diff --git a/src/lightning_app/CHANGELOG.md b/src/lightning_app/CHANGELOG.md
index 2aa5c7cdd8..5a88748832 100644
--- a/src/lightning_app/CHANGELOG.md
+++ b/src/lightning_app/CHANGELOG.md
@@ -45,7 +45,7 @@ The format is based on [Keep a Changelog](http://keepachangelog.com/en/1.0.0/).
 
 ### Fixed
 
--
+- Resolved a bug where the install command was not installing the latest version of an app/component by default ([#14181](https://github.com/Lightning-AI/lightning/pull/14181))
 
 
 ## [0.5.5] - 2022-08-9
diff --git a/src/lightning_app/cli/cmd_install.py b/src/lightning_app/cli/cmd_install.py
index f15567bd84..8f0e45145e 100644
--- a/src/lightning_app/cli/cmd_install.py
+++ b/src/lightning_app/cli/cmd_install.py
@@ -1,4 +1,3 @@
-import json
 import logging
 import os
 import re
@@ -7,6 +6,7 @@ import subprocess
 import sys
 
 import requests
+from packaging.version import Version
 
 from lightning_app.core.constants import LIGHTNING_APPS_PUBLIC_REGISTRY, LIGHTNING_COMPONENT_PUBLIC_REGISTRY
 
@@ -299,8 +299,8 @@ def _validate_name(name, resource_type, example):
 def _resolve_resource(registry_url, name, version_arg, resource_type):
     gallery_entries = []
     try:
-        url = requests.get(registry_url)
-        data = json.loads(url.text)
+        response = requests.get(registry_url)
+        data = response.json()
 
         if resource_type == "app":
             gallery_entries = [a for a in data["apps"] if a["canDownloadSourceCode"]]
@@ -328,7 +328,7 @@ def _resolve_resource(registry_url, name, version_arg, resource_type):
 
     entry = None
     if version_arg == "latest":
-        entry = entries[-1]
+        entry = max(entries, key=lambda app: Version(app["version"]))
     else:
         for e in entries:
             if e["version"] == version_arg:
diff --git a/tests/tests_app/cli/test_cmd_install.py b/tests/tests_app/cli/test_cmd_install.py
index 2d277ddb77..0139bbc9c5 100644
--- a/tests/tests_app/cli/test_cmd_install.py
+++ b/tests/tests_app/cli/test_cmd_install.py
@@ -212,6 +212,38 @@ def test_version_arg_app(tmpdir):
     assert result.exit_code == 0
 
 
+@mock.patch("lightning_app.cli.cmd_install.subprocess", mock.MagicMock())
+@mock.patch("lightning_app.cli.cmd_install.os.chdir", mock.MagicMock())
+@mock.patch("lightning_app.cli.cmd_install._show_install_app_prompt")
+def test_install_resolve_latest_version(mock_show_install_app_prompt, tmpdir):
+
+    app_name = "lightning/invideo"
+    runner = CliRunner()
+    with mock.patch("lightning_app.cli.cmd_install.requests.get") as get_api_mock:
+        get_api_mock.return_value.json.return_value = {
+            "apps": [
+                {
+                    "canDownloadSourceCode": True,
+                    "version": "0.0.2",
+                    "name": "lightning/invideo",
+                },
+                {
+                    "canDownloadSourceCode": True,
+                    "version": "0.0.4",
+                    "name": "lightning/invideo",
+                },
+                {
+                    "canDownloadSourceCode": True,
+                    "version": "0.0.5",
+                    "name": "another_app",
+                },
+            ]
+        }
+        runner.invoke(lightning_cli.install_app, [app_name, "--yes"])  # no version specified so latest is installed
+        assert mock_show_install_app_prompt.called
+        assert mock_show_install_app_prompt.call_args[0][0]["version"] == "0.0.4"
+
+
 def test_proper_url_parsing():
 
     name = "lightning/invideo"