diff --git a/apps/browser-extension/src/i18n/locales/en.json b/apps/browser-extension/src/i18n/locales/en.json
index 2873333f5..4be1ad5c6 100644
--- a/apps/browser-extension/src/i18n/locales/en.json
+++ b/apps/browser-extension/src/i18n/locales/en.json
@@ -211,7 +211,7 @@
     "allItemsInFolders": "All your items are organized in folders. Click a folder above to view your credentials, or use the search to find specific items.",
     "deleteFolder": "Delete Folder",
     "deleteFolderKeepItems": "Delete folder only",
-    "deleteFolderKeepItemsDescription": "Items will be moved back to the main list.",
+    "deleteFolderKeepItemsDescription": "Items will be moved to the parent folder.",
     "deleteFolderAndItems": "Delete folder and all items",
     "deleteFolderAndItemsDescription": "{{count}} item(s) will be moved to Recently Deleted.",
     "filters": {
diff --git a/apps/browser-extension/src/utils/db/repositories/FolderRepository.ts b/apps/browser-extension/src/utils/db/repositories/FolderRepository.ts
index e19b252d6..0ed75034f 100644
--- a/apps/browser-extension/src/utils/db/repositories/FolderRepository.ts
+++ b/apps/browser-extension/src/utils/db/repositories/FolderRepository.ts
@@ -109,9 +109,10 @@ export class FolderRepository extends BaseRepository {
 
   /**
    * Delete a folder (soft delete).
-   * Recursively handles child folders and items:
-   * - All items in this folder and child folders are moved to the parent folder (or root if no parent)
-   * - All child folders are moved to the parent of the deleted folder
+   * Handles child folders and items:
+   * - Items in this folder only are moved to the parent folder (or root if no parent)
+   * - Items in child folders stay in their respective folders (since child folders are moved to parent)
+   * - All direct child folders are moved to the parent of the deleted folder
    * @param folderId - The ID of the folder to delete
    * @returns The number of rows updated
    */
@@ -123,10 +124,7 @@ export class FolderRepository extends BaseRepository {
       const folder = this.getById(folderId);
       const targetParentId = folder?.ParentFolderId || null;
 
-      // Get all child folder IDs recursively
-      const allChildFolderIds = this.getAllChildFolderIds(folderId);
-
-      // Move all items in this folder and all child folders to the parent folder (or root if no parent)
+      // Move only items in this folder to the parent folder (or root if no parent)
       if (targetParentId) {
         // Has parent: move items to parent folder
         this.client.executeUpdate(FolderQueries.MOVE_ITEMS_TO_FOLDER, [
@@ -134,27 +132,12 @@ export class FolderRepository extends BaseRepository {
           currentDateTime,
           folderId
         ]);
-
-        for (const childFolderId of allChildFolderIds) {
-          this.client.executeUpdate(FolderQueries.MOVE_ITEMS_TO_FOLDER, [
-            targetParentId,
-            currentDateTime,
-            childFolderId
-          ]);
-        }
       } else {
         // No parent: move items to root (NULL)
         this.client.executeUpdate(FolderQueries.CLEAR_ITEMS_FOLDER, [
           currentDateTime,
           folderId
         ]);
-
-        for (const childFolderId of allChildFolderIds) {
-          this.client.executeUpdate(FolderQueries.CLEAR_ITEMS_FOLDER, [
-            currentDateTime,
-            childFolderId
-          ]);
-        }
       }
 
       // Move direct child folders to the parent of the deleted folder
diff --git a/apps/server/AliasVault.Client/Main/Pages/Items/Home.razor b/apps/server/AliasVault.Client/Main/Pages/Items/Home.razor
index 4c05b3032..d6fbcc22d 100644
--- a/apps/server/AliasVault.Client/Main/Pages/Items/Home.razor
+++ b/apps/server/AliasVault.Client/Main/Pages/Items/Home.razor
@@ -321,7 +321,7 @@ else
     OnDeleteFolderOnly="DeleteFolderOnlyAsync"
     OnDeleteFolderAndContents="DeleteFolderAndContentsAsync"
     FolderName="@CurrentFolderName"
-    ItemCount="@FilteredAndSortedItems.Count()" />
+    ItemCount="@CurrentFolderItemCount" />
 
