diff --git a/doc/releases/migration-guide-4.2.rst b/doc/releases/migration-guide-4.2.rst
index 34e9c1665abd..992a360d8c10 100644
--- a/doc/releases/migration-guide-4.2.rst
+++ b/doc/releases/migration-guide-4.2.rst
@@ -124,6 +124,15 @@ Bluetooth Host
   :zephyr_file:`include/zephyr/bluetooth/conn.h` have been renamed
   to ``BT_LE_CS_TONE_ANTENNA_CONFIGURATION_A<NUMBER>_B<NUMBER>``.
 
+* The ISO data paths are not longer setup automatically, and shall explicitly be setup and removed
+  by the application by calling :c:func:`bt_iso_setup_data_path` and
+  :c:func:`bt_iso_remove_data_path` respectively. (:github:`75549`)
+
+* ``BT_ISO_CHAN_TYPE_CONNECTED`` has been split into ``BT_ISO_CHAN_TYPE_CENTRAL`` and
+  ``BT_ISO_CHAN_TYPE_PERIPHERAL`` to better describe the type of the ISO channel, as behavior for
+  each role may be different. Any existing uses/checks for ``BT_ISO_CHAN_TYPE_CONNECTED``
+  can be replaced with an ``||`` of the two. (:github:`75549`)
+
 Networking
 **********
 
diff --git a/include/zephyr/bluetooth/iso.h b/include/zephyr/bluetooth/iso.h
index ff62661b9e8f..de38d102b7de 100644
--- a/include/zephyr/bluetooth/iso.h
+++ b/include/zephyr/bluetooth/iso.h
@@ -5,7 +5,7 @@
 
 /*
  * Copyright (c) 2020 Intel Corporation
- * Copyright (c) 2021-2024 Nordic Semiconductor ASA
+ * Copyright (c) 2021-2025 Nordic Semiconductor ASA
  *
  * SPDX-License-Identifier: Apache-2.0
  */
@@ -70,6 +70,14 @@ extern "C" {
 
 /** Unknown SDU interval */
 #define BT_ISO_SDU_INTERVAL_UNKNOWN 0x000000U
+/** The minimum value for vendor specific data path ID */
+#define BT_ISO_DATA_PATH_VS_ID_MIN  0x01
+/** The maximum value for vendor specific data path ID */
+#define BT_ISO_DATA_PATH_VS_ID_MAX  0xFE
+/** Minimum controller delay in microseconds (0 s) */
+#define BT_ISO_CONTROLLER_DELAY_MIN 0x000000
+/** Maximum controller delay in microseconds (4 s) */
+#define BT_ISO_CONTROLLER_DELAY_MAX 0x3D0900
 /** Minimum interval value in microseconds */
 #define BT_ISO_SDU_INTERVAL_MIN     0x0000FFU
 /** Maximum interval value in microseconds */
@@ -178,7 +186,8 @@ enum bt_iso_state {
  */
 enum bt_iso_chan_type {
 	BT_ISO_CHAN_TYPE_NONE,		/**< No channel type */
-	BT_ISO_CHAN_TYPE_CONNECTED,	/**< Connected */
+	BT_ISO_CHAN_TYPE_CENTRAL,       /**< Connected as central */
+	BT_ISO_CHAN_TYPE_PERIPHERAL,    /**< Connected as peripheral */
 	BT_ISO_CHAN_TYPE_BROADCASTER,	/**< Isochronous broadcaster */
 	BT_ISO_CHAN_TYPE_SYNC_RECEIVER	/**< Synchronized receiver */
 };
@@ -230,13 +239,6 @@ struct bt_iso_chan_io_qos {
 	 * This value is ignored if any advanced ISO parameters are set.
 	 */
 	uint8_t				rtn;
-	/**
-	 * @brief Channel data path reference
-	 *
-	 * Setting to NULL default to HCI data path (same as setting path.pid
-	 * to @ref BT_ISO_DATA_PATH_HCI).
-	 */
-	struct bt_iso_chan_path		*path;
 
 #if defined(CONFIG_BT_ISO_TEST_PARAMS) || defined(__DOXYGEN__)
 	/**
@@ -293,20 +295,37 @@ struct bt_iso_chan_qos {
 
 /** @brief ISO Channel Data Path structure. */
 struct bt_iso_chan_path {
-	/** Default path ID */
-	uint8_t				pid;
-	/** Coding Format */
-	uint8_t				format;
+	/**
+	 * @brief Default path ID
+	 *
+	 * @ref BT_ISO_DATA_PATH_HCI to use ISO over  HCI or between @ref BT_ISO_DATA_PATH_VS_ID_MIN
+	 * and @ref BT_ISO_DATA_PATH_VS_ID_MAX for vendor specific data paths.
+	 */
+	uint8_t pid;
+	/**
+	 * @brief Coding Format
+	 *
+	 * See the BT_HCI_CODING_FORMAT_* values for valid values.
+	 */
+	uint8_t format;
 	/** Company ID */
-	uint16_t			cid;
+	uint16_t cid;
 	/** Vendor-defined Codec ID */
-	uint16_t			vid;
-	/** Controller Delay */
-	uint32_t			delay;
-	/** Codec Configuration length*/
-	uint8_t				cc_len;
-	/** Pointer to an array containing the Codec Configuration */
-	uint8_t				*cc;
+	uint16_t vid;
+	/**
+	 * @brief Controller Delay in microseconds
+	 *
+	 * Value range from @ref BT_ISO_CONTROLLER_DELAY_MIN to @ref BT_ISO_CONTROLLER_DELAY_MAX.
+	 */
+	uint32_t delay;
+	/** Codec Configuration length */
+	uint8_t cc_len;
+	/**
+	 * @brief Pointer to an array containing the Codec Configuration
+	 *
+	 * Shall not be NULL if bt_iso_chan_path.cc_len is non-zero.
+	 */
+	uint8_t *cc;
 };
 
 /** ISO packet status flag bits */
@@ -691,6 +710,14 @@ struct bt_iso_chan_ops {
 	 * channel is disconnected, including when a connection gets
 	 * rejected or when setting security fails.
 	 *
+	 * If the channel was established (i.e. @ref bt_iso_chan_ops.connected has been called
+	 * for this channel), then the channel object is still valid and the memory of the channel
+	 * shall not be memset to 0 or otherwise free'd.
+	 * To avoid any issues it is recommended to use a @ref k_work_submit or similar to not
+	 * overwrite any data while in the callback.
+	 *
+	 * For the above reason it is still possible to use bt_iso_chan_get_info() on the @p chan.
+	 *
 	 * @param chan   The channel that has been Disconnected
 	 * @param reason BT_HCI_ERR_* reason for the disconnection.
 	 */
@@ -957,6 +984,70 @@ int bt_iso_chan_send(struct bt_iso_chan *chan, struct net_buf *buf, uint16_t seq
 int bt_iso_chan_send_ts(struct bt_iso_chan *chan, struct net_buf *buf, uint16_t seq_num,
 			uint32_t ts);
 
+/**
+ * @brief Sets up the ISO data path for a ISO channel
+ *
+ * The channel must be associated with a BIS or CIS handle first which it is when the
+ * bt_iso_chan_ops.connected() callback is called.
+ *
+ * @param chan The channel to setup the ISO data path for
+ * @param dir The direction to setup, either @ref BT_HCI_DATAPATH_DIR_CTLR_TO_HOST or
+ *            @ref BT_HCI_DATAPATH_DIR_HOST_TO_CTLR. For ISO broadcast channels this can only be
+ *            @ref BT_HCI_DATAPATH_DIR_HOST_TO_CTLR, and for ISO sync receiver channels this can
+ *            only be @ref BT_HCI_DATAPATH_DIR_CTLR_TO_HOST.
+ * @param path The data path
+ *
+ * @retval 0 Success
+ * @retval -EINVAL Invalid parameters
+ * @retval -ENOBUFS No HCI command buffer could be allocated
+ * @retval -EIO The controller rejected the request or response contains invalid data
+ * @retval -ENODEV @p chan is not associated with a CIS or BIS handle
+ * @retval -EACCES The controller rejected the request as disallowed
+ * @retval -ENOEXEC Unexpected error occurred
+ */
+int bt_iso_setup_data_path(const struct bt_iso_chan *chan, uint8_t dir,
+			   const struct bt_iso_chan_path *path);
+
+/**
+ * @brief Removes the ISO data path for a ISO channel
+ *
+ * Removes the ISO data path configured by bt_iso_setup_data_path() for the provided @p dir.
+ *
+ * The data paths of CIS for Peripherals are deleted by the controller,
+ * and thus it is not necessary (or possible) to remove
+ * data paths of CIS after they have disconnected for a Peripheral,
+ * as per Bluetooth Core specification 6.0, Vol 4, Part E, Section 7.7.5.
+ * The data paths for CIS for a Central remain valid, even after a disconnection, and thus a Central
+ * device should call bt_iso_remove_data_path() on disconnect if it no longer wants to use that CIS.
+ * All data paths created by a Central are removed when the CIG is removed with
+ * bt_iso_cig_terminate().
+ *
+ * Any data paths associated with an ISO Sync Receiver BIG are removed by the controller
+ * when the BIG sync is lost or terminated, and thus it is not necessary (or possible) to remove
+ * data paths of ISO channels associated with a BIG for a Sync Receiver,
+ * as per Bluetooth Core specification 6.0, Vol 4, Part E, Section 7.7.65.30
+ *
+ * All data paths associated with an ISO Broadcaster BIG are removed when the BIG is terminated by
+ * bt_iso_big_terminate(), and thus it is not necessary (or possible) to remove data paths of ISO
+ * channels associated with a BIG for a Broadcaster,
+ * as per Bluetooth Core specification 6.0, Vol 4, Part E, Section 7.8.105
+ *
+ * @param chan The channel to setup the ISO data path for
+ * @param dir The direction to setup, either @ref BT_HCI_DATAPATH_DIR_CTLR_TO_HOST or
+ *            @ref BT_HCI_DATAPATH_DIR_HOST_TO_CTLR. For ISO broadcast channels this can only be
+ *            @ref BT_HCI_DATAPATH_DIR_HOST_TO_CTLR, and for ISO sync receiver channels this can
+ *            only be @ref BT_HCI_DATAPATH_DIR_CTLR_TO_HOST.
+
+ * @retval 0 Success
+ * @retval -EINVAL Invalid parameters
+ * @retval -ENOBUFS No HCI command buffer could be allocated
+ * @retval -EIO The controller rejected the request or response contains invalid data
+ * @retval -ENODEV @p chan is not associated with a CIS or BIS handle
+ * @retval -EACCES The controller rejected the request as disallowed
+ * @retval -ENOEXEC Unexpected error occurred
+ */
+int bt_iso_remove_data_path(const struct bt_iso_chan *chan, uint8_t dir);
+
 /** @brief ISO Unicast TX Info Structure */
 struct bt_iso_unicast_tx_info {
 	/** The transport latency in us */
@@ -1082,20 +1173,30 @@ struct bt_iso_info {
 	/** Connection Type specific Info.*/
 	union {
 #if defined(CONFIG_BT_ISO_UNICAST) || defined(__DOXYGEN__)
-		/** Unicast specific Info.
+		/**
+		 * @brief Unicast specific Info.
+		 *
 		 * Only available when @kconfig{CONFIG_BT_ISO_UNICAST} is enabled.
+		 * Use this when the @ref bt_iso_info.type is @ref BT_ISO_CHAN_TYPE_CENTRAL or
+		 * @ref BT_ISO_CHAN_TYPE_PERIPHERAL.
 		 */
 		struct bt_iso_unicast_info unicast;
 #endif /* CONFIG_BT_ISO_UNICAST */
 #if defined(CONFIG_BT_ISO_BROADCASTER) || defined(__DOXYGEN__)
-		/** Broadcaster specific Info.
+		/**
+		 * @brief Broadcaster specific Info.
+		 *
 		 * Only available when @kconfig{CONFIG_BT_ISO_BROADCASTER} is enabled.
+		 * Use this when the @ref bt_iso_info.type is @ref BT_ISO_CHAN_TYPE_BROADCASTER.
 		 */
 		struct bt_iso_broadcaster_info broadcaster;
 #endif /* CONFIG_BT_ISO_BROADCASTER */
 #if defined(CONFIG_BT_ISO_SYNC_RECEIVER) || defined(__DOXYGEN__)
-		/** Sync receiver specific Info.
+		/**
+		 * @brief Sync receiver specific Info.
+		 *
 		 * Only available when @kconfig{CONFIG_BT_ISO_SYNC_RECEIVER} is enabled.
+		 * Use this when the @ref bt_iso_info.type is @ref BT_ISO_CHAN_TYPE_SYNC_RECEIVER.
 		 */
 		struct bt_iso_sync_receiver_info sync_receiver;
 #endif /* CONFIG_BT_ISO_SYNC_RECEIVER */
diff --git a/samples/bluetooth/iso_broadcast/src/main.c b/samples/bluetooth/iso_broadcast/src/main.c
index da06a9c417df..cef28fa1c1db 100644
--- a/samples/bluetooth/iso_broadcast/src/main.c
+++ b/samples/bluetooth/iso_broadcast/src/main.c
@@ -1,5 +1,5 @@
 /*
- * Copyright (c) 2021-2024 Nordic Semiconductor ASA
+ * Copyright (c) 2021-2025 Nordic Semiconductor ASA
  *
  * SPDX-License-Identifier: Apache-2.0
  */
@@ -8,6 +8,7 @@
 
