diff --git a/dbt/adapters/dremio/api/rest/utils.py b/dbt/adapters/dremio/api/rest/utils.py
index a90cc8cb..3a0c723e 100644
--- a/dbt/adapters/dremio/api/rest/utils.py
+++ b/dbt/adapters/dremio/api/rest/utils.py
@@ -120,6 +120,13 @@ def _check_error(response, details=""):
         except:  # NOQA
             return response.text
     if code == 400:
+        # Dremio Cloud returns 400 for an existing folder/object, whereas
+        # Software returns 409. Normalize so callers can catch a single
+        # DremioAlreadyExistsException.
+        if "An object already exists with that name" in response.text:
+            raise DremioAlreadyExistsException(
+                "Already exists:" + details, error, response
+            )
         raise DremioBadRequestException("Bad request:" + details, error,
                                         response)
     if code == 401:
diff --git a/tests/unit/test_connection.py b/tests/unit/test_connection.py
index 37153cc2..c0c0ba04 100644
--- a/tests/unit/test_connection.py
+++ b/tests/unit/test_connection.py
@@ -10,9 +10,12 @@
 # limitations under the License.
 
 import pytest
-from unittest.mock import patch
+from unittest.mock import MagicMock, patch
 from dbt_common.exceptions import DbtRuntimeError
-from dbt.adapters.dremio.api.rest.error import DremioRequestTimeoutException
+from dbt.adapters.dremio.api.rest.error import (
+    DremioAlreadyExistsException,
+    DremioRequestTimeoutException,
+)
 from dbt.adapters.dremio.connections import DremioConnectionManager
 
 
@@ -46,3 +49,22 @@ def test_connection_retry(
 
         # Assert
         assert mocked_post_func.call_count == TOTAL_CONNECTION_ATTEMPTS
+
+
+class TestCreateFolders:
+    def test_create_folders_swallows_already_exists(self):
+        # Guards the integration path: _check_error normalizes Cloud's
+        # 400 "already exists" to DremioAlreadyExistsException, which the
+        # existing handler in _create_folders is responsible for swallowing.
+        mgr = DremioConnectionManager.__new__(DremioConnectionManager)
+        mgr._make_new_folder_json = MagicMock(return_value="{}")
+        rest_client = MagicMock()
+        rest_client.create_catalog_api.side_effect = DremioAlreadyExistsException(
+            msg="Already exists:",
+            original_exception="400 Client Error: Bad Request",
+        )
+
+        mgr._create_folders("mySource", "staging.subfolder", rest_client)
+
+        # Both folders in the path attempted; both swallowed
+        assert rest_client.create_catalog_api.call_count == 2
diff --git a/tests/unit/test_rest_utils.py b/tests/unit/test_rest_utils.py
new file mode 100644
index 00000000..2785fdf6
--- /dev/null
+++ b/tests/unit/test_rest_utils.py
@@ -0,0 +1,61 @@
+# Copyright (C) 2022 Dremio Corporation
+# Licensed under the Apache License, Version 2.0 (the "License");
+# you may not use this file except in compliance with the License.
+# You may obtain a copy of the License at
+# http://www.apache.org/licenses/LICENSE-2.0
+# Unless required by applicable law or agreed to in writing, software
+# distributed under the License is distributed on an "AS IS" BASIS,
+# WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+# See the License for the specific language governing permissions and
+# limitations under the License.
+
+import json
+from unittest.mock import MagicMock
+
+import pytest
+
+from dbt.adapters.dremio.api.rest.error import (
+    DremioAlreadyExistsException,
+    DremioBadRequestException,
+)
+from dbt.adapters.dremio.api.rest.utils import _check_error
+
+
+_REASON_BY_STATUS = {400: "Bad Request", 409: "Conflict"}
+
+
+def _make_response(status_code, body_text):
+    response = MagicMock()
+    response.status_code = status_code
+    response.reason = _REASON_BY_STATUS.get(status_code, "Bad Request")
+    response.url = "https://api.dremio.cloud/v0/projects/test/catalog"
+    response.text = body_text
+    return response
+
+
+class TestCheckErrorAlreadyExists:
+    def test_cloud_400_already_exists_routes_to_already_exists_exception(self):
+        body = json.dumps(
+            {
+                "errorMessage": (
+                    "Unable to create folder staging on source mySource. "
+                    "An object already exists with that name."
+                ),
+                "moreInfo": "",
+            }
+        )
+        response = _make_response(400, body)
+        with pytest.raises(DremioAlreadyExistsException):
+            _check_error(response)
+
+    def test_400_other_message_still_raises_bad_request(self):
+        body = json.dumps({"errorMessage": "Some other 400 error", "moreInfo": ""})
+        response = _make_response(400, body)
+        with pytest.raises(DremioBadRequestException):
+            _check_error(response)
+
+    def test_409_still_raises_already_exists(self):
+        body = json.dumps({"errorMessage": "Already exists", "moreInfo": ""})
+        response = _make_response(409, body)
+        with pytest.raises(DremioAlreadyExistsException):
+            _check_error(response)