diff --git a/.changeset/loud-wombats-cross.md b/.changeset/loud-wombats-cross.md
new file mode 100644
index 0000000000000..5b2506394df3b
--- /dev/null
+++ b/.changeset/loud-wombats-cross.md
@@ -0,0 +1,6 @@
+---
+'@rocket.chat/meteor': patch
+---
+
+Fixes an issue where the Encrypted toggle in the `Create Channel Modal` would change unexpectedly or become disabled after switching the Private or Broadcast options when E2E defaults are enabled.
+
diff --git a/apps/meteor/client/NavBarV2/NavBarPagesGroup/actions/CreateChannelModal.spec.tsx b/apps/meteor/client/NavBarV2/NavBarPagesGroup/actions/CreateChannelModal.spec.tsx
new file mode 100644
index 0000000000000..81603cdeeca54
--- /dev/null
+++ b/apps/meteor/client/NavBarV2/NavBarPagesGroup/actions/CreateChannelModal.spec.tsx
@@ -0,0 +1,8 @@
+import { testCreateChannelModal } from './testCreateChannelModal';
+import CreateChannelModalComponent from '../../../sidebar/header/CreateChannel';
+
+jest.mock('../../../lib/utils/goToRoomById', () => ({
+	goToRoomById: jest.fn(),
+}));
+
+testCreateChannelModal(CreateChannelModalComponent);
diff --git a/apps/meteor/client/NavBarV2/NavBarPagesGroup/actions/CreateChannelModal.tsx b/apps/meteor/client/NavBarV2/NavBarPagesGroup/actions/CreateChannelModal.tsx
index 66a36866c9d29..bc3b71fcbfcfc 100644
--- a/apps/meteor/client/NavBarV2/NavBarPagesGroup/actions/CreateChannelModal.tsx
+++ b/apps/meteor/client/NavBarV2/NavBarPagesGroup/actions/CreateChannelModal.tsx
@@ -107,23 +107,23 @@ const CreateChannelModal = ({ teamId = '', onClose, reload }: CreateChannelModal
 	const { isPrivate, broadcast, readOnly, federated, encrypted } = watch();
 
 	useEffect(() => {
-		if (!isPrivate) {
-			setValue('encrypted', false);
-		}
-
-		if (broadcast) {
-			setValue('encrypted', false);
-		}
-
 		if (federated) {
 			// if room is federated, it cannot be encrypted or broadcast or readOnly
 			setValue('encrypted', false);
 			setValue('broadcast', false);
 			setValue('readOnly', false);
 		}
+	}, [federated, setValue]);
 
+	useEffect(() => {
+		if (!isPrivate) {
+			setValue('encrypted', false);
+		}
+	}, [isPrivate, setValue]);
+
+	useEffect(() => {
 		setValue('readOnly', broadcast);
-	}, [federated, setValue, broadcast, isPrivate]);
+	}, [broadcast, setValue]);
 
 	const validateChannelName = async (name: string): Promise<string | undefined> => {
 		if (!name) {
@@ -173,10 +173,7 @@ const CreateChannelModal = ({ teamId = '', onClose, reload }: CreateChannelModal
 		}
 	};
 
-	const e2eDisabled = useMemo<boolean>(
-		() => !isPrivate || broadcast || Boolean(!e2eEnabled) || Boolean(e2eEnabledForPrivateByDefault),
-		[e2eEnabled, e2eEnabledForPrivateByDefault, broadcast, isPrivate],
-	);
+	const e2eDisabled = useMemo<boolean>(() => !isPrivate || Boolean(!e2eEnabled) || federated, [e2eEnabled, federated, isPrivate]);
 
