diff --git a/tools/cosmovisor/CHANGELOG.md b/tools/cosmovisor/CHANGELOG.md
index 2e8b454ee9..211298f62d 100644
--- a/tools/cosmovisor/CHANGELOG.md
+++ b/tools/cosmovisor/CHANGELOG.md
@@ -36,6 +36,12 @@ Ref: https://keepachangelog.com/en/1.0.0/
 
 ## [Unreleased]
 
+## v1.7.1 - 2025-01-12
+
+### Bug Fixes
+
+* [#23652](https://github.com/cosmos/cosmos-sdk/pull/23652) Fix issue with wrong directory placement when using `prepare-upgrade` for non archive.
+
 ## v1.7.0 - 2024-11-18
 
 ### Features
diff --git a/tools/cosmovisor/cmd/cosmovisor/prepare_upgrade.go b/tools/cosmovisor/cmd/cosmovisor/prepare_upgrade.go
index f15e88803a..f3a5acc071 100644
--- a/tools/cosmovisor/cmd/cosmovisor/prepare_upgrade.go
+++ b/tools/cosmovisor/cmd/cosmovisor/prepare_upgrade.go
@@ -4,7 +4,6 @@ import (
 	"context"
 	"crypto/tls"
 	"fmt"
-	"path/filepath"
 	"strings"
 	"time"
 
@@ -73,8 +72,7 @@ func prepareUpgradeHandler(cmd *cobra.Command, _ []string) error {
 
 	logger.Info("Downloading upgrade binary", "url", binaryURL)
 
-	upgradeBin := filepath.Join(cfg.UpgradeBin(upgradeInfo.Name), cfg.Name)
-	if err := plan.DownloadUpgrade(filepath.Dir(upgradeBin), binaryURL, cfg.Name); err != nil {
+	if err := plan.DownloadUpgrade(cfg.UpgradeDir(upgradeInfo.Name), binaryURL, cfg.Name); err != nil {
 		return fmt.Errorf("failed to download and verify binary: %w", err)
 	}