 #include <zephyr/bluetooth/bluetooth.h>
 #include <zephyr/bluetooth/gap.h>
+#include <zephyr/bluetooth/hci_types.h>
 #include <zephyr/bluetooth/iso.h>
 #include <zephyr/sys/byteorder.h>
 
@@ -31,10 +32,21 @@ static uint16_t seq_num;
 
 static void iso_connected(struct bt_iso_chan *chan)
 {
+	const struct bt_iso_chan_path hci_path = {
+		.pid = BT_ISO_DATA_PATH_HCI,
+		.format = BT_HCI_CODING_FORMAT_TRANSPARENT,
+	};
+	int err;
+
 	printk("ISO Channel %p connected\n", chan);
 
 	seq_num = 0U;
 
+	err = bt_iso_setup_data_path(chan, BT_HCI_DATAPATH_DIR_HOST_TO_CTLR, &hci_path);
+	if (err != 0) {
+		printk("Failed to setup ISO TX data path: %d\n", err);
+	}
+
 	k_sem_give(&sem_big_cmplt);
 }
 
diff --git a/samples/bluetooth/iso_broadcast_benchmark/src/broadcaster.c b/samples/bluetooth/iso_broadcast_benchmark/src/broadcaster.c
index 4665eed3ca87..3f12619ed81e 100644
--- a/samples/bluetooth/iso_broadcast_benchmark/src/broadcaster.c
+++ b/samples/bluetooth/iso_broadcast_benchmark/src/broadcaster.c
@@ -1,5 +1,5 @@
 /*
- * Copyright (c) 2021-2024 Nordic Semiconductor ASA
+ * Copyright (c) 2021-2025 Nordic Semiconductor ASA
  *
  * SPDX-License-Identifier: Apache-2.0
  */
@@ -9,6 +9,7 @@
 #include <stdint.h>
 
 #include <zephyr/bluetooth/gap.h>
+#include <zephyr/bluetooth/hci_types.h>
 #include <zephyr/console/console.h>
 #include <zephyr/bluetooth/bluetooth.h>
 #include <zephyr/bluetooth/iso.h>
@@ -72,8 +73,19 @@ static const struct bt_data ad[] = {
 
 static void iso_connected(struct bt_iso_chan *chan)
 {
+	const struct bt_iso_chan_path hci_path = {
+		.pid = BT_ISO_DATA_PATH_HCI,
+		.format = BT_HCI_CODING_FORMAT_TRANSPARENT,
+	};
+	int err;
+
 	LOG_INF("ISO Channel %p connected", chan);
 
+	err = bt_iso_setup_data_path(chan, BT_HCI_DATAPATH_DIR_HOST_TO_CTLR, &hci_path);
+	if (err != 0) {
+		printk("Failed to setup ISO TX data path: %d\n", err);
+	}
+
 	connected_bis++;
 	if (connected_bis == big_create_param.num_bis) {
 		seq_num = 0U;
diff --git a/samples/bluetooth/iso_broadcast_benchmark/src/receiver.c b/samples/bluetooth/iso_broadcast_benchmark/src/receiver.c
index af684cecc52f..45efaf66a4bb 100644
--- a/samples/bluetooth/iso_broadcast_benchmark/src/receiver.c
+++ b/samples/bluetooth/iso_broadcast_benchmark/src/receiver.c
@@ -1,5 +1,5 @@
 /*
- * Copyright (c) 2021 Nordic Semiconductor ASA
+ * Copyright (c) 2021-2025 Nordic Semiconductor ASA
  *
  * SPDX-License-Identifier: Apache-2.0
  */
@@ -7,6 +7,7 @@
 #include <ctype.h>
 #include <zephyr/bluetooth/bluetooth.h>
 #include <zephyr/bluetooth/conn.h>
+#include <zephyr/bluetooth/hci_types.h>
 #include <zephyr/bluetooth/iso.h>
 #include <zephyr/sys/byteorder.h>
 #include <zephyr/console/console.h>
@@ -229,10 +230,21 @@ static void iso_recv(struct bt_iso_chan *chan,
 
 static void iso_connected(struct bt_iso_chan *chan)
 {
+	const struct bt_iso_chan_path hci_path = {
+		.pid = BT_ISO_DATA_PATH_HCI,
+		.format = BT_HCI_CODING_FORMAT_TRANSPARENT,
+	};
+	int err;
+
 	LOG_INF("ISO Channel %p connected", chan);
 
 	big_sync_start_time = k_uptime_get();
 
+	err = bt_iso_setup_data_path(chan, BT_HCI_DATAPATH_DIR_CTLR_TO_HOST, &hci_path);
+	if (err != 0) {
+		printk("Failed to setup ISO RX data path: %d\n", err);
+	}
+
 	k_sem_give(&sem_big_sync);
 }
 
diff --git a/samples/bluetooth/iso_central/src/main.c b/samples/bluetooth/iso_central/src/main.c
index a9352363714c..24b2f0d06682 100644
--- a/samples/bluetooth/iso_central/src/main.c
+++ b/samples/bluetooth/iso_central/src/main.c
@@ -1,5 +1,5 @@
 /*
- * Copyright (c) 2021-2024 Nordic Semiconductor ASA
+ * Copyright (c) 2021-2025 Nordic Semiconductor ASA
  *
  * SPDX-License-Identifier: Apache-2.0
  */
@@ -16,6 +16,7 @@
 #include <zephyr/bluetooth/conn.h>
 #include <zephyr/bluetooth/uuid.h>
 #include <zephyr/bluetooth/gatt.h>
+#include <zephyr/bluetooth/hci_types.h>
 #include <zephyr/bluetooth/iso.h>
 #include <zephyr/settings/settings.h>
 #include <zephyr/sys/byteorder.h>
@@ -142,18 +143,36 @@ static void start_scan(void)
 
 static void iso_connected(struct bt_iso_chan *chan)
 {
+	const struct bt_iso_chan_path hci_path = {
+		.pid = BT_ISO_DATA_PATH_HCI,
+		.format = BT_HCI_CODING_FORMAT_TRANSPARENT,
+	};
+	int err;
+
 	printk("ISO Channel %p connected\n", chan);
 
 	seq_num = 0U;
 
-	/* Start send timer */
-	k_work_schedule(&iso_send_work, K_MSEC(0));
+	err = bt_iso_setup_data_path(chan, BT_HCI_DATAPATH_DIR_HOST_TO_CTLR, &hci_path);
+	if (err != 0) {
+		printk("Failed to setup ISO TX data path: %d\n", err);
+	} else {
+		/* Start send timer */
+		k_work_schedule(&iso_send_work, K_NO_WAIT);
+	}
 }
 
 static void iso_disconnected(struct bt_iso_chan *chan, uint8_t reason)
 {
+	int err;
+
 	printk("ISO Channel %p disconnected (reason 0x%02x)\n", chan, reason);
 	k_work_cancel_delayable(&iso_send_work);
+
+	err = bt_iso_remove_data_path(chan, BT_HCI_DATAPATH_DIR_HOST_TO_CTLR);
+	if (err != 0) {
+		printk("Failed to setup ISO TX data path: %d\n", err);
+	}
 }
 
 static struct bt_iso_chan_ops iso_ops = {
@@ -165,7 +184,6 @@ static struct bt_iso_chan_io_qos iso_tx = {
 	.sdu = CONFIG_BT_ISO_TX_MTU,
 	.phy = BT_GAP_LE_PHY_2M,
 	.rtn = 1,
-	.path = NULL,
 };
 
 static struct bt_iso_chan_qos iso_qos = {
diff --git a/samples/bluetooth/iso_connected_benchmark/src/main.c b/samples/bluetooth/iso_connected_benchmark/src/main.c
index 1933033f8442..c6c807125ad6 100644
--- a/samples/bluetooth/iso_connected_benchmark/src/main.c
+++ b/samples/bluetooth/iso_connected_benchmark/src/main.c
@@ -1,5 +1,5 @@
 /*
- * Copyright (c) 2021 Nordic Semiconductor ASA
+ * Copyright (c) 2021-2025 Nordic Semiconductor ASA
  *
  * SPDX-License-Identifier: Apache-2.0
  */
@@ -7,6 +7,7 @@
 #include <ctype.h>
 #include <zephyr/bluetooth/conn.h>
 #include <zephyr/bluetooth/gap.h>
+#include <zephyr/bluetooth/hci_types.h>
 #include <zephyr/kernel.h>
 #include <string.h>
 #include <stdint.h>
@@ -306,7 +307,12 @@ static void iso_recv(struct bt_iso_chan *chan,
 
 static void iso_connected(struct bt_iso_chan *chan)
 {
+	const struct bt_iso_chan_path hci_path = {
+		.pid = BT_ISO_DATA_PATH_HCI,
+		.format = BT_HCI_CODING_FORMAT_TRANSPARENT,
+	};
 	struct iso_chan_work *chan_work;
+	struct bt_iso_info iso_info;
 	int err;
 
 	LOG_INF("ISO Channel %p connected", chan);
@@ -325,6 +331,20 @@ static void iso_connected(struct bt_iso_chan *chan)
 	chan_work = CONTAINER_OF(chan, struct iso_chan_work, chan);
 	chan_work->seq_num = 0U;
 
+	if (iso_info.can_recv) {
+		err = bt_iso_setup_data_path(chan, BT_HCI_DATAPATH_DIR_CTLR_TO_HOST, &hci_path);
+		if (err != 0) {
+			LOG_ERR("Failed to setup ISO RX data path: %d", err);
+		}
+	}
+
+	if (iso_info.can_send) {
+		err = bt_iso_setup_data_path(chan, BT_HCI_DATAPATH_DIR_HOST_TO_CTLR, &hci_path);
+		if (err != 0) {
+			LOG_ERR("Failed to setup ISO TX data path: %d", err);
+		}
+	}
+
 	k_sem_give(&sem_iso_connected);
 }
 
@@ -337,8 +357,10 @@ static void iso_disconnected(struct bt_iso_chan *chan, uint8_t reason)
 	 * of the last created CIS.
 	 */
 	static int64_t average_duration;
+	struct bt_iso_info iso_info;
 	uint64_t iso_conn_duration;
 	uint64_t total_duration;
+	int err;
 
 	if (iso_conn_start_time > 0) {
 		iso_conn_duration = k_uptime_get() - iso_conn_start_time;
@@ -354,6 +376,25 @@ static void iso_disconnected(struct bt_iso_chan *chan, uint8_t reason)
 		chan, reason, iso_conn_duration, average_duration);
 
 	k_sem_give(&sem_iso_disconnected);
+
+	err = bt_iso_chan_get_info(chan, &iso_info);
+	if (err != 0) {
+		LOG_ERR("Failed to get ISO info: %d\n", err);
+	} else if (iso_info.type == BT_ISO_CHAN_TYPE_CENTRAL) {
+		if (iso_info.can_recv) {
+			err = bt_iso_remove_data_path(chan, BT_HCI_DATAPATH_DIR_CTLR_TO_HOST);
+			if (err != 0) {
+				LOG_ERR("Failed to remove ISO RX data path: %d\n", err);
+			}
+		}
+
+		if (iso_info.can_send) {
+			err = bt_iso_remove_data_path(chan, BT_HCI_DATAPATH_DIR_HOST_TO_CTLR);
+			if (err != 0) {
+				LOG_ERR("Failed to remove ISO TX data path: %d\n", err);
+			}
+		}
+	}
 }
 
 static struct bt_iso_chan_ops iso_ops = {
diff --git a/samples/bluetooth/iso_peripheral/src/main.c b/samples/bluetooth/iso_peripheral/src/main.c
index d11baa9633fa..47d69595b5e3 100644
--- a/samples/bluetooth/iso_peripheral/src/main.c
+++ b/samples/bluetooth/iso_peripheral/src/main.c
@@ -1,5 +1,5 @@
 /*
- * Copyright (c) 2021 Nordic Semiconductor ASA
+ * Copyright (c) 2021-2025 Nordic Semiconductor ASA
  *
  * SPDX-License-Identifier: Apache-2.0
  */
@@ -15,6 +15,7 @@
 #include <zephyr/bluetooth/bluetooth.h>
 #include <zephyr/bluetooth/hci.h>
 #include <zephyr/bluetooth/conn.h>
+#include <zephyr/bluetooth/hci_types.h>
 #include <zephyr/bluetooth/iso.h>
 #include <zephyr/settings/settings.h>
 
@@ -104,7 +105,18 @@ static void iso_recv(struct bt_iso_chan *chan, const struct bt_iso_recv_info *in
 
 static void iso_connected(struct bt_iso_chan *chan)
 {
+	const struct bt_iso_chan_path hci_path = {
+		.pid = BT_ISO_DATA_PATH_HCI,
+		.format = BT_HCI_CODING_FORMAT_TRANSPARENT,
+	};
+	int err;
+
 	printk("ISO Channel %p connected\n", chan);
+
+	err = bt_iso_setup_data_path(chan, BT_HCI_DATAPATH_DIR_CTLR_TO_HOST, &hci_path);
+	if (err != 0) {
+		printk("Failed to setup ISO RX data path: %d", err);
+	}
 }
 
 static void iso_disconnected(struct bt_iso_chan *chan, uint8_t reason)
@@ -120,7 +132,6 @@ static struct bt_iso_chan_ops iso_ops = {
 
 static struct bt_iso_chan_io_qos iso_rx = {
 	.sdu = CONFIG_BT_ISO_TX_MTU,
-	.path = NULL,
 };
 
 static struct bt_iso_chan_qos iso_qos = {
diff --git a/samples/bluetooth/iso_receive/src/main.c b/samples/bluetooth/iso_receive/src/main.c
index e51bbe6d34be..81f2b80da663 100644
--- a/samples/bluetooth/iso_receive/src/main.c
+++ b/samples/bluetooth/iso_receive/src/main.c
@@ -1,5 +1,5 @@
 /*
- * Copyright (c) 2021 Nordic Semiconductor ASA
+ * Copyright (c) 2021-2024 Nordic Semiconductor ASA
  *
  * SPDX-License-Identifier: Apache-2.0
  */
@@ -9,6 +9,7 @@
 #include <zephyr/drivers/gpio.h>
 #include <zephyr/bluetooth/bluetooth.h>
 #include <zephyr/bluetooth/conn.h>
+#include <zephyr/bluetooth/hci_types.h>
 #include <zephyr/bluetooth/iso.h>
 #include <zephyr/sys/byteorder.h>
 
@@ -233,7 +234,19 @@ static void iso_recv(struct bt_iso_chan *chan, const struct bt_iso_recv_info *in
 
 static void iso_connected(struct bt_iso_chan *chan)
 {
+	const struct bt_iso_chan_path hci_path = {
+		.pid = BT_ISO_DATA_PATH_HCI,
+		.format = BT_HCI_CODING_FORMAT_TRANSPARENT,
+	};
+	int err;
+
 	printk("ISO Channel %p connected\n", chan);
+
+	err = bt_iso_setup_data_path(chan, BT_HCI_DATAPATH_DIR_CTLR_TO_HOST, &hci_path);
+	if (err != 0) {
+		printk("Failed to setup ISO RX data path: %d\n", err);
+	}
+
 	k_sem_give(&sem_big_sync);
 }
 
diff --git a/subsys/bluetooth/audio/ascs.c b/subsys/bluetooth/audio/ascs.c
index f2edf555a936..6f4924dc60d4 100644
--- a/subsys/bluetooth/audio/ascs.c
+++ b/subsys/bluetooth/audio/ascs.c
@@ -3,7 +3,7 @@
  */
 /*
  * Copyright (c) 2020 Intel Corporation
- * Copyright (c) 2022-2023 Nordic Semiconductor ASA
+ * Copyright (c) 2022-2025 Nordic Semiconductor ASA
  * Copyright (c) 2024 Demant A/S
  *
  * SPDX-License-Identifier: Apache-2.0
@@ -384,6 +384,11 @@ static void ase_enter_state_streaming(struct bt_ascs_ase *ase)
 
 	__ASSERT_NO_MSG(stream != NULL);
 
+	/* Setup the ISO data path when the stream is started. We could do it earlier when the CIS
+	 * is connected, but then we would just receive audio data that we would then just discard
+	 */
+	bt_bap_setup_iso_data_path(stream);
+
 	ops = stream->ops;
 	if (ops != NULL && ops->started != NULL) {
 		ops->started(stream);
@@ -417,6 +422,14 @@ static void ase_exit_state_streaming(struct bt_ascs_ase *ase)
 		reason = BT_HCI_ERR_UNSPECIFIED;
 	}
 
+	if (ase->ep.iso != NULL && ase->ep.iso->chan.state == BT_ISO_STATE_CONNECTED) {
+		/* Remove the ISO data path as we no longer want to process any ISO data for this
+		 * stream, but only if the CIS is still connected. If the CIS disconnected, then the
+		 * data path is automatically removed by the controller
+		 */
+		bt_bap_remove_iso_data_path(stream);
+	}
+
 	ops = stream->ops;
 
 	/*
@@ -1996,12 +2009,6 @@ static void ase_qos(struct bt_ascs_ase *ase, uint8_t cig_id, uint8_t cis_id,
 	ep->qos = *qos;
 	stream->qos = &ep->qos;
 
-	/* We setup the data path here, as this is the earliest where
-	 * we have the ISO <-> EP coupling completed (due to setting
-	 * the CIS ID in the QoS procedure).
-	 */
-	bt_bap_iso_configure_data_path(ep, stream->codec_cfg);
-
 	ep->cig_id = cig_id;
 	ep->cis_id = cis_id;
 
diff --git a/subsys/bluetooth/audio/bap_broadcast_sink.c b/subsys/bluetooth/audio/bap_broadcast_sink.c
index fa1f0b8ee564..9bb13aec5b95 100644
--- a/subsys/bluetooth/audio/bap_broadcast_sink.c
+++ b/subsys/bluetooth/audio/bap_broadcast_sink.c
@@ -1,7 +1,7 @@
 /*  Bluetooth Audio Broadcast Sink */
 
 /*
- * Copyright (c) 2021-2024 Nordic Semiconductor ASA
+ * Copyright (c) 2021-2025 Nordic Semiconductor ASA
  *
  * SPDX-License-Identifier: Apache-2.0
  */
@@ -356,6 +356,9 @@ static void broadcast_sink_iso_connected(struct bt_iso_chan *chan)
 
 	broadcast_sink_set_ep_state(ep, BT_BAP_EP_STATE_STREAMING);
 
+	/* Setup the ISO data path */
+	bt_bap_setup_iso_data_path(stream);
+
 	if (ops != NULL && ops->started != NULL) {
 		ops->started(stream);
 	} else {
@@ -973,7 +976,6 @@ static int bt_bap_broadcast_sink_setup_stream(struct bt_bap_broadcast_sink *sink
 	bt_bap_iso_bind_ep(iso, ep);
 
 	bt_bap_qos_cfg_to_iso_qos(iso->chan.qos->rx, &sink->qos_cfg);
-	bt_bap_iso_configure_data_path(ep, codec_cfg);
 
 	bt_bap_iso_unref(iso);
 
diff --git a/subsys/bluetooth/audio/bap_broadcast_source.c b/subsys/bluetooth/audio/bap_broadcast_source.c
index 132dca5580a3..748d9d68db9c 100644
--- a/subsys/bluetooth/audio/bap_broadcast_source.c
+++ b/subsys/bluetooth/audio/bap_broadcast_source.c
@@ -1,7 +1,7 @@
 /*  Bluetooth Audio Broadcast Source */
 
 /*
- * Copyright (c) 2021-2024 Nordic Semiconductor ASA
+ * Copyright (c) 2021-2025 Nordic Semiconductor ASA
  *
  * SPDX-License-Identifier: Apache-2.0
  */
@@ -191,6 +191,9 @@ static void broadcast_source_iso_connected(struct bt_iso_chan *chan)
 	stream->_prev_seq_num = 0U;
 #endif /* CONFIG_BT_BAP_DEBUG_STREAM_SEQ_NUM */
 
+	/* Setup the ISO data path */
+	bt_bap_setup_iso_data_path(stream);
+
 	ops = stream->ops;
 	if (ops != NULL && ops->connected != NULL) {
 		ops->connected(stream);
@@ -317,7 +320,7 @@ static int broadcast_source_setup_stream(uint8_t index, struct bt_bap_stream *st
 	bt_bap_iso_bind_ep(iso, ep);
 
 	bt_bap_qos_cfg_to_iso_qos(iso->chan.qos->tx, qos);
-	bt_bap_iso_configure_data_path(ep, codec_cfg);
+
 #if defined(CONFIG_BT_ISO_TEST_PARAMS)
 	iso->chan.qos->num_subevents = qos->num_subevents;
 #endif /* CONFIG_BT_ISO_TEST_PARAMS */
@@ -967,7 +970,6 @@ int bt_bap_broadcast_source_reconfig(struct bt_bap_broadcast_source *source,
 		 */
 		SYS_SLIST_FOR_EACH_CONTAINER(&subgroup->streams, stream, _node) {
 			bt_bap_stream_attach(NULL, stream, stream->ep, codec_cfg);
-			bt_bap_iso_configure_data_path(stream->ep, codec_cfg);
 		}
 	}
 
diff --git a/subsys/bluetooth/audio/bap_iso.c b/subsys/bluetooth/audio/bap_iso.c
index e58e139a7719..a661e4c357bf 100644
--- a/subsys/bluetooth/audio/bap_iso.c
+++ b/subsys/bluetooth/audio/bap_iso.c
@@ -170,43 +170,68 @@ static struct bt_bap_iso_dir *bap_iso_get_iso_dir(bool unicast_client, struct bt
 	}
 }
 
-void bt_bap_iso_configure_data_path(struct bt_bap_ep *ep, struct bt_audio_codec_cfg *codec_cfg)
+void bt_bap_setup_iso_data_path(struct bt_bap_stream *stream)
 {
+	struct bt_audio_codec_cfg *codec_cfg = stream->codec_cfg;
+	struct bt_bap_ep *ep = stream->ep;
 	struct bt_bap_iso *bap_iso = ep->iso;
-	struct bt_iso_chan_qos *qos = bap_iso->chan.qos;
 	const bool is_unicast_client =
 		IS_ENABLED(CONFIG_BT_BAP_UNICAST_CLIENT) && bt_bap_ep_is_unicast_client(ep);
 	struct bt_bap_iso_dir *iso_dir = bap_iso_get_iso_dir(is_unicast_client, bap_iso, ep->dir);
-	struct bt_iso_chan_path *path = &iso_dir->path;
+	struct bt_iso_chan_path path = {0};
+	uint8_t dir;
+	int err;
 
-	/* Setup the data path objects */
 	if (iso_dir == &bap_iso->rx) {
-		qos->rx->path = path;
+		dir = BT_HCI_DATAPATH_DIR_CTLR_TO_HOST;
 	} else {
-		qos->tx->path = path;
+		dir = BT_HCI_DATAPATH_DIR_HOST_TO_CTLR;
 	}
 