 	const createChannelFormId = useId();
 	const nameId = useId();
@@ -276,13 +273,16 @@ const CreateChannelModal = ({ teamId = '', onClose, reload }: CreateChannelModal
 							</Box>
 							<Field>
 								<FieldRow>
-									<FieldLabel htmlFor={federatedId}>{t('Federation_Matrix_Federated')}</FieldLabel>
+									<FieldLabel htmlFor={federatedId} id={`${federatedId}-label`}>
+										{t('Federation_Matrix_Federated')}
+									</FieldLabel>
 									<Controller
 										control={control}
 										name='federated'
 										render={({ field: { onChange, value, ref } }): ReactElement => (
 											<ToggleSwitch
 												aria-describedby={`${federatedId}-hint`}
+												aria-labelledby={`${federatedId}-label`}
 												id={federatedId}
 												ref={ref}
 												checked={value}
@@ -296,7 +296,9 @@ const CreateChannelModal = ({ teamId = '', onClose, reload }: CreateChannelModal
 							</Field>
 							<Field>
 								<FieldRow>
-									<FieldLabel htmlFor={encryptedId}>{t('Encrypted')}</FieldLabel>
+									<FieldLabel htmlFor={encryptedId} id={`${encryptedId}-label`}>
+										{t('Encrypted')}
+									</FieldLabel>
 									<Controller
 										control={control}
 										name='encrypted'
@@ -305,10 +307,10 @@ const CreateChannelModal = ({ teamId = '', onClose, reload }: CreateChannelModal
 												id={encryptedId}
 												ref={ref}
 												checked={value}
-												disabled={e2eDisabled || federated}
+												disabled={e2eDisabled}
 												onChange={onChange}
 												aria-describedby={`${encryptedId}-hint`}
-												aria-labelledby='Encrypted_channel_Label'
+												aria-labelledby={`${encryptedId}-label`}
 											/>
 										)}
 									/>
@@ -317,7 +319,9 @@ const CreateChannelModal = ({ teamId = '', onClose, reload }: CreateChannelModal
 							</Field>
 							<Field>
 								<FieldRow>
-									<FieldLabel htmlFor={readOnlyId}>{t('Read_only')}</FieldLabel>
+									<FieldLabel htmlFor={readOnlyId} id={`${readOnlyId}-label`}>
+										{t('Read_only')}
+									</FieldLabel>
 									<Controller
 										control={control}
 										name='readOnly'
@@ -325,6 +329,7 @@ const CreateChannelModal = ({ teamId = '', onClose, reload }: CreateChannelModal
 											<ToggleSwitch
 												id={readOnlyId}
 												aria-describedby={`${readOnlyId}-hint`}
+												aria-labelledby={`${readOnlyId}-label`}
 												ref={ref}
 												checked={value}
 												disabled={!canSetReadOnly || broadcast || federated}
@@ -339,13 +344,16 @@ const CreateChannelModal = ({ teamId = '', onClose, reload }: CreateChannelModal
 							</Field>
 							<Field>
 								<FieldRow>
-									<FieldLabel htmlFor={broadcastId}>{t('Broadcast')}</FieldLabel>
+									<FieldLabel htmlFor={broadcastId} id={`${broadcastId}-label`}>
+										{t('Broadcast')}
+									</FieldLabel>
 									<Controller
 										control={control}
 										name='broadcast'
 										render={({ field: { onChange, value, ref } }): ReactElement => (
 											<ToggleSwitch
 												aria-describedby={`${broadcastId}-hint`}
+												aria-labelledby={`${broadcastId}-label`}
 												id={broadcastId}
 												ref={ref}
 												checked={value}
diff --git a/apps/meteor/client/NavBarV2/NavBarPagesGroup/actions/testCreateChannelModal.tsx b/apps/meteor/client/NavBarV2/NavBarPagesGroup/actions/testCreateChannelModal.tsx
new file mode 100644
index 0000000000000..e2971bd6fa36b
--- /dev/null
+++ b/apps/meteor/client/NavBarV2/NavBarPagesGroup/actions/testCreateChannelModal.tsx
@@ -0,0 +1,179 @@
+import { mockAppRoot } from '@rocket.chat/mock-providers';
+import { render, screen } from '@testing-library/react';
+import userEvent from '@testing-library/user-event';
+
+import type CreateChannelModal2Component from './CreateChannelModal';
+import type CreateChannelModalComponent from '../../../sidebar/header/CreateChannel';
+
+// eslint-disable-next-line @typescript-eslint/naming-convention
+export function testCreateChannelModal(CreateChannelModal: typeof CreateChannelModalComponent | typeof CreateChannelModal2Component) {
