diff --git a/x-pack/plugins/fleet/server/services/package_policy.test.ts b/x-pack/plugins/fleet/server/services/package_policy.test.ts
index 21241e6d5723f..ab2bc944a1932 100644
--- a/x-pack/plugins/fleet/server/services/package_policy.test.ts
+++ b/x-pack/plugins/fleet/server/services/package_policy.test.ts
@@ -38,6 +38,17 @@ paths:
       },
     ];
   }
+  if (dataset === 'dataset1_level1') {
+    return [
+      {
+        buffer: Buffer.from(`
+type: log
+metricset: ["dataset1.level1"]
+`),
+      },
+    ];
+  }
+
   return [
     {
       buffer: Buffer.from(`
@@ -98,6 +109,7 @@ describe('Package policy service', () => {
               type: 'logs',
               dataset: 'package.dataset1',
               streams: [{ input: 'log', template_path: 'some_template_path.yml' }],
+              path: 'dataset1',
             },
           ],
           policy_templates: [
@@ -151,6 +163,57 @@ describe('Package policy service', () => {
       ]);
     });
 
+    it('should work with a two level dataset name', async () => {
+      const inputs = await packagePolicyService.compilePackagePolicyInputs(
+        ({
+          data_streams: [
+            {
+              type: 'logs',
+              dataset: 'package.dataset1.level1',
+              streams: [{ input: 'log', template_path: 'some_template_path.yml' }],
+              path: 'dataset1_level1',
+            },
+          ],
+          policy_templates: [
+            {
+              inputs: [{ type: 'log' }],
+            },
+          ],
+        } as unknown) as PackageInfo,
+        [
+          {
+            type: 'log',
+            enabled: true,
+            streams: [
+              {
+                id: 'datastream01',
+                data_stream: { dataset: 'package.dataset1.level1', type: 'logs' },
+                enabled: true,
+              },
+            ],
+          },
+        ]
+      );
+
+      expect(inputs).toEqual([
+        {
+          type: 'log',
+          enabled: true,
+          streams: [
+            {
+              id: 'datastream01',
+              data_stream: { dataset: 'package.dataset1.level1', type: 'logs' },
+              enabled: true,
+              compiled_stream: {
+                metricset: ['dataset1.level1'],
+                type: 'log',
+              },
+            },
+          ],
+        },
+      ]);
+    });
+
     it('should work with config variables at the input level', async () => {
       const inputs = await packagePolicyService.compilePackagePolicyInputs(
         ({
@@ -159,6 +222,7 @@ describe('Package policy service', () => {
               dataset: 'package.dataset1',
               type: 'logs',
               streams: [{ input: 'log', template_path: 'some_template_path.yml' }],
+              path: 'dataset1',
             },
           ],
           policy_templates: [
@@ -261,6 +325,7 @@ describe('Package policy service', () => {
               dataset: 'package.dataset1',
               type: 'logs',
               streams: [{ input: 'log', template_path: 'some_template_path.yml' }],
+              path: 'dataset1',
             },
           ],
           policy_templates: [
diff --git a/x-pack/plugins/fleet/server/services/package_policy.ts b/x-pack/plugins/fleet/server/services/package_policy.ts
index e4d34e551c95b..7c870415bc521 100644
--- a/x-pack/plugins/fleet/server/services/package_policy.ts
+++ b/x-pack/plugins/fleet/server/services/package_policy.ts
@@ -56,10 +56,6 @@ import { appContextService } from '.';
 
 const SAVED_OBJECT_TYPE = PACKAGE_POLICY_SAVED_OBJECT_TYPE;
 
-function getDataset(st: string) {
-  return st.split('.')[1];
-}
-
 class PackagePolicyService {
   public async create(
     soClient: SavedObjectsClientContract,
@@ -562,7 +558,7 @@ async function _compilePackageStream(
   if (!stream.enabled) {
     return { ...stream, compiled_stream: undefined };
   }
-  const datasetPath = getDataset(stream.data_stream.dataset);
+
   const packageDataStreams = pkgInfo.data_streams;
   if (!packageDataStreams) {
     throw new Error('Stream template not found, no data streams');
@@ -571,8 +567,11 @@ async function _compilePackageStream(
   const packageDataStream = packageDataStreams.find(
     (pkgDataStream) => pkgDataStream.dataset === stream.data_stream.dataset
   );
+
   if (!packageDataStream) {
-    throw new Error(`Stream template not found, unable to find dataset ${datasetPath}`);
+    throw new Error(
+      `Stream template not found, unable to find dataset ${stream.data_stream.dataset}`
+    );
   }
 
   const streamFromPkg = (packageDataStream.streams || []).find(
@@ -583,9 +582,11 @@ async function _compilePackageStream(
   }
 
   if (!streamFromPkg.template_path) {
-    throw new Error(`Stream template path not found for dataset ${datasetPath}`);
+    throw new Error(`Stream template path not found for dataset ${stream.data_stream.dataset}`);
   }
 
+  const datasetPath = packageDataStream.path;
+
   const [pkgStreamTemplate] = await getAssetsData(
     registryPkgInfo,
     (path: string) => path.endsWith(streamFromPkg.template_path),
@@ -594,7 +595,7 @@ async function _compilePackageStream(
 
   if (!pkgStreamTemplate || !pkgStreamTemplate.buffer) {
     throw new Error(
-      `Unable to load stream template ${streamFromPkg.template_path} for dataset ${datasetPath}`
+      `Unable to load stream template ${streamFromPkg.template_path} for dataset ${stream.data_stream.dataset}`
     );
   }