+	path.pid = codec_cfg->path_id;
+
 	/* Configure the data path to either use the controller for transcoding, or set the path to
 	 * be transparent to indicate that the transcoding happens somewhere else
 	 */
-	path->pid = codec_cfg->path_id;
-
 	if (codec_cfg->ctlr_transcode) {
-		path->format = codec_cfg->id;
-		path->cid = codec_cfg->cid;
-		path->vid = codec_cfg->vid;
-		path->delay = 0;
-		path->cc_len = codec_cfg->data_len;
-		path->cc = codec_cfg->data;
+		path.format = codec_cfg->id;
+		path.cid = codec_cfg->cid;
+		path.vid = codec_cfg->vid;
+		path.cc_len = codec_cfg->data_len;
+		path.cc = codec_cfg->data;
+	} else {
+		path.format = BT_HCI_CODING_FORMAT_TRANSPARENT;
+	}
+
+	err = bt_iso_setup_data_path(&bap_iso->chan, dir, &path);
+	if (err != 0) {
+		LOG_ERR("Failed to set ISO data path for ep %p and codec_cfg %p: %d", ep, codec_cfg,
+			err);
+	}
+}
+
+void bt_bap_remove_iso_data_path(struct bt_bap_stream *stream)
+{
+	struct bt_bap_ep *ep = stream->ep;
+	struct bt_bap_iso *bap_iso = ep->iso;
+	const bool is_unicast_client =
+		IS_ENABLED(CONFIG_BT_BAP_UNICAST_CLIENT) && bt_bap_ep_is_unicast_client(ep);
+	struct bt_bap_iso_dir *iso_dir = bap_iso_get_iso_dir(is_unicast_client, bap_iso, ep->dir);
+	uint8_t dir;
+	int err;
+
+	if (iso_dir == &bap_iso->rx) {
+		dir = BT_HCI_DATAPATH_DIR_CTLR_TO_HOST;
 	} else {
-		path->format = BT_HCI_CODING_FORMAT_TRANSPARENT;
-		path->cid = 0;
-		path->vid = 0;
-		path->delay = 0;
-		path->cc_len = 0;
-		path->cc = NULL;
+		dir = BT_HCI_DATAPATH_DIR_HOST_TO_CTLR;
+	}
+
+	err = bt_iso_remove_data_path(&bap_iso->chan, dir);
+	if (err != 0) {
+		LOG_ERR("Failed to remove ISO data path for ep %p: %d", ep, err);
 	}
 }
+
 static bool is_unicast_client_ep(struct bt_bap_ep *ep)
 {
 	return IS_ENABLED(CONFIG_BT_BAP_UNICAST_CLIENT) && bt_bap_ep_is_unicast_client(ep);
diff --git a/subsys/bluetooth/audio/bap_iso.h b/subsys/bluetooth/audio/bap_iso.h
index f1ebd0eed9b2..18a65c1ac7a7 100644
--- a/subsys/bluetooth/audio/bap_iso.h
+++ b/subsys/bluetooth/audio/bap_iso.h
@@ -2,7 +2,7 @@
  * @brief Internal APIs for BAP ISO handling
  *
  * Copyright (c) 2022 Codecoup
- * Copyright (c) 2023 Nordic Semiconductor ASA
+ * Copyright (c) 2023-2024 Nordic Semiconductor ASA
  *
  * SPDX-License-Identifier: Apache-2.0
  */
@@ -19,7 +19,6 @@
 struct bt_bap_iso_dir {
 	struct bt_bap_stream *stream;
 	struct bt_bap_ep *ep;
-	struct bt_iso_chan_path path;
 	struct bt_iso_chan_io_qos qos;
 	uint8_t cc[CONFIG_BT_AUDIO_CODEC_CFG_MAX_DATA_SIZE];
 };
@@ -46,7 +45,8 @@ void bt_bap_iso_foreach(bt_bap_iso_func_t func, void *user_data);
 struct bt_bap_iso *bt_bap_iso_find(bt_bap_iso_func_t func, void *user_data);
 void bt_bap_iso_init(struct bt_bap_iso *iso, struct bt_iso_chan_ops *ops);
 void bt_bap_iso_bind_ep(struct bt_bap_iso *iso, struct bt_bap_ep *ep);
-void bt_bap_iso_configure_data_path(struct bt_bap_ep *ep, struct bt_audio_codec_cfg *codec_cfg);
+void bt_bap_setup_iso_data_path(struct bt_bap_stream *stream);
+void bt_bap_remove_iso_data_path(struct bt_bap_stream *stream);
 void bt_bap_iso_unbind_ep(struct bt_bap_iso *iso, struct bt_bap_ep *ep);
 struct bt_bap_ep *bt_bap_iso_get_ep(bool unicast_client, struct bt_bap_iso *iso,
 				    enum bt_audio_dir dir);
diff --git a/subsys/bluetooth/audio/bap_unicast_client.c b/subsys/bluetooth/audio/bap_unicast_client.c
index 2b52c000b11b..1f081ee805b1 100644
--- a/subsys/bluetooth/audio/bap_unicast_client.c
+++ b/subsys/bluetooth/audio/bap_unicast_client.c
@@ -4,7 +4,7 @@
 
 /*
  * Copyright (c) 2020 Intel Corporation
- * Copyright (c) 2022-2023 Nordic Semiconductor ASA
+ * Copyright (c) 2022-2025 Nordic Semiconductor ASA
  *
  * SPDX-License-Identifier: Apache-2.0
  */
@@ -1019,13 +1019,6 @@ static void unicast_client_ep_qos_state(struct bt_bap_ep *ep, struct net_buf_sim
 		if (err != 0) {
 			LOG_ERR("Failed to disconnect stream: %d", err);
 		}
-	} else {
-		/* We setup the data path here, as this is the earliest where
-		 * we have the ISO <-> EP coupling completed (due to setting
-		 * the CIS ID in the QoS procedure).
-		 */
-
-		bt_bap_iso_configure_data_path(ep, stream->codec_cfg);
 	}
 
 	/* Notify upper layer */
@@ -1108,6 +1101,11 @@ static void unicast_client_ep_streaming_state(struct bt_bap_ep *ep, struct net_b
 
 	LOG_DBG("dir %s cig 0x%02x cis 0x%02x", bt_audio_dir_str(ep->dir), ep->cig_id, ep->cis_id);
 
+	/* Setup the ISO data path when the stream is started. We could do it earlier when the CIS
+	 * is connected, but then we would just receive audio data that we would then just discard
+	 */
+	bt_bap_setup_iso_data_path(stream);
+
 	/* Notify upper layer
 	 *
 	 * If the state did not change then only the metadata was changed
@@ -1222,6 +1220,13 @@ static void unicast_client_ep_set_status(struct bt_bap_ep *ep, struct net_buf_si
 				ep->reason = BT_HCI_ERR_SUCCESS;
 			}
 
+			if (ep->iso != NULL) {
+				/* Remove the ISO data path as we no longer want to process any ISO
+				 * data for this stream.
+				 */
+				bt_bap_remove_iso_data_path(stream);
+			}
+
 			if (ops != NULL && ops->stopped != NULL) {
 				ops->stopped(stream, reason);
 			} else {
diff --git a/subsys/bluetooth/host/conn.c b/subsys/bluetooth/host/conn.c
index 92ebec4ad4dc..366ba197c4b1 100644
--- a/subsys/bluetooth/host/conn.c
+++ b/subsys/bluetooth/host/conn.c
@@ -7,6 +7,7 @@
  * SPDX-License-Identifier: Apache-2.0
  */
 
+#include <zephyr/bluetooth/iso.h>
 #include <zephyr/kernel.h>
 #include <string.h>
 #include <errno.h>
@@ -2978,7 +2979,9 @@ int bt_conn_get_info(const struct bt_conn *conn, struct bt_conn_info *info)
 #if defined(CONFIG_BT_ISO)
 	case BT_CONN_TYPE_ISO:
 		if (IS_ENABLED(CONFIG_BT_ISO_UNICAST) &&
-		    conn->iso.info.type == BT_ISO_CHAN_TYPE_CONNECTED && conn->iso.acl != NULL) {
+		    (conn->iso.info.type == BT_ISO_CHAN_TYPE_CENTRAL ||
+		     conn->iso.info.type == BT_ISO_CHAN_TYPE_PERIPHERAL) &&
+		    conn->iso.acl != NULL) {
 			info->le.dst = &conn->iso.acl->le.dst;
 			info->le.src = &bt_dev.id_addr[conn->iso.acl->id];
 		} else {
diff --git a/subsys/bluetooth/host/iso.c b/subsys/bluetooth/host/iso.c
index 973a9c61f764..cc881e3d8ce9 100644
--- a/subsys/bluetooth/host/iso.c
+++ b/subsys/bluetooth/host/iso.c
@@ -2,7 +2,7 @@
 
 /*
  * Copyright (c) 2020 Intel Corporation
- * Copyright (c) 2021-2024 Nordic Semiconductor ASA
+ * Copyright (c) 2021-2025 Nordic Semiconductor ASA
  *
  * SPDX-License-Identifier: Apache-2.0
  */
@@ -77,7 +77,6 @@ struct bt_conn iso_conns[CONFIG_BT_ISO_MAX_CHAN];
 struct bt_iso_cig cigs[CONFIG_BT_ISO_MAX_CIG];
 
 static struct bt_iso_cig *get_cig(const struct bt_iso_chan *iso_chan);
-static void bt_iso_remove_data_path(struct bt_conn *iso);
 static int hci_le_create_cis(const struct bt_iso_connect_param *param, size_t count);
 
 #endif /* CONFIG_BT_ISO_CENTRAL */
@@ -197,15 +196,6 @@ static int hci_le_setup_iso_data_path(const struct bt_conn *iso, uint8_t dir,
 	uint8_t *cc;
 	int err;
 
-	__ASSERT(dir == BT_HCI_DATAPATH_DIR_HOST_TO_CTLR || dir == BT_HCI_DATAPATH_DIR_CTLR_TO_HOST,
-		 "invalid ISO data path dir: %u", dir);
-
-	if ((path->cc == NULL && path->cc_len != 0)) {
-		LOG_DBG("Invalid ISO data path CC: %p %u", path->cc, path->cc_len);
-
-		return -EINVAL;
-	}
-
 	buf = bt_hci_cmd_create(BT_HCI_OP_LE_SETUP_ISO_PATH, sizeof(*cp) + path->cc_len);
 	if (!buf) {
 		return -ENOBUFS;
@@ -249,103 +239,197 @@ static void bt_iso_chan_add(struct bt_conn *iso, struct bt_iso_chan *chan)
 	LOG_DBG("iso %p chan %p", iso, chan);
 }
 
-static int bt_iso_setup_data_path(struct bt_iso_chan *chan)
+static int validate_iso_setup_data_path_parms(const struct bt_iso_chan *chan, uint8_t dir,
+					      const struct bt_iso_chan_path *path)
 {
-	int err;
-	struct bt_iso_chan_path default_hci_path = {.pid = BT_ISO_DATA_PATH_HCI,
-						    .format = BT_HCI_CODING_FORMAT_TRANSPARENT,
-						    .cc_len = 0x00};
-	struct bt_iso_chan_path *out_path = NULL;
-	struct bt_iso_chan_path *in_path = NULL;
-	struct bt_iso_chan_io_qos *tx_qos;
-	struct bt_iso_chan_io_qos *rx_qos;
 	struct bt_conn *iso;
-	uint8_t dir;
+
+	CHECKIF(chan == NULL) {
+		LOG_DBG("chan is NULL");
+
+		return -EINVAL;
+	}
+
+	CHECKIF(path == NULL) {
+		LOG_DBG("path is NULL");
+
+		return -EINVAL;
+	}
+
+	CHECKIF(dir != BT_HCI_DATAPATH_DIR_HOST_TO_CTLR &&
+		dir != BT_HCI_DATAPATH_DIR_CTLR_TO_HOST) {
+		LOG_DBG("Invalid dir: %u", dir);
+
+		return -EINVAL;
+	}
 
 	iso = chan->iso;
+	if (iso == NULL) {
+		LOG_DBG("chan %p not associated with a CIS/BIS handle", chan);
 
