diff --git a/crates/sui/src/sui_commands.rs b/crates/sui/src/sui_commands.rs
index d83350e25bdbd..8a539ade6fbbe 100644
--- a/crates/sui/src/sui_commands.rs
+++ b/crates/sui/src/sui_commands.rs
@@ -638,41 +638,59 @@ async fn start(
     }
 
     let mut swarm_builder = Swarm::builder();
+
     // If this is set, then no data will be persisted between runs, and a new genesis will be
     // generated each run.
-    if force_regenesis {
+    let config_dir = if force_regenesis {
         swarm_builder =
             swarm_builder.committee_size(NonZeroUsize::new(DEFAULT_NUMBER_OF_AUTHORITIES).unwrap());
         let genesis_config = GenesisConfig::custom_genesis(1, 100);
         swarm_builder = swarm_builder.with_genesis_config(genesis_config);
         let epoch_duration_ms = epoch_duration_ms.unwrap_or(DEFAULT_EPOCH_DURATION_MS);
         swarm_builder = swarm_builder.with_epoch_duration_ms(epoch_duration_ms);
+        tempdir()?.into_path()
     } else {
-        if config.is_none() && !sui_config_dir()?.join(SUI_NETWORK_CONFIG).exists() {
-            genesis(None, None, None, false, epoch_duration_ms, None, false).await.map_err(|_| anyhow!("Cannot run genesis with non-empty Sui config directory: {}.\n\nIf you are trying to run a local network without persisting the data (so a new genesis that is randomly generated and will not be saved once the network is shut down), use --force-regenesis flag.\nIf you are trying to persist the network data and start from a new genesis, use sui genesis --help to see how to generate a new genesis.", sui_config_dir().unwrap().display()))?;
-        }
-
-        // Load the config of the Sui authority.
-        // To keep compatibility with sui-test-validator where the user can pass a config
-        // directory, this checks if the config is a file or a directory
-        let network_config_path = if let Some(ref config) = config {
-            if config.is_dir() {
-                config.join(SUI_NETWORK_CONFIG)
-            } else if config.is_file()
-                && config
-                    .extension()
-                    .is_some_and(|ext| (ext == "yml" || ext == "yaml"))
+        // If the config path looks like a YAML file, it is treated as if it is the network.yaml
+        // overriding the network.yaml found in the sui config directry. Otherwise it is treated as
+        // the sui config directory for backwards compatibility with `sui-test-validator`.
+        let (network_config_path, sui_config_path) = match config {
+            Some(config)
+                if config.is_file()
+                    && config
+                        .extension()
+                        .is_some_and(|e| e == "yml" || e == "yaml") =>
             {
-                config.clone()
-            } else {
-                config.join(SUI_NETWORK_CONFIG)
+                (config, sui_config_dir()?)
+            }
+
+            Some(config) => (config.join(SUI_NETWORK_CONFIG), config),
+
+            None => {
+                let sui_config = sui_config_dir()?;
+                let network_config = sui_config.join(SUI_NETWORK_CONFIG);
+
+                if !network_config.exists() {
+                    genesis(None, None, None, false, epoch_duration_ms, None, false)
+                        .await
+                        .map_err(|_| {
+                            anyhow!(
+                                "Cannot run genesis with non-empty Sui config directory: {}.\n\n\
+                                If you are trying to run a local network without persisting the \
+                                data (so a new genesis that is randomly generated and will not be \
+                                saved once the network is shut down), use --force-regenesis flag.\n\
+                                If you are trying to persist the network data and start from a new \
+                                genesis, use sui genesis --help to see how to generate a new \
+                                genesis.",
+                                sui_config.display(),
+                            )
+                        })?;
+                }
+
+                (network_config, sui_config)
             }
-        } else {
-            config
-                .clone()
-                .unwrap_or(sui_config_dir()?)
-                .join(SUI_NETWORK_CONFIG)
         };
+
+        // Load the config of the Sui authority.
         let network_config: NetworkConfig =
             PersistedConfig::read(&network_config_path).map_err(|err| {
                 err.context(format!(
@@ -682,9 +700,11 @@ async fn start(
             })?;
 
         swarm_builder = swarm_builder
-            .dir(sui_config_dir()?)
+            .dir(sui_config_path.clone())
             .with_network_config(network_config);
-    }
+
+        sui_config_path
+    };
 
     let data_ingestion_path = tempdir()?.into_path();
 
@@ -768,14 +788,6 @@ async fn start(
         let faucet_address = parse_host_port(input, DEFAULT_FAUCET_PORT)
             .map_err(|_| anyhow!("Invalid faucet host and port"))?;
         tracing::info!("Starting the faucet service at {faucet_address}");
-        let config_dir = if force_regenesis {
-            tempdir()?.into_path()
-        } else {
-            match config {
-                Some(config) => config,
-                None => sui_config_dir()?,
-            }
-        };
 
         let host_ip = match faucet_address {
             SocketAddr::V4(addr) => *addr.ip(),