diff --git a/src/libraries/System.Private.CoreLib/src/Microsoft/Win32/SafeHandles/SafeFileHandle.Windows.cs b/src/libraries/System.Private.CoreLib/src/Microsoft/Win32/SafeHandles/SafeFileHandle.Windows.cs
index 91b863e22f7a51..5b87aba0918650 100644
--- a/src/libraries/System.Private.CoreLib/src/Microsoft/Win32/SafeHandles/SafeFileHandle.Windows.cs
+++ b/src/libraries/System.Private.CoreLib/src/Microsoft/Win32/SafeHandles/SafeFileHandle.Windows.cs
@@ -136,8 +136,11 @@ private static unsafe void Preallocate(string fullPath, long preallocationSize,
                 int errorCode = Marshal.GetLastPInvokeError();
 
                 // Only throw for errors that indicate there is not enough space.
-                if (errorCode == Interop.Errors.ERROR_DISK_FULL ||
-                    errorCode == Interop.Errors.ERROR_FILE_TOO_LARGE)
+                // SetFileInformationByHandle fails with ERROR_DISK_FULL in certain cases when the size is disallowed by filesystem,
+                // such as >4GB on FAT32 volume. We cannot distinguish them currently.
+                if (errorCode is Interop.Errors.ERROR_DISK_FULL or
+                    Interop.Errors.ERROR_FILE_TOO_LARGE or
+                    Interop.Errors.ERROR_INVALID_PARAMETER)
                 {
                     fileHandle.Dispose();
 
@@ -147,7 +150,7 @@ private static unsafe void Preallocate(string fullPath, long preallocationSize,
                     throw new IOException(SR.Format(errorCode == Interop.Errors.ERROR_DISK_FULL
                                                         ? SR.IO_DiskFull_Path_AllocationSize
                                                         : SR.IO_FileTooLarge_Path_AllocationSize,
-                                            fullPath, preallocationSize));
+                                            fullPath, preallocationSize), Win32Marshal.MakeHRFromErrorCode(errorCode));
                 }
             }
         }
diff --git a/src/libraries/System.Runtime/tests/System.IO.FileSystem.Tests/File/OpenHandle.cs b/src/libraries/System.Runtime/tests/System.IO.FileSystem.Tests/File/OpenHandle.cs
index 36349e8b993b7c..3d7bcb303b4ce7 100644
--- a/src/libraries/System.Runtime/tests/System.IO.FileSystem.Tests/File/OpenHandle.cs
+++ b/src/libraries/System.Runtime/tests/System.IO.FileSystem.Tests/File/OpenHandle.cs
@@ -95,5 +95,43 @@ public void DeleteOnClose_FileDeletedAfterSafeHandleDispose(FileOptions options)
             }
             Assert.False(File.Exists(path));
         }
+
+        [Fact]
+        [PlatformSpecific(TestPlatforms.Windows)]
+        public void PreallocationSizeVeryLargeThrowsCorrectHResult()
+        {
+            const long VeryLargeFileSize = (long)128 * 1024 * 1024 * 1024 * 1024; // 128TB
+
+            // The largest file size depends on cluster size.
+            // See https://learn.microsoft.com/en-us/windows-server/storage/file-server/ntfs-overview#support-for-large-volumes
+
+
+            const int ERROR_INVALID_PARAMETER = unchecked((int)0x80070057);
+            const int ERROR_DISK_FULL = unchecked((int)0x80070070);
+
+            string path = GetTestFilePath();
+            if (!IOServices.IsDriveNTFS(Path.GetPathRoot(path)))
+            {
+                // Skip the test for non-NTFS filesystems
+                return;
+            }
+
+            if (new DriveInfo(path).TotalFreeSpace >= VeryLargeFileSize)
+            {
+                // Skip the test if somehow the drive is really big.
+                return;
+            }
+
+            try
+            {
+                using (File.OpenHandle(path, mode: FileMode.Create, access: FileAccess.ReadWrite, preallocationSize: VeryLargeFileSize)) { }
+                Assert.Fail("File.OpenHandle should throw due to failure to preallocate a very large file.");
+            }
+            catch (IOException ex)
+            {
+                // Accept both results since we cannot assume the cluster size of testing volume
+                Assert.True(ex.HResult is ERROR_INVALID_PARAMETER or ERROR_DISK_FULL);
+            }
+        }
     }
 }