diff --git a/app/screens/create_direct_message/create_direct_message.tsx b/app/screens/create_direct_message/create_direct_message.tsx
index 291c5b458..7cd3dcae7 100644
--- a/app/screens/create_direct_message/create_direct_message.tsx
+++ b/app/screens/create_direct_message/create_direct_message.tsx
@@ -233,9 +233,9 @@ export default function CreateDirectMessage({
     const userFetchFunction = useCallback(async (page: number) => {
         let results;
         if (restrictDirectMessage) {
-            results = await fetchProfilesInTeam(serverUrl, currentTeamId, page, General.PROFILE_CHUNK_SIZE);
+            results = await fetchProfilesInTeam(serverUrl, currentTeamId, page, General.PROFILE_CHUNK_SIZE, '', {active: true});
         } else {
-            results = await fetchProfiles(serverUrl, page, General.PROFILE_CHUNK_SIZE);
+            results = await fetchProfiles(serverUrl, page, General.PROFILE_CHUNK_SIZE, {active: true});
         }
 
         if (results.users?.length) {
@@ -249,9 +249,9 @@ export default function CreateDirectMessage({
         const lowerCasedTerm = searchTerm.toLowerCase();
         let results;
         if (restrictDirectMessage) {
-            results = await searchProfiles(serverUrl, lowerCasedTerm, {team_id: currentTeamId, allow_inactive: true});
+            results = await searchProfiles(serverUrl, lowerCasedTerm, {team_id: currentTeamId, allow_inactive: false});
         } else {
-            results = await searchProfiles(serverUrl, lowerCasedTerm, {allow_inactive: true});
+            results = await searchProfiles(serverUrl, lowerCasedTerm, {allow_inactive: false});
         }
 
         if (results.data) {
diff --git a/detox/e2e/test/channels/create_direct_message.e2e.ts b/detox/e2e/test/channels/create_direct_message.e2e.ts
index 83d9d401a..e5f713d22 100644
--- a/detox/e2e/test/channels/create_direct_message.e2e.ts
+++ b/detox/e2e/test/channels/create_direct_message.e2e.ts
@@ -171,4 +171,35 @@ describe('Channels - Create Direct Message', () => {
         // # Go back to channel list screen
         await CreateDirectMessageScreen.close();
     });
+
+    it('MM-T63374 - should not display deactivated users in the create direct message screen', async () => {
+        // # As admin, create a new user to test with
+        const {user: deactivatedUser} = await User.apiCreateUser(siteOneUrl);
+        await Team.apiAddUserToTeam(siteOneUrl, deactivatedUser.id, testTeam.id);
+
+        // # Open create direct message screen and verify we can find the user
+        await CreateDirectMessageScreen.open();
+        await CreateDirectMessageScreen.searchInput.replaceText(deactivatedUser.username);
+        await wait(timeouts.ONE_SEC);
+
+        // * Verify the new user appears in search results before deactivation
+        await expect(CreateDirectMessageScreen.getUserItemDisplayName(deactivatedUser.id)).toBeVisible();
+
+        // # Close the create direct message screen
+        await CreateDirectMessageScreen.close();
+
+        // # Deactivate the user
+        await User.apiDeactivateUser(siteOneUrl, deactivatedUser.id);
+
+        // # Open create direct message screen again and search for the deactivated user
+        await CreateDirectMessageScreen.open();
+        await CreateDirectMessageScreen.searchInput.replaceText(deactivatedUser.username);
+        await wait(timeouts.ONE_SEC);
+
+        // * Verify the deactivated user does not appear in search results
+        await expect(element(by.text(`No matches found for “${deactivatedUser.username}”`))).toBeVisible();
+
+        // # Go back to channel list screen
+        await CreateDirectMessageScreen.close();
+    });
 });