diff --git a/modules/nanopb/nanopb.cmake b/modules/nanopb/nanopb.cmake
index 5158090aae9..c57f89c6ed8 100644
--- a/modules/nanopb/nanopb.cmake
+++ b/modules/nanopb/nanopb.cmake
@@ -4,6 +4,7 @@
 
 include_guard(GLOBAL)
 
+set(NANOPB_SRC_ROOT_FOLDER ${ZEPHYR_NANOPB_MODULE_DIR})
 list(APPEND CMAKE_MODULE_PATH ${ZEPHYR_NANOPB_MODULE_DIR}/extra)
 
 find_package(Nanopb REQUIRED)
diff --git a/submanifests/optional.yaml b/submanifests/optional.yaml
index 1e278cc8f6d..82007d5ae26 100644
--- a/submanifests/optional.yaml
+++ b/submanifests/optional.yaml
@@ -22,7 +22,7 @@ manifest:
       groups:
         - optional
     - name: nanopb
-      revision: f6187b05a5eaf753faa0e29a5acd77dd0544d474
+      revision: 7f88274070afa5edfaf608f4d8e32f3d3c1de139
       path: modules/lib/nanopb
       remote: upstream
       groups: