diff --git a/changelog/64728.fixed.md b/changelog/64728.fixed.md
new file mode 100644
index 00000000000..0d18efed6f3
--- /dev/null
+++ b/changelog/64728.fixed.md
@@ -0,0 +1 @@
+Cloud honors root_dir config settin when determining log file location
diff --git a/salt/config/__init__.py b/salt/config/__init__.py
index 0af8c0c1f46..965da432222 100644
--- a/salt/config/__init__.py
+++ b/salt/config/__init__.py
@@ -2765,7 +2765,7 @@ def cloud_config(
     # prepend root_dir
     prepend_root_dirs = ["cachedir"]
     if "log_file" in opts and urllib.parse.urlparse(opts["log_file"]).scheme == "":
-        prepend_root_dirs.append(opts["log_file"])
+        prepend_root_dirs.append("log_file")
     prepend_root_dir(opts, prepend_root_dirs)
 
     salt.features.setup_features(opts)
diff --git a/tests/pytests/functional/test_config.py b/tests/pytests/functional/test_config.py
index 76d25118f4a..e03a3b42d19 100644
--- a/tests/pytests/functional/test_config.py
+++ b/tests/pytests/functional/test_config.py
@@ -25,3 +25,16 @@ def test_minion_config_type_check(caplog):
         assert msg not in caplog.text
     finally:
         os.remove(path)
+
+
+def test_cloud_config_relative_logfile(tmp_path):
+    root_path = tmp_path
+    config_path = tmp_path / "conf"
+    config_path.mkdir()
+    cloud_config = config_path / "cloud"
+    cloud_config.write_text("")
+    master_config = config_path / "master"
+    master_config = config_path / "master"
+    master_config.write_text(f"root_dir: {root_path}")
+    opts = salt.config.cloud_config(cloud_config)
+    assert opts["log_file"] == str(root_path / "var" / "log" / "salt" / "cloud")