diff --git a/orbit/changes/25373-tmp-dir-fix b/orbit/changes/25373-tmp-dir-fix
new file mode 100644
index 000000000000..d5ca96c97fb1
--- /dev/null
+++ b/orbit/changes/25373-tmp-dir-fix
@@ -0,0 +1,2 @@
+- Fixed a bug where fleetd was not properly cleaning up temporary directories during software
+  installation.
\ No newline at end of file
diff --git a/orbit/pkg/installer/installer.go b/orbit/pkg/installer/installer.go
index 91a2e84a6b3f..d3aadff7116b 100644
--- a/orbit/pkg/installer/installer.go
+++ b/orbit/pkg/installer/installer.go
@@ -235,6 +235,18 @@ func (r *Runner) installSoftware(ctx context.Context, installID string) (*fleet.
 		return payload, fmt.Errorf("creating temporary directory: %w", err)
 	}
 
+	// remove tmp directory and installer
+	defer func() {
+		removeAllFn := r.removeAllFn
+		if removeAllFn == nil {
+			removeAllFn = os.RemoveAll
+		}
+		err := removeAllFn(tmpDir)
+		if err != nil {
+			log.Err(err)
+		}
+	}()
+
 	var installerPath string
 	if installer.SoftwareInstallerURL != nil && installer.SoftwareInstallerURL.URL != "" {
 		log.Debug().Str("install_id", installID).Msgf("about to download software installer from URL")
@@ -255,18 +267,6 @@ func (r *Runner) installSoftware(ctx context.Context, installID string) (*fleet.
 		}
 	}
 
-	// remove tmp directory and installer
-	defer func() {
-		removeAllFn := r.removeAllFn
-		if removeAllFn == nil {
-			removeAllFn = os.RemoveAll
-		}
-		err := removeAllFn(tmpDir)
-		if err != nil {
-			log.Err(err)
-		}
-	}()
-
 	scriptExtension := ".sh"
 	if runtime.GOOS == "windows" {
 		scriptExtension = ".ps1"
diff --git a/orbit/pkg/installer/installer_test.go b/orbit/pkg/installer/installer_test.go
index 07b329b5efee..bb40296eb647 100644
--- a/orbit/pkg/installer/installer_test.go
+++ b/orbit/pkg/installer/installer_test.go
@@ -421,6 +421,20 @@ func TestInstallerRun(t *testing.T) {
 		assert.Equal(t, 2, numPostInstallMatches)
 	})
 
+	t.Run("failed installer download", func(t *testing.T) {
+		resetAll()
+
+		oc.downloadInstallerFn = func(installerID uint, downloadDir string) (string, error) {
+			return "", errors.New("failed to download installer")
+		}
+
+		err := r.run(context.Background(), &config)
+		require.Error(t, err)
+
+		require.True(t, removeAllFnCalled)
+		require.True(t, tmpDirFnCalled)
+		require.Equal(t, tmpDir, removedDir)
+	})
 	t.Run("failed results upload", func(t *testing.T) {
 		var retries int
 		// set a shorter interval to speed up tests
@@ -669,7 +683,6 @@ func TestInstallerRunWithInstallerFromURL(t *testing.T) {
 		assert.True(t, getInstallerDetailsFnCalled)
 		assert.Equal(t, installDetails.ExecutionID, installIdRequested)
 	})
-
 }
 
 func TestScriptsDisabled(t *testing.T) {