diff --git a/sql/core/src/main/scala/org/apache/spark/sql/internal/SharedState.scala b/sql/core/src/main/scala/org/apache/spark/sql/internal/SharedState.scala
index 47119ab903da7..ce4385d88f1e9 100644
--- a/sql/core/src/main/scala/org/apache/spark/sql/internal/SharedState.scala
+++ b/sql/core/src/main/scala/org/apache/spark/sql/internal/SharedState.scala
@@ -53,7 +53,7 @@ private[sql] class SharedState(
     initialConfigs: scala.collection.Map[String, String])
   extends Logging {
 
-  SharedState.setFsUrlStreamHandlerFactory(sparkContext.conf)
+  SharedState.setFsUrlStreamHandlerFactory(sparkContext.conf, sparkContext.hadoopConfiguration)
 
   private val (conf, hadoopConf) = {
     // Load hive-site.xml into hadoopConf and determine the warehouse path which will be set into
@@ -174,13 +174,13 @@ private[sql] class SharedState(
 object SharedState extends Logging {
   @volatile private var fsUrlStreamHandlerFactoryInitialized = false
 
-  private def setFsUrlStreamHandlerFactory(conf: SparkConf): Unit = {
+  private def setFsUrlStreamHandlerFactory(conf: SparkConf, hadoopConf: Configuration): Unit = {
     if (!fsUrlStreamHandlerFactoryInitialized &&
         conf.get(DEFAULT_URL_STREAM_HANDLER_FACTORY_ENABLED)) {
       synchronized {
         if (!fsUrlStreamHandlerFactoryInitialized) {
           try {
-            URL.setURLStreamHandlerFactory(new FsUrlStreamHandlerFactory())
+            URL.setURLStreamHandlerFactory(new FsUrlStreamHandlerFactory(hadoopConf))
             fsUrlStreamHandlerFactoryInitialized = true
           } catch {
             case NonFatal(_) =>
diff --git a/sql/core/src/test/scala/org/apache/spark/sql/internal/SharedStateSuite.scala b/sql/core/src/test/scala/org/apache/spark/sql/internal/SharedStateSuite.scala
new file mode 100644
index 0000000000000..81bf15342423c
--- /dev/null
+++ b/sql/core/src/test/scala/org/apache/spark/sql/internal/SharedStateSuite.scala
@@ -0,0 +1,55 @@
+/*
+ * Licensed to the Apache Software Foundation (ASF) under one or more
+ * contributor license agreements.  See the NOTICE file distributed with
+ * this work for additional information regarding copyright ownership.
+ * The ASF licenses this file to You under the Apache License, Version 2.0
+ * (the "License"); you may not use this file except in compliance with
+ * the License.  You may obtain a copy of the License at
+ *
+ *    http://www.apache.org/licenses/LICENSE-2.0
+ *
+ * Unless required by applicable law or agreed to in writing, software
+ * distributed under the License is distributed on an "AS IS" BASIS,
+ * WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+ * See the License for the specific language governing permissions and
+ * limitations under the License.
+ */
+
+package org.apache.spark.sql.internal
+
+import java.net.URL
+
+import org.apache.hadoop.conf.Configuration
+import org.apache.hadoop.fs.FsUrlStreamHandlerFactory
+
+import org.apache.spark.SparkConf
+import org.apache.spark.sql.test.SharedSparkSession
+
+
+/**
+ * Tests for [[org.apache.spark.sql.internal.SharedState]].
+ */
+class SharedStateSuite extends SharedSparkSession {
+
+  override protected def sparkConf: SparkConf = {
+    super.sparkConf
+      .set("spark.hadoop.fs.defaultFS", "file:///")
+  }
+
+  test("SPARK-31692: Url handler factory should have the hadoop configs from Spark conf") {
+    // Accessing shared state to init the object since it is `lazy val`
+    spark.sharedState
+    val field = classOf[URL].getDeclaredField("factory")
+    field.setAccessible(true)
+    val value = field.get(null)
+    assert(value.isInstanceOf[FsUrlStreamHandlerFactory])
+    val streamFactory = value.asInstanceOf[FsUrlStreamHandlerFactory]
+
+    val confField = classOf[FsUrlStreamHandlerFactory].getDeclaredField("conf")
+    confField.setAccessible(true)
+    val conf = confField.get(streamFactory)
+
+    assert(conf.isInstanceOf[Configuration])
+    assert(conf.asInstanceOf[Configuration].get("fs.defaultFS") == "file:///")
+  }
+}