diff --git a/plutus-core/changelog.d/20260320_154057_yuriy.lazaryev_issue_7542_flat_enum_bug.md b/plutus-core/changelog.d/20260320_154057_yuriy.lazaryev_issue_7542_flat_enum_bug.md
new file mode 100644
index 00000000000..ba3cd485c75
--- /dev/null
+++ b/plutus-core/changelog.d/20260320_154057_yuriy.lazaryev_issue_7542_flat_enum_bug.md
@@ -0,0 +1,3 @@
+### Fixed
+
+- Fixed `consClose` in the Flat decoder failing to advance the stream pointer past 1 byte, which corrupted decoder state for Generic-derived Flat instances of large enums (>256 constructors) and caused infinite memory consumption during deserialization.
diff --git a/plutus-core/flat/src/PlutusCore/Flat/Decoder/Prim.hs b/plutus-core/flat/src/PlutusCore/Flat/Decoder/Prim.hs
index a3e37db50fc..319ed7040a3 100644
--- a/plutus-core/flat/src/PlutusCore/Flat/Decoder/Prim.hs
+++ b/plutus-core/flat/src/PlutusCore/Flat/Decoder/Prim.hs
@@ -103,17 +103,10 @@ consOpen = Get $ \endPtr s -> do
           else notEnoughSpace endPtr s
   return $ GetResult s (ConsState w 0)
 
-{-| Switch back to normal decoding
- {\-# NOINLINE consClose  #-\} -}
+{-| Switch back to normal decoding by advancing the main stream
+past the constructor tag bits that were decoded via 'ConsState'. -}
 consClose :: Int -> Get ()
-consClose n = Get $ \endPtr s -> do
-  let u' = n + usedBits s
-  if u' < 8
-    then return $ GetResult (s {usedBits = u'}) ()
-    else
-      if currPtr s >= endPtr
-        then notEnoughSpace endPtr s
-        else return $ GetResult (s {currPtr = currPtr s `plusPtr` 1, usedBits = u' - 8}) ()
+consClose = dropBits
 
 {- ensureBits endPtr s n = when ((endPtr `minusPtr` currPtr s) * 8 - usedBits s < n) $ notEnoughSpace endPtr s
 dropBits8 s n =
diff --git a/plutus-core/flat/test/Spec.hs b/plutus-core/flat/test/Spec.hs
index 522e2e5a067..5f66fcab7fe 100644
--- a/plutus-core/flat/test/Spec.hs
+++ b/plutus-core/flat/test/Spec.hs
@@ -348,6 +348,34 @@ testLargeEnum = testGroup "test enum with more than 256 constructors"
       -- , encRaw (E258_256,E258_257,E258_258) [0b11111110,0b11111111,0b01111111,0b11000000]
     , map trip [E258_1, E258_256, E258_257, E258_258]
     , map trip [E256_1, E256_134, E256_256]
+      -- Issue #7542: consClose only advances currPtr by 1 byte, so when
+      -- (constructor_bits + usedBits >= 16) the decoder state is corrupted
+      -- (usedBits overflows to 8+). This makes the Filler decoder loop
+      -- forever, building infinite FillerBit chains and consuming all memory.
+      --
+      -- The bug requires: (a) a constructor needing 9 bits (depth-9 in the
+      -- Generic tree), AND (b) 7 prior consumed bits so usedBits=7 before
+      -- consOpen. We use 7 nested Bool fields to set up condition (b).
+      --
+      -- Control: E258_256 needs only 8 bits, so 8+7=15 < 16 - no overflow.
+    , [trip (False, (False, (False, (False, (False, (False, (False, E258_256)))))))]
+      -- Bug: E258_258 needs 9 bits, so 9+7=16 - consClose overflows usedBits.
+      -- Without fix: unflat hangs forever (Filler decoder infinite loop).
+    , [localOption (mkTimeout 5000000) $
+        trip (False, (False, (False, (False, (False, (False, (False, E258_258)))))))]
+      -- consClose must reject when constructor bits exceed the remaining buffer,
+      -- not silently leave the decoder in an invalid state for strictDecoder to
+      -- catch later. E258_258 needs 9 bits but a 1-byte buffer only has 8.
+      -- With correct bounds checking (ensureBits), consClose throws NotEnoughSpace.
+      -- Without it, consClose "succeeds" and strictDecoder catches TooMuchSpace.
+    , [testCase "consClose rejects 9-bit tag in 1-byte buffer" $
+        case unflatRaw (B.pack [0xFF]) :: Decoded E258 of
+          Left (NotEnoughSpace _) -> return ()
+          Left (TooMuchSpace _)   -> assertFailure
+            "consClose let overrun through (caught by strictDecoder as TooMuchSpace)"
+          Left other               -> assertFailure $ "Unexpected error: " ++ show other
+          Right _                  -> assertFailure "Should not decode: only 8 bits for a 9-bit tag"
+      ]
 #endif
     ]