diff --git a/include/zephyr/bluetooth/bluetooth.h b/include/zephyr/bluetooth/bluetooth.h
index 59689974b87..72c386ae4d6 100644
--- a/include/zephyr/bluetooth/bluetooth.h
+++ b/include/zephyr/bluetooth/bluetooth.h
@@ -231,6 +231,10 @@ int bt_enable(bt_ready_cb_t cb);
  *
  * Disable Bluetooth. Can't be called before bt_enable has completed.
  *
+ * This API will clear all configured identities and keys that are not persistently
+ * stored with @kconfig{CONFIG_BT_SETTINGS}. These can be restored
+ * with settings_load() before reenabling the stack.
+ *
  * Close and release HCI resources. Result is architecture dependent.
  *
  * @return Zero on success or (negative) error code otherwise.
diff --git a/subsys/bluetooth/host/hci_core.c b/subsys/bluetooth/host/hci_core.c
index 1c4a5ca67e1..3f0a32dd094 100644
--- a/subsys/bluetooth/host/hci_core.c
+++ b/subsys/bluetooth/host/hci_core.c
@@ -4233,6 +4233,13 @@ int bt_disable(void)
 	/* Some functions rely on checking this bitfield */
 	memset(bt_dev.supported_commands, 0x00, sizeof(bt_dev.supported_commands));
 
+	/* Reset IDs and corresponding keys. */
+	bt_dev.id_count = 0;
+#if defined(CONFIG_BT_SMP)
+	bt_dev.le.rl_entries = 0;
+	bt_keys_reset();
+#endif
+
 	/* If random address was set up - clear it */
 	bt_addr_le_copy(&bt_dev.random_addr, BT_ADDR_LE_ANY);
 
diff --git a/subsys/bluetooth/host/keys.c b/subsys/bluetooth/host/keys.c
index c8184d7cbb4..6740d43b1cd 100644
--- a/subsys/bluetooth/host/keys.c
+++ b/subsys/bluetooth/host/keys.c
@@ -80,6 +80,11 @@ static bool key_is_in_use(uint8_t id)
 }
 #endif /* CONFIG_BT_KEYS_OVERWRITE_OLDEST */
 
+void bt_keys_reset(void)
+{
+	memset(key_pool, 0, sizeof(key_pool));
+}
+
 struct bt_keys *bt_keys_get_addr(uint8_t id, const bt_addr_le_t *addr)
 {
 	struct bt_keys *keys;
diff --git a/subsys/bluetooth/host/keys.h b/subsys/bluetooth/host/keys.h
index 198b6991ca9..76508e0cf39 100644
--- a/subsys/bluetooth/host/keys.h
+++ b/subsys/bluetooth/host/keys.h
@@ -82,6 +82,12 @@ struct bt_keys {
 #define BT_KEYS_STORAGE_LEN     (sizeof(struct bt_keys) - \
 				 offsetof(struct bt_keys, storage_start))
 
+/** Clears all keys.
+ *
+ * Keys stored in settings are not cleared.
+ */
+void bt_keys_reset(void);
+
 /**
  * @brief Get a call through the callback for each key with the same type
  *
diff --git a/tests/bsim/bluetooth/host/iso/cis/prj.conf b/tests/bsim/bluetooth/host/iso/cis/prj.conf
index 134cd4beed5..8637b14f004 100644
--- a/tests/bsim/bluetooth/host/iso/cis/prj.conf
+++ b/tests/bsim/bluetooth/host/iso/cis/prj.conf
@@ -2,6 +2,7 @@ CONFIG_BT=y
 CONFIG_LOG=y
 CONFIG_ASSERT=y
 CONFIG_BT_SMP=y
+CONFIG_BT_MAX_PAIRED=2
 
 CONFIG_BT_DEVICE_NAME="CIS test"
 
diff --git a/tests/bsim/bluetooth/host/misc/disable/src/main_disable.c b/tests/bsim/bluetooth/host/misc/disable/src/main_disable.c
index d4a6f6d904a..43f9b00af8b 100644
--- a/tests/bsim/bluetooth/host/misc/disable/src/main_disable.c
+++ b/tests/bsim/bluetooth/host/misc/disable/src/main_disable.c
@@ -35,6 +35,62 @@ static void test_disable_main(void)
 	PASS("Disable test passed\n");
 }
 