 @code {
     private IStringLocalizer Localizer => LocalizerFactory.Create("Pages.Main.Items.Home", "AliasVault.Client");
@@ -392,6 +392,25 @@ else
     /// </summary>
     private string CurrentFolderName { get; set; } = string.Empty;
 
+    /// <summary>
+    /// Gets the total item count in the current folder tree (includes items in all subfolders recursively).
+    /// Used for the delete folder modal to determine if "delete with contents" option should be shown.
+    /// </summary>
+    private int CurrentFolderItemCount
+    {
+        get
+        {
+            if (!FolderId.HasValue)
+            {
+                return FilteredAndSortedItems.Count();
+            }
+
+            // Find the current folder in the Folders list and return its recursive count
+            var currentFolder = Folders.FirstOrDefault(f => f.Id == FolderId.Value);
+            return currentFolder?.ItemCount ?? 0;
+        }
+    }
+
     /// <summary>
     /// Gets or sets whether the settings dropdown is shown.
     /// </summary>
@@ -889,16 +908,28 @@ else
     }
 
     /// <summary>
-    /// Delete the current folder only (move items to root).
+    /// Delete the current folder only (move items to parent folder).
     /// </summary>
     private async Task DeleteFolderOnlyAsync()
     {
         if (FolderId.HasValue)
         {
+            // Get the parent folder ID before deletion
+            var folder = await FolderService.GetByIdAsync(FolderId.Value);
+            var parentFolderId = folder?.ParentFolderId;
+
             var success = await FolderService.DeleteAsync(FolderId.Value);
             if (success)
             {
-                NavigationManager.NavigateTo("/items");
+                // Navigate to parent folder if it exists, otherwise root
+                if (parentFolderId.HasValue)
+                {
+                    NavigationManager.NavigateTo($"/items/folder/{parentFolderId.Value}");
+                }
+                else
+                {
+                    NavigationManager.NavigateTo("/items");
+                }
             }
             else
             {
@@ -914,10 +945,22 @@ else
     {
         if (FolderId.HasValue)
         {
+            // Get the parent folder ID before deletion
+            var folder = await FolderService.GetByIdAsync(FolderId.Value);
+            var parentFolderId = folder?.ParentFolderId;
+
             var success = await FolderService.DeleteWithContentsAsync(FolderId.Value);
             if (success)
             {
-                NavigationManager.NavigateTo("/items");
+                // Navigate to parent folder if it exists, otherwise root
+                if (parentFolderId.HasValue)
+                {
+                    NavigationManager.NavigateTo($"/items/folder/{parentFolderId.Value}");
+                }
+                else
+                {
+                    NavigationManager.NavigateTo("/items");
+                }
             }
             else
             {
diff --git a/apps/server/AliasVault.Client/Resources/Components/Folders/DeleteFolderModal.en.resx b/apps/server/AliasVault.Client/Resources/Components/Folders/DeleteFolderModal.en.resx
index 44cace688..71bff6b97 100644
--- a/apps/server/AliasVault.Client/Resources/Components/Folders/DeleteFolderModal.en.resx
+++ b/apps/server/AliasVault.Client/Resources/Components/Folders/DeleteFolderModal.en.resx
@@ -72,7 +72,7 @@
     <comment>Title for delete folder only option</comment>
   </data>
   <data name="DeleteFolderOnlyDescription" xml:space="preserve">
-    <value>Items in this folder will be moved to root</value>
+    <value>Items will be moved to the parent folder</value>
     <comment>Description for delete folder only option</comment>
   </data>
   <data name="DeleteFolderAndContentsTitle" xml:space="preserve">
diff --git a/apps/server/AliasVault.Client/Services/FolderService.cs b/apps/server/AliasVault.Client/Services/FolderService.cs
index 1a193e518..48843cfab 100644
--- a/apps/server/AliasVault.Client/Services/FolderService.cs
+++ b/apps/server/AliasVault.Client/Services/FolderService.cs
@@ -233,6 +233,7 @@ public sealed class FolderService(DbService dbService)
         foreach (var item in itemsInFolders)
         {
             item.DeletedAt = currentDateTime;
+            item.FolderId = null;
             item.UpdatedAt = currentDateTime;
         }