+	describe('CreateChannelModal', () => {
+		it('should render with encryption option disabled and set to off when E2E_Enable=false and E2E_Enabled_Default_PrivateRooms=false', async () => {
+			render(<CreateChannelModal onClose={() => null} />, {
+				wrapper: mockAppRoot().withSetting('E2E_Enable', false).withSetting('E2E_Enabled_Default_PrivateRooms', false).build(),
+			});
+
+			await userEvent.click(screen.getByText('Advanced_settings'));
+
+			const encrypted = screen.getByLabelText('Encrypted') as HTMLInputElement;
+			expect(encrypted).toBeInTheDocument();
+			expect(encrypted).not.toBeChecked();
+			expect(encrypted).toBeDisabled();
+		});
+
+		it('should render with encryption option enabled and set to off when E2E_Enable=true and E2E_Enabled_Default_PrivateRooms=false', async () => {
+			render(<CreateChannelModal onClose={() => null} />, {
+				wrapper: mockAppRoot().withSetting('E2E_Enable', true).withSetting('E2E_Enabled_Default_PrivateRooms', false).build(),
+			});
+
+			await userEvent.click(screen.getByText('Advanced_settings'));
+
+			const encrypted = screen.getByLabelText('Encrypted') as HTMLInputElement;
+			expect(encrypted).toBeInTheDocument();
+			expect(encrypted).not.toBeChecked();
+			expect(encrypted).toBeEnabled();
+		});
+
+		it('should render with encryption option disabled and set to off when E2E_Enable=false and E2E_Enabled_Default_PrivateRooms=true', async () => {
+			render(<CreateChannelModal onClose={() => null} />, {
+				wrapper: mockAppRoot().withSetting('E2E_Enable', false).withSetting('E2E_Enabled_Default_PrivateRooms', true).build(),
+			});
+
+			await userEvent.click(screen.getByText('Advanced_settings'));
+
+			const encrypted = screen.getByLabelText('Encrypted') as HTMLInputElement;
+			expect(encrypted).toBeInTheDocument();
+
+			expect(encrypted).not.toBeChecked();
+			expect(encrypted).toBeDisabled();
+		});
+
+		it('should render with encryption option enabled and set to on when E2E_Enable=true and E2E_Enabled_Default_PrivateRooms=True', async () => {
+			render(<CreateChannelModal onClose={() => null} />, {
+				wrapper: mockAppRoot().withSetting('E2E_Enable', true).withSetting('E2E_Enabled_Default_PrivateRooms', true).build(),
+			});
+
+			await userEvent.click(screen.getByText('Advanced_settings'));
+
+			const encrypted = screen.getByLabelText('Encrypted') as HTMLInputElement;
+			expect(encrypted).toBeChecked();
+			expect(encrypted).toBeEnabled();
+		});
+
+		it('when Private goes ON → OFF: forces Encrypted OFF and disables it (E2E_Enable=true, E2E_Enabled_Default_PrivateRooms=true)', async () => {
+			render(<CreateChannelModal onClose={() => null} />, {
+				wrapper: mockAppRoot().withSetting('E2E_Enable', true).withSetting('E2E_Enabled_Default_PrivateRooms', true).build(),
+			});
+
+			await userEvent.click(screen.getByText('Advanced_settings'));
+
+			const encrypted = screen.getByLabelText('Encrypted') as HTMLInputElement;
+			const priv = screen.getByLabelText('Private') as HTMLInputElement;
+
+			// initial: private=true, encrypted ON and enabled
+			expect(priv).toBeChecked();
+			expect(encrypted).toBeChecked();
+			expect(encrypted).toBeEnabled();
+
+			// Private ON -> OFF: encrypted must become OFF and disabled
+			await userEvent.click(priv);
+			expect(priv).not.toBeChecked();
+			expect(encrypted).not.toBeChecked();
+			expect(encrypted).toBeDisabled();
+		});
+
+		it('when Private goes OFF → ON: keeps Encrypted OFF but re-enables it (E2E_Enable=true, E2E_Enabled_Default_PrivateRooms=true)', async () => {
+			render(<CreateChannelModal onClose={() => null} />, {
+				wrapper: mockAppRoot().withSetting('E2E_Enable', true).withSetting('E2E_Enabled_Default_PrivateRooms', true).build(),
+			});
+
+			await userEvent.click(screen.getByText('Advanced_settings'));
+
+			const encrypted = screen.getByLabelText('Encrypted') as HTMLInputElement;
+			const priv = screen.getByLabelText('Private') as HTMLInputElement;
+
+			// turn private OFF to simulate user path from non-private
+			await userEvent.click(priv);
+			expect(priv).not.toBeChecked();
+			expect(encrypted).not.toBeChecked();
+			expect(encrypted).toBeDisabled();
+
+			// turn private back ON -> encrypted should remain OFF but become enabled
