diff --git a/changelog/62670.fixed b/changelog/62670.fixed
new file mode 100644
index 00000000000..2fdcb6b8b84
--- /dev/null
+++ b/changelog/62670.fixed
@@ -0,0 +1 @@
+Fixed pdbedit.create trying to use a bytes-like hash as string.
diff --git a/salt/modules/pdbedit.py b/salt/modules/pdbedit.py
index b3fb15f8275..e35283eb08e 100644
--- a/salt/modules/pdbedit.py
+++ b/salt/modules/pdbedit.py
@@ -203,7 +203,7 @@ def create(login, password, password_hashed=False, machine_account=False):
         password_hash = password.upper()
         password = ""  # wipe password
     else:
-        password_hash = generate_nt_hash(password)
+        password_hash = generate_nt_hash(password).decode("ascii")
 
     # create user
     if login not in list_users(False):
diff --git a/tests/pytests/unit/modules/test_pdbedit.py b/tests/pytests/unit/modules/test_pdbedit.py
index a132a4b5128..9f6d77462f0 100644
--- a/tests/pytests/unit/modules/test_pdbedit.py
+++ b/tests/pytests/unit/modules/test_pdbedit.py
@@ -1,3 +1,4 @@
+import hashlib
 from textwrap import dedent
 
 import pytest
@@ -5,6 +6,12 @@ import pytest
 import salt.modules.pdbedit as pdbedit
 from tests.support.mock import MagicMock, patch
 
+try:
+    hashlib.new("md4", "".encode("utf-16le"))
+    MD4_SUPPORTED = True
+except ValueError:
+    MD4_SUPPORTED = False
+
 
 @pytest.fixture
 def configure_loader_modules():
@@ -134,3 +141,17 @@ def test_when_verbose_and_multiple_records_present_data_should_be_correctly_pars
     ):
         actual_data = pdbedit.list_users(verbose=True)
         assert actual_data == expected_data
+
+
+@pytest.mark.skipif(not MD4_SUPPORTED, reason="Requires md4")
+def test_create_with_existing_user_updates_password():
+    with patch(
+        "salt.modules.pdbedit.list_users", MagicMock(return_value=["Foo"])
+    ), patch(
+        "salt.modules.pdbedit.get_user",
+        MagicMock(return_value={"nt hash": "old value"}),
+    ), patch.dict(
+        pdbedit.__salt__, {"cmd.run_all": MagicMock(return_value={"retcode": 0})}
+    ):
+        ret = pdbedit.create("Foo", "secret")
+        assert {"Foo": "updated"} == ret