diff --git a/cmake/modules/extensions.cmake b/cmake/modules/extensions.cmake
index 20dc01cbb38..52bb28b0b47 100644
--- a/cmake/modules/extensions.cmake
+++ b/cmake/modules/extensions.cmake
@@ -2534,6 +2534,8 @@ endfunction()
 #                          to absolute path, relative from `APPLICATION_SOURCE_DIR`
 #                          Issue an error for any relative path not specified
 #                          by user with `-D<path>`
+#                          BASE_DIR <base-dir>: convert paths relative to <base-dir>
+#                                               instead of `APPLICATION_SOURCE_DIR`
 #
 # returns an updated list of absolute paths
 #
@@ -2587,7 +2589,7 @@ Please provide one of following: APPLICATION_ROOT, CONF_FILES")
   endif()
 
   if(${ARGV0} STREQUAL APPLICATION_ROOT)
-    set(single_args APPLICATION_ROOT)
+    set(single_args APPLICATION_ROOT BASE_DIR)
   elseif(${ARGV0} STREQUAL CONF_FILES)
     set(options QUALIFIERS REQUIRED)
     set(single_args BOARD BOARD_REVISION BOARD_QUALIFIERS DTS KCONF DEFCONFIG BUILD SUFFIX)
@@ -2600,6 +2602,10 @@ Please provide one of following: APPLICATION_ROOT, CONF_FILES")
   endif()
 
   if(ZFILE_APPLICATION_ROOT)
+    if(NOT DEFINED ZFILE_BASE_DIR)
+      set(ZFILE_BASE_DIR ${APPLICATION_SOURCE_DIR})
+    endif()
+
     # Note: user can do: `-D<var>=<relative-path>` and app can at same
     # time specify `list(APPEND <var> <abs-path>)`
     # Thus need to check and update only CACHED variables (-D<var>).
@@ -2610,7 +2616,7 @@ Please provide one of following: APPLICATION_ROOT, CONF_FILES")
       # path from  `APPLICATION_SOURCE_DIR`.
       if(NOT IS_ABSOLUTE ${path})
         list(FIND ${ZFILE_APPLICATION_ROOT} ${path} index)
-	cmake_path(ABSOLUTE_PATH path BASE_DIRECTORY ${APPLICATION_SOURCE_DIR} NORMALIZE)
+        cmake_path(ABSOLUTE_PATH path BASE_DIRECTORY ${ZFILE_BASE_DIR} NORMALIZE)
         if(NOT ${index} LESS 0)
           list(REMOVE_AT ${ZFILE_APPLICATION_ROOT} ${index})
           list(INSERT ${ZFILE_APPLICATION_ROOT} ${index} ${path})
@@ -2630,7 +2636,7 @@ Relative paths are only allowed with `-D${ARGV1}=<path>`")
       endif()
     endforeach()
 
-    list(REMOVE_DUPLICATES ZFILE_APPLICATION_ROOT)
+    list(REMOVE_DUPLICATES ${ZFILE_APPLICATION_ROOT})
     # This updates the provided argument in parent scope (callers scope)
     set(${ZFILE_APPLICATION_ROOT} ${${ZFILE_APPLICATION_ROOT}} PARENT_SCOPE)
   endif()
diff --git a/cmake/modules/root.cmake b/cmake/modules/root.cmake
index 0f4d5e1437b..e14b853831f 100644
--- a/cmake/modules/root.cmake
+++ b/cmake/modules/root.cmake
@@ -12,6 +12,7 @@
 # - SOC_ROOT:        CMake list of SoC roots containing SoC implementations
 # - BOARD_ROOT:      CMake list of board roots containing board and shield implementations
 # - MODULE_EXT_ROOT: CMake list of module external roots containing module glue code
+# - SCA_ROOT:        CMake list of SCA roots containing static code analysis integration code
 #
 # If a root is defined it will check the list of paths in the root and convert
 # any relative path to absolute path and update the root list.
diff --git a/share/sysbuild/cmake/modules/sysbuild_default.cmake b/share/sysbuild/cmake/modules/sysbuild_default.cmake
index 6bcf714de95..66ffb7374b3 100644
--- a/share/sysbuild/cmake/modules/sysbuild_default.cmake
+++ b/share/sysbuild/cmake/modules/sysbuild_default.cmake
@@ -9,7 +9,7 @@ include(extensions)
 include(sysbuild_extensions)
 include(python)
 include(west)
-include(root)
+include(sysbuild_root)
 include(zephyr_module)
 include(boards)
 include(shields)
diff --git a/share/sysbuild/cmake/modules/sysbuild_extensions.cmake b/share/sysbuild/cmake/modules/sysbuild_extensions.cmake
index 28d08cc5857..c20fcdb1e51 100644
--- a/share/sysbuild/cmake/modules/sysbuild_extensions.cmake
+++ b/share/sysbuild/cmake/modules/sysbuild_extensions.cmake
@@ -460,16 +460,6 @@ function(ExternalZephyrProject_Cmake)
                PROPERTY IMAGE_CONF_SCRIPT
   )
 
