diff --git a/cmake/modules/configuration_files.cmake b/cmake/modules/configuration_files.cmake
index e5db53fd088..e539e48f09c 100644
--- a/cmake/modules/configuration_files.cmake
+++ b/cmake/modules/configuration_files.cmake
@@ -11,6 +11,7 @@
 # The following variables will be defined when this CMake module completes:
 #
 # - CONF_FILE:              List of Kconfig fragments
+# - OVERLAY_CONFIG:         List of additional Kconfig fragments
 # - DTC_OVERLAY_FILE:       List of devicetree overlay files
 # - APPLICATION_CONFIG_DIR: Root folder for application configuration
 #
@@ -114,3 +115,5 @@ DTC_OVERLAY_FILE=\"dts1.overlay dts2.overlay\"")
 
 # The DTC_OVERLAY_FILE variable is now set to its final value.
 zephyr_boilerplate_watch(DTC_OVERLAY_FILE)
+
+zephyr_get(OVERLAY_CONFIG SYSBUILD LOCAL)
diff --git a/cmake/modules/kconfig.cmake b/cmake/modules/kconfig.cmake
index 3bcd23d51d7..1b064eedffb 100644
--- a/cmake/modules/kconfig.cmake
+++ b/cmake/modules/kconfig.cmake
@@ -76,7 +76,6 @@ if(CONF_FILE)
   string(REPLACE " " ";" CONF_FILE_AS_LIST "${CONF_FILE_EXPANDED}")
 endif()
 
-zephyr_get(OVERLAY_CONFIG SYSBUILD LOCAL)
 if(OVERLAY_CONFIG)
   string(CONFIGURE "${OVERLAY_CONFIG}" OVERLAY_CONFIG_EXPANDED)
   string(REPLACE " " ";" OVERLAY_CONFIG_AS_LIST "${OVERLAY_CONFIG_EXPANDED}")
diff --git a/share/sysbuild/cmake/modules/sysbuild_kconfig.cmake b/share/sysbuild/cmake/modules/sysbuild_kconfig.cmake
index 5dbf82728a5..f8390877939 100644
--- a/share/sysbuild/cmake/modules/sysbuild_kconfig.cmake
+++ b/share/sysbuild/cmake/modules/sysbuild_kconfig.cmake
@@ -25,7 +25,11 @@ else()
 endif()
 
 if(DEFINED SB_CONF_FILE AND NOT IS_ABSOLUTE SB_CONF_FILE)
-  cmake_path(ABSOLUTE_PATH SB_CONF_FILE BASE_DIRECTORY ${APP_DIR} OUTPUT_VARIABLE SB_CONF_FILE)
+  cmake_path(ABSOLUTE_PATH SB_CONF_FILE BASE_DIRECTORY ${APP_DIR})
+endif()
+
+if(DEFINED SB_OVERLAY_CONFIG AND NOT IS_ABSOLUTE SB_OVERLAY_CONFIG)
+  cmake_path(ABSOLUTE_PATH SB_OVERLAY_CONFIG BASE_DIRECTORY ${APP_DIR})
 endif()
 
 if(DEFINED SB_CONF_FILE AND NOT DEFINED CACHE{SB_CONF_FILE})
@@ -48,6 +52,7 @@ file(TOUCH ${CMAKE_CURRENT_BINARY_DIR}/empty.conf)
 set(APPLICATION_SOURCE_DIR ${CMAKE_CURRENT_SOURCE_DIR})
 set(AUTOCONF_H             ${CMAKE_CURRENT_BINARY_DIR}/autoconf.h)
 set(CONF_FILE              ${SB_CONF_FILE})
+set(OVERLAY_CONFIG         "${SB_OVERLAY_CONFIG}")
 set(BOARD_DEFCONFIG        "${CMAKE_CURRENT_BINARY_DIR}/empty.conf")
 if(DEFINED BOARD_REVISION)
   set(BOARD_REVISION_CONFIG "${CMAKE_CURRENT_BINARY_DIR}/empty.conf")