-	tx_qos = chan->qos->tx;
-	rx_qos = chan->qos->rx;
+		return -ENODEV;
+	}
 
-	/* The following code sets the in and out paths for ISO data.
-	 * If the application provides a path for a direction (tx/rx) we use
-	 * that, otherwise we simply fall back to HCI.
-	 *
-	 * If the direction is not set (by whether tx_qos or rx_qos is NULL),
-	 * then we fallback to the HCI path object, but we disable the direction
-	 * in the controller.
-	 */
+	if (!iso->iso.info.can_recv && dir == BT_HCI_DATAPATH_DIR_CTLR_TO_HOST) {
+		LOG_DBG("Invalid dir %u for chan %p that cannot receive data", dir, chan);
 
-	if (tx_qos != NULL && iso->iso.info.can_send) {
-		if (tx_qos->path != NULL) { /* Use application path */
-			in_path = tx_qos->path;
-		} else { /* else fallback to HCI path */
-			in_path = &default_hci_path;
-		}
+		return -EINVAL;
 	}
 
-	if (rx_qos != NULL && iso->iso.info.can_recv) {
-		if (rx_qos->path != NULL) { /* Use application path */
-			out_path = rx_qos->path;
-		} else { /* else fallback to HCI path */
-			out_path = &default_hci_path;
-		}
+	if (!iso->iso.info.can_send && dir == BT_HCI_DATAPATH_DIR_HOST_TO_CTLR) {
+		LOG_DBG("Invalid dir %u for chan %p that cannot send data", dir, chan);
+
+		return -EINVAL;
 	}
 
-	__ASSERT(in_path || out_path, "At least one path shall be shell: in %p out %p", in_path,
-		 out_path);
+	CHECKIF(path->pid != BT_ISO_DATA_PATH_HCI &&
+		!IN_RANGE(path->pid, BT_ISO_DATA_PATH_VS_ID_MIN, BT_ISO_DATA_PATH_VS_ID_MAX)) {
+		LOG_DBG("Invalid pid %u", path->pid);
 
-	if (IS_ENABLED(CONFIG_BT_ISO_BROADCASTER) &&
-	    iso->iso.info.type == BT_ISO_CHAN_TYPE_BROADCASTER && in_path) {
-		dir = BT_HCI_DATAPATH_DIR_HOST_TO_CTLR;
-		err = hci_le_setup_iso_data_path(iso, dir, in_path);
-		if (err != 0) {
-			LOG_DBG("Failed to set broadcaster data path: %d", err);
-		}
+		return -EINVAL;
+	}
+
+	CHECKIF(path->format > BT_HCI_CODING_FORMAT_G729A &&
+		path->format != BT_HCI_CODING_FORMAT_VS) {
+		LOG_DBG("Invalid format %u", path->format);
+
+		return -EINVAL;
+	}
+
+	CHECKIF(path->delay > BT_ISO_CONTROLLER_DELAY_MAX) {
+		LOG_DBG("Invalid delay: %u", path->delay);
+
+		return -EINVAL;
+	}
 
+	CHECKIF(path->cc_len > 0U && path->cc == NULL) {
+		LOG_DBG("No CC provided for CC length %u", path->cc_len);
+
+		return -EINVAL;
+	}
+
+	return 0;
+}
+
+int bt_iso_setup_data_path(const struct bt_iso_chan *chan, uint8_t dir,
+			   const struct bt_iso_chan_path *path)
+{
+	int err;
+
+	err = validate_iso_setup_data_path_parms(chan, dir, path);
+	if (err != 0) {
 		return err;
-	} else if (IS_ENABLED(CONFIG_BT_ISO_SYNC_RECEIVER) &&
-		   iso->iso.info.type == BT_ISO_CHAN_TYPE_SYNC_RECEIVER && out_path) {
-		dir = BT_HCI_DATAPATH_DIR_CTLR_TO_HOST;
-		err = hci_le_setup_iso_data_path(iso, dir, out_path);
-		if (err != 0) {
-			LOG_DBG("Failed to set sync receiver data path: %d", err);
+	}
+
+	err = hci_le_setup_iso_data_path(chan->iso, dir, path);
+	if (err != 0) {
+		LOG_DBG("Failed to set data path: %d", err);
+
+		/* Return known possible errors */
+		if (err == -ENOBUFS || err == -EIO || err == -EACCES) {
+			return err;
 		}
 
+		LOG_DBG("Unknown error from hci_le_setup_iso_data_path: %d", err);
+
+		return -ENOEXEC;
+	}
+
+	return 0;
+}
+
+static int hci_le_remove_iso_data_path(struct bt_conn *iso, uint8_t dir)
+{
+	struct bt_hci_cp_le_remove_iso_path *cp;
+	struct bt_hci_rp_le_remove_iso_path *rp;
+	struct net_buf *buf, *rsp;
+	int err;
+
+	buf = bt_hci_cmd_create(BT_HCI_OP_LE_REMOVE_ISO_PATH, sizeof(*cp));
+	if (!buf) {
+		return -ENOBUFS;
+	}
+
+	cp = net_buf_add(buf, sizeof(*cp));
+	cp->handle = sys_cpu_to_le16(iso->handle);
+	/* The path_dir is a bitfield and it's technically possible to do BIT(0) | BIT(1) but for
+	 * simplicity our API only supports removing a single ISO data path at a time.
+	 * We can convert from BT_HCI_DATAPATH_DIR_HOST_TO_CTLR and BT_HCI_DATAPATH_DIR_CTLR_TO_HOST
+	 * to the proper values just by using `BIT`
+	 */
+	cp->path_dir = BIT(dir);
+
+	err = bt_hci_cmd_send_sync(BT_HCI_OP_LE_REMOVE_ISO_PATH, buf, &rsp);
+	if (err) {
 		return err;
-	} else if (IS_ENABLED(CONFIG_BT_ISO_UNICAST) &&
-		   iso->iso.info.type == BT_ISO_CHAN_TYPE_CONNECTED) {
-		if (in_path != NULL) {
-			/* Enable TX */
-			dir = BT_HCI_DATAPATH_DIR_HOST_TO_CTLR;
-			err = hci_le_setup_iso_data_path(iso, dir, in_path);
-			if (err) {
-				LOG_DBG("Failed to setup host-to-ctrl path: %d", err);
-				return err;
-			}
-		}
+	}
 
-		if (out_path != NULL) {
-			/* Enable RX */
-			dir = BT_HCI_DATAPATH_DIR_CTLR_TO_HOST;
-			err = hci_le_setup_iso_data_path(iso, dir, out_path);
-			if (err) {
-				LOG_DBG("Failed to setup ctlr-to-host path: %d", err);
-				return err;
-			}
-		}
+	rp = (void *)rsp->data;
+	if (rp->status || (sys_le16_to_cpu(rp->handle) != iso->handle)) {
+		err = -EIO;
+	}
+
+	net_buf_unref(rsp);
+
+	return err;
+}
+
+static int validate_iso_remove_data_path(const struct bt_iso_chan *chan, uint8_t dir)
+{
+	struct bt_conn *iso;
+
+	CHECKIF(chan == NULL) {
+		LOG_DBG("chan is NULL");
 
-		return 0;
-	} else {
-		__ASSERT(false, "Invalid iso.info.type: %u", iso->iso.info.type);
 		return -EINVAL;
 	}
+
+	CHECKIF(dir != BT_HCI_DATAPATH_DIR_HOST_TO_CTLR &&
+		dir != BT_HCI_DATAPATH_DIR_CTLR_TO_HOST) {
+		LOG_DBG("Invalid dir: %u", dir);
+
+		return -EINVAL;
+	}
+
+	iso = chan->iso;
+	if (iso == NULL) {
+		LOG_DBG("chan %p not associated with a CIS/BIS handle", chan);
+
+		return -ENODEV;
+	}
+
+	return 0;
+}
+
+int bt_iso_remove_data_path(const struct bt_iso_chan *chan, uint8_t dir)
+{
+	int err;
+
+	err = validate_iso_remove_data_path(chan, dir);
+	if (err != 0) {
+		return err;
+	}
+
+	err = hci_le_remove_iso_data_path(chan->iso, dir);
+	if (err != 0) {
+		LOG_DBG("Failed to remove data path: %d", err);
+
+		/* Return known possible errors */
+		if (err == -ENOBUFS || err == -EIO || err == -EACCES) {
+			return err;
+		}
+
+		LOG_DBG("Unknown error from hci_le_remove_iso_data_path: %d", err);
+
+		return -ENOEXEC;
+	}
+
+	return 0;
 }
 
 void bt_iso_connected(struct bt_conn *iso)
 {
 	struct bt_iso_chan *chan;
-	int err;
 
 	if (iso == NULL || iso->type != BT_CONN_TYPE_ISO) {
 		LOG_DBG("Invalid parameters: iso %p iso->type %u", iso, iso ? iso->type : 0);
@@ -360,32 +444,6 @@ void bt_iso_connected(struct bt_conn *iso)
 		return;
 	}
 
-	err = bt_iso_setup_data_path(chan);
-	if (err != 0) {
-		if (false) {
-
-#if defined(CONFIG_BT_ISO_BROADCAST)
-		} else if (iso->iso.info.type == BT_ISO_CHAN_TYPE_BROADCASTER ||
-			   iso->iso.info.type == BT_ISO_CHAN_TYPE_SYNC_RECEIVER) {
-			struct bt_iso_big *big;
-
-			big = lookup_big_by_handle(iso->iso.big_handle);
-
-			err = bt_iso_big_terminate(big);
-			if (err != 0) {
-				LOG_ERR("Could not terminate BIG: %d", err);
-			}
-#endif /* CONFIG_BT_ISO_BROADCAST */
-
-		} else if (IS_ENABLED(CONFIG_BT_ISO_UNICAST) &&
-			   iso->iso.info.type == BT_ISO_CHAN_TYPE_CONNECTED) {
-			bt_conn_disconnect(iso, BT_HCI_ERR_REMOTE_USER_TERM_CONN);
-		} else {
-			__ASSERT(false, "Invalid iso.info.type: %u", iso->iso.info.type);
-		}
-		return;
-	}
-
 	bt_iso_chan_set_state(chan, BT_ISO_STATE_CONNECTED);
 
 	if (chan->ops->connected) {
@@ -395,6 +453,7 @@ void bt_iso_connected(struct bt_conn *iso)
 
 static void bt_iso_chan_disconnected(struct bt_iso_chan *chan, uint8_t reason)
 {
+	const uint8_t conn_type = chan->iso->iso.info.type;
 	LOG_DBG("%p, reason 0x%02x", chan, reason);
 
 	__ASSERT(chan->iso != NULL, "NULL conn for iso chan %p", chan);
@@ -402,23 +461,26 @@ static void bt_iso_chan_disconnected(struct bt_iso_chan *chan, uint8_t reason)
 	bt_iso_chan_set_state(chan, BT_ISO_STATE_DISCONNECTED);
 	bt_conn_set_state(chan->iso, BT_CONN_DISCONNECT_COMPLETE);
 
+	/* Calling disconnected before final cleanup allows users to use bt_iso_chan_get_info in
+	 * the callback and to be more similar to the ACL disconnected callback. This also means
+	 * that the channel cannot be reused or memset in the callback
+	 */
+	if (chan->ops->disconnected) {
+		chan->ops->disconnected(chan, reason);
+	}
+
 	/* The peripheral does not have the concept of a CIG, so once a CIS
 	 * disconnects it is completely freed by unref'ing it
 	 */
 	if (IS_ENABLED(CONFIG_BT_ISO_UNICAST) &&
-	    chan->iso->iso.info.type == BT_ISO_CHAN_TYPE_CONNECTED) {
+	    (conn_type == BT_ISO_CHAN_TYPE_CENTRAL || conn_type == BT_ISO_CHAN_TYPE_PERIPHERAL)) {
 		bt_iso_cleanup_acl(chan->iso);
 
-		if (chan->iso->role == BT_HCI_ROLE_PERIPHERAL) {
+		if (conn_type == BT_ISO_CHAN_TYPE_PERIPHERAL) {
 			bt_conn_unref(chan->iso);
 			chan->iso = NULL;
 #if defined(CONFIG_BT_ISO_CENTRAL)
 		} else {
-			/* ISO data paths are automatically removed when the
-			 * peripheral disconnects, so we only need to
-			 * move it for the central
-			 */
-			bt_iso_remove_data_path(chan->iso);
 			bool is_chan_connected;
 			struct bt_iso_cig *cig;
 			struct bt_iso_chan *cis_chan;
@@ -442,10 +504,6 @@ static void bt_iso_chan_disconnected(struct bt_iso_chan *chan, uint8_t reason)
 #endif /* CONFIG_BT_ISO_CENTRAL */
 		}
 	}
-
-	if (chan->ops->disconnected) {
-		chan->ops->disconnected(chan, reason);
-	}
 }
 
 void bt_iso_disconnected(struct bt_conn *iso)
@@ -1131,7 +1189,7 @@ static void store_cis_info(const struct bt_hci_evt_le_cis_established *evt, stru
 			tx->sdu = sys_le16_to_cpu(evt->p_max_pdu);
 		}
 
