diff --git a/src/main/frontend/app/components/directory-picker/directory-picker.tsx b/src/main/frontend/app/components/directory-picker/directory-picker.tsx
index 0a7f93f3..32b8c75f 100644
--- a/src/main/frontend/app/components/directory-picker/directory-picker.tsx
+++ b/src/main/frontend/app/components/directory-picker/directory-picker.tsx
@@ -1,5 +1,6 @@
 import { useCallback, useEffect, useState } from 'react'
 import FolderIcon from '/icons/solar/Folder.svg?react'
+import NameInputDialog from '~/components/file-structure/name-input-dialog'
 import { filesystemService } from '~/services/filesystem-service'
 import type { FilesystemEntry } from '~/types/filesystem.types'
 import { ApiError } from '~/utils/api'
@@ -26,11 +27,13 @@ export default function DirectoryPicker({
   const [selectedEntry, setSelectedEntry] = useState<string | null>(null)
   const [loading, setLoading] = useState(false)
   const [error, setError] = useState<string | null>(null)
+  const [isCreatingFolder, setIsCreatingFolder] = useState(false)
 
   const loadEntries = useCallback(async (path: string) => {
     setLoading(true)
     setError(null)
     setSelectedEntry(null)
+    setIsCreatingFolder(false)
     try {
       const result = await filesystemService.browse(path)
       setEntries(result.entries)
@@ -47,10 +50,6 @@ export default function DirectoryPicker({
     }
   }, [])
 
-  const handleNavigateUp = () => {
-    loadEntries(parentPath)
-  }
-
   useEffect(() => {
     if (isOpen) {
       setSelectedEntry(null)
@@ -60,8 +59,6 @@ export default function DirectoryPicker({
 
   if (!isOpen) return null
 
-  const canGoUp = parentPath !== ''
-
   const handleClick = (entry: FilesystemEntry) => {
     setSelectedEntry(entry.path)
   }
@@ -70,6 +67,21 @@ export default function DirectoryPicker({
     loadEntries(entry.path)
   }
 
+  const handleCreateFolder = async (folderName: string) => {
+    const basePath = selectedEntry ?? currentPath
+    const separator = basePath.includes('\\') ? '\\' : '/'
+    const newPath = `${basePath}${separator}${folderName}`
+    setIsCreatingFolder(false)
+    try {
+      await filesystemService.createDirectory(newPath)
+      await loadEntries(basePath)
+      setSelectedEntry(newPath)
+    } catch {
+      setError('Failed to create folder')
+    }
+  }
+
+  const canGoUp = parentPath !== ''
   const activePath = selectedEntry ?? currentPath
 
   return (
@@ -87,21 +99,32 @@ export default function DirectoryPicker({
 
         <div className="border-border flex items-center gap-2 border-b px-4 py-2">
           <Button
-            onClick={handleNavigateUp}
+            onClick={() => loadEntries(parentPath)}
             disabled={!canGoUp}
             className="disabled:text-foreground-muted text-xs disabled:opacity-30"
           >
             ..
           </Button>
-          <span className="text-foreground-muted truncate text-xs">{currentPath || rootLabel}</span>
+          <span className="text-foreground-muted flex-1 truncate text-xs">{currentPath || rootLabel}</span>
+          {currentPath && !isCreatingFolder && (
+            <Button
+              onClick={() => setIsCreatingFolder(true)}
+              className="text-foreground-muted hover:text-foreground shrink-0 text-xs"
+              title="Create a new folder here"
+            >
+              New Folder
+            </Button>
+          )}
         </div>
 
-        <div className="flex-1 overflow-y-auto p-2">
-          {loading && <p className="text-foreground-muted p-4 text-center text-xs">Loading...</p>}
+        <div className="flex-1 overflow-y-auto py-1">
+          {loading && <p className="text-foreground-muted p-4 text-center text-xs">Loading…</p>}
           {error && <p className="p-4 text-center text-xs text-red-500">{error}</p>}
-          {!loading && !error && entries.length === 0 && (
+
+          {!loading && !error && entries.length === 0 && !isCreatingFolder && (
             <p className="text-foreground-muted p-4 text-center text-xs italic">No subdirectories</p>
           )}
+
           {!loading &&
             !error &&
             entries.map((entry) => (
@@ -113,8 +136,8 @@ export default function DirectoryPicker({
                   selectedEntry === entry.path ? 'bg-backdrop font-medium' : 'hover:bg-backdrop/50'
                 }`}
               >
-                <span className="relative text-xs">
-                  <FolderIcon className="fill-foreground w-4 flex-shrink-0" />
+                <span className="relative flex-shrink-0 text-xs">
+                  <FolderIcon className="fill-foreground w-4" />
                   {entry.projectRoot && (
                     <span className="absolute bottom-0.5 h-1.5 w-1.5 rounded-full bg-black" style={{ left: '65%' }} />
                   )}
@@ -122,6 +145,15 @@ export default function DirectoryPicker({
                 <span className="truncate">{entry.name}</span>
               </button>
             ))}
+
+          {isCreatingFolder && (
+            <NameInputDialog
+              title="New Folder"
+              submitLabel="Create"
+              onSubmit={(name) => void handleCreateFolder(name)}
+              onCancel={() => setIsCreatingFolder(false)}
+            />
+          )}
         </div>
 
