diff --git a/src/borg/archiver/create_cmd.py b/src/borg/archiver/create_cmd.py
index 82d009148..c5616f04e 100644
--- a/src/borg/archiver/create_cmd.py
+++ b/src/borg/archiver/create_cmd.py
@@ -510,7 +510,13 @@ class CreateMixIn:
                             return
                     if not recurse_excluded_dir:
                         if not dry_run:
-                            status = fso.process_dir_with_fd(path=path, fd=child_fd, st=st, strip_prefix=strip_prefix)
+                            try:
+                                status = fso.process_dir_with_fd(
+                                    path=path, fd=child_fd, st=st, strip_prefix=strip_prefix
+                                )
+                            except BackupItemExcluded:
+                                status = "-"  # excluded (dir)
+                                recurse = False
                         else:
                             status = "+"  # included (dir)
                     if recurse:
diff --git a/src/borg/testsuite/archiver/create_cmd_test.py b/src/borg/testsuite/archiver/create_cmd_test.py
index 82b515e59..c0543ad78 100644
--- a/src/borg/testsuite/archiver/create_cmd_test.py
+++ b/src/borg/testsuite/archiver/create_cmd_test.py
@@ -1065,3 +1065,23 @@ def test_create_with_compression_algorithms(archivers, request):
     for i in range(count):
         os.unlink(os.path.join(archiver.input_path, f"zeros_{i}"))
         os.unlink(os.path.join(archiver.input_path, f"random_{i}"))
+
+
+def test_exclude_nodump_dir_with_file(archivers, request):
+    """A directory flagged NODUMP and its contents must not be archived."""
+    archiver = request.getfixturevalue(archivers)
+    if not has_lchflags:
+        pytest.skip("platform does not support setting UF_NODUMP")
+
+    # Prepare input tree: input/nd directory (NODUMP) containing a file.
+    create_regular_file(archiver.input_path, "nd/file_in_ndir", contents=b"hello")
+    platform.set_flags(os.path.join(archiver.input_path, "nd"), stat.UF_NODUMP)
+
+    # Create repo and archive
+    cmd(archiver, "repo-create", RK_ENCRYPTION)
+    cmd(archiver, "create", "test", "input")
+
+    # Verify: neither the directory nor its contained file are present in the archive
+    list_output = cmd(archiver, "list", "test", "--short")
+    assert "input/nd\n" not in list_output
+    assert "input/nd/file_in_ndir\n" not in list_output