diff --git a/src/backend/InvenTree/InvenTree/api_version.py b/src/backend/InvenTree/InvenTree/api_version.py
index 1839b2cd09..7f83a19e2e 100644
--- a/src/backend/InvenTree/InvenTree/api_version.py
+++ b/src/backend/InvenTree/InvenTree/api_version.py
@@ -1,11 +1,14 @@
 """InvenTree API version information."""
 
 # InvenTree API version
-INVENTREE_API_VERSION = 552
+INVENTREE_API_VERSION = 553
 """Increment this API version number whenever there is a significant change to the API that any clients need to know about."""
 
 INVENTREE_API_TEXT = """
 
+v553 -> 2026-10-04 : https://github.com/inventree/InvenTree/pull/12965
+    - Fix user creation with 'group_ids' via the User API endpoint
+
 v552 -> 2026-10-02 : https://github.com/inventree/InvenTree/pull/12967
     - Fix transitions endpoint schema to indicate that it returns a list
 
diff --git a/src/backend/InvenTree/users/serializers.py b/src/backend/InvenTree/users/serializers.py
index 404f8f94cd..91da686115 100644
--- a/src/backend/InvenTree/users/serializers.py
+++ b/src/backend/InvenTree/users/serializers.py
@@ -336,6 +336,9 @@ class ExtendedUserSerializer(UserSerializer):
 
         read_only_fields = [*UserSerializer.Meta.read_only_fields, 'groups']
 
+    # 'group_ids' is a write-only serializer field which does not exist on the model
+    SKIP_CREATE_FIELDS = ['group_ids']
+
     groups = GroupSerializer(many=True, read_only=True)
 
     # Write-only field, for updating the groups associated with the user
@@ -529,8 +532,14 @@ class UserCreateSerializer(ExtendedUserSerializer):
 
         base_url = get_base_url()
 
+        # Extract the groups to assign to the new user
+        groups = validated_data.pop('group_ids', None)
+
         instance = super().create(validated_data)
 
+        if groups is not None:
+            instance.groups.set(groups)
+
         # Create the EmailAddress entry for the user
         if instance.email:
             EmailAddress.objects.create(
diff --git a/src/backend/InvenTree/users/test_api.py b/src/backend/InvenTree/users/test_api.py
index 3088d7a55c..4644ef23f8 100644
--- a/src/backend/InvenTree/users/test_api.py
+++ b/src/backend/InvenTree/users/test_api.py
@@ -154,6 +154,43 @@ class UserAPITests(InvenTreeAPITestCase):
         self.assertEqual(response.data['username'], 'Superuser')
         self.assertEqual(response.data['is_superuser'], True)
 
+    def test_user_create_with_groups(self):
+        """Test that groups can be assigned when creating a new user via the API."""
+        url = reverse('api-user-list')
+
+        group_a = Group.objects.create(name='Group A')
+        group_b = Group.objects.create(name='Group B')
+
+        self.user.is_staff = True
+        self.user.save()
+        self.assignRole('admin.add')
+
+        data = {
+            'username': 'grouped',
+            'first_name': 'Grouped',
+            'last_name': 'User',
+            'email': 'grouped@example.org',
+            'group_ids': [group_a.pk, group_b.pk],
+        }
+
+        response = self.post(url, data=data, expected_code=201)
+
+        self.assertEqual(response.data['username'], 'grouped')
+
+        group_names = {g['name'] for g in response.data['groups']}
+        self.assertEqual(group_names, {'Group A', 'Group B'})
+
+        user = User.objects.get(username='grouped')
+        self.assertEqual(set(user.groups.all()), {group_a, group_b})
+
+        # Creating a user without specifying groups must still work
+        response = self.post(
+            url,
+            data={**data, 'username': 'ungrouped', 'group_ids': []},
+            expected_code=201,
+        )
+        self.assertEqual(response.data['groups'], [])
+
     def test_user_detail(self):
         """Test the UserDetail API endpoint."""
         user = User.objects.first()