diff --git a/tests/pytorch/attention/test_attention.py b/tests/pytorch/attention/test_attention.py
index 82791084d8..21fccd8fb6 100644
--- a/tests/pytorch/attention/test_attention.py
+++ b/tests/pytorch/attention/test_attention.py
@@ -28,8 +28,10 @@
     _attention_backends,
 )
 from transformer_engine.pytorch.attention.dot_product_attention.utils import (
+    AttentionParams,
     FlashAttentionUtils,
     check_set_window_size,
+    get_attention_backend,
 )
 from transformer_engine.pytorch.attention import RotaryPositionEmbedding
 import transformer_engine.pytorch.cpp_extensions as ext
@@ -322,6 +324,65 @@ def test_dpa_num_splits(dtype, model_configs, model):
     )
 
 
+@pytest.mark.skipif(
+    device_compute_capability not in ((10, 0), (10, 3)),
+    reason="This backend preference applies only to SM100/SM103.",
+)
+@pytest.mark.skipif(
+    not FlashAttentionUtils.is_installed,
+    reason="A supported FlashAttention 2 installation is required.",
+)
+@pytest.mark.skipif(
+    get_cudnn_version() < (9, 0, 0),
+    reason="cuDNN 9.0.0+ is required for THD FusedAttention.",
+)
+def test_thd_dropout_prefers_flash_attention_2(monkeypatch):
+    """THD training with dropout must select FA2 over FusedAttention on SM100/103.
+
+    cuDNN's dropout kernels for this combination are far slower than FA2's and are not on
+    the roadmap, so the choice is made here rather than left to the generic Hopper+ rule
+    that prefers FusedAttention.
+    """
+    # NVTE_FLASH_ATTN_V2 is read separately from NVTE_FLASH_ATTN, so an environment that
+    # disables FA2 on purpose would otherwise reach the availability assertion below.
+    monkeypatch.setenv("NVTE_FLASH_ATTN", "1")
+    monkeypatch.setenv("NVTE_FLASH_ATTN_V2", "1")
+    monkeypatch.setenv("NVTE_FUSED_ATTN", "1")
+
+    attention_params = AttentionParams(
+        qkv_dtype=torch.bfloat16,
+        qkv_layout="thd_thd_thd",
+        batch_size=4,
+        num_heads=16,
+        num_gqa_groups=16,
+        max_seqlen_q=1024,
+        max_seqlen_kv=1024,
+        head_dim_qk=128,
+        head_dim_v=128,
+        attn_mask_type="padding_causal",
+        core_attention_bias_shape=None,
+        attention_dropout=0.1,
+        is_training=True,
+    )
+    (
+        use_flash_attention,
+        flash_attention_backend,
+        use_fused_attention,
+        fused_attention_backend,
+        _,
+        available_backends,
+    ) = get_attention_backend(attention_params)
+
+    # Assert availability first: without both candidates the preference is not exercised.
+    assert available_backends[0], "FlashAttention is unavailable for this configuration"
+    assert available_backends[1], "FusedAttention is unavailable for this configuration"
+
+    assert use_flash_attention
+    assert flash_attention_backend == FlashAttentionUtils.version
+    assert not use_fused_attention
+    assert fused_attention_backend is None
+
+
 # ==============================
 # Flash Attention 4 (FA4) tests
 # ==============================
diff --git a/transformer_engine/pytorch/attention/dot_product_attention/utils.py b/transformer_engine/pytorch/attention/dot_product_attention/utils.py
index 6eb3ce54f1..60cfa54136 100644
--- a/transformer_engine/pytorch/attention/dot_product_attention/utils.py
+++ b/transformer_engine/pytorch/attention/dot_product_attention/utils.py
@@ -1615,8 +1615,23 @@ def _is_fa3_supported(num_heads, num_gqa_groups, head_dim_qk, head_dim_v, qkv_dt
         bool(available_backends[2]),
     )
 
-    # Select FusedAttention for performance
-    if use_flash_attention and use_fused_attention and device_compute_capability >= (9, 0):
+    # Prefer FA2 for THD training with dropout on SM100/103, where FusedAttention has a known
+    # performance issue. At this point use_flash_attention_2 confirms a usable installation.
+    is_slow_fused_thd_dropout = (
+        is_training
+        and qkv_format == "thd"
+        and attention_dropout != 0.0
+        and device_compute_capability in ((10, 0), (10, 3))
+    )
+    if is_slow_fused_thd_dropout and use_flash_attention_2 and use_fused_attention:
+        logger.debug(
+            "Disabling FusedAttention to give FlashAttention 2 preference for THD with dropout"
+            " on SM100/103"
+        )
+        use_fused_attention = False
+        fused_attention_backend = None
+    # Select FusedAttention for performance in all other Hopper+ configurations.
+    elif use_flash_attention and use_fused_attention and device_compute_capability >= (9, 0):
         logger.debug(
             "Disabling FlashAttention to give FusedAttention preference on Hopper+ "
             "for performance reasons"