-		iso_conn->info.type = BT_ISO_CHAN_TYPE_CONNECTED;
+		iso_conn->info.type = BT_ISO_CHAN_TYPE_PERIPHERAL;
 	} else {
 		/* values are already set for central - Verify */
 		if (tx != NULL && tx->phy != c_phy) {
@@ -1548,7 +1606,7 @@ void hci_le_cis_req(struct net_buf *buf)
 		return;
 	}
 
-	iso->iso.info.type = BT_ISO_CHAN_TYPE_CONNECTED;
+	iso->iso.info.type = BT_ISO_CHAN_TYPE_PERIPHERAL;
 	iso->iso.cig_id = evt->cig_id;
 	iso->iso.cis_id = evt->cis_id;
 
@@ -1591,80 +1649,6 @@ static struct bt_conn *bt_conn_add_iso(struct bt_conn *acl)
 #endif /* CONFIG_BT_ISO_PERIPHERAL */
 
 #if defined(CONFIG_BT_ISO_CENTRAL)
-static int hci_le_remove_iso_data_path(struct bt_conn *iso, uint8_t dir)
-{
-	struct bt_hci_cp_le_remove_iso_path *cp;
-	struct bt_hci_rp_le_remove_iso_path *rp;
-	struct net_buf *buf, *rsp;
-	int err;
-
-	buf = bt_hci_cmd_create(BT_HCI_OP_LE_REMOVE_ISO_PATH, sizeof(*cp));
-	if (!buf) {
-		return -ENOBUFS;
-	}
-
-	cp = net_buf_add(buf, sizeof(*cp));
-	cp->handle = sys_cpu_to_le16(iso->handle);
-	cp->path_dir = dir;
-
-	err = bt_hci_cmd_send_sync(BT_HCI_OP_LE_REMOVE_ISO_PATH, buf, &rsp);
-	if (err) {
-		return err;
-	}
-
-	rp = (void *)rsp->data;
-	if (rp->status || (sys_le16_to_cpu(rp->handle) != iso->handle)) {
-		err = -EIO;
-	}
-
-	net_buf_unref(rsp);
-
-	return err;
-}
-
-static void bt_iso_remove_data_path(struct bt_conn *iso)
-{
-	enum bt_iso_chan_type type = iso->iso.info.type;
-
-	LOG_DBG("%p", iso);
-
-	/* TODO: Removing the ISO data path is never used for broadcast:
-	 * Remove the following broadcast implementation?
-	 */
-	if ((IS_ENABLED(CONFIG_BT_ISO_BROADCASTER) && type == BT_ISO_CHAN_TYPE_BROADCASTER) ||
-	    (IS_ENABLED(CONFIG_BT_ISO_SYNC_RECEIVER) && type == BT_ISO_CHAN_TYPE_SYNC_RECEIVER)) {
-		struct bt_iso_chan *chan;
-		struct bt_iso_chan_io_qos *tx_qos;
-		uint8_t dir;
-
-		chan = iso_chan(iso);
-		if (chan == NULL) {
-			return;
-		}
-
-		tx_qos = chan->qos->tx;
-
-		/* Only remove one data path for BIS as per the spec */
-		if (tx_qos) {
-			dir = BIT(BT_HCI_DATAPATH_DIR_HOST_TO_CTLR);
-		} else {
-			dir = BIT(BT_HCI_DATAPATH_DIR_CTLR_TO_HOST);
-		}
-
-		(void)hci_le_remove_iso_data_path(iso, dir);
-	} else if (IS_ENABLED(CONFIG_BT_ISO_UNICAST) && type == BT_ISO_CHAN_TYPE_CONNECTED) {
-		/* Remove both directions for CIS*/
-
-		/* TODO: Check which has been setup first to avoid removing
-		 * data paths that are not setup
-		 */
-		(void)hci_le_remove_iso_data_path(iso, BIT(BT_HCI_DATAPATH_DIR_HOST_TO_CTLR));
-		(void)hci_le_remove_iso_data_path(iso, BIT(BT_HCI_DATAPATH_DIR_CTLR_TO_HOST));
-	} else {
-		__ASSERT(false, "Invalid iso.type: %u", type);
-	}
-}
-
 static bool valid_chan_qos(const struct bt_iso_chan_qos *qos, bool advanced)
 {
 #if defined(CONFIG_BT_ISO_TEST_PARAMS)
@@ -1984,7 +1968,7 @@ static int cig_init_cis(struct bt_iso_cig *cig, const struct bt_iso_cig_param *p
 			iso_conn = &cis->iso->iso;
 
 			iso_conn->cig_id = cig->id;
-			iso_conn->info.type = BT_ISO_CHAN_TYPE_CONNECTED;
+			iso_conn->info.type = BT_ISO_CHAN_TYPE_CENTRAL;
 			iso_conn->cis_id = cig->num_cis++;
 
 			bt_iso_chan_add(cis->iso, cis);
@@ -2553,7 +2537,8 @@ static bool iso_chans_connecting(void)
 		const struct bt_conn *iso = &iso_conns[i];
 		const struct bt_iso_chan *iso_chan;
 
-		if (iso == NULL || iso->iso.info.type != BT_ISO_CHAN_TYPE_CONNECTED) {
+		if (iso == NULL || !(iso->iso.info.type == BT_ISO_CHAN_TYPE_CENTRAL ||
+				     iso->iso.info.type == BT_ISO_CHAN_TYPE_PERIPHERAL)) {
 			continue;
 		}
 
diff --git a/subsys/bluetooth/host/shell/iso.c b/subsys/bluetooth/host/shell/iso.c
index 9113859b7135..47a6cfb87bd3 100644
--- a/subsys/bluetooth/host/shell/iso.c
+++ b/subsys/bluetooth/host/shell/iso.c
@@ -5,7 +5,7 @@
 
 /*
  * Copyright (c) 2020 Intel Corporation
- * Copyright (c) 2021 Nordic Semiconductor ASA
+ * Copyright (c) 2021-2025 Nordic Semiconductor ASA
  *
  * SPDX-License-Identifier: Apache-2.0
  */
@@ -13,6 +13,7 @@
 #include <stddef.h>
 #include <stdlib.h>
 #include <ctype.h>
+#include <zephyr/bluetooth/hci_types.h>
 #include <zephyr/kernel.h>
 #include <zephyr/shell/shell.h>
 #include <zephyr/sys/byteorder.h>
@@ -85,6 +86,10 @@ static void iso_recv(struct bt_iso_chan *chan, const struct bt_iso_recv_info *in
 
 static void iso_connected(struct bt_iso_chan *chan)
 {
+	const struct bt_iso_chan_path hci_path = {
+		.pid = BT_ISO_DATA_PATH_HCI,
+		.format = BT_HCI_CODING_FORMAT_TRANSPARENT,
+	};
 	struct bt_iso_info iso_info;
 	int err;
 
@@ -92,12 +97,13 @@ static void iso_connected(struct bt_iso_chan *chan)
 
 	err = bt_iso_chan_get_info(chan, &iso_info);
 	if (err != 0) {
-		printk("Failed to get ISO info: %d", err);
+		bt_shell_error("Failed to get ISO info: %d", err);
 		return;
 	}
 
 #if defined(CONFIG_BT_ISO_TX)
-	if (iso_info.type == BT_ISO_CHAN_TYPE_CONNECTED) {
+	if (iso_info.type == BT_ISO_CHAN_TYPE_CENTRAL ||
+	    iso_info.type == BT_ISO_CHAN_TYPE_PERIPHERAL) {
 		cis_sn_last = 0U;
 		cis_sn_last_updated_ticks = k_uptime_ticks();
 	} else {
@@ -105,12 +111,47 @@ static void iso_connected(struct bt_iso_chan *chan)
 		bis_sn_last_updated_ticks = k_uptime_ticks();
 	}
 #endif /* CONFIG_BT_ISO_TX */
+
+	if (iso_info.can_recv) {
+		err = bt_iso_setup_data_path(chan, BT_HCI_DATAPATH_DIR_CTLR_TO_HOST, &hci_path);
+		if (err != 0) {
+			bt_shell_error("Failed to setup ISO RX data path: %d", err);
+		}
+	}
+
+	if (iso_info.can_send) {
+		err = bt_iso_setup_data_path(chan, BT_HCI_DATAPATH_DIR_HOST_TO_CTLR, &hci_path);
+		if (err != 0) {
+			bt_shell_error("Failed to setup ISO TX data path: %d", err);
+		}
+	}
 }
 
 static void iso_disconnected(struct bt_iso_chan *chan, uint8_t reason)
 {
-	bt_shell_print("ISO Channel %p disconnected with reason 0x%02x",
-		       chan, reason);
+	struct bt_iso_info iso_info;
+	int err;
+
+	bt_shell_print("ISO Channel %p disconnected with reason 0x%02x", chan, reason);
+
+	err = bt_iso_chan_get_info(chan, &iso_info);
+	if (err != 0) {
+		bt_shell_error("Failed to get ISO info: %d", err);
+	} else if (iso_info.type == BT_ISO_CHAN_TYPE_CENTRAL) {
+		if (iso_info.can_recv) {
+			err = bt_iso_remove_data_path(chan, BT_HCI_DATAPATH_DIR_CTLR_TO_HOST);
+			if (err != 0) {
+				bt_shell_error("Failed to remove ISO RX data path: %d", err);
+			}
+		}
+
+		if (iso_info.can_send) {
+			err = bt_iso_remove_data_path(chan, BT_HCI_DATAPATH_DIR_HOST_TO_CTLR);
+			if (err != 0) {
+				bt_shell_error("Failed to remove ISO TX data path: %d", err);
+			}
+		}
+	}
 }
 
 static struct bt_iso_chan_ops iso_ops = {
diff --git a/tests/bluetooth/audio/mocks/src/iso.c b/tests/bluetooth/audio/mocks/src/iso.c
index cd00681d9671..ac4e58314c10 100644
--- a/tests/bluetooth/audio/mocks/src/iso.c
+++ b/tests/bluetooth/audio/mocks/src/iso.c
@@ -1,6 +1,6 @@
 /*
  * Copyright (c) 2023 Codecoup
- * Copyright (c) 2024 Nordic Semiconductor ASA
+ * Copyright (c) 2024-2025 Nordic Semiconductor ASA
  *
  * SPDX-License-Identifier: Apache-2.0
  */
@@ -82,6 +82,17 @@ void mock_bt_iso_cleanup(void)
 
 }
 
+int bt_iso_setup_data_path(const struct bt_iso_chan *chan, uint8_t dir,
+			   const struct bt_iso_chan_path *path)
+{
+	return 0;
+}
+
+int bt_iso_remove_data_path(const struct bt_iso_chan *chan, uint8_t dir)
+{
+	return 0;
+}
+
 void mock_bt_iso_connected(struct bt_conn *iso)
 {
 	struct bt_iso_chan *chan = iso->chan;
diff --git a/tests/bsim/bluetooth/host/iso/bis/src/bis_broadcaster.c b/tests/bsim/bluetooth/host/iso/bis/src/bis_broadcaster.c
index d18bc3050531..cabb51697be9 100644
--- a/tests/bsim/bluetooth/host/iso/bis/src/bis_broadcaster.c
+++ b/tests/bsim/bluetooth/host/iso/bis/src/bis_broadcaster.c
@@ -1,15 +1,29 @@
 /*
- * Copyright (c) 2024 Nordic Semiconductor
+ * Copyright (c) 2024-2025 Nordic Semiconductor
  *
  * SPDX-License-Identifier: Apache-2.0
  */
+
+#include <stdbool.h>
+#include <stddef.h>
+#include <stdint.h>
+
+#include <zephyr/autoconf.h>
 #include <zephyr/bluetooth/bluetooth.h>
+#include <zephyr/bluetooth/gap.h>
+#include <zephyr/bluetooth/hci_types.h>
 #include <zephyr/bluetooth/iso.h>
+#include <zephyr/kernel.h>
 #include <zephyr/logging/log.h>
+#include <zephyr/logging/log_core.h>
+#include <zephyr/net_buf.h>
+#include <zephyr/sys/util.h>
+#include <zephyr/sys_clock.h>
 
