diff --git a/Cargo.lock b/Cargo.lock
index f72e84f..cbb37ab 100644
--- a/Cargo.lock
+++ b/Cargo.lock
@@ -532,7 +532,7 @@ checksum = "9d26fcce2f397e5488affdf681b20c030aa9faa877b92b1825e5d66b08d2fc33"
 
 [[package]]
 name = "stone"
-version = "1.8.0"
+version = "1.8.1"
 dependencies = [
  "assert_cmd",
  "clap",
diff --git a/Cargo.toml b/Cargo.toml
index 086c5e9..7ddfd79 100644
--- a/Cargo.toml
+++ b/Cargo.toml
@@ -1,6 +1,6 @@
 [package]
 name = "stone"
-version = "1.8.0"
+version = "1.8.1"
 edition = "2024"
 description = "A CLI for managing Avocado stones."
 homepage = "https://github.com/avocado-linux/stone"
diff --git a/src/commands/stone/provision.rs b/src/commands/stone/provision.rs
index 2d018ab..5f75e73 100644
--- a/src/commands/stone/provision.rs
+++ b/src/commands/stone/provision.rs
@@ -365,8 +365,10 @@ fn create_fat_manifest_with_resolved_paths(
 
     for entry in files {
         let (input_filename, output_name) = match entry {
-            FileEntry::String(filename) => (filename.as_str(), None),
-            FileEntry::Object { input, output } => (input.as_str(), Some(output.clone())),
+            // For String entries, use the original filename as the output path in the FAT image
+            FileEntry::String(filename) => (filename.as_str(), filename.clone()),
+            // For Object entries, use the explicit output path
+            FileEntry::Object { input, output } => (input.as_str(), output.clone()),
         };
 
         // Resolve the input file across all input directories
@@ -375,8 +377,10 @@ fn create_fat_manifest_with_resolved_paths(
         })?;
 
         fat_files.push(fat::FileEntry {
+            // filename: absolute path where the file is found (for reading)
             filename: Some(resolved_path.to_string_lossy().to_string()),
-            output: output_name,
+            // output: relative path where to place the file in the FAT image
+            output: Some(output_name),
         });
     }
 
diff --git a/tests/commands/stone/provision/mod.rs b/tests/commands/stone/provision/mod.rs
index 49331d5..2fbf8e3 100644
--- a/tests/commands/stone/provision/mod.rs
+++ b/tests/commands/stone/provision/mod.rs
@@ -1216,6 +1216,121 @@ echo "SD_SPECIFIC=$SD_SPECIFIC" >> provision_sd_output.txt
     assert!(sd_output.contains("SD_SPECIFIC=sd-value"));
 }
 
+#[test]
+fn test_provision_fat_image_files_at_correct_paths() {
+    // This test verifies that files in FAT images are placed at the correct
+    // relative paths, not with absolute path prefixes (regression test for bug
+    // where files were placed at /opt/_avocado/.../file.txt instead of /file.txt)
+    let temp_dir = TempDir::new().unwrap();
+    let input_path1 = temp_dir.path().join("input1");
+    let input_path2 = temp_dir.path().join("input2");
+
+    fs::create_dir_all(&input_path1).unwrap();
+    fs::create_dir_all(&input_path2).unwrap();
+
+    // Create test files in different input directories
+    fs::write(
+        input_path1.join("file_from_input1.txt"),
+        "Content from input1",
+    )
+    .unwrap();
+    fs::write(
+        input_path2.join("file_from_input2.txt"),
+        "Content from input2",
+    )
+    .unwrap();
+
+    // Create os-release in second directory
+    let os_release_content = r#"NAME="Avocado Linux"
+VERSION="1.0.0"
+ID=avocado
+VERSION_ID="1.0.0"
+VERSION_CODENAME=test
+PRETTY_NAME="Avocado Linux 1.0.0"
+VENDOR_NAME="Avocado Linux""#;
+    fs::write(input_path2.join("os-release"), os_release_content).unwrap();
+
+    // Create a manifest with FAT image that references files from both directories
+    let manifest_content = r#"{
+        "runtime": {
+            "platform": "test-platform",
+            "architecture": "noarch"
+        },
+        "storage_devices": {
+            "test_device": {
+                "out": "test.img",
+                "devpath": "/dev/test",
+                "images": {
+                    "fat_image": {
+                        "out": "boot.img",
+                        "size": 16,
+                        "size_unit": "megabytes",
+                        "build_args": {
+                            "type": "fat",
+                            "variant": "FAT32",
+                            "files": [
+                                "file_from_input1.txt",
+                                "file_from_input2.txt"
+                            ]
+                        }
+                    }
+                },
+                "partitions": []
+            }
+        }
+    }"#;
+
+    fs::write(input_path2.join("manifest.json"), manifest_content).unwrap();
+
+    Command::cargo_bin("stone")
+        .unwrap()
+        .args([
+            "provision",
+            "--input-dir",
+            &input_path1.to_string_lossy(),
+            "--input-dir",
+            &input_path2.to_string_lossy(),
+        ])
+        .assert()
+        .success();
+
+    // Verify the FAT image was created
+    let fat_image_path = input_path2.join("_build").join("boot.img");
+    assert!(fat_image_path.exists(), "FAT image should be created");
+
+    // List files in the FAT image and verify they are at the correct paths
+    let files_in_fat = stone::fat::list_fat_files(&fat_image_path)
+        .expect("Should be able to list FAT image contents");
+
+    // Files should be at the root of the image, not with absolute path prefixes
+    assert!(
+        files_in_fat.contains(&"file_from_input1.txt".to_string()),
+        "file_from_input1.txt should be at root of FAT image, not with absolute path. Found files: {:?}",
+        files_in_fat
+    );
+    assert!(
+        files_in_fat.contains(&"file_from_input2.txt".to_string()),
+        "file_from_input2.txt should be at root of FAT image, not with absolute path. Found files: {:?}",
+        files_in_fat
+    );
+
+    // Ensure files are at the root (no directory prefix)
+    // Files should be just the filename, not "/some/path/filename.txt"
+    for file in &files_in_fat {
+        assert!(
+            !file.starts_with('/') || file.matches('/').count() == 1,
+            "File '{}' should be at root of FAT image, not in a subdirectory",
+            file
+        );
+        // Make sure there are no deep paths like /opt/_avocado/...
+        assert!(
+            file.matches('/').count() <= 1,
+            "File '{}' has too many path components, should be at root",
+            file
+        );
+    }
+}
+
 #[test]
 fn test_provision_with_manifest_in_second_directory() {
     let temp_dir = TempDir::new().unwrap();