diff --git a/apps/desktop/src/components/layout/SqlLibraryPanel.vue b/apps/desktop/src/components/layout/SqlLibraryPanel.vue
index 010169ce8..57174ac25 100644
--- a/apps/desktop/src/components/layout/SqlLibraryPanel.vue
+++ b/apps/desktop/src/components/layout/SqlLibraryPanel.vue
@@ -421,13 +421,19 @@ function isFolderExpanded(folderId: string) {
 
 async function openNewFolderInput(parentFolderId?: string) {
   const parent = parentFolderId ? savedSqlStore.allFolders.find((folder) => folder.id === parentFolderId) : undefined;
+  if (parentFolderId && !parent) return;
   const connectionId = parent?.connectionId || connectionStore.connections[0]?.id;
   if (!connectionId) return;
   if (parent?.id) {
     collapsedFolders.value = new Set([...collapsedFolders.value].filter((id) => id !== parent.id));
   }
-  const folder = await savedSqlStore.createFolder(connectionId, t("savedSql.newFolderDefault"), parent?.id);
-  startRenameFolder(folder);
+  try {
+    const folder = await savedSqlStore.createFolder(connectionId, t("savedSql.newFolderDefault"), parent?.id);
+    searchText.value = "";
+    startRenameFolder(folder);
+  } catch (e: any) {
+    toast(t("savedSql.createFolderFailed", { message: e?.message || String(e) }), 5000);
+  }
 }
 
 async function openNewQueryInFolder(folder?: SavedSqlFolder) {
@@ -892,7 +898,7 @@ const contextMenuItems = computed<CtxMenuItem[]>(() => {
     ];
   }
   return [
-    { label: t("savedSql.newFolder"), action: () => openNewFolderInput(target.id), icon: FolderPlus },
+    { label: t("savedSql.newSubfolder"), action: () => openNewFolderInput(target.id), icon: FolderPlus },
     { label: t("savedSql.newQuery"), action: () => openNewQueryInFolder(target), icon: FilePlus },
     { label: t("sqlLibrary.importIntoFolder"), action: () => importDirectoryIntoLibrary(target), icon: Download },
     { label: t("sqlLibrary.exportFolder"), action: () => exportFolderContents(target), icon: Upload },
@@ -1150,7 +1156,7 @@ function showDropInside(targetId: string) {
         </Button>
       </LightTooltip>
       <LightTooltip :text="t('savedSql.newFolder')" side="bottom" :delay="0" :close-delay="0" nowrap>
-        <Button variant="ghost" size="icon" class="h-5 w-5" @click="openNewFolderInput">
+        <Button variant="ghost" size="icon" class="h-5 w-5" @click="openNewFolderInput()">
           <FolderPlus class="h-3 w-3" />
         </Button>
       </LightTooltip>
@@ -1225,6 +1231,18 @@ function showDropInside(targetId: string) {
                     {{ item.item.name }}
                     <span class="ml-1 text-muted-foreground">({{ folderFileCount(item.item.id) }})</span>
                   </span>
+                  <LightTooltip v-if="!isRenamingFolder(item.item.id)" :text="t('savedSql.newSubfolder')" side="left" :delay="0" :close-delay="0" nowrap>
+                    <button
+                      type="button"
+                      data-no-drag="true"
+                      class="flex h-5 w-5 shrink-0 items-center justify-center rounded text-muted-foreground/70 hover:bg-accent hover:text-foreground focus-visible:outline-none focus-visible:ring-1 focus-visible:ring-ring"
+                      :aria-label="t('savedSql.newSubfolder')"
+                      @mousedown.stop
+                      @click.stop="openNewFolderInput(item.item.id)"
+                    >
+                      <FolderPlus class="h-3.5 w-3.5" />
+                    </button>
+                  </LightTooltip>
                 </div>
 
                 <div
@@ -1298,6 +1316,18 @@ function showDropInside(targetId: string) {
                     {{ row.folder.name }}
                     <span class="ml-1 text-muted-foreground">({{ folderFileCount(row.folder.id) }})</span>
                   </span>
+                  <LightTooltip v-if="!isRenamingFolder(row.folder.id)" :text="t('savedSql.newSubfolder')" side="left" :delay="0" :close-delay="0" nowrap>
+                    <button
+                      type="button"
+                      data-no-drag="true"
+                      class="flex h-5 w-5 shrink-0 items-center justify-center rounded text-muted-foreground/70 hover:bg-accent hover:text-foreground focus-visible:outline-none focus-visible:ring-1 focus-visible:ring-ring"
+                      :aria-label="t('savedSql.newSubfolder')"
+                      @mousedown.stop
+                      @click.stop="openNewFolderInput(row.folder.id)"
+                    >
+                      <FolderPlus class="h-3.5 w-3.5" />
+                    </button>
+                  </LightTooltip>
                 </div>
 
