diff --git a/server/src/main/java/org/opensearch/indices/RemoteStoreSettings.java b/server/src/main/java/org/opensearch/indices/RemoteStoreSettings.java
index 4bd0caa709436..1f09af234ae30 100644
--- a/server/src/main/java/org/opensearch/indices/RemoteStoreSettings.java
+++ b/server/src/main/java/org/opensearch/indices/RemoteStoreSettings.java
@@ -75,7 +75,7 @@ public class RemoteStoreSettings {
     @ExperimentalApi
     public static final Setting<RemoteStoreEnums.PathType> CLUSTER_REMOTE_STORE_PATH_TYPE_SETTING = new Setting<>(
         "cluster.remote_store.index.path.type",
-        RemoteStoreEnums.PathType.FIXED.toString(),
+        RemoteStoreEnums.PathType.HASHED_PREFIX.toString(),
         RemoteStoreEnums.PathType::parseString,
         Property.NodeScope,
         Property.Dynamic
diff --git a/server/src/main/java/org/opensearch/repositories/blobstore/BlobStoreRepository.java b/server/src/main/java/org/opensearch/repositories/blobstore/BlobStoreRepository.java
index 742c5101f622b..893ec1002ea09 100644
--- a/server/src/main/java/org/opensearch/repositories/blobstore/BlobStoreRepository.java
+++ b/server/src/main/java/org/opensearch/repositories/blobstore/BlobStoreRepository.java
@@ -362,7 +362,7 @@ protected static long calculateMaxWithinIntLimit(long defaultThresholdOfHeap, lo
 
     public static final Setting<PathType> SHARD_PATH_TYPE = new Setting<>(
         "shard_path_type",
-        PathType.FIXED.toString(),
+        PathType.HASHED_PREFIX.toString(),
         PathType::parseString
     );
 
diff --git a/server/src/test/java/org/opensearch/index/remote/RemoteStoreCustomMetadataResolverTests.java b/server/src/test/java/org/opensearch/index/remote/RemoteStoreCustomMetadataResolverTests.java
index 331ebd0e3fcd4..53aceca5c3222 100644
--- a/server/src/test/java/org/opensearch/index/remote/RemoteStoreCustomMetadataResolverTests.java
+++ b/server/src/test/java/org/opensearch/index/remote/RemoteStoreCustomMetadataResolverTests.java
@@ -29,7 +29,6 @@
 public class RemoteStoreCustomMetadataResolverTests extends OpenSearchTestCase {
 
     RepositoriesService repositoriesService = mock(RepositoriesService.class);
-    Settings settings = Settings.EMPTY;
 
     public void testGetPathStrategyMinVersionOlder() {
         Settings settings = Settings.builder().put(CLUSTER_REMOTE_STORE_PATH_TYPE_SETTING.getKey(), randomFrom(PathType.values())).build();
@@ -138,6 +137,12 @@ public void testGetPathStrategyStrategyWithDynamicUpdate() {
             () -> repositoriesService,
             settings
         );
+        assertEquals(PathType.HASHED_PREFIX, resolver.getPathStrategy().getType());
+        assertNotNull(resolver.getPathStrategy().getHashAlgorithm());
+        assertEquals(PathHashAlgorithm.FNV_1A_COMPOSITE_1, resolver.getPathStrategy().getHashAlgorithm());
+
+        // Set FIXED with null hash algorithm
+        clusterSettings.applySettings(Settings.builder().put(CLUSTER_REMOTE_STORE_PATH_TYPE_SETTING.getKey(), PathType.FIXED).build());
         assertEquals(PathType.FIXED, resolver.getPathStrategy().getType());
         assertNull(resolver.getPathStrategy().getHashAlgorithm());