diff --git a/src/lib/components/layout/Sidebar/Folders/EditFolderModal.svelte b/src/lib/components/layout/Sidebar/Folders/EditFolderModal.svelte
new file mode 100644
index 000000000..2235f5a39
--- /dev/null
+++ b/src/lib/components/layout/Sidebar/Folders/EditFolderModal.svelte
@@ -0,0 +1,139 @@
+<script lang="ts">
+	import { createEventDispatcher, getContext } from 'svelte';
+	import Modal from '$lib/components/common/Modal.svelte';
+	import Textarea from '$lib/components/common/Textarea.svelte';
+	import { user } from '$lib/stores';
+	const dispatch = createEventDispatcher();
+	const i18n = getContext('i18n');
+	export let show = false;
+	export let folder = { id: '', name: '', system_prompt: '' };
+	let currentName = '';
+	let currentSystemPrompt = '';
+	let loading = false;
+	let initialized = false;
+	// Initialize values once when modal opens
+	$: if (show && folder && !initialized) {
+		currentName = folder.name || '';
+		currentSystemPrompt = folder.system_prompt || '';
+		initialized = true;
+	}
+	// Reset when modal closes
+	$: if (!show) {
+		initialized = false;
+		loading = false;
+	}
+	// Auto-focus name input when modal opens
+	$: if (show && initialized) {
+		setTimeout(() => {
+			document.getElementById('folderName')?.focus();
+		}, 150);
+	}
+	const handleSubmit = () => {
+		if (!currentName.trim()) return;
+		loading = true;
+		dispatch('saveFolder', {
+			id: folder.id,
+			name: currentName.trim(),
+			system_prompt: currentSystemPrompt.trim() || null
+		});
+	};
+	const handleClose = () => {
+		loading = false;
+		initialized = false;
+		dispatch('close');
+	};
+</script>
+
+<Modal bind:show on:close={handleClose} size="md">
+	<div>
+		<div class="flex justify-between items-center dark:text-gray-100 px-5 pt-4 pb-1.5">
+			<div class="text-lg font-medium self-center font-primary">
+				{$i18n.t('Edit Folder')}
+			</div>
+			<button
+				class="self-center p-1 hover:bg-gray-100 dark:hover:bg-gray-800 rounded-full"
+				on:click={handleClose}
+				aria-label={$i18n.t('Close')}
+			>
+				<svg
+					xmlns="http://www.w3.org/2000/svg"
+					viewBox="0 0 20 20"
+					fill="currentColor"
+					class="w-5 h-5"
+				>
+					<path
+						d="M6.28 5.22a.75.75 0 00-1.06 1.06L8.94 10l-3.72 3.72a.75.75 0 101.06 1.06L10 11.06l3.72 3.72a.75.75 0 101.06-1.06L11.06 10l3.72-3.72a.75.75 0 00-1.06-1.06L10 8.94 6.28 5.22z"
+					/>
+				</svg>
+			</button>
+		</div>
+		<form
+			class="flex flex-col w-full px-6 pb-6 md:space-y-5 dark:text-gray-200"
+			on:submit|preventDefault={handleSubmit}
+		>
+			<div class="px-1 space-y-4">
+				<div>
+					<label for="folderName" class="block mb-1 text-xs text-gray-500">
+						{$i18n.t('Folder Name')}
+					</label>
+					<input
+						id="folderName"
+						class="w-full text-sm bg-transparent placeholder:text-gray-400 dark:placeholder:text-gray-600 outline-none border border-gray-300 dark:border-gray-700 rounded-lg p-2 focus:ring-1 focus:ring-blue-500"
+						type="text"
+						bind:value={currentName}
+						placeholder={$i18n.t('Enter folder name')}
+						required
+					/>
+				</div>
+
+				{#if $user?.role === 'admin' || ($user?.permissions.chat?.system_prompt ?? true)}
+					<div>
+						<label for="systemPrompt" class="block mb-1 text-xs text-gray-500">
+							{$i18n.t('System Prompt (Optional)')}
+						</label>
+						<Textarea
+							id="systemPrompt"
+							bind:value={currentSystemPrompt}
+							placeholder={$i18n.t('Enter a system prompt for all chats in this folder...')}
+							className="w-full text-sm bg-transparent placeholder:text-gray-400 dark:placeholder:text-gray-600 outline-none border border-gray-300 dark:border-gray-700 rounded-lg p-2 focus:ring-1 focus:ring-blue-500 min-h-[120px] resize-y"
+							rows={5}
+						/>
+					</div>
+				{/if}
+			</div>
+			<div class="flex justify-end items-center pt-4 text-sm font-medium gap-2">
+				<button
+					type="button"
+					class="px-3.5 py-1.5 text-sm font-medium dark:bg-gray-700 dark:hover:bg-gray-600 bg-gray-100 hover:bg-gray-200 text-black dark:text-white transition rounded-full"
+					on:click={handleClose}
+				>
+					{$i18n.t('Cancel')}
+				</button>
+				<button
+					class="px-3.5 py-1.5 text-sm font-medium bg-black hover:bg-gray-800 text-white dark:bg-white dark:text-black dark:hover:bg-gray-200 transition rounded-full flex items-center"
+					type="submit"
+					disabled={loading}
+				>
+					{#if loading}
+						<div class="mr-2 self-center">
+							<svg class="animate-spin h-4 w-4" viewBox="0 0 24 24">
+								<circle
+									cx="12"
+									cy="12"
+									r="10"
+									stroke="currentColor"
+									stroke-width="2"
+									fill="none"
+									stroke-linecap="round"
+									stroke-dasharray="32"
+									stroke-dashoffset="32"
+								/>
+							</svg>
+						</div>
+					{/if}
+					{$i18n.t('Save')}
+				</button>
+			</div>
+		</form>
+	</div>
+</Modal>