 #include "babblekit/flags.h"
 #include "babblekit/sync.h"
 #include "babblekit/testcase.h"
+#include "bstests.h"
 
 LOG_MODULE_REGISTER(bis_broadcaster, LOG_LEVEL_INF);
 
@@ -86,6 +100,12 @@ static void send_data_cb(struct k_work *work)
 
 static void iso_connected_cb(struct bt_iso_chan *chan)
 {
+	const struct bt_iso_chan_path hci_path = {
+		.pid = BT_ISO_DATA_PATH_HCI,
+		.format = BT_HCI_CODING_FORMAT_TRANSPARENT,
+	};
+	int err;
+
 	LOG_INF("ISO Channel %p connected", chan);
 
 	if (chan == default_chan) {
@@ -93,6 +113,9 @@ static void iso_connected_cb(struct bt_iso_chan *chan)
 
 		SET_FLAG(flag_iso_connected);
 	}
+
+	err = bt_iso_setup_data_path(chan, BT_HCI_DATAPATH_DIR_HOST_TO_CTLR, &hci_path);
+	TEST_ASSERT(err == 0, "Failed to set ISO data path: %d", err);
 }
 
 static void iso_disconnected_cb(struct bt_iso_chan *chan, uint8_t reason)
@@ -127,7 +150,6 @@ static void init(void)
 		.sdu = CONFIG_BT_ISO_TX_MTU,
 		.phy = BT_GAP_LE_PHY_2M,
 		.rtn = 1,
-		.path = NULL,
 	};
 	static struct bt_iso_chan_qos iso_qos = {
 		.tx = &iso_tx,
diff --git a/tests/bsim/bluetooth/host/iso/bis/src/bis_receiver.c b/tests/bsim/bluetooth/host/iso/bis/src/bis_receiver.c
index 5f80abdd1c1d..aea23723ff01 100644
--- a/tests/bsim/bluetooth/host/iso/bis/src/bis_receiver.c
+++ b/tests/bsim/bluetooth/host/iso/bis/src/bis_receiver.c
@@ -1,5 +1,5 @@
 /*
- * Copyright (c) 2024 Nordic Semiconductor
+ * Copyright (c) 2024-2025 Nordic Semiconductor
  *
  * SPDX-License-Identifier: Apache-2.0
  */
@@ -8,6 +8,7 @@
 
 #include <zephyr/bluetooth/bluetooth.h>
 #include <zephyr/bluetooth/gap.h>
+#include <zephyr/bluetooth/hci_types.h>
 #include <zephyr/bluetooth/iso.h>
 #include <zephyr/logging/log.h>
 #include <zephyr/sys/util.h>
@@ -82,9 +83,18 @@ static void iso_recv(struct bt_iso_chan *chan, const struct bt_iso_recv_info *in
 
 static void iso_connected(struct bt_iso_chan *chan)
 {
+	const struct bt_iso_chan_path hci_path = {
+		.pid = BT_ISO_DATA_PATH_HCI,
+		.format = BT_HCI_CODING_FORMAT_TRANSPARENT,
+	};
+	int err;
+
 	LOG_INF("ISO Channel %p connected", chan);
 
 	SET_FLAG(flag_iso_connected);
+
+	err = bt_iso_setup_data_path(chan, BT_HCI_DATAPATH_DIR_CTLR_TO_HOST, &hci_path);
+	TEST_ASSERT(err == 0, "Failed to setup ISO RX data path: %d\n", err);
 }
 
 static void iso_disconnected(struct bt_iso_chan *chan, uint8_t reason)
diff --git a/tests/bsim/bluetooth/host/iso/cis/CMakeLists.txt b/tests/bsim/bluetooth/host/iso/cis/CMakeLists.txt
index a0328bc68707..346345967c55 100644
--- a/tests/bsim/bluetooth/host/iso/cis/CMakeLists.txt
+++ b/tests/bsim/bluetooth/host/iso/cis/CMakeLists.txt
@@ -3,7 +3,10 @@
 cmake_minimum_required(VERSION 3.20.0)
 
 find_package(Zephyr REQUIRED HINTS $ENV{ZEPHYR_BASE})
-project(bsim_test_l2cap_send_on_connect)
+project(bsim_test_iso_cis)
+
+add_subdirectory(${ZEPHYR_BASE}/tests/bsim/babblekit babblekit)
+target_link_libraries(app PRIVATE babblekit)
 
 target_sources(app PRIVATE
   src/common.c
@@ -18,7 +21,6 @@ zephyr_include_directories(
   )
 
 add_subdirectory(${ZEPHYR_BASE}/tests/bluetooth/common/testlib testlib)
-add_subdirectory(${ZEPHYR_BASE}/tests/bsim/babblekit babblekit)
 
 target_link_libraries(app PRIVATE
   testlib
diff --git a/tests/bsim/bluetooth/host/iso/cis/src/cis_central.c b/tests/bsim/bluetooth/host/iso/cis/src/cis_central.c
index f67afe3d3994..dc7d46100a9e 100644
--- a/tests/bsim/bluetooth/host/iso/cis/src/cis_central.c
+++ b/tests/bsim/bluetooth/host/iso/cis/src/cis_central.c
@@ -1,16 +1,30 @@
 /*
- * Copyright (c) 2023 Nordic Semiconductor
+ * Copyright (c) 2023-2025 Nordic Semiconductor
  *
  * SPDX-License-Identifier: Apache-2.0
  */
 
-#include "babblekit/testcase.h"
-#include "babblekit/flags.h"
-#include "common.h"
+#include <stddef.h>
+#include <stdint.h>
 
+#include <zephyr/autoconf.h>
+#include <zephyr/bluetooth/addr.h>
 #include <zephyr/bluetooth/bluetooth.h>
+#include <zephyr/bluetooth/conn.h>
+#include <zephyr/bluetooth/gap.h>
+#include <zephyr/bluetooth/hci_types.h>
 #include <zephyr/bluetooth/iso.h>
+#include <zephyr/kernel.h>
+#include <zephyr/net_buf.h>
 #include <zephyr/sys/printk.h>
+#include <zephyr/sys/util.h>
+#include <zephyr/sys_clock.h>
+#include <zephyr/toolchain.h>
+
+#include "babblekit/testcase.h"
+#include "babblekit/flags.h"
+#include "bstests.h"
+#include "common.h"
 
 #define ENQUEUE_COUNT 2
 
@@ -104,6 +118,12 @@ static void device_found(const bt_addr_le_t *addr, int8_t rssi, uint8_t type,
 
 static void iso_connected(struct bt_iso_chan *chan)
 {
+	const struct bt_iso_chan_path hci_path = {
+		.pid = BT_ISO_DATA_PATH_HCI,
+		.format = BT_HCI_CODING_FORMAT_TRANSPARENT,
+	};
+	int err;
+
 	printk("ISO Channel %p connected\n", chan);
 
 	seq_num = 0U;
@@ -115,10 +135,15 @@ static void iso_connected(struct bt_iso_chan *chan)
 
 		SET_FLAG(flag_iso_connected);
 	}
+
+	err = bt_iso_setup_data_path(chan, BT_HCI_DATAPATH_DIR_HOST_TO_CTLR, &hci_path);
+	TEST_ASSERT(err == 0, "Failed to set ISO data path: %d", err);
 }
 
 static void iso_disconnected(struct bt_iso_chan *chan, uint8_t reason)
 {
+	int err;
+
 	printk("ISO Channel %p disconnected (reason 0x%02x)\n", chan, reason);
 
 	if (chan == default_chan) {
@@ -126,6 +151,9 @@ static void iso_disconnected(struct bt_iso_chan *chan, uint8_t reason)
 
 		UNSET_FLAG(flag_iso_connected);
 	}
+
+	err = bt_iso_remove_data_path(chan, BT_HCI_DATAPATH_DIR_HOST_TO_CTLR);
+	TEST_ASSERT(err == 0, "Failed to remove ISO data path: %d", err);
 }
 
 static void sdu_sent_cb(struct bt_iso_chan *chan)
@@ -156,7 +184,6 @@ static void init(void)
 		.sdu = CONFIG_BT_ISO_TX_MTU,
 		.phy = BT_GAP_LE_PHY_2M,
 		.rtn = 1,
-		.path = NULL,
 	};
 	static struct bt_iso_chan_qos iso_qos = {
 		.tx = &iso_tx,
diff --git a/tests/bsim/bluetooth/host/iso/cis/src/cis_peripheral.c b/tests/bsim/bluetooth/host/iso/cis/src/cis_peripheral.c
index ef0ede7b0817..96b8865c1f4e 100644
--- a/tests/bsim/bluetooth/host/iso/cis/src/cis_peripheral.c
+++ b/tests/bsim/bluetooth/host/iso/cis/src/cis_peripheral.c
@@ -1,21 +1,31 @@
 /*
- * Copyright (c) 2023 Nordic Semiconductor
+ * Copyright (c) 2023-2025 Nordic Semiconductor
  *
  * SPDX-License-Identifier: Apache-2.0
  */
 
+#include <errno.h>
 #include <stdbool.h>
+#include <stdint.h>
+#include <string.h>
 
-#include "babblekit/testcase.h"
-#include "babblekit/flags.h"
-#include "common.h"
-
+#include <zephyr/autoconf.h>
 #include <zephyr/bluetooth/bluetooth.h>
+#include <zephyr/bluetooth/conn.h>
+#include <zephyr/bluetooth/gap.h>
+#include <zephyr/bluetooth/hci_types.h>
 #include <zephyr/bluetooth/iso.h>
+#include <zephyr/net_buf.h>
 #include <zephyr/sys/printk.h>
+#include <zephyr/sys/util.h>
 
 #include <testlib/conn.h>
 
+#include "babblekit/testcase.h"
+#include "babblekit/flags.h"
+#include "bstests.h"
+#include "common.h"
+
 extern enum bst_result_t bst_result;
 
 DEFINE_FLAG_STATIC(flag_data_received);
@@ -74,7 +84,16 @@ static void iso_recv(struct bt_iso_chan *chan, const struct bt_iso_recv_info *in
 
 static void iso_connected(struct bt_iso_chan *chan)
 {
+	const struct bt_iso_chan_path hci_path = {
+		.pid = BT_ISO_DATA_PATH_HCI,
+		.format = BT_HCI_CODING_FORMAT_TRANSPARENT,
+	};
+	int err;
+
 	printk("ISO Channel %p connected\n", chan);
+
+	err = bt_iso_setup_data_path(chan, BT_HCI_DATAPATH_DIR_CTLR_TO_HOST, &hci_path);
+	TEST_ASSERT(err == 0, "Failed to set ISO data path: %d", err);
 }
 
 static void iso_disconnected(struct bt_iso_chan *chan, uint8_t reason)
@@ -101,7 +120,6 @@ static void init(void)
 {
 	static struct bt_iso_chan_io_qos iso_rx = {
 		.sdu = CONFIG_BT_ISO_TX_MTU,
-		.path = NULL,
 	};
 	static struct bt_iso_server iso_server = {
 #if defined(CONFIG_BT_SMP)
diff --git a/tests/bsim/bluetooth/host/iso/frag/src/broadcaster.c b/tests/bsim/bluetooth/host/iso/frag/src/broadcaster.c
index cdc9d68aceee..7688bb822d2c 100644
--- a/tests/bsim/bluetooth/host/iso/frag/src/broadcaster.c
+++ b/tests/bsim/bluetooth/host/iso/frag/src/broadcaster.c
@@ -1,9 +1,10 @@
 /*
- * Copyright (c) 2024 Nordic Semiconductor
+ * Copyright (c) 2024-2025 Nordic Semiconductor
  *
  * SPDX-License-Identifier: Apache-2.0
  */
 
