diff --git a/.changeset/thin-countries-battle.md b/.changeset/thin-countries-battle.md
new file mode 100644
index 0000000000..27fc49ff16
--- /dev/null
+++ b/.changeset/thin-countries-battle.md
@@ -0,0 +1,5 @@
+---
+'@backstage/core-plugin-api': patch
+---
+
+Change `IconComponent` type to be compatible with Material UI v5 icons.
diff --git a/packages/core-plugin-api/api-report.md b/packages/core-plugin-api/api-report.md
index 227b9b9816..5577d94359 100644
--- a/packages/core-plugin-api/api-report.md
+++ b/packages/core-plugin-api/api-report.md
@@ -502,9 +502,14 @@ export const googleAuthApiRef: ApiRef<
 >;
 
 // @public
-export type IconComponent = ComponentType<{
-  fontSize?: 'default' | 'small' | 'large';
-}>;
+export type IconComponent = ComponentType<
+  | {
+      fontSize?: 'large' | 'small' | 'default';
+    }
+  | {
+      fontSize?: 'medium' | 'large' | 'small';
+    }
+>;
 
 // @public
 export type IdentityApi = {
diff --git a/packages/core-plugin-api/src/icons/types.ts b/packages/core-plugin-api/src/icons/types.ts
index d7dca27bf9..22af0a5737 100644
--- a/packages/core-plugin-api/src/icons/types.ts
+++ b/packages/core-plugin-api/src/icons/types.ts
@@ -32,6 +32,14 @@ import { ComponentType } from 'react';
  *
  * @public
  */
-export type IconComponent = ComponentType<{
-  fontSize?: 'default' | 'small' | 'large';
-}>;
+
+export type IconComponent = ComponentType<
+  /* MUI v4 */
+  | {
+      fontSize?: 'large' | 'small' | 'default';
+    }
+  /* MUI v5: https://mui.com/material-ui/migration/v5-component-changes/#icon */
+  | {
+      fontSize?: 'medium' | 'large' | 'small';
+    }
+>;