+static void test_disable_set_default_id(void)
+{
+	/* FIXME: Temporary workaround to get around a bug in the controller.
+	 * The controller gets stuck in the POWER_CLOCK ISR without this.
+	 * See open PR: https://github.com/zephyrproject-rtos/zephyr/pull/73342
+	 * for more details.
+	 */
+	k_sleep(K_MSEC(1));
+
+	for (int i = 0; i < NUM_ITERATIONS; i++) {
+		int err;
+		size_t id_count;
+		bt_addr_le_t stored_id;
+		bt_addr_le_t addr = {.type = BT_ADDR_LE_RANDOM,
+				     .a = {.val = {i, 2, 3, 4, 5, 0xc0}}};
+
+		err = bt_id_create(&addr, NULL);
+		if (err != 0) {
+			FAIL("Creating ID failed (err %d)\n", err);
+		}
+
+		err = bt_enable(NULL);
+		if (err != 0) {
+			FAIL("Enable failed (err %d)\n", err);
+		}
+
+		bt_id_get(NULL, &id_count);
+		if (id_count != 1) {
+			FAIL("Expected only one ID, but got: %u\n", id_count);
+		}
+
+		id_count = 1;
+		bt_id_get(&stored_id, &id_count);
+		if (id_count != 1) {
+			FAIL("Expected only one ID, but got: %u\n", id_count);
+		}
+
+		if (!bt_addr_le_eq(&stored_id, &addr)) {
+			uint8_t addr_set_str[BT_ADDR_LE_STR_LEN];
+			uint8_t addr_stored_str[BT_ADDR_LE_STR_LEN];
+
+			bt_addr_le_to_str(&addr, addr_set_str, BT_ADDR_LE_STR_LEN);
+			bt_addr_le_to_str(&stored_id, addr_stored_str, BT_ADDR_LE_STR_LEN);
+			FAIL("Expected stored ID to be equal to set ID: %s, %s\n",
+			     addr_set_str, addr_stored_str);
+		}
+
+		err = bt_disable();
+		if (err) {
+			FAIL("Enable failed (err %d)\n", err);
+		}
+	}
+
+	PASS("Disable set default ID test passed\n");
+}
+
 static const struct bst_test_instance test_def[] = {
 	{
 		.test_id = "disable",
@@ -43,6 +99,13 @@ static const struct bst_test_instance test_def[] = {
 		.test_tick_f = test_tick,
 		.test_main_f = test_disable_main
 	},
+	{
+		.test_id = "disable_set_default_id",
+		.test_descr = "disable_test where each iteration sets the default ID",
+		.test_pre_init_f = test_init,
+		.test_tick_f = test_tick,
+		.test_main_f = test_disable_set_default_id
+	},
 	BSTEST_END_MARKER
 };
 
diff --git a/tests/bsim/bluetooth/host/misc/disable/tests_scripts/disable_set_default_id.sh b/tests/bsim/bluetooth/host/misc/disable/tests_scripts/disable_set_default_id.sh
new file mode 100755
index 00000000000..437dcdff139
--- /dev/null
+++ b/tests/bsim/bluetooth/host/misc/disable/tests_scripts/disable_set_default_id.sh
@@ -0,0 +1,20 @@
+#!/usr/bin/env bash
+# Copyright (c) 2022 Nordic Semiconductor
+# SPDX-License-Identifier: Apache-2.0
+
+source ${ZEPHYR_BASE}/tests/bsim/sh_common.source
+
+# Disable test: bt_enable and bt_disable are called in a loop.
+# Each iteration the default ID is updated
+simulation_id="disable_test_set_default_id"
+verbosity_level=2
+
+cd ${BSIM_OUT_PATH}/bin
+
+Execute ./bs_${BOARD_TS}_tests_bsim_bluetooth_host_misc_disable_prj_conf \
+  -v=${verbosity_level} -s=${simulation_id} -d=0 -testid=disable_set_default_id
+
+Execute ./bs_2G4_phy_v1 -v=${verbosity_level} -s=${simulation_id} \
+  -D=1 -sim_length=10e6 $@
+
+wait_for_background_jobs