="Failed" />
+      <GlBadge {...args} variant="success" icon="status_success" iconOpticallyAligned aria-label="Passed" />
+      <GlBadge {...args} variant="warning" icon="status_pending" iconOpticallyAligned aria-label="Pending" />
+    </div>
+  ),
+  play: async ({ canvas }) => {
+    for(const [icon, label] of [
+      ["issue-open-m", "Open"],
+      ["issue-close", "Closed"],
+      ["status_failed", "Failed"],
+      ["status_success", "Passed"],
+      ["status_pending", "Pending"],
+    ]) {
+      const badge = canvas.getByRole("img", { name: label });
+
+      await expect(canvas.getByTestId(`${icon}-icon`)).not.toHaveClass("-gl-ml-2");
+      await expect(badge).toHaveClass("!gl-px-2");
+      await expect(badge.querySelector(".gl-badge-content")).toBeNull();
+    }
+  },
+};
+
 export const Truncated: Story = {
   argTypes: {
     children: {
diff --git a/packages/ui/src/base/badge/badge.test.tsx b/packages/ui/src/base/badge/badge.test.tsx
index e8ff243..0e5a9ed 100644
--- a/packages/ui/src/base/badge/badge.test.tsx
+++ b/packages/ui/src/base/badge/badge.test.tsx
@@ -73,6 +73,7 @@ describe("GlBadge", () => {
     it.each([
       [{ icon: "issue-open-m" }, true],
       [{ icon: "issue-close" }, true],
+      [{ icon: "status_failed", iconOpticallyAligned: true }, true],
       [{ icon: "license", iconOpticallyAligned: true }, true],
       [{ icon: "license" }, false],
     ] as const)("aligns circular icons for %s", (props, expected) => {
@@ -81,6 +82,22 @@ describe("GlBadge", () => {
       expect(markup.includes("-gl-ml-2")).toBe(expected);
     });
 
+    it.each([
+      ["issue-open-m", false],
+      ["issue-close", false],
+      ["status_failed", true],
+    ] as const)("keeps the icon-only %s badge centered", (icon, iconOpticallyAligned) => {
+      const markup = renderToStaticMarkup(
+        <GlBadge aria-label="Status" icon={icon} iconOpticallyAligned={iconOpticallyAligned} />,
+      );
+
+      expect(markup).not.toContain("-gl-ml-2");
+      expect(markup).toContain("role=\"img\"");
+      expect(markup).toContain("aria-label=\"Status\"");
+      expect(markup).toContain("!gl-px-2");
+      expect(markup).not.toContain("gl-badge-content");
+    });
+
     it("warns when an icon-only badge has no aria-label", () => {
       const warn = vi.spyOn(console, "warn").mockImplementation(() => {});
 
@@ -132,11 +149,12 @@ describe("GlBadge", () => {
 
     it("keeps the img role for icon-only link badges", () => {
       const markup = renderBadge(
-        { "aria-label": "Scheduled", href: "https://www.gitlab.com", icon: "calendar" },
+        { "aria-label": "Closed", href: "https://www.gitlab.com", icon: "issue-close" },
         null,
       );
 
       expect(markup).toContain("role=\"img\"");
+      expect(markup).not.toContain("-gl-ml-2");
     });
   });
 });
diff --git a/packages/ui/src/base/badge/badge.tsx b/packages/ui/src/base/badge/badge.tsx
index f4e036b..5c39907 100644
--- a/packages/ui/src/base/badge/badge.tsx
+++ b/packages/ui/src/base/badge/badge.tsx
@@ -45,7 +45,7 @@ export type GlBadgeProps = BaseBadgeProps & {
   href?: string;
   /** Name of an icon from `@gitlab/svgs` shown before the text. */
   icon?: string;
-  /** Optically aligns circular icons with the badge. */
+  /** Optically aligns circular icons when the badge also has content. */
   iconOpticallyAligned?: boolean;
   /** Icon size: `sm` (12px) or `md` (16px). */
   iconSize?: GlBadgeIconSize;
@@ -147,7 +147,7 @@ const GlBadge = forwardRef<HTMLElement, GlBadgeProps>(function GlBadge({
       {icon ? (
         <GlIcon
           className={badgeIconVariants({
-            circular: iconOpticallyAligned || circularIconNames.has(icon),
+            circular: hasContent && (iconOpticallyAligned || circularIconNames.has(icon)),
           })}
           name={icon}
           size={badgeIconSizes[iconSize]} />