                 <div
diff --git a/apps/desktop/src/i18n/locales/en.ts b/apps/desktop/src/i18n/locales/en.ts
index d2f131c70..cc5f04120 100644
--- a/apps/desktop/src/i18n/locales/en.ts
+++ b/apps/desktop/src/i18n/locales/en.ts
@@ -112,6 +112,7 @@ export default {
     rootFolder: "SQL Library",
     newQuery: "New Query",
     newFolder: "New SQL Folder",
+    newSubfolder: "New Subfolder",
     newFolderDefault: "New Folder",
     renameFolder: "Rename Folder",
     deleteFolder: "Delete Folder",
diff --git a/apps/desktop/src/i18n/locales/es.ts b/apps/desktop/src/i18n/locales/es.ts
index d02740079..5e8d9db24 100644
--- a/apps/desktop/src/i18n/locales/es.ts
+++ b/apps/desktop/src/i18n/locales/es.ts
@@ -114,6 +114,7 @@ export default withEnglishFallback({
     rootFolder: "Biblioteca SQL",
     newQuery: "Nueva consulta",
     newFolder: "Nueva carpeta SQL",
+    newSubfolder: "Nueva subcarpeta",
     newFolderDefault: "Nueva carpeta",
     renameFolder: "Renombrar carpeta",
     deleteFolder: "Eliminar carpeta",
diff --git a/apps/desktop/src/i18n/locales/it.ts b/apps/desktop/src/i18n/locales/it.ts
index b92767d79..a689350e6 100644
--- a/apps/desktop/src/i18n/locales/it.ts
+++ b/apps/desktop/src/i18n/locales/it.ts
@@ -113,6 +113,7 @@ export default withEnglishFallback({
     rootFolder: "Libreria SQL",
     newQuery: "Nuova query",
     newFolder: "Nuova Cartella SQL",
+    newSubfolder: "Nuova Sottocartella",
     newFolderDefault: "Nuova Cartella",
     renameFolder: "Rinomina Cartella",
     deleteFolder: "Elimina Cartella",
diff --git a/apps/desktop/src/i18n/locales/ja.ts b/apps/desktop/src/i18n/locales/ja.ts
index c415c0e84..c79924c8d 100644
--- a/apps/desktop/src/i18n/locales/ja.ts
+++ b/apps/desktop/src/i18n/locales/ja.ts
@@ -114,6 +114,7 @@ export default withEnglishFallback({
     rootFolder: "SQLライブラリ",
     newQuery: "新規クエリ",
     newFolder: "新しいSQLフォルダ",
+    newSubfolder: "新しいサブフォルダ",
     newFolderDefault: "新しいフォルダ",
     renameFolder: "フォルダ名を変更",
     deleteFolder: "フォルダを削除",
diff --git a/apps/desktop/src/i18n/locales/pt-BR.ts b/apps/desktop/src/i18n/locales/pt-BR.ts
index 661554781..9150f270d 100644
--- a/apps/desktop/src/i18n/locales/pt-BR.ts
+++ b/apps/desktop/src/i18n/locales/pt-BR.ts
@@ -114,6 +114,7 @@ export default withEnglishFallback({
     rootFolder: "Biblioteca SQL",
     newQuery: "Nova Consulta",
     newFolder: "Nova Pasta SQL",
+    newSubfolder: "Nova Subpasta",
     newFolderDefault: "Nova Pasta",
     renameFolder: "Renomear Pasta",
     deleteFolder: "Excluir Pasta",
diff --git a/apps/desktop/src/i18n/locales/zh-CN.ts b/apps/desktop/src/i18n/locales/zh-CN.ts
index 3c85095b2..035af9a2e 100644
--- a/apps/desktop/src/i18n/locales/zh-CN.ts
+++ b/apps/desktop/src/i18n/locales/zh-CN.ts
@@ -114,6 +114,7 @@ export default withEnglishFallback({
     rootFolder: "SQL 库",
     newQuery: "新建查询",
     newFolder: "新建 SQL 文件夹",
+    newSubfolder: "新建子文件夹",
     newFolderDefault: "新建文件夹",
     renameFolder: "重命名文件夹",
     deleteFolder: "删除文件夹",
diff --git a/apps/desktop/src/i18n/locales/zh-TW.ts b/apps/desktop/src/i18n/locales/zh-TW.ts
index 4e857e4a7..31799e79b 100644
--- a/apps/desktop/src/i18n/locales/zh-TW.ts
+++ b/apps/desktop/src/i18n/locales/zh-TW.ts
@@ -114,6 +114,7 @@ export default withEnglishFallback({
     rootFolder: "SQL 庫",
     newQuery: "新建查詢",
     newFolder: "建立 SQL 資料夾",
+    newSubfolder: "建立子資料夾",
     newFolderDefault: "建立資料夾",
     renameFolder: "重新命名資料夾",
     deleteFolder: "刪除資料夾",
diff --git a/docs/assets/issue-3864-nested-sql-folders.png b/docs/assets/issue-3864-nested-sql-folders.png
new file mode 100644
index 000000000..32b931f5f
Binary files /dev/null and b/docs/assets/issue-3864-nested-sql-folders.png differ
diff --git a/packages/app-tests/savedSqlStore.test.ts b/packages/app-tests/savedSqlStore.test.ts
index d90d4c24f..bf9b854cc 100644
--- a/packages/app-tests/savedSqlStore.test.ts
+++ b/packages/app-tests/savedSqlStore.test.ts
@@ -48,6 +48,66 @@ test("concurrent saved SQL folder creates reuse the same pending folder", async
   assert.equal(store.folders[0]?.id, firstFolder.id);
 });
 