-  # Update ROOT variables with relative paths to use absolute paths based on
-  # the source application directory.
-  foreach(type MODULE_EXT BOARD SOC ARCH SCA)
-    if(DEFINED CACHE{${type}_ROOT} AND NOT IS_ABSOLUTE $CACHE{${type}_ROOT})
-      set(rel_path $CACHE{${type}_ROOT})
-      cmake_path(ABSOLUTE_PATH rel_path BASE_DIRECTORY "${APP_DIR}" NORMALIZE OUTPUT_VARIABLE abs_path)
-      set(${type}_ROOT ${abs_path} CACHE PATH "Sysbuild adjusted absolute path" FORCE)
-    endif()
-  endforeach()
-
   sysbuild_cache(CREATE APPLICATION ${ZCMAKE_APPLICATION})
 
   foreach(script ${${ZCMAKE_APPLICATION}_CONF_SCRIPT})
diff --git a/share/sysbuild/cmake/modules/sysbuild_root.cmake b/share/sysbuild/cmake/modules/sysbuild_root.cmake
new file mode 100644
index 00000000000..ca9f37238cf
--- /dev/null
+++ b/share/sysbuild/cmake/modules/sysbuild_root.cmake
@@ -0,0 +1,63 @@
+# SPDX-License-Identifier: Apache-2.0
+#
+# Copyright (c) 2024, Nordic Semiconductor ASA
+
+# Convert Zephyr roots to absolute paths to be used by sysbuild.
+#
+# This CMake module will convert all relative paths in existing ROOT lists to
+# absolute path relative from APP_DIR.
+#
+# Optional variables:
+# - ARCH_ROOT:       CMake list of arch roots containing arch implementations
+# - SOC_ROOT:        CMake list of SoC roots containing SoC implementations
+# - BOARD_ROOT:      CMake list of board roots containing board and shield implementations
+# - MODULE_EXT_ROOT: CMake list of module external roots containing module glue code
+# - SCA_ROOT:        CMake list of SCA roots containing static code analysis integration code
+#
+# If a root is defined it will check the list of paths in the root and convert
+# any relative path to absolute path and update the root list.
+# If a root is undefined it will still be undefined when this module has loaded.
+#
+# Converted paths are placed in the CMake cache so that they are propagated
+# correctly to image builds.
+
+include_guard(GLOBAL)
+
+include(extensions)
+
+# Merge in variables from other sources
+zephyr_get(MODULE_EXT_ROOT MERGE)
+zephyr_get(BOARD_ROOT MERGE)
+zephyr_get(SOC_ROOT MERGE)
+zephyr_get(ARCH_ROOT MERGE)
+zephyr_get(SCA_ROOT MERGE)
+
+# Convert paths to absolute, relative from APP_DIR
+zephyr_file(APPLICATION_ROOT MODULE_EXT_ROOT BASE_DIR ${APP_DIR})
+zephyr_file(APPLICATION_ROOT BOARD_ROOT BASE_DIR ${APP_DIR})
+zephyr_file(APPLICATION_ROOT SOC_ROOT BASE_DIR ${APP_DIR})
+zephyr_file(APPLICATION_ROOT ARCH_ROOT BASE_DIR ${APP_DIR})
+zephyr_file(APPLICATION_ROOT SCA_ROOT BASE_DIR ${APP_DIR})
+
+# Sysbuild must ensure any locally defined variables in sysbuild/CMakeLists.txt
+# have been added to the cache in order for the settings to propagate to images.
+# note: zephyr_file has removed any list duplicates
+if(DEFINED MODULE_EXT_ROOT)
+  set(MODULE_EXT_ROOT ${MODULE_EXT_ROOT} CACHE PATH "Sysbuild adjusted MODULE_EXT_ROOT" FORCE)
+endif()
+
+if(DEFINED BOARD_ROOT)
+  set(BOARD_ROOT ${BOARD_ROOT} CACHE PATH "Sysbuild adjusted BOARD_ROOT" FORCE)
+endif()
+
+if(DEFINED SOC_ROOT)
+  set(SOC_ROOT ${SOC_ROOT} CACHE PATH "Sysbuild adjusted SOC_ROOT" FORCE)
+endif()
+
+if(DEFINED ARCH_ROOT)
+  set(ARCH_ROOT ${ARCH_ROOT} CACHE PATH "Sysbuild adjusted ARCH_ROOT" FORCE)
+endif()
+
+if(DEFINED SCA_ROOT)
+  set(SCA_ROOT ${SCA_ROOT} CACHE PATH "Sysbuild adjusted SCA_ROOT" FORCE)
+endif()