diff --git a/subsys/settings/src/settings_file.c b/subsys/settings/src/settings_file.c
index 43dcd1004f580..a056e969fb911 100644
--- a/subsys/settings/src/settings_file.c
+++ b/subsys/settings/src/settings_file.c
@@ -539,18 +539,23 @@ static int mkdir_for_file(const char *file_path)
 		if (i > 0 && file_path[i] == '/') {
 			dir_path[i] = '\0';
 
-			err = mkdir_if_not_exists(dir_path);
-			if (err) {
-				return err;
+			/* Skip mkdir for FatFS root directories (ending with ':') */
+			if (strrchr(dir_path, ':') == &dir_path[strlen(dir_path) - 1]) {
+				LOG_DBG("FatFS root directory detected, skipping mkdir for path: ""%s", dir_path);
+			} else {
+				err = mkdir_if_not_exists(dir_path);
+				if (err) {
+					return err;
+				}
 			}
 		}
-
 		dir_path[i] = file_path[i];
 	}
 
 	return 0;
 }
 
+
 int settings_backend_init(void)
 {
 	static struct settings_file config_init_settings_file = {