diff --git a/src/components/FileSidebar.tsx b/src/components/FileSidebar.tsx
index e039ccb0d..0a0c242fd 100644
--- a/src/components/FileSidebar.tsx
+++ b/src/components/FileSidebar.tsx
@@ -7,6 +7,8 @@ import { transformFilesToTreeData } from "@/lib/utils/transformFilesToTreeData"
 import type {
   ICreateFileProps,
   ICreateFileResult,
+  IDeleteDirectoryProps,
+  IDeleteDirectoryResult,
   IDeleteFileProps,
   IDeleteFileResult,
   IRenameFileProps,
@@ -23,6 +25,9 @@ interface FileSidebarProps {
   fileSidebarState: ReturnType<typeof useState<boolean>>
   handleCreateFile: (props: ICreateFileProps) => ICreateFileResult
   handleDeleteFile: (props: IDeleteFileProps) => IDeleteFileResult
+  handleDeleteDirectory: (
+    props: IDeleteDirectoryProps,
+  ) => IDeleteDirectoryResult
   handleRenameFile: (props: IRenameFileProps) => IRenameFileResult
   isCreatingFile: boolean
   setIsCreatingFile: React.Dispatch<React.SetStateAction<boolean>>
@@ -39,6 +44,7 @@ const FileSidebar: React.FC<FileSidebarProps> = ({
   fileSidebarState,
   handleCreateFile,
   handleDeleteFile,
+  handleDeleteDirectory,
   handleRenameFile,
   isCreatingFile,
   setIsCreatingFile,
@@ -67,6 +73,7 @@ const FileSidebar: React.FC<FileSidebarProps> = ({
     renamingFile,
     handleRenameFile,
     handleDeleteFile,
+    handleDeleteDirectory,
     setRenamingFile,
     onFileSelect,
     onFolderSelect,
diff --git a/src/components/package-port/CodeAndPreview.tsx b/src/components/package-port/CodeAndPreview.tsx
index 02a9f2cb7..5728539dd 100644
--- a/src/components/package-port/CodeAndPreview.tsx
+++ b/src/components/package-port/CodeAndPreview.tsx
@@ -101,6 +101,7 @@ export function CodeAndPreview({ pkg, projectUrl, isPackageFetched }: Props) {
     createFile,
     mainComponentPath,
     deleteFile,
+    deleteDirectory,
     isFullyLoaded,
     onFileSelect,
     totalFilesCount,
@@ -239,6 +240,7 @@ export function CodeAndPreview({ pkg, projectUrl, isPackageFetched }: Props) {
             loadedFilesCount={loadedFilesCount}
             isFullyLoaded={isFullyLoaded}
             handleDeleteFile={deleteFile}
+            handleDeleteDirectory={deleteDirectory}
             handleRenameFile={renameFile}
             isPriorityFileFetched={
               !priorityFileFetched && Boolean(urlParams.package_id)
diff --git a/src/components/package-port/CodeEditor.tsx b/src/components/package-port/CodeEditor.tsx
index e365d91a6..0d4ced01d 100644
--- a/src/components/package-port/CodeEditor.tsx
+++ b/src/components/package-port/CodeEditor.tsx
@@ -9,6 +9,8 @@ import { useShikiHighlighter } from "@/hooks/use-shiki-highlighter"
 import {
   ICreateFileProps,
   ICreateFileResult,
+  IDeleteDirectoryProps,
+  IDeleteDirectoryResult,
   IDeleteFileProps,
   IDeleteFileResult,
   IRenameFileProps,
@@ -74,6 +76,7 @@ export const CodeEditor = ({
   handleRenameFile,
   handleCreateFile,
   handleDeleteFile,
+  handleDeleteDirectory,
   pkg,
   isFullyLoaded = false,
   totalFilesCount = 0,
@@ -85,6 +88,9 @@ export const CodeEditor = ({
   isSaving?: boolean
   handleCreateFile: (props: ICreateFileProps) => ICreateFileResult
   handleDeleteFile: (props: IDeleteFileProps) => IDeleteFileResult
+  handleDeleteDirectory: (
+    props: IDeleteDirectoryProps,
+  ) => IDeleteDirectoryResult
   handleRenameFile: (props: IRenameFileProps) => IRenameFileResult
   pkg?: Package
   readOnly?: boolean
@@ -814,6 +820,7 @@ export const CodeEditor = ({
         handleCreateFile={handleCreateFile}
         handleRenameFile={handleRenameFile}
         handleDeleteFile={handleDeleteFile}
+        handleDeleteDirectory={handleDeleteDirectory}
         isCreatingFile={isCreatingFile}
         setIsCreatingFile={setIsCreatingFile}
         pkg={pkg}
diff --git a/src/hooks/useFileManagement.ts b/src/hooks/useFileManagement.ts
index 7c5f12a56..d7a24fd41 100644
--- a/src/hooks/useFileManagement.ts
+++ b/src/hooks/useFileManagement.ts
@@ -36,6 +36,15 @@ export interface IDeleteFileProps {
   onError: (error: Error) => void
 }
 
+export interface IDeleteDirectoryProps {
+  directoryPath: string
+  onError: (error: Error) => void
+}
+
+export interface IDeleteDirectoryResult {
+  directoryDeleted: boolean
+}
+
 export interface IRenameFileProps {
   oldFilename: string
   newFilename: string
@@ -403,18 +412,30 @@ export function useFileManagement({
