diff --git a/changelogs/fragments/7998-icinga2-inventory-group_by_hostgroups-parameter.yml b/changelogs/fragments/7998-icinga2-inventory-group_by_hostgroups-parameter.yml
new file mode 100644
index 0000000000..1170a108fd
--- /dev/null
+++ b/changelogs/fragments/7998-icinga2-inventory-group_by_hostgroups-parameter.yml
@@ -0,0 +1,2 @@
+minor_changes:
+  - icinga2 inventory plugin - adds new parameter ``group_by_hostgroups`` in order to make grouping by Icinga2 hostgroups optional (https://github.com/ansible-collections/community.general/pull/7998).
\ No newline at end of file
diff --git a/plugins/inventory/icinga2.py b/plugins/inventory/icinga2.py
index a418707332..6a6bafdb42 100644
--- a/plugins/inventory/icinga2.py
+++ b/plugins/inventory/icinga2.py
@@ -63,6 +63,12 @@ DOCUMENTATION = '''
         default: address
         choices: ['name', 'display_name', 'address']
         version_added: 4.2.0
+      group_by_hostgroups:
+        description:
+          - Uses Icinga2 hostgroups as groups.
+        type: boolean
+        default: true
+        version_added: 8.4.0
 '''
 
 EXAMPLES = r'''
@@ -114,6 +120,7 @@ class InventoryModule(BaseInventoryPlugin, Constructable):
         self.ssl_verify = None
         self.host_filter = None
         self.inventory_attr = None
+        self.group_by_hostgroups = None
 
         self.cache_key = None
         self.use_cache = None
@@ -248,12 +255,13 @@ class InventoryModule(BaseInventoryPlugin, Constructable):
                 host_attrs['state'] = 'on'
             else:
                 host_attrs['state'] = 'off'
-            host_groups = host_attrs.get('groups')
             self.inventory.add_host(host_name)
-            for group in host_groups:
-                if group not in self.inventory.groups.keys():
-                    self.inventory.add_group(group)
-                self.inventory.add_child(group, host_name)
+            if self.group_by_hostgroups:
+                host_groups = host_attrs.get('groups')
+                for group in host_groups:
+                    if group not in self.inventory.groups.keys():
+                        self.inventory.add_group(group)
+                    self.inventory.add_child(group, host_name)
             # If the address attribute is populated, override ansible_host with the value
             if host_attrs.get('address') != '':
                 self.inventory.set_variable(host_name, 'ansible_host', host_attrs.get('address'))
@@ -283,6 +291,7 @@ class InventoryModule(BaseInventoryPlugin, Constructable):
         self.ssl_verify = self.get_option('validate_certs')
         self.host_filter = self.get_option('host_filter')
         self.inventory_attr = self.get_option('inventory_attr')
+        self.group_by_hostgroups = self.get_option('group_by_hostgroups')
 
         if self.templar.is_template(self.icinga2_url):
             self.icinga2_url = self.templar.template(variable=self.icinga2_url, disable_lookups=False)
diff --git a/tests/unit/plugins/inventory/test_icinga2.py b/tests/unit/plugins/inventory/test_icinga2.py
index e3928b0dbe..859f29d3b0 100644
--- a/tests/unit/plugins/inventory/test_icinga2.py
+++ b/tests/unit/plugins/inventory/test_icinga2.py
@@ -86,6 +86,8 @@ def get_option(option):
         return {}
     elif option == 'strict':
         return False
+    elif option == 'group_by_hostgroups':
+        return True
     else:
         return None
 
@@ -96,6 +98,7 @@ def test_populate(inventory, mocker):
     inventory.icinga2_password = 'password'
     inventory.icinga2_url = 'https://localhost:5665' + '/v1'
     inventory.inventory_attr = "address"
+    inventory.group_by_hostgroups = True
 
     # bypass authentication and API fetch calls
     inventory._check_api = mocker.MagicMock(side_effect=check_api)