diff --git a/drivers/sensor/bosch/bmp581/bmp581.c b/drivers/sensor/bosch/bmp581/bmp581.c
index 8d36b8e846513..f556a94af5133 100644
--- a/drivers/sensor/bosch/bmp581/bmp581.c
+++ b/drivers/sensor/bosch/bmp581/bmp581.c
@@ -405,11 +405,17 @@ static int bmp581_sample_fetch(const struct device *dev, enum sensor_channel cha
 
 	ret = bmp581_reg_read_rtio(&conf->bus, BMP5_REG_TEMP_DATA_XLSB, data, 6);
 	if (ret == BMP5_OK) {
-		/* convert raw sensor data to sensor_value. Shift the decimal part by 1 decimal
-		 * place to compensate for the conversion in sensor_value_to_double()
+		/* convert raw sensor data to sensor_value.
+		 * BMP581 temperature data is 24-bit signed with LSB = 1/65536 °C
 		 */
-		drv->last_sample.temperature.val1 = data[2];
-		drv->last_sample.temperature.val2 = (data[1] << 8 | data[0]) * 10;
+		int32_t raw_temp = ((int32_t)((uint32_t)(((uint32_t)data[2] << 16) |
+							 ((uint16_t)data[1] << 8) | data[0])
+					      << 8) >>
+				    8);
+
+		/* Convert raw temperature: LSB = 1/65536 °C, val2 in millionths */
+		drv->last_sample.temperature.val1 = raw_temp / 65536;
+		drv->last_sample.temperature.val2 = ((int64_t)(raw_temp % 65536) * 1000000) / 65536;
 
 		if (drv->osr_odr_press_config.press_en == BMP5_ENABLE) {
 			/* convert raw sensor data to sensor_value. Shift the decimal part by