diff --git a/apps/meteor/app/lib/server/functions/createRoom.ts b/apps/meteor/app/lib/server/functions/createRoom.ts
index b936d30145069..233c6cb9548cc 100644
--- a/apps/meteor/app/lib/server/functions/createRoom.ts
+++ b/apps/meteor/app/lib/server/functions/createRoom.ts
@@ -136,6 +136,7 @@ export const createRoom = async <T extends RoomType>(
 > => {
 	const { teamId, ...optionalExtraData } = roomExtraData || ({} as IRoom);
 
+	// TODO: use a shared helper to check whether a user is federated
 	const hasFederatedMembers = members.some((member) => {
 		if (typeof member === 'string') {
 			return member.includes(':') && member.includes('@');
diff --git a/apps/meteor/server/methods/createDirectMessage.ts b/apps/meteor/server/methods/createDirectMessage.ts
index ac9a9479a9bce..ffe355f85ed94 100644
--- a/apps/meteor/server/methods/createDirectMessage.ts
+++ b/apps/meteor/server/methods/createDirectMessage.ts
@@ -42,7 +42,11 @@ export async function createDirectMessage(
 	const users = await Promise.all(usernames.filter((username) => username !== me.username));
 	const options: Exclude<ICreateRoomParams['options'], undefined> = { creator: me._id };
 	const roomUsers = excludeSelf ? users : [me, ...users];
-	const federated = false;
+
+	// TODO: use a shared helper to check whether a user is federated
+	// since the DM creation API doesn't tell us if the room is federated (unlike normal channels),
+	// we're currently inferring it: if any participant has a Matrix-style ID (@user:server), we treat the DM as federated
+	const hasFederatedMembers = roomUsers.some((user) => typeof user === 'string' && user.includes(':') && user.includes('@'));
 
 	// allow self-DMs
 	if (roomUsers.length === 1 && roomUsers[0] !== undefined && typeof roomUsers[0] !== 'string' && roomUsers[0]._id !== me._id) {
@@ -91,7 +95,7 @@ export async function createDirectMessage(
 		false,
 		undefined,
 		{
-			federated,
+			...(hasFederatedMembers && { federated: true }),
 		},
 		options,
 	);
diff --git a/ee/packages/federation-matrix/tests/end-to-end/room.spec.ts b/ee/packages/federation-matrix/tests/end-to-end/room.spec.ts
index 3987331816fd1..0927e53620c76 100644
--- a/ee/packages/federation-matrix/tests/end-to-end/room.spec.ts
+++ b/ee/packages/federation-matrix/tests/end-to-end/room.spec.ts
@@ -1,4 +1,4 @@
-import type { IMessage } from '@rocket.chat/core-typings';
+import type { IMessage, IUser } from '@rocket.chat/core-typings';
 
 import {
 	createRoom,
@@ -8,7 +8,7 @@ import {
 	addUserToRoom,
 	addUserToRoomSlashCommand,
 } from '../../../../../apps/meteor/tests/data/rooms.helper';
-import { getRequestConfig, createUser } from '../../../../../apps/meteor/tests/data/users.helper';
+import { type IRequestConfig, getRequestConfig, createUser, deleteUser } from '../../../../../apps/meteor/tests/data/users.helper';
 import { IS_EE } from '../../../../../apps/meteor/tests/e2e/config/constants';
 import { federationConfig } from '../helper/config';
 import { createDDPListener } from '../helper/ddp-listener';
@@ -18,8 +18,8 @@ import { SynapseClient } from '../helper/synapse-client';
 // import { t } from 'i18next';
 
 (IS_EE ? describe : describe.skip)('Federation', () => {
-	let rc1AdminRequestConfig: any;
-	let rc1User1RequestConfig: any;
+	let rc1AdminRequestConfig: IRequestConfig;
+	let rc1User1RequestConfig: IRequestConfig;
 	let hs1AdminApp: SynapseClient;
 	let hs1User1App: SynapseClient;
 
@@ -72,6 +72,56 @@ import { SynapseClient } from '../helper/synapse-client';
 	});
 
 	describe('Rooms', () => {
+		describe('Create direct message rooms', () => {
+			// Creating a fresh user for this test suite to avoid collisions,
+			// since DMs are unique for each user pair
+			let userRequestConfig: IRequestConfig;
+			let createdUser: IUser;
+			beforeAll(async () => {
+				const user = { username: `user-${Date.now()}`, password: '123' };
+				createdUser = await createUser(user, rc1AdminRequestConfig);
+				userRequestConfig = await getRequestConfig(federationConfig.rc1.apiUrl, user.username, user.password);
+			});
+
+			afterAll(async () => {
+				await deleteUser(createdUser, {}, rc1AdminRequestConfig);
+			});
+
+			it('It should create a federated room when federated members are added', async () => {
+				const response = await createRoom({
+					type: 'd',
+					username: federationConfig.hs1.adminMatrixUserId,
+					config: userRequestConfig,
+				});
+
+				expect(response.status).toBe(200);
+				expect(response.body).toHaveProperty('success', true);
+				expect(response.body).toHaveProperty('room');
+				expect(response.body.room).toHaveProperty('_id');
+				expect(response.body.room).toHaveProperty('t', 'd');
+
+				const roomInfo = await getRoomInfo(response.body.room._id, userRequestConfig);
+				expect(roomInfo.room).toHaveProperty('federated', true);
+			});
+
+			it('It should create a non-federated room when only local members are added', async () => {
+				const response = await createRoom({
+					type: 'd',
+					username: federationConfig.rc1.additionalUser1.username,
+					config: userRequestConfig,
+				});
+
+				expect(response.status).toBe(200);
+				expect(response.body).toHaveProperty('success', true);
+				expect(response.body).toHaveProperty('room');
+				expect(response.body.room).toHaveProperty('_id');
+				expect(response.body.room).toHaveProperty('t', 'd');
+
+				const roomInfo = await getRoomInfo(response.body.room._id, userRequestConfig);
+				expect(roomInfo.room).not.toHaveProperty('federated');
+			});
+		});
+
 		describe('Create a room on RC as private, explicitly not federated, with federated users in creation modal', () => {
 			describe('Add 1 federated user in the creation modal', () => {
 				it('It should not allow the creation of the room', async () => {