diff --git a/src/wp-includes/rest-api/endpoints/class-wp-rest-attachments-controller.php b/src/wp-includes/rest-api/endpoints/class-wp-rest-attachments-controller.php
index 56c648e9bf..90ab5185fd 100644
--- a/src/wp-includes/rest-api/endpoints/class-wp-rest-attachments-controller.php
+++ b/src/wp-includes/rest-api/endpoints/class-wp-rest-attachments-controller.php
@@ -136,7 +136,6 @@ class WP_REST_Attachments_Controller extends WP_REST_Posts_Controller {
 		}
 
 		$attachment                 = $this->prepare_item_for_database( $request );
-		$attachment->file           = $file;
 		$attachment->post_mime_type = $type;
 		$attachment->guid           = $url;
 
@@ -144,7 +143,8 @@ class WP_REST_Attachments_Controller extends WP_REST_Posts_Controller {
 			$attachment->post_title = preg_replace( '/\.[^.]+$/', '', basename( $file ) );
 		}
 
-		$id = wp_insert_post( wp_slash( (array) $attachment ), true );
+		// $post_parent is inherited from $attachment['post_parent'].
+		$id = wp_insert_attachment( wp_slash( (array) $attachment ), $file, 0, true );
 
 		if ( is_wp_error( $id ) ) {
 			if ( 'db_update_error' === $id->get_error_code() ) {
diff --git a/tests/phpunit/tests/rest-api/rest-attachments-controller.php b/tests/phpunit/tests/rest-api/rest-attachments-controller.php
index 2131e03f41..79c76a60f1 100644
--- a/tests/phpunit/tests/rest-api/rest-attachments-controller.php
+++ b/tests/phpunit/tests/rest-api/rest-attachments-controller.php
@@ -773,6 +773,20 @@ class WP_Test_REST_Attachments_Controller extends WP_Test_REST_Post_Type_Control
 		$this->assertEquals( '', $attachment['alt_text'] );
 	}
 
+	/**
+	 * @ticket 40861
+	 */
+	public function test_create_item_ensure_relative_path() {
+		wp_set_current_user( self::$author_id );
+		$request = new WP_REST_Request( 'POST', '/wp/v2/media' );
+		$request->set_header( 'Content-Type', 'image/jpeg' );
+		$request->set_header( 'Content-Disposition', 'attachment; filename=canola.jpg' );
+		$request->set_body( file_get_contents( $this->test_file ) );
+		$response   = rest_get_server()->dispatch( $request );
+		$attachment = $response->get_data();
+		$this->assertNotContains( ABSPATH, get_post_meta( $attachment['id'], '_wp_attached_file', true ) );
+	}
+
 	public function test_update_item() {
 		wp_set_current_user( self::$editor_id );
 		$attachment_id = $this->factory->attachment->create_object(