diff --git a/changelogs/fragments/1632-changes-to-no-allocate-eip-when-connectivity_type=private.yml b/changelogs/fragments/1632-changes-to-no-allocate-eip-when-connectivity_type=private.yml
new file mode 100644
index 0000000000..4b820a3498
--- /dev/null
+++ b/changelogs/fragments/1632-changes-to-no-allocate-eip-when-connectivity_type=private.yml
@@ -0,0 +1,2 @@
+bugfixes:
+- ec2_vpc_nat_gateway - fixes to nat gateway so that when the user creates a private NAT gateway, an Elastic IP address should not be allocated. The module had inncorrectly always allocate elastic IP address when creating private nat gateway (https://github.com/ansible-collections/amazon.aws/pull/1632).
\ No newline at end of file
diff --git a/plugins/modules/ec2_vpc_nat_gateway.py b/plugins/modules/ec2_vpc_nat_gateway.py
index 9c0229906a..34f4fde632 100644
--- a/plugins/modules/ec2_vpc_nat_gateway.py
+++ b/plugins/modules/ec2_vpc_nat_gateway.py
@@ -736,10 +736,11 @@ def pre_create(
             msg = f"NAT Gateway {existing_gateways[0]['nat_gateway_id']} already exists in subnet_id {subnet_id}"
             return changed, msg, results
         else:
-            changed, msg, allocation_id = allocate_eip_address(client, module)
+            if connectivity_type == "public":
+                changed, msg, allocation_id = allocate_eip_address(client, module)
 
-            if not changed:
-                return changed, msg, dict()
+                if not changed:
+                    return changed, msg, dict()
 
     elif eip_address or allocation_id:
         if eip_address and not allocation_id:
diff --git a/tests/integration/targets/ec2_vpc_nat_gateway/tasks/main.yml b/tests/integration/targets/ec2_vpc_nat_gateway/tasks/main.yml
index 501cccaf9b..4007d2014a 100644
--- a/tests/integration/targets/ec2_vpc_nat_gateway/tasks/main.yml
+++ b/tests/integration/targets/ec2_vpc_nat_gateway/tasks/main.yml
@@ -919,6 +919,7 @@
       - create_ngw.changed
       - create_ngw.connectivity_type == 'private'
       - '"create_time" in create_ngw'
+      - '"allocation_id" not in create_ngw.nat_gateway_addresses[0]'
 
   - name: 'set facts: NAT gateway ID'
     set_fact: