diff --git a/api4/plugin.go b/api4/plugin.go
index 0c7f7a773b..13bed46757 100644
--- a/api4/plugin.go
+++ b/api4/plugin.go
@@ -151,6 +151,10 @@ func installMarketplacePlugin(c *Context, w http.ResponseWriter, r *http.Request
 	}
 	auditRec.AddMeta("plugin_id", pluginRequest.Id)
 
+	// Always install the latest compatible version
+	// https://mattermost.atlassian.net/browse/MM-41981
+	pluginRequest.Version = ""
+
 	manifest, appErr := c.App.Channels().InstallMarketplacePlugin(pluginRequest)
 	if appErr != nil {
 		c.Err = appErr
diff --git a/api4/plugin_test.go b/api4/plugin_test.go
index 0fcfc6ddf7..5381be4704 100644
--- a/api4/plugin_test.go
+++ b/api4/plugin_test.go
@@ -1308,7 +1308,7 @@ func TestInstallMarketplacePlugin(t *testing.T) {
 		},
 	}
 
-	request := &model.InstallMarketplacePluginRequest{Id: "", Version: ""}
+	request := &model.InstallMarketplacePluginRequest{Id: ""}
 
 	th.TestForSystemAdminAndLocal(t, func(t *testing.T, client *model.Client4) {
 		th.App.UpdateConfig(func(cfg *model.Config) {
@@ -1374,7 +1374,7 @@ func TestInstallMarketplacePlugin(t *testing.T) {
 			*cfg.PluginSettings.EnableMarketplace = true
 			*cfg.PluginSettings.MarketplaceURL = testServer.URL
 		})
-		pRequest := &model.InstallMarketplacePluginRequest{Id: "some_plugin_id", Version: "0.0.1"}
+		pRequest := &model.InstallMarketplacePluginRequest{Id: "some_plugin_id"}
 		plugin, resp, err := client.InstallMarketplacePlugin(pRequest)
 		require.Error(t, err)
 		CheckInternalErrorStatus(t, resp)
@@ -1395,7 +1395,7 @@ func TestInstallMarketplacePlugin(t *testing.T) {
 			*cfg.PluginSettings.MarketplaceURL = testServer.URL
 			*cfg.PluginSettings.AllowInsecureDownloadURL = true
 		})
-		pRequest := &model.InstallMarketplacePluginRequest{Id: "testplugin2", Version: "1.2.2"}
+		pRequest := &model.InstallMarketplacePluginRequest{Id: "testplugin2"}
 		plugin, resp, err := client.InstallMarketplacePlugin(pRequest)
 		require.Error(t, err)
 		CheckInternalErrorStatus(t, resp)
@@ -1425,7 +1425,7 @@ func TestInstallMarketplacePlugin(t *testing.T) {
 		appErr := th.App.AddPublicKey("pub_key", key)
 		require.Nil(t, appErr)
 
-		pRequest := &model.InstallMarketplacePluginRequest{Id: "testplugin2", Version: "1.2.3"}
+		pRequest := &model.InstallMarketplacePluginRequest{Id: "testplugin2"}
 		manifest, _, err := client.InstallMarketplacePlugin(pRequest)
 		require.NoError(t, err)
 		require.NotNil(t, manifest)
@@ -1447,6 +1447,51 @@ func TestInstallMarketplacePlugin(t *testing.T) {
 		require.Nil(t, appErr)
 	}, "verify, install and remove plugin")
 
