diff --git a/changelogs/fragments/win_file_util-test-exception-handler.yaml b/changelogs/fragments/win_file_util-test-exception-handler.yaml
new file mode 100644
index 00000000000..03082c2de1f
--- /dev/null
+++ b/changelogs/fragments/win_file_util-test-exception-handler.yaml
@@ -0,0 +1,3 @@
+bugfixes:
+- Ansible.ModuleUtils.FileUtil - Catch DirectoryNotFoundException with Test-AnsiblePath
+  https://github.com/ansible/ansible/pull/37968
diff --git a/lib/ansible/module_utils/powershell/Ansible.ModuleUtils.FileUtil.psm1 b/lib/ansible/module_utils/powershell/Ansible.ModuleUtils.FileUtil.psm1
index 2e905593ebd..727da967f66 100644
--- a/lib/ansible/module_utils/powershell/Ansible.ModuleUtils.FileUtil.psm1
+++ b/lib/ansible/module_utils/powershell/Ansible.ModuleUtils.FileUtil.psm1
@@ -17,7 +17,7 @@ Function Test-AnsiblePath {
     # Replacement for Test-Path
     try {
         $file_attributes = [System.IO.File]::GetAttributes($Path)
-    } catch [System.IO.FileNotFoundException] {
+    } catch [System.IO.FileNotFoundException], [System.IO.DirectoryNotFoundException] {
         return $false
     }
 
diff --git a/test/integration/targets/win_module_utils/library/file_util_test.ps1 b/test/integration/targets/win_module_utils/library/file_util_test.ps1
index 28e091c3809..b2a2fb8d20d 100644
--- a/test/integration/targets/win_module_utils/library/file_util_test.ps1
+++ b/test/integration/targets/win_module_utils/library/file_util_test.ps1
@@ -48,6 +48,14 @@ if ($pagefile) {
 $actual = Test-AnsiblePath -Path C:\fakefile
 Assert-Equals -actual $actual -expected $false
 
+# Test-AnsiblePath Directory that doesn't exist
+$actual = Test-AnsiblePath -Path C:\fakedirectory
+Assert-Equals -actual $actual -expected $false
+
+# Test-AnsiblePath file in non-existant directory
+$actual = Test-AnsiblePath -Path C:\fakedirectory\fakefile.txt
+Assert-Equals -actual $actual -expected $false
+
 # Test-AnsiblePath Normal directory
 $actual = Test-AnsiblePath -Path C:\Windows
 Assert-Equals -actual $actual -expected $true
diff --git a/test/integration/targets/win_shell/tasks/main.yml b/test/integration/targets/win_shell/tasks/main.yml
index b1162794d13..4680e417eda 100644
--- a/test/integration/targets/win_shell/tasks/main.yml
+++ b/test/integration/targets/win_shell/tasks/main.yml
@@ -144,6 +144,19 @@
     that:
     - statout.stat.exists == true
 
+# https://github.com/ansible/ansible/issues/37967
+- name: test creates with file in missing directory
+  win_shell: echo hi
+  args:
+    creates: c:\fakefolder\fakefolder2\fakefile.txt
+  register: shellout
+
+- name: validate result
+  assert:
+    that:
+    - shellout.skipped is not defined
+    - shellout.changed
+
 - name: run with removes, should remove
   win_shell: Remove-Item c:\testfile.txt
   args: