diff --git a/tools/cmakev2/utilities.cmake b/tools/cmakev2/utilities.cmake
index 36715986407..28588cba59c 100644
--- a/tools/cmakev2/utilities.cmake
+++ b/tools/cmakev2/utilities.cmake
@@ -819,7 +819,12 @@ function(target_add_binary_data target embed_file embed_type)
     idf_build_get_property(build_dir BUILD_DIR)
     idf_build_get_property(idf_path IDF_PATH)
 
-    get_filename_component(embed_file "${embed_file}" ABSOLUTE)
+    # The target_add_binary_data function is also called within the
+    # idf_component_include function, which is not executed in the component
+    # directory context. Therefore, ensure that the absolute path of the
+    # embedded file is resolved relative to the component directory.
+    idf_component_get_property(component_directory "${target}" COMPONENT_DIR)
+    get_filename_component(embed_file "${embed_file}" ABSOLUTE BASE_DIR "${component_directory}")
 
     get_filename_component(name "${embed_file}" NAME)
     set(embed_srcfile "${build_dir}/${name}.S")
@@ -841,6 +846,22 @@ function(target_add_binary_data target embed_file embed_type)
         WORKING_DIRECTORY "${build_dir}"
         VERBATIM)
 
+    # A file generated by `add_custom_command` can be used as a dependency only
+    # within the directory context where the target was created (see
+    # https://cmake.org/cmake/help/latest/command/add_custom_command.html).
+    # Since embedded files are collected in the EMBED_FILES and EMBED_TXTFILES
+    # component properties, and the source files are generated in the
+    # idf_component_include function, which is not called in the component’s
+    # directory context, we must create an explicit target and add it as a
+    # dependency of the component target. To avoid potential target name
+    # collisions with embedded files that share the same name but reside in
+    # different directories, add a hash of the full embedded file path to
+    # the generated target name.
+    string(MD5 hash "${embed_file}")
+    string(MAKE_C_IDENTIFIER "gen_${name}_${hash}" embed_srcfile_target)
+    add_custom_target(${embed_srcfile_target} DEPENDS "${embed_srcfile}")
+    add_dependencies(${target} ${embed_srcfile_target})
+
     set_property(DIRECTORY "${CMAKE_CURRENT_SOURCE_DIR}" APPEND PROPERTY ADDITIONAL_CLEAN_FILES "${embed_srcfile}")
 
     target_sources("${target}" PRIVATE "${embed_srcfile}")