+	th.TestForSystemAdminAndLocal(t, func(t *testing.T, client *model.Client4) {
+		testServer := httptest.NewServer(http.HandlerFunc(func(res http.ResponseWriter, req *http.Request) {
+			serverVersion := req.URL.Query().Get("server_version")
+			require.NotEmpty(t, serverVersion)
+			require.Equal(t, model.CurrentVersion, serverVersion)
+			res.WriteHeader(http.StatusOK)
+			json, err := json.Marshal([]*model.MarketplacePlugin{samplePlugins[1]})
+			require.NoError(t, err)
+			res.Write(json)
+		}))
+		defer testServer.Close()
+
+		th.App.UpdateConfig(func(cfg *model.Config) {
+			*cfg.PluginSettings.EnableMarketplace = true
+			*cfg.PluginSettings.EnableRemoteMarketplace = true
+			*cfg.PluginSettings.MarketplaceURL = testServer.URL
+		})
+
+		key, err := os.Open(filepath.Join(path, "development-private-key.asc"))
+		require.NoError(t, err)
+		appErr := th.App.AddPublicKey("pub_key", key)
+		require.Nil(t, appErr)
+
+		pRequest := &model.InstallMarketplacePluginRequest{Id: "testplugin2", Version: "9.9.9"}
+		manifest, _, err := client.InstallMarketplacePlugin(pRequest)
+		require.NoError(t, err)
+		require.NotNil(t, manifest)
+		require.Equal(t, "testplugin2", manifest.Id)
+		require.Equal(t, "1.2.3", manifest.Version)
+
+		filePath := filepath.Join("plugins", "testplugin2.tar.gz.sig")
+		savedSigFile, appErr := th.App.ReadFile(filePath)
+		require.Nil(t, appErr)
+		require.EqualValues(t, sigFile, savedSigFile)
+
+		_, err = client.RemovePlugin(manifest.Id)
+		require.NoError(t, err)
+		exists, appErr := th.App.FileExists(filePath)
+		require.Nil(t, appErr)
+		require.False(t, exists)
+
+		appErr = th.App.DeletePublicKey("pub_key")
+		require.Nil(t, appErr)
+	}, "ignore version in Marketplace request")
+
 	th.TestForSystemAdminAndLocal(t, func(t *testing.T, client *model.Client4) {
 		requestHandled := false
 
@@ -1612,7 +1657,7 @@ func TestInstallMarketplacePlugin(t *testing.T) {
 			require.Len(t, pluginsResp.Inactive, 0)
 
 			// Should fail to install unknown prepackaged plugin
-			pRequest := &model.InstallMarketplacePluginRequest{Id: "testplugin", Version: "0.0.2"}
+			pRequest := &model.InstallMarketplacePluginRequest{Id: "testpluginXX"}
 			manifest, resp, err := client.InstallMarketplacePlugin(pRequest)
 			require.Error(t, err)
 			CheckInternalErrorStatus(t, resp)
@@ -1628,7 +1673,7 @@ func TestInstallMarketplacePlugin(t *testing.T) {
 			require.Len(t, pluginsResp.Active, 0)
 			require.Len(t, pluginsResp.Inactive, 0)
 
-			pRequest = &model.InstallMarketplacePluginRequest{Id: "testplugin", Version: "0.0.1"}
+			pRequest = &model.InstallMarketplacePluginRequest{Id: "testplugin"}
 			manifest1, _, err := client.InstallMarketplacePlugin(pRequest)
 			require.NoError(t, err)
 			require.NotNil(t, manifest1)
@@ -1643,7 +1688,7 @@ func TestInstallMarketplacePlugin(t *testing.T) {
 			}})
 
 			// Try to install remote marketplace plugin
-			pRequest = &model.InstallMarketplacePluginRequest{Id: "testplugin2", Version: "1.2.3"}
+			pRequest = &model.InstallMarketplacePluginRequest{Id: "testplugin2"}
 			manifest, resp, err = client.InstallMarketplacePlugin(pRequest)
 			require.Error(t, err)
 			CheckInternalErrorStatus(t, resp)
@@ -1657,7 +1702,7 @@ func TestInstallMarketplacePlugin(t *testing.T) {
 				*cfg.PluginSettings.AllowInsecureDownloadURL = true
 			})
 
-			pRequest = &model.InstallMarketplacePluginRequest{Id: "testplugin2", Version: "1.2.3"}
+			pRequest = &model.InstallMarketplacePluginRequest{Id: "testplugin2"}
 			manifest2, _, err := client.InstallMarketplacePlugin(pRequest)
 			require.NoError(t, err)
 			require.NotNil(t, manifest2)
@@ -1746,7 +1791,7 @@ func TestInstallMarketplacePlugin(t *testing.T) {
 		require.Len(t, pluginsResp.Active, 0)
 		require.Len(t, pluginsResp.Inactive, 0)
 
