diff --git a/config/nrfconnect/chip-module/Kconfig b/config/nrfconnect/chip-module/Kconfig
index b377c65c2e222f..e4a0a9f3a1abab 100644
--- a/config/nrfconnect/chip-module/Kconfig
+++ b/config/nrfconnect/chip-module/Kconfig
@@ -284,5 +284,9 @@ config CHIP_CERTIFiCATION_DECLARATION_OTA_IMAGE_ID
 
 endif
 
+# See config/zephyr/Kconfig for full definition
+config CHIP_FACTORY_RESET_ERASE_NVS
+	bool
+	default y if CHIP_FACTORY_DATA || CHIP_FACTORY_DATA_CUSTOM_BACKEND
 
 endif
diff --git a/config/zephyr/Kconfig b/config/zephyr/Kconfig
index efa0f7abc2c476..9928bb35b49258 100644
--- a/config/zephyr/Kconfig
+++ b/config/zephyr/Kconfig
@@ -202,6 +202,17 @@ config CHIP_CRYPTO_PSA
 	  Use the backend for the Matter crypto layer that is based on PSA crypto
 	  API instead of the default, based on legacy mbedTLS APIs.
 
+config CHIP_FACTORY_RESET_ERASE_NVS
+	bool "Erase NVS flash pages on factory reset"
+	depends on SETTINGS_NVS
+	help
+	  When factory reset is requested, erase flash pages occupied by non-volatile storage
+	  instead of removing Matter-related settings only. This provides a more robust
+	  factory reset mechanism and allows to regain the original storage performance if any
+	  firmware issue has brought it to an unexpected state. For this reason, it is
+	  advisable to set this option if all configuration, including device-specific
+	  entries, is supposed to be cleared on a factory reset.
+
 config CHIP_MALLOC_SYS_HEAP
 	bool "Memory allocator based on Zephyr sys_heap"
 	imply SYS_HEAP_RUNTIME_STATS
diff --git a/docs/guides/nrfconnect_examples_configuration.md b/docs/guides/nrfconnect_examples_configuration.md
index 119852b3929a89..0254d8bb390644 100644
--- a/docs/guides/nrfconnect_examples_configuration.md
+++ b/docs/guides/nrfconnect_examples_configuration.md
@@ -193,6 +193,15 @@ instead of using a QR code, which is the default configuration.
 To enable NFC for commissioning and share the onboarding payload in an NFC tag,
 set the `CONFIG_CHIP_NFC_COMMISSIONING` option.
 
+**Factory reset behavior**
+
+By default, the factory reset procedure implemented in the Matter stack removes
+Matter-related settings only. If your application does not depend on any
+device-lifelong data stored in the non-volatile storage, set the
+`CONFIG_CHIP_FACTORY_RESET_ERASE_NVS` option to fully erase the NVS partition at
+the factory reset. This approach is more robust and regains the original NVS
+performance in case it has been polluted with unwanted entries.
+
 **Logging**
 
 You can enable logging for both the stack and Zephyr’s
diff --git a/src/platform/Zephyr/ConfigurationManagerImpl.cpp b/src/platform/Zephyr/ConfigurationManagerImpl.cpp
index bd19057e65d3bf..107579afbfbb03 100644
--- a/src/platform/Zephyr/ConfigurationManagerImpl.cpp
+++ b/src/platform/Zephyr/ConfigurationManagerImpl.cpp
@@ -32,6 +32,11 @@
 #include <lib/support/CodeUtils.h>
 #include <lib/support/logging/CHIPLogging.h>
 
+#ifdef CONFIG_CHIP_FACTORY_RESET_ERASE_NVS
+#include <zephyr/fs/nvs.h>
+#include <zephyr/settings/settings.h>
+#endif
+
 namespace chip {
 namespace DeviceLayer {
 
@@ -168,14 +173,30 @@ void ConfigurationManagerImpl::RunConfigUnitTest(void)
 void ConfigurationManagerImpl::DoFactoryReset(intptr_t arg)
 {
     ChipLogProgress(DeviceLayer, "Performing factory reset");
+
+#ifdef CONFIG_CHIP_FACTORY_RESET_ERASE_NVS
+    void * storage = nullptr;
+    int status     = settings_storage_get(&storage);
+
+    if (status == 0)
+    {
+        status = nvs_clear(static_cast<nvs_fs *>(storage));
+    }
+
+    if (status)
+    {
+        ChipLogError(DeviceLayer, "Factory reset failed: %d", status);
+    }
+#else
     const CHIP_ERROR err = PersistedStorage::KeyValueStoreMgrImpl().DoFactoryReset();
 
     if (err != CHIP_NO_ERROR)
+    {
         ChipLogError(DeviceLayer, "Factory reset failed: %" CHIP_ERROR_FORMAT, err.Format());
+    }
 
-#if CHIP_DEVICE_CONFIG_ENABLE_THREAD
-    ThreadStackMgr().ErasePersistentInfo();
-#endif // CHIP_DEVICE_CONFIG_ENABLE_THREAD
+    ConnectivityMgr().ErasePersistentInfo();
+#endif
 
     PlatformMgr().Shutdown();
 }