diff --git a/sqlmesh/core/engine_adapter/redshift.py b/sqlmesh/core/engine_adapter/redshift.py
index 13796a513e..f314f704b6 100644
--- a/sqlmesh/core/engine_adapter/redshift.py
+++ b/sqlmesh/core/engine_adapter/redshift.py
@@ -60,6 +60,7 @@ class RedshiftEngineAdapter(
             exp.DataType.build("CHAR", dialect=DIALECT).this: 4096,
             exp.DataType.build("VARCHAR", dialect=DIALECT).this: 65535,
         },
+        precision_increase_allowed_types={exp.DataType.build("VARCHAR", dialect=DIALECT).this},
         drop_cascade=True,
     )
     VARIABLE_LENGTH_DATA_TYPES = {
diff --git a/sqlmesh/core/schema_diff.py b/sqlmesh/core/schema_diff.py
index 674b1df76f..d1ca567630 100644
--- a/sqlmesh/core/schema_diff.py
+++ b/sqlmesh/core/schema_diff.py
@@ -341,6 +341,7 @@ class SchemaDiffer(PydanticModel):
     coerceable_types_: t.Dict[exp.DataType, t.Set[exp.DataType]] = Field(
         default_factory=dict, alias="coerceable_types"
     )
+    precision_increase_allowed_types: t.Optional[t.Set[exp.DataType.Type]] = None
     support_coercing_compatible_types: bool = False
     drop_cascade: bool = False
     parameterized_type_defaults: t.Dict[
@@ -367,7 +368,10 @@ def coerceable_types(self) -> t.Dict[exp.DataType, t.Set[exp.DataType]]:
     def _is_compatible_type(self, current_type: exp.DataType, new_type: exp.DataType) -> bool:
         # types are identical or both types are parameterized and new has higher precision
         # - default parameter values are automatically provided if not present
-        if current_type == new_type or self._is_precision_increase(current_type, new_type):
+        if current_type == new_type or (
+            self._is_precision_increase_allowed(current_type)
+            and self._is_precision_increase(current_type, new_type)
+        ):
             return True
         # types are un-parameterized and compatible
         if current_type in self.compatible_types:
@@ -390,6 +394,12 @@ def _is_coerceable_type(self, current_type: exp.DataType, new_type: exp.DataType
             return is_coerceable
         return False
 
+    def _is_precision_increase_allowed(self, current_type: exp.DataType) -> bool:
+        return (
+            self.precision_increase_allowed_types is None
+            or current_type.this in self.precision_increase_allowed_types
+        )
+
     def _is_precision_increase(self, current_type: exp.DataType, new_type: exp.DataType) -> bool:
         if current_type.this == new_type.this and not current_type.is_type(
             *exp.DataType.NESTED_TYPES
diff --git a/tests/core/engine_adapter/test_redshift.py b/tests/core/engine_adapter/test_redshift.py
index 930b0a607c..6d1bbcf61f 100644
--- a/tests/core/engine_adapter/test_redshift.py
+++ b/tests/core/engine_adapter/test_redshift.py
@@ -366,6 +366,55 @@ def table_columns(table_name: str) -> t.Dict[str, exp.DataType]:
     ]
 
 
+def test_alter_table_precision_increase_varchar(adapter: t.Callable):
+    current_table_name = "test_table"
+    target_table_name = "target_table"
+
+    def table_columns(table_name: str) -> t.Dict[str, exp.DataType]:
+        if table_name == current_table_name:
+            return {
+                "id": exp.DataType.build("int"),
+                "test_column": exp.DataType.build("VARCHAR(10)"),
+            }
+        else:
+            return {
+                "id": exp.DataType.build("int"),
+                "test_column": exp.DataType.build("VARCHAR(20)"),
+            }
+
+    adapter.columns = table_columns
+
+    adapter.alter_table(adapter.get_alter_expressions(current_table_name, target_table_name))
+    assert to_sql_calls(adapter) == [
+        'ALTER TABLE "test_table" ALTER COLUMN "test_column" TYPE VARCHAR(20)',
+    ]
+
+
+def test_alter_table_precision_increase_decimal(adapter: t.Callable):
+    current_table_name = "test_table"
+    target_table_name = "target_table"
+
+    def table_columns(table_name: str) -> t.Dict[str, exp.DataType]:
+        if table_name == current_table_name:
+            return {
+                "id": exp.DataType.build("int"),
+                "test_column": exp.DataType.build("DECIMAL(10, 10)"),
+            }
+        else:
+            return {
+                "id": exp.DataType.build("int"),
+                "test_column": exp.DataType.build("DECIMAL(25, 10)"),
+            }
+
+    adapter.columns = table_columns
+
+    adapter.alter_table(adapter.get_alter_expressions(current_table_name, target_table_name))
+    assert to_sql_calls(adapter) == [
+        'ALTER TABLE "test_table" DROP COLUMN "test_column" CASCADE',
+        'ALTER TABLE "test_table" ADD COLUMN "test_column" DECIMAL(25, 10)',
+    ]
+
+
 def test_merge(make_mocked_engine_adapter: t.Callable, mocker: MockerFixture):
     adapter = make_mocked_engine_adapter(RedshiftEngineAdapter)
     mocker.patch(
diff --git a/tests/core/test_schema_diff.py b/tests/core/test_schema_diff.py
index 3a921598a1..85f4d424a3 100644
--- a/tests/core/test_schema_diff.py
+++ b/tests/core/test_schema_diff.py
@@ -884,6 +884,42 @@ def test_schema_diff_calculate_type_transitions():
             ],
             {},
         ),
+        # Increase the precision of a type is ALTER when the type is supported
+        (
+            "STRUCT<id INT, address VARCHAR(120)>",
+            "STRUCT<id INT, address VARCHAR(121)>",
+            [
+                TableAlterOperation.alter_type(
+                    TableAlterColumn.primitive("address"),
+                    "VARCHAR(121)",
+                    current_type="VARCHAR(120)",
+                    expected_table_struct="STRUCT<id INT, address VARCHAR(121)>",
+                )
+            ],
+            dict(
+                precision_increase_allowed_types={exp.DataType.build("VARCHAR").this},
+            ),
+        ),
+        # Increase the precision of a type is DROP/ADD when the type is not supported
+        (
+            "STRUCT<id INT, address VARCHAR(120)>",
+            "STRUCT<id INT, address VARCHAR(121)>",
+            [
+                TableAlterOperation.drop(
+                    TableAlterColumn.primitive("address"),
+                    "STRUCT<id INT>",
+                    "VARCHAR(120)",
+                ),
+                TableAlterOperation.add(
+                    TableAlterColumn.primitive("address"),
+                    "VARCHAR(121)",
+                    expected_table_struct="STRUCT<id INT, address VARCHAR(121)>",
+                ),
+            ],
+            dict(
+                precision_increase_allowed_types={exp.DataType.build("DECIMAL").this},
+            ),
+        ),
         # Decrease the precision of a type is DROP/ADD
         (
             "STRUCT<id INT, address VARCHAR(120)>",