diff --git a/src/lib/components/layout/Sidebar/Folders.svelte b/src/lib/components/layout/Sidebar/Folders.svelte
index 1a0771f1f..cd75d1d30 100644
--- a/src/lib/components/layout/Sidebar/Folders.svelte
+++ b/src/lib/components/layout/Sidebar/Folders.svelte
@@ -1,11 +1,17 @@
 <script lang="ts">
-	import { createEventDispatcher } from 'svelte';
+	import { createEventDispatcher, getContext } from 'svelte';
+	import { toast } from 'svelte-sonner';
+	import RecursiveFolder from './RecursiveFolder.svelte';
+	import EditFolderModal from './Folders/EditFolderModal.svelte';
+	import { updateFolderById } from '$lib/apis/folders';
 
 	const dispatch = createEventDispatcher();
-	import RecursiveFolder from './RecursiveFolder.svelte';
+	const i18n = getContext('i18n');
+
 	export let folders = {};
 
 	let folderList = [];
+
 	// Get the list of folders that have no parent, sorted by name alphabetically
 	$: folderList = Object.keys(folders)
 		.filter((key) => folders[key].parent_id === null)
@@ -15,8 +21,63 @@
 				sensitivity: 'base'
 			})
 		);
+
+	let showEditFolderModal = false;
+	let currentEditingFolder = null;
+
+	const handleEditFolderEvent = (event) => {
+		const folderToEdit = event.detail;
+		if (folderToEdit && folderToEdit.id) {
+			currentEditingFolder = { ...folderToEdit };
+			showEditFolderModal = true;
+		} else {
+			console.error('EditFolder event did not provide valid folder data:', event.detail);
+			toast.error($i18n.t('Failed to open edit dialog: Invalid folder data.'));
+		}
+	};
+
+	const handleSaveFolderEdit = async (event) => {
+		const { id, name, system_prompt } = event.detail;
+
+		try {
+			const updatedFolder = await updateFolderById(localStorage.token, id, {
+				name,
+				system_prompt
+			});
+
+			if (updatedFolder && updatedFolder.id) {
+				toast.success($i18n.t('Folder updated successfully'));
+				showEditFolderModal = false;
+				currentEditingFolder = null;
+				dispatch('update', updatedFolder);
+			} else {
+				const errorDetail = updatedFolder?.detail || $i18n.t('Unknown error');
+				toast.error(`${$i18n.t('Failed to update folder')}: ${errorDetail}`);
+			}
+		} catch (error) {
+			console.error('Failed to update folder:', error);
+			const errorDetail = error?.detail || error?.message || $i18n.t('Unknown error');
+			toast.error(`${$i18n.t('Failed to update folder')}: ${errorDetail}`);
+		}
+	};
+
+	const handleCreateChatInFolder = (event) => {
+	    dispatch('createChatInFolder', event.detail);
+	};
 </script>
 
+{#if showEditFolderModal && currentEditingFolder}
+	<EditFolderModal
+		bind:show={showEditFolderModal}
+		folder={currentEditingFolder}
+		on:saveFolder={handleSaveFolderEdit}
+		on:close={() => {
+			showEditFolderModal = false;
+			currentEditingFolder = null;
+		}}
+	/>
+{/if}
+
 {#each folderList as folderId (folderId)}
 	<RecursiveFolder
 		className=""
@@ -31,5 +92,7 @@
 		on:change={(e) => {
 			dispatch('change', e.detail);
 		}}
+		on:editFolder={handleEditFolderEvent}
+		on:createChatInFolder={handleCreateChatInFolder}
 	/>
 {/each}