diff --git a/changelogs/fragments/82066.yml b/changelogs/fragments/82066.yml
new file mode 100644
index 00000000000..5f2e34d0ca8
--- /dev/null
+++ b/changelogs/fragments/82066.yml
@@ -0,0 +1,3 @@
+---
+minor_changes:
+  - removed the unused argument ``create_new_password`` from ``CLI.build_vault_ids`` (https://github.com/ansible/ansible/pull/82066).
\ No newline at end of file
diff --git a/lib/ansible/cli/__init__.py b/lib/ansible/cli/__init__.py
index 5cddbed6144..d64b87597f5 100644
--- a/lib/ansible/cli/__init__.py
+++ b/lib/ansible/cli/__init__.py
@@ -194,8 +194,7 @@ class CLI(ABC):
 
     @staticmethod
     def build_vault_ids(vault_ids, vault_password_files=None,
-                        ask_vault_pass=None, create_new_password=None,
-                        auto_prompt=True):
+                        ask_vault_pass=None, auto_prompt=True):
         vault_password_files = vault_password_files or []
         vault_ids = vault_ids or []
 
@@ -218,7 +217,6 @@ class CLI(ABC):
 
         return vault_ids
 
-    # TODO: remove the now unused args
     @staticmethod
     def setup_vault_secrets(loader, vault_ids, vault_password_files=None,
                             ask_vault_pass=None, create_new_password=False,
@@ -252,7 +250,6 @@ class CLI(ABC):
         vault_ids = CLI.build_vault_ids(vault_ids,
                                         vault_password_files,
                                         ask_vault_pass,
-                                        create_new_password,
                                         auto_prompt=auto_prompt)
 
         last_exception = found_vault_secret = None
diff --git a/test/units/cli/test_cli.py b/test/units/cli/test_cli.py
index 93bbfe2dad0..510f5c351b2 100644
--- a/test/units/cli/test_cli.py
+++ b/test/units/cli/test_cli.py
@@ -50,14 +50,6 @@ class TestCliBuildVaultIds(unittest.TestCase):
         res = cli.CLI.build_vault_ids(['foo@bar'])
         self.assertEqual(res, ['foo@bar'])
 
-    def test_create_new_password_no_vault_id(self):
-        res = cli.CLI.build_vault_ids([], create_new_password=True)
-        self.assertEqual(res, ['default@prompt_ask_vault_pass'])
-
-    def test_create_new_password_no_vault_id_no_auto_prompt(self):
-        res = cli.CLI.build_vault_ids([], auto_prompt=False, create_new_password=True)
-        self.assertEqual(res, [])
-
     def test_no_vault_id_no_auto_prompt(self):
         # simulate 'ansible-playbook site.yml' with out --ask-vault-pass, should not prompt
         res = cli.CLI.build_vault_ids([], auto_prompt=False)
@@ -75,23 +67,12 @@ class TestCliBuildVaultIds(unittest.TestCase):
         res = cli.CLI.build_vault_ids([], auto_prompt=True, ask_vault_pass=True)
         self.assertEqual(res, ['default@prompt_ask_vault_pass'])
 
-    def test_create_new_password_auto_prompt(self):
-        # simulate 'ansible-vault encrypt somefile.yml'
-        res = cli.CLI.build_vault_ids([], auto_prompt=True, create_new_password=True)
+    def test_no_vault_id_ask_vault_pass(self):
+        res = cli.CLI.build_vault_ids([], ask_vault_pass=True)
         self.assertEqual(res, ['default@prompt_ask_vault_pass'])
 
-    def test_create_new_password_no_vault_id_ask_vault_pass(self):
-        res = cli.CLI.build_vault_ids([], ask_vault_pass=True,
-                                      create_new_password=True)
-        self.assertEqual(res, ['default@prompt_ask_vault_pass'])
-
-    def test_create_new_password_with_vault_ids(self):
-        res = cli.CLI.build_vault_ids(['foo@bar'], create_new_password=True)
-        self.assertEqual(res, ['foo@bar'])
-
-    def test_create_new_password_no_vault_ids_password_files(self):
-        res = cli.CLI.build_vault_ids([], vault_password_files=['some-password-file'],
-                                      create_new_password=True)
+    def test_no_vault_ids_password_files(self):
+        res = cli.CLI.build_vault_ids([], vault_password_files=['some-password-file'])
         self.assertEqual(res, ['default@some-password-file'])
 
     def test_everything(self):
@@ -100,7 +81,6 @@ class TestCliBuildVaultIds(unittest.TestCase):
                                       vault_password_files=['yet-another-password-file',
                                                             'one-more-password-file'],
                                       ask_vault_pass=True,
-                                      create_new_password=True,
                                       auto_prompt=False)
 
         self.assertEqual(set(res), set(['blip@prompt', 'baz@prompt_ask_vault_pass',