-		pRequest := &model.InstallMarketplacePluginRequest{Id: "testplugin", Version: "0.0.1"}
+		pRequest := &model.InstallMarketplacePluginRequest{Id: "testplugin"}
 		manifest, resp, err := client.InstallMarketplacePlugin(pRequest)
 		require.Error(t, err)
 		CheckInternalErrorStatus(t, resp)
@@ -1757,7 +1802,7 @@ func TestInstallMarketplacePlugin(t *testing.T) {
 		require.Len(t, pluginsResp.Active, 0)
 		require.Len(t, pluginsResp.Inactive, 0)
 
-		pRequest = &model.InstallMarketplacePluginRequest{Id: "testplugin2", Version: "1.2.3"}
+		pRequest = &model.InstallMarketplacePluginRequest{Id: "testplugin2"}
 		manifest, resp, err = client.InstallMarketplacePlugin(pRequest)
 		require.Error(t, err)
 		CheckInternalErrorStatus(t, resp)
diff --git a/app/plugin_install.go b/app/plugin_install.go
index 6bda8e7848..35e4154654 100644
--- a/app/plugin_install.go
+++ b/app/plugin_install.go
@@ -196,23 +196,39 @@ func (ch *Channels) InstallMarketplacePlugin(request *model.InstallMarketplacePl
 		signatureFile = bytes.NewReader(prepackagedPlugin.Signature)
 	}
 
-	if *ch.cfgSvc.Config().PluginSettings.EnableRemoteMarketplace && pluginFile == nil {
+	if *ch.cfgSvc.Config().PluginSettings.EnableRemoteMarketplace {
 		var plugin *model.BaseMarketplacePlugin
 		plugin, appErr = ch.getRemoteMarketplacePlugin(request.Id, request.Version)
 		if appErr != nil {
 			return nil, appErr
 		}
 
-		downloadedPluginBytes, err := ch.srv.downloadFromURL(plugin.DownloadURL)
-		if err != nil {
-			return nil, model.NewAppError("InstallMarketplacePlugin", "app.plugin.install_marketplace_plugin.app_error", nil, err.Error(), http.StatusInternalServerError)
+		var prepackagedVersion semver.Version
+		if prepackagedPlugin != nil {
+			var err error
+			prepackagedVersion, err = semver.Parse(prepackagedPlugin.Manifest.Version)
+			if err != nil {
+				return nil, model.NewAppError("InstallMarketplacePlugin", "app.plugin.invalid_version.app_error", nil, err.Error(), http.StatusBadRequest)
+			}
 		}
-		signature, err := plugin.DecodeSignature()
+
+		marketplaceVersion, err := semver.Parse(plugin.Manifest.Version)
 		if err != nil {
-			return nil, model.NewAppError("InstallMarketplacePlugin", "app.plugin.signature_decode.app_error", nil, err.Error(), http.StatusNotImplemented)
+			return nil, model.NewAppError("InstallMarketplacePlugin", "app.prepackged-plugin.invalid_version.app_error", nil, err.Error(), http.StatusBadRequest)
+		}
+
+		if prepackagedVersion.LT(marketplaceVersion) { // Always true if no prepackaged plugin was found
+			downloadedPluginBytes, err := ch.srv.downloadFromURL(plugin.DownloadURL)
+			if err != nil {
+				return nil, model.NewAppError("InstallMarketplacePlugin", "app.plugin.install_marketplace_plugin.app_error", nil, err.Error(), http.StatusInternalServerError)
+			}
+			signature, err := plugin.DecodeSignature()
+			if err != nil {
+				return nil, model.NewAppError("InstallMarketplacePlugin", "app.plugin.signature_decode.app_error", nil, err.Error(), http.StatusNotImplemented)
+			}
+			pluginFile = bytes.NewReader(downloadedPluginBytes)
+			signatureFile = signature
 		}
-		pluginFile = bytes.NewReader(downloadedPluginBytes)
-		signatureFile = signature
 	}
 
 	if pluginFile == nil {
diff --git a/i18n/en.json b/i18n/en.json
index e5ca71e033..b367792d7a 100644
--- a/i18n/en.json
+++ b/i18n/en.json
@@ -5999,6 +5999,10 @@
     "id": "app.preference.save.updating.app_error",
     "translation": "We encountered an error while updating preferences."
   },
+  {
+    "id": "app.prepackged-plugin.invalid_version.app_error",
+    "translation": "Prepackged plugin version could not be parsed."
+  },
   {
     "id": "app.reaction.bulk_get_for_post_ids.app_error",
     "translation": "Unable to get reactions for post."