In some embodiments, a method for automatically and dynamically controlling the power states of physical layer links (PHYs) in a modular information handling system is provided. A chassis manager automatically determines a status of at least one of the chassis manager and a managed chassis module of a modular information handling system. The chassis manager automatically identifies a PHY power down condition based at least on the determined status of at least one of the chassis manager and the managed chassis module, and in response to identifying the power down condition, the chassis manager powers down one or more management link PHYs associated with a management link between the chassis manager and the managed chassis module.