diff --git a/Cargo.lock b/Cargo.lock
index 27cc1d89db..7be6912ea4 100644
--- a/Cargo.lock
+++ b/Cargo.lock
@@ -7345,6 +7345,7 @@ dependencies = [
  "bls",
  "deposit_contract",
  "derivative",
+ "directory",
  "eth2_keystore",
  "filesystem",
  "hex",
diff --git a/common/validator_dir/Cargo.toml b/common/validator_dir/Cargo.toml
index 0eba4cf232..091140568a 100644
--- a/common/validator_dir/Cargo.toml
+++ b/common/validator_dir/Cargo.toml
@@ -20,6 +20,7 @@ tree_hash = "0.4.1"
 hex = "0.4.2"
 derivative = "2.1.1"
 lockfile = { path = "../lockfile" }
+directory = { path = "../directory" }
 
 [dev-dependencies]
 tempfile = "3.1.0"
diff --git a/common/validator_dir/src/builder.rs b/common/validator_dir/src/builder.rs
index a7732a7798..4ab9764f84 100644
--- a/common/validator_dir/src/builder.rs
+++ b/common/validator_dir/src/builder.rs
@@ -1,6 +1,7 @@
 use crate::{Error as DirError, ValidatorDir};
 use bls::get_withdrawal_credentials;
 use deposit_contract::{encode_eth1_tx_data, Error as DepositError};
+use directory::ensure_dir_exists;
 use eth2_keystore::{Error as KeystoreError, Keystore, KeystoreBuilder, PlainText};
 use filesystem::create_with_600_perms;
 use rand::{distributions::Alphanumeric, Rng};
@@ -41,6 +42,7 @@ pub enum Error {
     #[cfg(feature = "insecure_keys")]
     InsecureKeysError(String),
     MissingPasswordDir,
+    UnableToCreatePasswordDir(String),
 }
 
 impl From<KeystoreError> for Error {
@@ -160,6 +162,10 @@ impl<'a> Builder<'a> {
             create_dir_all(&dir).map_err(Error::UnableToCreateDir)?;
         }
 
+        if let Some(password_dir) = &self.password_dir {
+            ensure_dir_exists(password_dir).map_err(Error::UnableToCreatePasswordDir)?;
+        }
+
         // The withdrawal keystore must be initialized in order to store it or create an eth1
         // deposit.
         if (self.store_withdrawal_keystore || self.deposit_info.is_some())