+			await userEvent.click(priv);
+			expect(priv).toBeChecked();
+			expect(encrypted).not.toBeChecked();
+			expect(encrypted).toBeEnabled();
+		});
+
+		it('private room: toggling Broadcast on/off does not change or disable Encrypted', async () => {
+			render(<CreateChannelModal onClose={() => null} />, {
+				wrapper: mockAppRoot().withSetting('E2E_Enable', true).withSetting('E2E_Enabled_Default_PrivateRooms', true).build(),
+			});
+
+			await userEvent.click(screen.getByText('Advanced_settings'));
+
+			const encrypted = screen.getByLabelText('Encrypted') as HTMLInputElement;
+			const broadcast = screen.getByLabelText('Broadcast') as HTMLInputElement;
+			const priv = screen.getByLabelText('Private') as HTMLInputElement;
+
+			expect(priv).toBeChecked();
+			expect(encrypted).toBeChecked();
+			expect(encrypted).toBeEnabled();
+			expect(broadcast).not.toBeChecked();
+
+			// Broadcast: OFF -> ON (Encrypted unchanged + enabled)
+			await userEvent.click(broadcast);
+			expect(broadcast).toBeChecked();
+			expect(encrypted).toBeChecked();
+			expect(encrypted).toBeEnabled();
+
+			// Broadcast: ON -> OFF (Encrypted unchanged + enabled)
+			await userEvent.click(broadcast);
+			expect(broadcast).not.toBeChecked();
+			expect(encrypted).toBeChecked();
+			expect(encrypted).toBeEnabled();
+
+			// User can still toggle Encrypted freely while Broadcast is OFF
+			await userEvent.click(encrypted);
+			expect(encrypted).not.toBeChecked();
+
+			// User can still toggle Encrypted freely while Broadcast is ON
+			await userEvent.click(broadcast);
+			expect(broadcast).toBeChecked();
+			expect(encrypted).not.toBeChecked();
+			expect(encrypted).toBeEnabled();
+		});
+
+		it('non-private room: Encrypted remains OFF and disabled regardless of Broadcast state', async () => {
+			render(<CreateChannelModal onClose={() => null} />, {
+				wrapper: mockAppRoot().withSetting('E2E_Enable', true).withSetting('E2E_Enabled_Default_PrivateRooms', true).build(),
+			});
+
+			await userEvent.click(screen.getByText('Advanced_settings'));
+
+			const encrypted = screen.getByLabelText('Encrypted') as HTMLInputElement;
+			const broadcast = screen.getByLabelText('Broadcast') as HTMLInputElement;
+			const priv = screen.getByLabelText('Private') as HTMLInputElement;
+
+			// Switch to non-private
+			await userEvent.click(priv);
+			expect(priv).not.toBeChecked();
+
+			// Encrypted must be OFF + disabled (non-private cannot be encrypted)
+			expect(encrypted).not.toBeChecked();
+			expect(encrypted).toBeDisabled();
+
+			// Broadcast: OFF -> ON (Encrypted stays OFF + disabled)
+			await userEvent.click(broadcast);
+			expect(broadcast).toBeChecked();
+			expect(encrypted).not.toBeChecked();
+			expect(encrypted).toBeDisabled();
+
+			// Broadcast: ON -> OFF (Encrypted still OFF + disabled)
+			await userEvent.click(broadcast);
+			expect(broadcast).not.toBeChecked();
+			expect(encrypted).not.toBeChecked();
+			expect(encrypted).toBeDisabled();
+		});
+	});
+}
diff --git a/apps/meteor/client/sidebar/header/CreateChannel/CreateChannelModal.spec.tsx b/apps/meteor/client/sidebar/header/CreateChannel/CreateChannelModal.spec.tsx
new file mode 100644
index 0000000000000..8c979f0a59b3e
--- /dev/null
+++ b/apps/meteor/client/sidebar/header/CreateChannel/CreateChannelModal.spec.tsx
@@ -0,0 +1,8 @@
+import CreateChannelModal from './CreateChannelModal';
+import { testCreateChannelModal } from '../../../NavBarV2/NavBarPagesGroup/actions/testCreateChannelModal';
+
+jest.mock('../../../lib/utils/goToRoomById', () => ({
+	goToRoomById: jest.fn(),
+}));
+
+testCreateChannelModal(CreateChannelModal);
diff --git a/apps/meteor/client/sidebar/header/CreateChannel/CreateChannelModal.tsx b/apps/meteor/client/sidebar/header/CreateChannel/CreateChannelModal.tsx
index 42e9032d9dc78..1fe7b6bafe37c 100644
--- a/apps/meteor/client/sidebar/header/CreateChannel/CreateChannelModal.tsx
+++ b/apps/meteor/client/sidebar/header/CreateChannel/CreateChannelModal.tsx
@@ -109,23 +109,23 @@ const CreateChannelModal = ({ teamId = '', mainRoom, onClose, reload }: CreateCh
 	const { isPrivate, broadcast, readOnly, federated, encrypted } = watch();
 