         <div className="border-border flex items-center justify-between border-t px-4 py-3">
diff --git a/src/main/frontend/app/components/file-structure/file-tree-dialogs.tsx b/src/main/frontend/app/components/file-structure/file-tree-dialogs.tsx
index 5de34c46..9d92d427 100644
--- a/src/main/frontend/app/components/file-structure/file-tree-dialogs.tsx
+++ b/src/main/frontend/app/components/file-structure/file-tree-dialogs.tsx
@@ -49,6 +49,7 @@ export default function FileTreeDialogs({
         <NameInputDialog
           title={nameDialog.title}
           initialValue={nameDialog.initialValue}
+          submitLabel={nameDialog.submitLabel}
           onSubmit={nameDialog.onSubmit}
           onCancel={onCloseNameDialog}
           patterns={nameDialog.patterns}
diff --git a/src/main/frontend/app/components/file-structure/name-input-dialog.tsx b/src/main/frontend/app/components/file-structure/name-input-dialog.tsx
index fb3e0299..50871f76 100644
--- a/src/main/frontend/app/components/file-structure/name-input-dialog.tsx
+++ b/src/main/frontend/app/components/file-structure/name-input-dialog.tsx
@@ -25,6 +25,7 @@ export const FOLDER_OR_ADAPTER_NAME_PATTERNS: Record<string, RegExp> = BASE_NAME
 interface NameInputDialogProps {
   title: string
   initialValue?: string
+  submitLabel?: string
   onSubmit: (name: string) => void
   onCancel: () => void
   patterns?: Record<string, RegExp>
@@ -33,6 +34,7 @@ interface NameInputDialogProps {
 export default function NameInputDialog({
   title,
   initialValue = '',
+  submitLabel = 'OK',
   onSubmit,
   onCancel,
   patterns = FOLDER_OR_ADAPTER_NAME_PATTERNS,
@@ -63,7 +65,7 @@ export default function NameInputDialog({
   return createPortal(
     <div
       ref={overlayRef}
-      className="fixed inset-0 z-50 flex items-center justify-center bg-black/30"
+      className="fixed inset-0 z-[70] flex items-center justify-center bg-black/30"
       onClick={handleOverlayClick}
     >
       <div className="bg-background border-border w-80 rounded-md border p-4 shadow-lg">
@@ -82,7 +84,7 @@ export default function NameInputDialog({
             Cancel
           </Button>
           <Button onClick={handleSubmit} disabled={!isValid} className="px-3 py-1 text-sm">
-            OK
+            {submitLabel}
           </Button>
         </div>
       </div>
diff --git a/src/main/frontend/app/components/file-structure/studio-file-tree-dialogs.tsx b/src/main/frontend/app/components/file-structure/studio-file-tree-dialogs.tsx
index 684c0e39..6ed4d8c5 100644
--- a/src/main/frontend/app/components/file-structure/studio-file-tree-dialogs.tsx
+++ b/src/main/frontend/app/components/file-structure/studio-file-tree-dialogs.tsx
@@ -51,6 +51,7 @@ export default function StudioFileTreeDialogs({
         <NameInputDialog
           title={nameDialog.title}
           initialValue={nameDialog.initialValue}
+          submitLabel={nameDialog.submitLabel}
           onSubmit={nameDialog.onSubmit}
           onCancel={onCloseNameDialog}
           patterns={nameDialog.patterns}
diff --git a/src/main/frontend/app/components/file-structure/use-file-tree-context-menu.ts b/src/main/frontend/app/components/file-structure/use-file-tree-context-menu.ts
index 259b76fd..a91a7310 100644
--- a/src/main/frontend/app/components/file-structure/use-file-tree-context-menu.ts
+++ b/src/main/frontend/app/components/file-structure/use-file-tree-context-menu.ts
@@ -20,6 +20,7 @@ export interface ContextMenuState {
 export interface NameDialogState {
   title: string
   initialValue?: string
+  submitLabel?: string
   onSubmit: (name: string) => void
   patterns?: Record<string, RegExp>
 }
@@ -118,6 +119,7 @@ export function useFileTreeContextMenu({
 
