diff --git a/tools/projmgr/src/ProjMgrWorker.cpp b/tools/projmgr/src/ProjMgrWorker.cpp
index f517f886f..de0c0b1f1 100644
--- a/tools/projmgr/src/ProjMgrWorker.cpp
+++ b/tools/projmgr/src/ProjMgrWorker.cpp
@@ -157,13 +157,14 @@ bool ProjMgrWorker::AddContexts(ProjMgrParser& parser, ContextDesc& descriptor,
 void ProjMgrWorker::UpdateTmpDir() {
   auto& tmpdir = m_parser->GetCsolution().directories.tmpdir;
   auto& base = m_outputDir.empty() ? m_parser->GetCsolution().directory : m_outputDir;
-  if (!tmpdir.empty()) {
-    if (!m_activeTargetType.empty()) {
-      tmpdir = RteUtils::ExpandAccessSequences(tmpdir, {
+  if (!m_activeTargetType.empty()) {
+    const auto& targetSet = m_activeTargetSet.set.empty() ? "default" : m_activeTargetSet.set;
+    // default tmpdir: tmp/$TargetType$/$TargetSet$
+    tmpdir = tmpdir.empty() ? "tmp/" + m_activeTargetType + "/" + targetSet :
+      RteUtils::ExpandAccessSequences(tmpdir, {
         { RteConstants::AS_TARGET_TYPE, m_activeTargetType },
-        { RteConstants::AS_TARGET_SET, m_activeTargetSet.set.empty() ? "default" : m_activeTargetSet.set } }
+        { RteConstants::AS_TARGET_SET, targetSet } }
       );
-    }
   }
   tmpdir = base + "/" + (tmpdir.empty() ? "tmp" : tmpdir);
 }
diff --git a/tools/projmgr/test/data/ImageOnly/ref/image-only.cbuild-idx.yml b/tools/projmgr/test/data/ImageOnly/ref/image-only.cbuild-idx.yml
index 5db63fcf9..2bc5d1f47 100644
--- a/tools/projmgr/test/data/ImageOnly/ref/image-only.cbuild-idx.yml
+++ b/tools/projmgr/test/data/ImageOnly/ref/image-only.cbuild-idx.yml
@@ -2,7 +2,7 @@ build-idx:
   generated-by: csolution version 0.0.0
   csolution: image-only.csolution.yml
   cbuild-run: out/image-only+CM0.cbuild-run.yml
-  tmpdir: tmp
+  tmpdir: tmp/CM0/default
   image-only: true
   cbuilds:
     - cbuild: out/image-only/CM0/image-only+CM0.cbuild.yml
diff --git a/tools/projmgr/test/data/TestSolution/tmpdir-default-active.csolution.yml b/tools/projmgr/test/data/TestSolution/tmpdir-default-active.csolution.yml
new file mode 100644
index 000000000..c54bd721d
--- /dev/null
+++ b/tools/projmgr/test/data/TestSolution/tmpdir-default-active.csolution.yml
@@ -0,0 +1,18 @@
+# yaml-language-server: $schema=https://raw.githubusercontent.com/Open-CMSIS-Pack/devtools/main/tools/projmgr/schemas/csolution.schema.json
+
+solution:
+
+  compiler: AC6
+
+  target-types:
+    - type: TypeA
+      target-set:
+        - set: Set1
+          images:
+            - project-context: test1.Debug
+
+  build-types:
+    - type: Debug
+
+  projects:
+    - project: ./TestProject1/test1.cproject.yml
diff --git a/tools/projmgr/test/data/WestSupport/ref/solution.cbuild-idx.yml b/tools/projmgr/test/data/WestSupport/ref/solution.cbuild-idx.yml
index 42afa8b5d..422ce3f01 100644
--- a/tools/projmgr/test/data/WestSupport/ref/solution.cbuild-idx.yml
+++ b/tools/projmgr/test/data/WestSupport/ref/solution.cbuild-idx.yml
@@ -2,7 +2,7 @@ build-idx:
   generated-by: csolution version 0.0.0
   csolution: solution.csolution.yml
   cbuild-run: out/solution+CM0.cbuild-run.yml
-  tmpdir: tmp
+  tmpdir: tmp/CM0/default
   cbuilds:
     - cbuild: out/core0/CM0/Debug/core0.Debug+CM0.cbuild.yml
       west: true
diff --git a/tools/projmgr/test/src/ProjMgrUnitTests.cpp b/tools/projmgr/test/src/ProjMgrUnitTests.cpp
index 328eabd7a..ceb712f57 100644
--- a/tools/projmgr/test/src/ProjMgrUnitTests.cpp
+++ b/tools/projmgr/test/src/ProjMgrUnitTests.cpp
@@ -4388,6 +4388,20 @@ TEST_F(ProjMgrUnitTests, OutputDirsTmpdirAccessSequence) {
   EXPECT_EQ("tmp/TypeA/Set1", cbuild["build-idx"]["tmpdir"].as<string>());
 }
 
+TEST_F(ProjMgrUnitTests, OutputDirsTmpdirDefault) {
+  char* argv[5];
+  const string& csolution = testinput_folder + "/TestSolution/tmpdir-default-active.csolution.yml";
+  argv[1] = (char*)"convert";
+  argv[2] = (char*)csolution.c_str();
+  argv[3] = (char*)"--active";
+  argv[4] = (char*)"TypeA@Set1";
+  EXPECT_EQ(0, RunProjMgr(5, argv, m_envp));
+
+  // Check default tmp directory for active target type and target set
+  const YAML::Node& cbuild = YAML::LoadFile(testinput_folder + "/TestSolution/tmpdir-default-active.cbuild-idx.yml");
+  EXPECT_EQ("tmp/TypeA/Set1", cbuild["build-idx"]["tmpdir"].as<string>());
+}
+
 TEST_F(ProjMgrUnitTests, OutputDirsAbsolutePath) {
   StdStreamRedirect streamRedirect;
   char* argv[5];