diff --git a/level_zero/core/source/context/context_imp.cpp b/level_zero/core/source/context/context_imp.cpp
index 49cd3464bd..a6a6b16c29 100644
--- a/level_zero/core/source/context/context_imp.cpp
+++ b/level_zero/core/source/context/context_imp.cpp
@@ -227,6 +227,14 @@ ze_result_t ContextImp::allocSharedMem(ze_device_handle_t hDevice,
         unifiedMemoryProperties.allocationFlags.flags.locallyUncachedResource = 1;
     }
 
+    if (deviceDesc->flags & ZE_DEVICE_MEM_ALLOC_FLAG_BIAS_INITIAL_PLACEMENT) {
+        unifiedMemoryProperties.allocationFlags.allocFlags.usmInitialPlacementGpu = 1;
+    }
+
+    if (hostDesc->flags & ZE_HOST_MEM_ALLOC_FLAG_BIAS_INITIAL_PLACEMENT) {
+        unifiedMemoryProperties.allocationFlags.allocFlags.usmInitialPlacementCpu = 1;
+    }
+
     auto usmPtr =
         this->driverHandle->svmAllocsManager->createSharedUnifiedMemoryAllocation(size,
                                                                                   unifiedMemoryProperties,
diff --git a/level_zero/core/test/unit_tests/sources/memory/test_memory.cpp b/level_zero/core/test/unit_tests/sources/memory/test_memory.cpp
index 3dcb5c9625..5ba274ac5a 100644
--- a/level_zero/core/test/unit_tests/sources/memory/test_memory.cpp
+++ b/level_zero/core/test/unit_tests/sources/memory/test_memory.cpp
@@ -100,6 +100,56 @@ TEST_F(MemoryTest, whenAllocatingSharedMemoryWithUncachedFlagThenLocallyUncached
     ASSERT_EQ(result, ZE_RESULT_SUCCESS);
 }
 
+TEST_F(MemoryTest, whenAllocatingSharedMemoryWithDeviceInitialPlacementBiasFlagThenFlagsAreSetupCorrectly) {
+    size_t size = 10;
+    size_t alignment = 1u;
+    void *ptr = nullptr;
+
+    ze_device_mem_alloc_desc_t deviceDesc = {};
+    deviceDesc.flags = ZE_DEVICE_MEM_ALLOC_FLAG_BIAS_INITIAL_PLACEMENT;
+    ze_host_mem_alloc_desc_t hostDesc = {};
+    ze_result_t result = context->allocSharedMem(device->toHandle(),
+                                                 &deviceDesc,
+                                                 &hostDesc,
+                                                 size, alignment, &ptr);
+
+    EXPECT_EQ(ZE_RESULT_SUCCESS, result);
+    EXPECT_NE(nullptr, ptr);
+
+    auto allocData = driverHandle->getSvmAllocsManager()->getSVMAlloc(ptr);
+    EXPECT_NE(nullptr, allocData);
+    EXPECT_EQ(0u, allocData->allocationFlagsProperty.allocFlags.usmInitialPlacementCpu);
+    EXPECT_EQ(1u, allocData->allocationFlagsProperty.allocFlags.usmInitialPlacementGpu);
+
+    result = context->freeMem(ptr);
+    ASSERT_EQ(result, ZE_RESULT_SUCCESS);
+}
+
+TEST_F(MemoryTest, whenAllocatingSharedMemoryWithHostInitialPlacementBiasFlagThenFlagsAreSetupCorrectly) {
+    size_t size = 10;
+    size_t alignment = 1u;
+    void *ptr = nullptr;
+
+    ze_device_mem_alloc_desc_t deviceDesc = {};
+    ze_host_mem_alloc_desc_t hostDesc = {};
+    hostDesc.flags = ZE_HOST_MEM_ALLOC_FLAG_BIAS_INITIAL_PLACEMENT;
+    ze_result_t result = context->allocSharedMem(device->toHandle(),
+                                                 &deviceDesc,
+                                                 &hostDesc,
+                                                 size, alignment, &ptr);
+
+    EXPECT_EQ(ZE_RESULT_SUCCESS, result);
+    EXPECT_NE(nullptr, ptr);
+
+    auto allocData = driverHandle->getSvmAllocsManager()->getSVMAlloc(ptr);
+    EXPECT_NE(nullptr, allocData);
+    EXPECT_EQ(1u, allocData->allocationFlagsProperty.allocFlags.usmInitialPlacementCpu);
+    EXPECT_EQ(0u, allocData->allocationFlagsProperty.allocFlags.usmInitialPlacementGpu);
+
+    result = context->freeMem(ptr);
+    ASSERT_EQ(result, ZE_RESULT_SUCCESS);
+}
+
 struct SVMAllocsManagerOutOFMemoryMock : public NEO::SVMAllocsManager {
     SVMAllocsManagerOutOFMemoryMock(MemoryManager *memoryManager) : NEO::SVMAllocsManager(memoryManager, false) {}
     void *createUnifiedMemoryAllocation(size_t size,