 	useEffect(() => {
-		if (!isPrivate) {
-			setValue('encrypted', false);
-		}
-
-		if (broadcast) {
-			setValue('encrypted', false);
-		}
-
 		if (federated) {
 			// if room is federated, it cannot be encrypted or broadcast or readOnly
 			setValue('encrypted', false);
 			setValue('broadcast', false);
 			setValue('readOnly', false);
 		}
+	}, [federated, setValue]);
 
+	useEffect(() => {
+		if (!isPrivate) {
+			setValue('encrypted', false);
+		}
+	}, [isPrivate, setValue]);
+
+	useEffect(() => {
 		setValue('readOnly', broadcast);
-	}, [federated, setValue, broadcast, isPrivate]);
+	}, [broadcast, setValue]);
 
 	const validateChannelName = async (name: string): Promise<string | undefined> => {
 		if (!name) {
@@ -175,10 +175,7 @@ const CreateChannelModal = ({ teamId = '', mainRoom, onClose, reload }: CreateCh
 		}
 	};
 
-	const e2eDisabled = useMemo<boolean>(
-		() => !isPrivate || broadcast || Boolean(!e2eEnabled) || Boolean(e2eEnabledForPrivateByDefault),
-		[e2eEnabled, e2eEnabledForPrivateByDefault, broadcast, isPrivate],
-	);
+	const e2eDisabled = useMemo<boolean>(() => !isPrivate || Boolean(!e2eEnabled) || federated, [e2eEnabled, federated, isPrivate]);
 
 	const createChannelFormId = useId();
 	const nameId = useId();
@@ -307,7 +304,7 @@ const CreateChannelModal = ({ teamId = '', mainRoom, onClose, reload }: CreateCh
 												id={encryptedId}
 												ref={ref}
 												checked={value}
-												disabled={e2eDisabled || federated}
+												disabled={e2eDisabled}
 												onChange={onChange}
 												aria-describedby={`${encryptedId}-hint`}
 											/>