diff --git a/jetstream/kv.go b/jetstream/kv.go
index 3bc689039..f1596e544 100644
--- a/jetstream/kv.go
+++ b/jetstream/kv.go
@@ -17,6 +17,7 @@ import (
 	"context"
 	"errors"
 	"fmt"
+	"reflect"
 	"regexp"
 	"strconv"
 	"strings"
@@ -488,8 +489,26 @@ func (js *jetStream) CreateKeyValue(ctx context.Context, cfg KeyValueConfig) (Ke
 			// errors are joined so that backwards compatibility is retained
 			// and previous checks for ErrStreamNameAlreadyInUse will still work.
 			err = errors.Join(fmt.Errorf("%w: %s", ErrBucketExists, cfg.Bucket), err)
+
+			// If we have a failure to add, it could be because we have
+			// a config change if the KV was created against before a bug fix
+			// that changed the value of discard policy.
+			// We will check if the stream exists and if the only difference
+			// is the discard policy, we will update the stream.
+			// The same logic applies for KVs created pre 2.9.x and
+			// the AllowDirect setting.
+			if stream, _ = js.Stream(ctx, scfg.Name); stream != nil {
+				cfg := stream.CachedInfo().Config
+				cfg.Discard = scfg.Discard
+				cfg.AllowDirect = scfg.AllowDirect
+				if reflect.DeepEqual(cfg, scfg) {
+					stream, err = js.UpdateStream(ctx, scfg)
+				}
+			}
+		}
+		if err != nil {
+			return nil, err
 		}
-		return nil, err
 	}
 	pushJS, err := js.legacyJetStream()
 	if err != nil {
diff --git a/jetstream/test/kv_test.go b/jetstream/test/kv_test.go
index b6ad3a611..8b455e425 100644
--- a/jetstream/test/kv_test.go
+++ b/jetstream/test/kv_test.go
@@ -1634,3 +1634,58 @@ func TestKeyValueCompression(t *testing.T) {
 		t.Fatalf("Expected stream to be compressed with S2")
 	}
 }
+
+func TestKeyValueCreateRepairOldKV(t *testing.T) {
+	s := RunBasicJetStreamServer()
+	defer shutdownJSServerAndRemoveStorage(t, s)
+
+	nc, js := jsClient(t, s)
+	defer nc.Close()
+	ctx := context.Background()
+
+	// create a standard kv
+	_, err := js.CreateKeyValue(ctx, jetstream.KeyValueConfig{
+		Bucket: "A",
+	})
+	if err != nil {
+		t.Fatalf("Error creating kv: %v", err)
+	}
+
+	// get stream config and set discard policy to old and AllowDirect to false
+	stream, err := js.Stream(ctx, "KV_A")
+	if err != nil {
+		t.Fatalf("Error getting stream info: %v", err)
+	}
+	streamCfg := stream.CachedInfo().Config
+	streamCfg.Discard = jetstream.DiscardOld
+	streamCfg.AllowDirect = false
+
+	// create a new kv with the same name - client should fix the config
+	_, err = js.CreateKeyValue(ctx, jetstream.KeyValueConfig{
+		Bucket: "A",
+	})
+	if err != nil {
+		t.Fatalf("Error creating kv: %v", err)
+	}
+
+	// get stream config again and check if the discard policy is set to new
+	stream, err = js.Stream(ctx, "KV_A")
+	if err != nil {
+		t.Fatalf("Error getting stream info: %v", err)
+	}
+	if stream.CachedInfo().Config.Discard != jetstream.DiscardNew {
+		t.Fatalf("Expected stream to have discard policy set to new")
+	}
+	if !stream.CachedInfo().Config.AllowDirect {
+		t.Fatalf("Expected stream to have AllowDirect set to true")
+	}
+
+	// attempting to create a new kv with the same name and different settings should fail
+	_, err = js.CreateKeyValue(ctx, jetstream.KeyValueConfig{
+		Bucket:      "A",
+		Description: "New KV",
+	})
+	if !errors.Is(err, jetstream.ErrBucketExists) {
+		t.Fatalf("Expected error to be ErrBucketExists, got: %v", err)
+	}
+}