+#include <zephyr/bluetooth/hci_types.h>
 #include <zephyr/sys/byteorder.h>
 #include <zephyr/bluetooth/bluetooth.h>
 #include <zephyr/bluetooth/iso.h>
@@ -58,6 +59,15 @@ static int send_data(struct bt_iso_chan *chan, bool ts)
 
 static void iso_connected_cb(struct bt_iso_chan *chan)
 {
+	const struct bt_iso_chan_path hci_path = {
+		.pid = BT_ISO_DATA_PATH_HCI,
+		.format = BT_HCI_CODING_FORMAT_TRANSPARENT,
+	};
+	int err;
+
+	err = bt_iso_setup_data_path(chan, BT_HCI_DATAPATH_DIR_HOST_TO_CTLR, &hci_path);
+	TEST_ASSERT(err == 0, "Unable to setup ISO TX path: %d", err);
+
 	LOG_INF("ISO Channel %p connected", chan);
 
 	SET_FLAG(iso_connected);
@@ -155,7 +165,6 @@ static void init(void)
 		.sdu = CONFIG_BT_ISO_TX_MTU,
 		.phy = BT_GAP_LE_PHY_2M,
 		.rtn = 1,
-		.path = NULL,
 	};
 	static struct bt_iso_chan_qos iso_qos = {
 		.tx = &iso_tx,
diff --git a/tests/bsim/bluetooth/host/iso/frag_2/src/broadcaster.c b/tests/bsim/bluetooth/host/iso/frag_2/src/broadcaster.c
index c5491a5520fb..1850adcdd11c 100644
--- a/tests/bsim/bluetooth/host/iso/frag_2/src/broadcaster.c
+++ b/tests/bsim/bluetooth/host/iso/frag_2/src/broadcaster.c
@@ -1,9 +1,10 @@
 /*
- * Copyright (c) 2024 Nordic Semiconductor
+ * Copyright (c) 2024-2025 Nordic Semiconductor
  *
  * SPDX-License-Identifier: Apache-2.0
  */
 
+#include <zephyr/bluetooth/hci_types.h>
 #include <zephyr/sys/byteorder.h>
 #include <zephyr/bluetooth/bluetooth.h>
 #include <zephyr/bluetooth/iso.h>
@@ -57,6 +58,15 @@ static int send_data(struct bt_iso_chan *chan)
 
 static void iso_connected_cb(struct bt_iso_chan *chan)
 {
+	const struct bt_iso_chan_path hci_path = {
+		.pid = BT_ISO_DATA_PATH_HCI,
+		.format = BT_HCI_CODING_FORMAT_TRANSPARENT,
+	};
+	int err;
+
+	err = bt_iso_setup_data_path(chan, BT_HCI_DATAPATH_DIR_HOST_TO_CTLR, &hci_path);
+	TEST_ASSERT(err == 0, "Unable to setup ISO TX path: %d", err);
+
 	LOG_INF("ISO Channel %p connected", chan);
 
 	SET_FLAG(iso_connected);
@@ -152,7 +162,6 @@ static struct bt_iso_chan_io_qos iso_tx = {
 	.sdu = CONFIG_BT_ISO_TX_MTU,
 	.phy = BT_GAP_LE_PHY_2M,
 	.rtn = 1,
-	.path = NULL,
 };
 static struct bt_iso_chan_qos iso_qos = {
 	.tx = &iso_tx,
diff --git a/tests/bsim/bluetooth/ll/bis/src/test_bis.c b/tests/bsim/bluetooth/ll/bis/src/test_bis.c
index 57aab410fff6..a3cb8fe90771 100644
--- a/tests/bsim/bluetooth/ll/bis/src/test_bis.c
+++ b/tests/bsim/bluetooth/ll/bis/src/test_bis.c
@@ -1,5 +1,5 @@
 /*
- * Copyright (c) 2020 Nordic Semiconductor ASA
+ * Copyright (c) 2020-2025 Nordic Semiconductor ASA
  *
  * SPDX-License-Identifier: Apache-2.0
  */
@@ -12,6 +12,7 @@
 
 #include <zephyr/bluetooth/bluetooth.h>
 #include <zephyr/bluetooth/hci.h>
+#include <zephyr/bluetooth/hci_types.h>
 #include <zephyr/bluetooth/iso.h>
 
 #include "subsys/bluetooth/host/hci_core.h"
@@ -71,14 +72,12 @@ static struct bt_iso_chan_ops iso_ops = {
 	.recv		= iso_recv,
 };
 
-static struct bt_iso_chan_path iso_path_rx = {
-	.pid = BT_HCI_DATAPATH_ID_HCI
-};
-
 static struct bt_iso_chan_qos bis_iso_qos;
 static struct bt_iso_chan_io_qos iso_tx_qos;
-static struct bt_iso_chan_io_qos iso_rx_qos = {
-	.path = &iso_path_rx
+static struct bt_iso_chan_io_qos iso_rx_qos;
+static struct bt_iso_chan_path hci_path = {
+	.pid = BT_HCI_DATAPATH_ID_HCI,
+	.format = BT_HCI_CODING_FORMAT_TRANSPARENT,
 };
 
 static struct bt_iso_chan bis_iso_chan = {
@@ -609,10 +608,34 @@ static void iso_recv(struct bt_iso_chan *chan,
 
 static void iso_connected(struct bt_iso_chan *chan)
 {
+	struct bt_iso_info iso_info;
+	int err;
+
 	printk("ISO Channel %p connected\n", chan);
 
 	seq_num = 0U;
 	is_iso_connected = true;
+
+	err = bt_iso_chan_get_info(chan, &iso_info);
+	if (err != 0) {
+		FAIL("Failed to get ISO info: %d\n", err);
+	} else {
+		if (iso_info.can_recv) {
+			err = bt_iso_setup_data_path(chan, BT_HCI_DATAPATH_DIR_CTLR_TO_HOST,
+						     &hci_path);
+			if (err != 0) {
+				FAIL("Failed to setup ISO RX data path: %d\n", err);
+			}
+		}
+
+		if (iso_info.can_send) {
+			err = bt_iso_setup_data_path(chan, BT_HCI_DATAPATH_DIR_HOST_TO_CTLR,
+						     &hci_path);
+			if (err != 0) {
+				FAIL("Failed to setup ISO TX data path: %d\n", err);
+			}
+		}
+	}
 }
 
 static void iso_disconnected(struct bt_iso_chan *chan, uint8_t reason)
@@ -938,7 +961,7 @@ static void test_iso_recv_main(void)
 	big_param.mse = 1;
 	big_param.sync_timeout = 100; /* 1000 ms */
 	big_param.encryption = false;
-	iso_path_rx.pid = BT_HCI_DATAPATH_ID_HCI;
+	hci_path.pid = BT_HCI_DATAPATH_ID_HCI;
 	memset(big_param.bcode, 0, sizeof(big_param.bcode));
 	err = bt_iso_big_sync(sync, &big_param, &big);
 	if (err) {
@@ -1158,7 +1181,7 @@ static void test_iso_recv_vs_dp_main(void)
 	is_iso_connected = false;
 	is_iso_disconnected = 0U;
 	is_iso_vs_emitted = false;
-	iso_path_rx.pid = BT_HCI_DATAPATH_ID_VS;
+	hci_path.pid = BT_HCI_DATAPATH_ID_VS;
 
 	err = bt_iso_big_sync(sync, &big_param, &big);
 	if (err) {
diff --git a/tests/bsim/bluetooth/ll/cis/src/main.c b/tests/bsim/bluetooth/ll/cis/src/main.c
index a3a8b0c91697..d835052be5fc 100644
--- a/tests/bsim/bluetooth/ll/cis/src/main.c
+++ b/tests/bsim/bluetooth/ll/cis/src/main.c
@@ -1,7 +1,7 @@
 /* main.c - Application main entry point */
 
 /*
- * Copyright (c) 2023 Nordic Semiconductor ASA
+ * Copyright (c) 2023-2025 Nordic Semiconductor ASA
  *
  * SPDX-License-Identifier: Apache-2.0
  */
@@ -13,6 +13,7 @@
 
 #include <zephyr/bluetooth/bluetooth.h>
 #include <zephyr/bluetooth/conn.h>
+#include <zephyr/bluetooth/hci_types.h>
 #include <zephyr/bluetooth/iso.h>
 #include <zephyr/bluetooth/hci.h>
 #include <zephyr/sys/util.h>
@@ -312,16 +313,65 @@ void iso_sent(struct bt_iso_chan *chan)
 
 static void iso_connected(struct bt_iso_chan *chan)
 {
+	const struct bt_iso_chan_path hci_path = {
+		.pid = BT_ISO_DATA_PATH_HCI,
+		.format = BT_HCI_CODING_FORMAT_TRANSPARENT,
+	};
+	struct bt_iso_info iso_info;
+	int err;
+
+	err = bt_iso_chan_get_info(chan, &iso_info);
+	if (err != 0) {
+		FAIL("Failed to get ISO info: %d\n", err);
+		return;
+	}
+
 	printk("ISO Channel %p connected\n", chan);
 
 	k_sem_give(&sem_iso_conn);
+
+	if (iso_info.can_recv) {
+		err = bt_iso_setup_data_path(chan, BT_HCI_DATAPATH_DIR_CTLR_TO_HOST, &hci_path);
+		if (err != 0) {
+			FAIL("Failed to setup ISO RX data path: %d\n", err);
+		}
+	}
+
+	if (iso_info.can_send) {
+		err = bt_iso_setup_data_path(chan, BT_HCI_DATAPATH_DIR_HOST_TO_CTLR, &hci_path);
+		if (err != 0) {
+			FAIL("Failed to setup ISO TX data path: %d\n", err);
+		}
+	}
 }
 
 static void iso_disconnected(struct bt_iso_chan *chan, uint8_t reason)
 {
+	struct bt_iso_info iso_info;
+	int err;
+
 	printk("ISO Channel %p disconnected (reason 0x%02x)\n", chan, reason);
 
 	k_sem_give(&sem_iso_disc);
+
+	err = bt_iso_chan_get_info(chan, &iso_info);
+	if (err != 0) {
+		FAIL("Failed to get ISO info: %d\n", err);
+	} else if (iso_info.type == BT_ISO_CHAN_TYPE_CENTRAL) {
+		if (iso_info.can_recv) {
+			err = bt_iso_remove_data_path(chan, BT_HCI_DATAPATH_DIR_CTLR_TO_HOST);
+			if (err != 0) {
+				FAIL("Failed to remove ISO RX data path: %d\n", err);
+			}
+		}
+
+		if (iso_info.can_send) {
+			err = bt_iso_remove_data_path(chan, BT_HCI_DATAPATH_DIR_HOST_TO_CTLR);
+			if (err != 0) {
+				FAIL("Failed to remove ISO TX data path: %d\n", err);
+			}
+		}
+	}
 }
 
 static struct bt_iso_chan_ops iso_ops = {
@@ -358,7 +408,6 @@ static void test_cis_central(void)
 	for (int i = 0; i < CONFIG_BT_ISO_MAX_CHAN; i++) {
 		iso_tx[i].sdu = CONFIG_BT_ISO_TX_MTU;
 		iso_tx[i].phy = BT_GAP_LE_PHY_2M;
-		iso_tx[i].path = NULL;
 		if (IS_ENABLED(CONFIG_TEST_FT_SKIP_SUBEVENTS)) {
 			iso_tx[i].rtn = 2U;
 		} else {
@@ -374,7 +423,6 @@ static void test_cis_central(void)
 
 		iso_rx[i].sdu = CONFIG_BT_ISO_RX_MTU;
 		iso_rx[i].phy = BT_GAP_LE_PHY_2M;
-		iso_rx[i].path = NULL;
 		if (IS_ENABLED(CONFIG_TEST_FT_SKIP_SUBEVENTS)) {
 			iso_rx[i].rtn = 2U;
 		} else {
@@ -658,7 +706,6 @@ static void test_cis_peripheral(void)
 	for (int i = 0; i < CONFIG_BT_ISO_MAX_CHAN; i++) {
 		iso_tx_p[i].sdu = CONFIG_BT_ISO_TX_MTU;
 		iso_tx_p[i].phy = BT_GAP_LE_PHY_2M;
-		iso_tx_p[i].path = NULL;
 		if (IS_ENABLED(CONFIG_TEST_FT_SKIP_SUBEVENTS)) {
 			iso_tx_p[i].rtn = 2U;
 		} else {