+test("creates a nested SQL folder under the requested parent", async () => {
+  const root: SavedSqlFolder = {
+    id: "root",
+    connectionId: "conn-1",
+    name: "Root",
+    orderIndex: 0,
+    createdAt: "2026-07-19T00:00:00.000Z",
+    updatedAt: "2026-07-19T00:00:00.000Z",
+  };
+  const sibling: SavedSqlFolder = {
+    id: "child-1",
+    connectionId: "conn-1",
+    parentFolderId: "root",
+    name: "Existing child",
+    orderIndex: 0,
+    createdAt: "2026-07-19T00:00:00.000Z",
+    updatedAt: "2026-07-19T00:00:00.000Z",
+  };
+  apiMock.loadSavedSqlLibrary.mockResolvedValue({ folders: [root, sibling], files: [] });
+
+  const store = useSavedSqlStore();
+  await store.initFromStorage();
+  const child = await store.createFolder("conn-1", "Nested child", "root");
+
+  assert.equal(child.parentFolderId, "root");
+  assert.equal(child.connectionId, "conn-1");
+  assert.equal(child.orderIndex, 1);
+  assert.equal(apiMock.saveSavedSqlFolder.mock.calls.at(-1)?.[0].parentFolderId, "root");
+  assert.deepEqual(
+    store.listChildFolders("conn-1", "root").map((folder) => folder.id),
+    ["child-1", child.id],
+  );
+});
+
+test("does not move a SQL folder into its own descendant", async () => {
+  const root: SavedSqlFolder = {
+    id: "root",
+    connectionId: "conn-1",
+    name: "Root",
+    createdAt: "2026-07-19T00:00:00.000Z",
+    updatedAt: "2026-07-19T00:00:00.000Z",
+  };
+  const child: SavedSqlFolder = {
+    id: "child",
+    connectionId: "conn-1",
+    parentFolderId: "root",
+    name: "Child",
+    createdAt: "2026-07-19T00:00:00.000Z",
+    updatedAt: "2026-07-19T00:00:00.000Z",
+  };
+  apiMock.loadSavedSqlLibrary.mockResolvedValue({ folders: [root, child], files: [] });
+
+  const store = useSavedSqlStore();
+  await store.initFromStorage();
+  await store.moveFolderToFolder("root", "child");
+
+  assert.equal(store.allFolders.find((folder) => folder.id === "root")?.parentFolderId, undefined);
+  assert.equal(apiMock.saveSavedSqlFolder.mock.calls.length, 0);
+});
+
 test("saved SQL summaries load file content on demand", async () => {
   const summaryFile: SavedSqlFile = {
     id: "sql-1",