       setNameDialog({
         title: 'New File',
+        submitLabel: 'Create',
         onSubmit: async (name: string) => {
           if (!ensureHasCorrectExtension(name)) {
             showErrorToast(`Filename must have one of the following extensions: ${ALLOWED_EXTENSIONS.join(', ')}`)
@@ -148,6 +150,7 @@ export function useFileTreeContextMenu({
 
       setNameDialog({
         title: 'New Folder',
+        submitLabel: 'Create',
         onSubmit: async (name: string) => {
           try {
             await createFolderInProject(projectName, `${parentPath}/${name}`)
diff --git a/src/main/frontend/app/components/file-structure/use-studio-context-menu.ts b/src/main/frontend/app/components/file-structure/use-studio-context-menu.ts
index 82aedfe0..b3fb0aac 100644
--- a/src/main/frontend/app/components/file-structure/use-studio-context-menu.ts
+++ b/src/main/frontend/app/components/file-structure/use-studio-context-menu.ts
@@ -27,6 +27,7 @@ export interface StudioContextMenuState {
 export interface NameDialogState {
   title: string
   initialValue?: string
+  submitLabel?: string
   onSubmit: (name: string) => void
   patterns?: Record<string, RegExp>
 }
@@ -171,6 +172,7 @@ export function useStudioContextMenu({ projectName, dataProvider }: UseStudioCon
 
       setNameDialog({
         title: 'New Configuration File',
+        submitLabel: 'Create',
         onSubmit: async (name: string) => {
           const fileName = ensureXmlExtension(name)
           try {
@@ -201,6 +203,7 @@ export function useStudioContextMenu({ projectName, dataProvider }: UseStudioCon
 
       setNameDialog({
         title: 'New Adapter',
+        submitLabel: 'Create',
         onSubmit: async (name: string) => {
           try {
             await createAdapter(projectName, name, menu.path)
@@ -224,6 +227,7 @@ export function useStudioContextMenu({ projectName, dataProvider }: UseStudioCon
 
       setNameDialog({
         title: 'New Folder',
+        submitLabel: 'Create',
         onSubmit: async (name: string) => {
           try {
             await createFolderInProject(projectName, `${menu.folderPath}/${name}`)
diff --git a/src/main/frontend/app/services/filesystem-service.ts b/src/main/frontend/app/services/filesystem-service.ts
index e59cb5f0..6a20654f 100644
--- a/src/main/frontend/app/services/filesystem-service.ts
+++ b/src/main/frontend/app/services/filesystem-service.ts
@@ -10,4 +10,8 @@ export const filesystemService = {
     const result = await this.browse(path)
     return result.resolvedPath
   },
+
+  async createDirectory(path: string): Promise<void> {
+    return apiFetch(`/filesystem/mkdir?path=${encodeURIComponent(path)}`, { method: 'POST' })
+  },
 }
diff --git a/src/main/java/org/frankframework/flow/filesystem/FilesystemController.java b/src/main/java/org/frankframework/flow/filesystem/FilesystemController.java
index 5ba77fc7..2802881f 100644
--- a/src/main/java/org/frankframework/flow/filesystem/FilesystemController.java
+++ b/src/main/java/org/frankframework/flow/filesystem/FilesystemController.java
@@ -5,6 +5,7 @@
 import org.springframework.http.HttpStatus;
 import org.springframework.http.ResponseEntity;
 import org.springframework.web.bind.annotation.GetMapping;
+import org.springframework.web.bind.annotation.PostMapping;
 import org.springframework.web.bind.annotation.RequestMapping;
 import org.springframework.web.bind.annotation.RequestParam;
 import org.springframework.web.bind.annotation.RestController;
@@ -28,4 +29,16 @@ public ResponseEntity<BrowseResult> browse(@RequestParam(required = false, defau
 			return ResponseEntity.status(HttpStatus.FORBIDDEN).build();
 		}
 	}
+
+	@PostMapping("/mkdir")
+	public ResponseEntity<Void> mkdir(@RequestParam String path) throws IOException {
+		try {
+			fileSystemStorage.createProjectDirectory(path);
+			return ResponseEntity.ok().build();
+		} catch (AccessDeniedException _) {
+			return ResponseEntity.status(HttpStatus.FORBIDDEN).build();
+		} catch (SecurityException _) {
+			return ResponseEntity.status(HttpStatus.BAD_REQUEST).build();
+		}
+	}
 }