diff --git a/crates/bevy_asset/src/server/info.rs b/crates/bevy_asset/src/server/info.rs
index f41057f6221e9b..b81c3feb07f705 100644
--- a/crates/bevy_asset/src/server/info.rs
+++ b/crates/bevy_asset/src/server/info.rs
@@ -86,23 +86,6 @@ impl std::fmt::Debug for AssetInfos {
 }
 
 impl AssetInfos {
-    pub(crate) fn create_loading_handle<A: Asset>(&mut self) -> Handle<A> {
-        unwrap_with_context(
-            Self::create_handle_internal(
-                &mut self.infos,
-                &self.handle_providers,
-                &mut self.living_labeled_assets,
-                self.watching_for_changes,
-                TypeId::of::<A>(),
-                None,
-                None,
-                true,
-            ),
-            std::any::type_name::<A>(),
-        )
-        .typed_debug_checked()
-    }
-
     pub(crate) fn create_loading_handle_untyped(
         &mut self,
         type_id: TypeId,
diff --git a/crates/bevy_asset/src/server/mod.rs b/crates/bevy_asset/src/server/mod.rs
index 73e73c25c8f930..864faf70fc71be 100644
--- a/crates/bevy_asset/src/server/mod.rs
+++ b/crates/bevy_asset/src/server/mod.rs
@@ -23,6 +23,7 @@ use crossbeam_channel::{Receiver, Sender};
 use futures_lite::StreamExt;
 use info::*;
 use parking_lot::RwLock;
+use std::path::PathBuf;
 use std::{any::TypeId, path::Path, sync::Arc};
 use thiserror::Error;
 
@@ -525,15 +526,33 @@ impl AssetServer {
     /// Loads all assets from the specified folder recursively. The [`LoadedFolder`] asset (when it loads) will
     /// contain handles to all assets in the folder. You can wait for all assets to load by checking the [`LoadedFolder`]'s
     /// [`RecursiveDependencyLoadState`].
+    ///
+    /// Loading the same folder multiple times will return the same handle. If the `file_watcher`
+    /// feature is enabled, [`LoadedFolder`] handles will reload when a file in the folder is
+    /// removed, added or moved. This includes files in subdirectories and moving, adding,
+    /// or removing complete subdirectories.
     #[must_use = "not using the returned strong handle may result in the unexpected release of the assets"]
     pub fn load_folder<'a>(&self, path: impl Into<AssetPath<'a>>) -> Handle<LoadedFolder> {
-        let handle = {
-            let mut infos = self.data.infos.write();
-            infos.create_loading_handle::<LoadedFolder>()
-        };
-        let id = handle.id().untyped();
         let path = path.into().into_owned();
+        let (handle, should_load) = self
+            .data
+            .infos
+            .write()
+            .get_or_create_path_handle::<LoadedFolder>(
+                path.clone(),
+                HandleLoadingMode::Request,
+                None,
+            );
+        if !should_load {
+            return handle;
+        }
+        let id = handle.id().untyped();
+        self.load_folder_internal(id, path);
+
+        handle
+    }
 
+    pub(crate) fn load_folder_internal(&self, id: UntypedAssetId, path: AssetPath) {
         fn load_folder<'a>(
             source: AssetSourceId<'static>,
             path: &'a Path,
@@ -568,6 +587,7 @@ impl AssetServer {
             })
         }
 
+        let path = path.into_owned();
         let server = self.clone();
         IoTaskPool::get()
             .spawn(async move {
@@ -607,8 +627,6 @@ impl AssetServer {
                 }
             })
             .detach();
-
-        handle
     }
 
     fn send_asset_event(&self, event: InternalAssetEvent) {
@@ -860,6 +878,19 @@ pub fn handle_internal_asset_events(world: &mut World) {
             }
         }
 
+        let reload_parent_folders = |path: PathBuf, source: &AssetSourceId<'static>| {
+            let mut current_folder = path;
+            while let Some(parent) = current_folder.parent() {
+                current_folder = parent.to_path_buf();
+                let parent_asset_path =
+                    AssetPath::from(current_folder.clone()).with_source(source.clone());
+                if let Some(folder_handle) = infos.get_path_handle(parent_asset_path.clone()) {
+                    info!("Reloading folder {parent_asset_path} because the content has changed");
+                    server.load_folder_internal(folder_handle.id(), parent_asset_path);
+                }
+            }
+        };
+
         let mut paths_to_reload = HashSet::new();
         let mut handle_event = |source: AssetSourceId<'static>, event: AssetSourceEvent| {
             match event {
@@ -870,6 +901,16 @@ pub fn handle_internal_asset_events(world: &mut World) {
                     queue_ancestors(&path, &infos, &mut paths_to_reload);
                     paths_to_reload.insert(path);
                 }
+                AssetSourceEvent::RenamedFolder { old, new } => {
+                    reload_parent_folders(old, &source);
+                    reload_parent_folders(new, &source);
+                }
+                AssetSourceEvent::AddedAsset(path)
+                | AssetSourceEvent::RemovedAsset(path)
+                | AssetSourceEvent::RemovedFolder(path)
+                | AssetSourceEvent::AddedFolder(path) => {
+                    reload_parent_folders(path, &source);
+                }
                 _ => {}
             }
         };