diff --git a/share/sysbuild/CMakeLists.txt b/share/sysbuild/CMakeLists.txt
index f856b99411ef5a..8370490fb94766 100644
--- a/share/sysbuild/CMakeLists.txt
+++ b/share/sysbuild/CMakeLists.txt
@@ -21,7 +21,7 @@ if(NOT DEFINED APPLICATION_BINARY_DIR)
 endif()
 
 if(EXISTS ${APP_DIR}/sysbuild/CMakeLists.txt)
-  add_subdirectory(${APP_DIR}/sysbuild sysbuild/application)
+  add_subdirectory(${APP_DIR}/sysbuild _sysbuild)
 else()
-  add_subdirectory(template sysbuild/application)
+  add_subdirectory(template _sysbuild)
 endif()