diff --git a/src/wp-includes/rest-api/endpoints/class-wp-rest-users-controller.php b/src/wp-includes/rest-api/endpoints/class-wp-rest-users-controller.php
index 9b25cf7974cbc..7060d806a6106 100644
--- a/src/wp-includes/rest-api/endpoints/class-wp-rest-users-controller.php
+++ b/src/wp-includes/rest-api/endpoints/class-wp-rest-users-controller.php
@@ -622,9 +622,6 @@ public function create_item( $request ) {
 				}
 				return $error;
 			}
-		}
-
-		if ( is_multisite() ) {
 			$user_id = wpmu_create_user( $user->user_login, $user->user_pass, $user->user_email );
 
 			if ( ! $user_id ) {
@@ -637,21 +634,35 @@ public function create_item( $request ) {
 
 			$user->ID = $user_id;
 			$user_id  = wp_update_user( wp_slash( (array) $user ) );
+		} else {
+			$user_id = wp_insert_user( wp_slash( (array) $user ) );
+		}
 
-			if ( is_wp_error( $user_id ) ) {
-				return $user_id;
+		if ( is_wp_error( $user_id ) ) {
+			if ( in_array( $user_id->get_error_code(), array( 'existing_user_login' ) ) ) {
+				return new WP_Error(
+					'rest_existing_user_login',
+					__( 'Sorry, that username already exists!' ),
+					array( 'status' => 409 )
+				);
 			}
 
+			if ( in_array( $user_id->get_error_code(), array( 'existing_user_email' ) ) ) {
+				return new WP_Error(
+					'rest_user_existing_user_email',
+					__( 'Sorry, that email address is already used!",' ),
+					array( 'status' => 409 )
+				);
+			}
+
+			return $user_id;
+		}
+
+		if ( is_multisite() ) {
 			$result = add_user_to_blog( get_site()->id, $user_id, '' );
 			if ( is_wp_error( $result ) ) {
 				return $result;
 			}
-		} else {
-			$user_id = wp_insert_user( wp_slash( (array) $user ) );
-
-			if ( is_wp_error( $user_id ) ) {
-				return $user_id;
-			}
 		}
 
 		$user = get_user_by( 'id', $user_id );
diff --git a/tests/phpunit/tests/rest-api/rest-users-controller.php b/tests/phpunit/tests/rest-api/rest-users-controller.php
index b78e95b95f48d..931027666bc27 100644
--- a/tests/phpunit/tests/rest-api/rest-users-controller.php
+++ b/tests/phpunit/tests/rest-api/rest-users-controller.php
@@ -1689,6 +1689,48 @@ public function test_create_user_invalid_role() {
 		$this->assertErrorResponse( 'rest_user_invalid_role', $response, 400 );
 	}
 
+	/**
+	 * @ticket 41672
+	 */
+	public function test_create_user_with_existing_username_or_email() {
+		$this->allow_user_to_manage_multisite();
+		wp_set_current_user( self::$user );
+
+		// Create User
+		$params = array(
+			'username' => 'testjsonuser',
+			'password' => 'testjsonpassword',
+			'email'    => 'testjson@example.com',
+		);
+
+		$request = new WP_REST_Request( 'POST', '/wp/v2/users' );
+		$request->add_header( 'content-type', 'application/json' );
+		$request->set_body( wp_json_encode( $params ) );
+		$response = rest_get_server()->dispatch( $request );
+		$this->check_add_edit_user_response( $response );
+
+		// Make request again, expecting existing_user_login response
+		$params = array(
+			'username' => 'testjsonuser',
+			'password' => 'testjsonpassword',
+			'email'    => 'testjson1@example.com',
+		);
+
+		$request->set_body( wp_json_encode( $params ) );
+		$response = rest_get_server()->dispatch( $request );
+		$this->assertErrorResponse( 'rest_existing_user_login', $response, 409 );
+
+		// Make request again, expecting existing_user_email response
+		$params = array(
+			'username' => 'testjsonuser1',
+			'password' => 'testjsonpassword',
+			'email'    => 'testjson@example.com',
+		);
+		$request->set_body( wp_json_encode( $params ) );
+		$response = rest_get_server()->dispatch( $request );
+		$this->assertErrorResponse( 'rest_user_existing_user_email', $response, 409 );
+	}
+
 	public function test_update_item() {
 		$user_id = self::factory()->user->create(
 			array(