The recall pertains to 2019 and 2020 model year cars and Volvo Australia confirmed to CarAdvice that it has identified 9205 affected vehicles in Australia.
The AEB issue was identified in Volvo's internal evaluations, which were first triggered by tests conducted by the Federation of Danish Motorists (FDM).
"Under certain temperature conditions, the AEB support system may not auto brake for certain objects, pedestrians and cyclists," Volvo said in a statement.
"The system will however always trigger a collision warning to the driver (sound and light indication) and provide brake support (but not auto brake) when pedestrians or cyclists are detected.
"The regular brake system in these cars is not affected by the AEB issue and all other functions in the car are still functioning as normal. The cars are therefore safe to use."
There have been no reported incidents connected to the AEB issue.
As it is a software issue, Volvo has said it will update the software free of charge and ensure any incoming cars are also updated accordingly.
"The cars that have not landed as yet and/or are still in Volvo Car Australia and its nationwide dealerships care will be updated with the correct software prior to being released to our customers," Volvo Australia said.
"Cars that visit our dealerships will automatically be updated with the correct software.
"Volvo Cars is contacting owners of all concerned cars, asking them to contact their Volvo dealer to have their cars corrected free of charge.
"Volvo Cars has also introduced the correct software in production of new cars."