     const fileExists = localFiles?.some((file) => file.path === filename)
     if (!fileExists) {
       onError(new Error("File does not exist"))
-      return {
-        fileDeleted: false,
-      }
+      return { fileDeleted: false }
     }
     const updatedFiles = localFiles.filter((file) => file.path !== filename)
     setLocalFiles(updatedFiles)
     onFileSelect(
       updatedFiles.filter((file) => !isHiddenFile(file.path))[0]?.path || "",
     )
-    return {
-      fileDeleted: true,
-    }
+    return { fileDeleted: true }
+  }
+
+  const deleteDirectory = ({
+    directoryPath,
+    onError,
+  }: IDeleteDirectoryProps): IDeleteDirectoryResult => {
+    const normalizedDir = directoryPath.replace(/\/+$/, "") + "/"
+    const updatedFiles = localFiles.filter(
+      (file) =>
+        file.path !== directoryPath && !file.path.startsWith(normalizedDir),
+    )
+    setLocalFiles(updatedFiles)
+    onFileSelect(
+      updatedFiles.filter((f) => !isHiddenFile(f.path))[0]?.path || "",
+    )
+    return { directoryDeleted: true }
   }
 
   const renameFile = ({
@@ -628,6 +649,7 @@ export function useFileManagement({
     createFile,
     priorityFileFetched,
     deleteFile,
+    deleteDirectory,
     renameFile,
     saveFiles,
     localFiles,
diff --git a/src/lib/utils/transformFilesToTreeData.tsx b/src/lib/utils/transformFilesToTreeData.tsx
index 27e3b6cef..f9b842843 100644
--- a/src/lib/utils/transformFilesToTreeData.tsx
+++ b/src/lib/utils/transformFilesToTreeData.tsx
@@ -3,6 +3,7 @@ import type { TreeDataItem } from "@/components/ui/tree-view"
 import type {
   IRenameFileProps,
   IDeleteFileProps,
+  IDeleteDirectoryProps,
 } from "@/hooks/useFileManagement"
 import { isHiddenFile } from "@/components/ViewPackagePage/utils/is-hidden-file"
 import { File, Folder, MoreVertical, Pencil, Trash2 } from "lucide-react"
@@ -25,6 +26,9 @@ interface TransformFilesToTreeDataProps {
   renamingFile: string | null
   handleRenameFile: (props: IRenameFileProps) => { fileRenamed: boolean }
   handleDeleteFile: (props: IDeleteFileProps) => { fileDeleted: boolean }
+  handleDeleteDirectory: (props: IDeleteDirectoryProps) => {
+    directoryDeleted: boolean
+  }
   setRenamingFile: (filename: string | null) => void
   onFileSelect: (filename: FileName) => void
   onFolderSelect: (folderPath: string) => void
@@ -41,6 +45,7 @@ export const transformFilesToTreeData = ({
   renamingFile,
   handleRenameFile,
   handleDeleteFile,
+  handleDeleteDirectory,
   setRenamingFile,
   onFileSelect,
   onFolderSelect,
@@ -162,17 +167,28 @@ export const transformFilesToTreeData = ({
                     )}
                     <DropdownMenuItem
                       onClick={() => {
-                        const { fileDeleted } = handleDeleteFile({
-                          filename: itemId,
-                          onError: (error) => {
-                            toast({
-                              title: `Error deleting file ${itemId}`,
-                              description: error.message,
-                            })
-                          },
-                        })
-                        if (fileDeleted) {
-                          setErrorMessage("")
+                        if (isLeafNode) {
+                          const { fileDeleted } = handleDeleteFile({
+                            filename: itemId,
+                            onError: (error) => {
+                              toast({
+                                title: `Error deleting file ${itemId}`,
+                                description: error.message,
+                              })
+                            },
+                          })
+                          if (fileDeleted) setErrorMessage("")
+                        } else {
+                          const { directoryDeleted } = handleDeleteDirectory({
+                            directoryPath: itemId,
+                            onError: (error) => {
+                              toast({
+                                title: `Error deleting directory ${itemId}`,
+                                description: error.message,
+                              })
+                            },
+                          })
+                          if (directoryDeleted) setErrorMessage("")
                         }
                         setOpenDropdownId(null)
                       }}