diff --git a/CLAUDE.md b/CLAUDE.md
index 47dc3e3d863..c3170642553 120000
--- a/CLAUDE.md
+++ b/CLAUDE.md
@@ -1 +1 @@
-AGENTS.md
\ No newline at end of file
+AGENTS.md
diff --git a/apps/web/src/components/Sidebar.tsx b/apps/web/src/components/Sidebar.tsx
index 89ced46454b..a1932feb258 100644
--- a/apps/web/src/components/Sidebar.tsx
+++ b/apps/web/src/components/Sidebar.tsx
@@ -2,6 +2,7 @@ import {
   ArchiveIcon,
   ArrowUpDownIcon,
   ChevronRightIcon,
+  ChevronsDownUpIcon,
   FolderIcon,
   GitPullRequestIcon,
   PlusIcon,
@@ -678,6 +679,7 @@ export default function Sidebar() {
   );
   const markThreadUnread = useUiStateStore((store) => store.markThreadUnread);
   const toggleProject = useUiStateStore((store) => store.toggleProject);
+  const setAllProjectsExpanded = useUiStateStore((store) => store.setAllProjectsExpanded);
   const reorderProjects = useUiStateStore((store) => store.reorderProjects);
   const clearComposerDraftForThread = useComposerDraftStore((store) => store.clearDraftThread);
   const getDraftThreadByProjectId = useComposerDraftStore(
@@ -744,6 +746,11 @@ export default function Sidebar() {
       })),
     [orderedProjects, projectExpandedById],
   );
+  const canCollapseAllProjects = useMemo(
+    () =>
+      sidebarProjects.some((project) => project.expanded) || expandedThreadListsByProject.size > 0,
+    [expandedThreadListsByProject, sidebarProjects],
+  );
   const sidebarThreads = useMemo(() => Object.values(sidebarThreadsById), [sidebarThreadsById]);
   const projectCwdById = useMemo(
     () => new Map(projects.map((project) => [project.id, project.cwd] as const)),
@@ -1964,6 +1971,14 @@ export default function Sidebar() {
     });
   }, []);
 
+  const handleCollapseAllProjects = useCallback(() => {
+    setExpandedThreadListsByProject((current) => (current.size === 0 ? current : new Set()));
+    setAllProjectsExpanded(
+      sidebarProjects.map((project) => project.id),
+      false,
+    );
+  }, [setAllProjectsExpanded, sidebarProjects]);
+
   const wordmark = (
     <div className="flex items-center gap-2">
       <SidebarTrigger className="shrink-0 md:hidden" />
@@ -2038,6 +2053,22 @@ export default function Sidebar() {
                   Projects
                 </span>
                 <div className="flex items-center gap-1">
+                  <Tooltip>
+                    <TooltipTrigger
+                      render={
+                        <button
+                          type="button"
+                          aria-label="Collapse all folders"
+                          disabled={!canCollapseAllProjects}
+                          className="inline-flex size-5 cursor-pointer items-center justify-center rounded-md text-muted-foreground/60 transition-colors hover:bg-accent hover:text-foreground disabled:cursor-default disabled:opacity-40 disabled:hover:bg-transparent disabled:hover:text-muted-foreground/60"
+                          onClick={handleCollapseAllProjects}
+                        />
+                      }
+                    >
+                      <ChevronsDownUpIcon className="size-3.5" />
+                    </TooltipTrigger>
+                    <TooltipPopup side="right">Collapse all folders</TooltipPopup>
+                  </Tooltip>
                   <ProjectSortMenu
                     projectSortOrder={appSettings.sidebarProjectSortOrder}
                     threadSortOrder={appSettings.sidebarThreadSortOrder}
diff --git a/apps/web/src/uiStateStore.test.ts b/apps/web/src/uiStateStore.test.ts
index b0b19f763aa..719e685b585 100644
--- a/apps/web/src/uiStateStore.test.ts
+++ b/apps/web/src/uiStateStore.test.ts
@@ -5,6 +5,7 @@ import {
   clearThreadUi,
   markThreadUnread,
   reorderProjects,
+  setAllProjectsExpanded,
   setProjectExpanded,
   syncProjects,
   syncThreads,
@@ -177,6 +178,42 @@ describe("uiStateStore pure functions", () => {
     expect(next.projectOrder).toEqual([project1]);
   });
 
+  it("setAllProjectsExpanded collapses every project without touching order", () => {
+    const project1 = ProjectId.makeUnsafe("project-1");
+    const project2 = ProjectId.makeUnsafe("project-2");
+    const initialState = makeUiState({
+      projectExpandedById: {
+        [project1]: true,
+        [project2]: true,
+      },
+      projectOrder: [project2, project1],
+    });
+
+    const next = setAllProjectsExpanded(initialState, [project1, project2], false);
+
+    expect(next.projectExpandedById).toEqual({
+      [project1]: false,
+      [project2]: false,
+    });
+    expect(next.projectOrder).toEqual([project2, project1]);
+  });
+
+  it("setAllProjectsExpanded seeds missing project expansion state for known projects", () => {
+    const project1 = ProjectId.makeUnsafe("project-1");
+    const project2 = ProjectId.makeUnsafe("project-2");
+    const initialState = makeUiState({
+      projectOrder: [project2, project1],
+    });
+
+    const next = setAllProjectsExpanded(initialState, [project1, project2], false);
+
+    expect(next.projectExpandedById).toEqual({
+      [project1]: false,
+      [project2]: false,
+    });
+    expect(next.projectOrder).toEqual([project2, project1]);
+  });
+
   it("clearThreadUi removes visit state for deleted threads", () => {
     const thread1 = ThreadId.makeUnsafe("thread-1");
     const initialState = makeUiState({
diff --git a/apps/web/src/uiStateStore.ts b/apps/web/src/uiStateStore.ts
index 342f2db18f6..ac2cf11bcf5 100644
--- a/apps/web/src/uiStateStore.ts
+++ b/apps/web/src/uiStateStore.ts
@@ -356,6 +356,34 @@ export function setProjectExpanded(
   };
 }
 
+export function setAllProjectsExpanded(
+  state: UiState,
+  projectIds: readonly ProjectId[],
+  expanded: boolean,
+): UiState {
+  const nextExpandedById = { ...state.projectExpandedById };
+  let changed = false;
+
+  for (const projectId of projectIds) {
+    if (nextExpandedById[projectId] !== expanded) {
+      nextExpandedById[projectId] = expanded;
+      changed = true;
+    }
+  }
+
+  if (!changed) {
+    return state;
+  }
+
+  if (recordsEqual(state.projectExpandedById, nextExpandedById)) {
+    return state;
+  }
+  return {
+    ...state,
+    projectExpandedById: nextExpandedById,
+  };
+}
+
 export function reorderProjects(
   state: UiState,
   draggedProjectId: ProjectId,
@@ -389,6 +417,7 @@ interface UiStateStore extends UiState {
   clearThreadUi: (threadId: ThreadId) => void;
   toggleProject: (projectId: ProjectId) => void;
   setProjectExpanded: (projectId: ProjectId, expanded: boolean) => void;
+  setAllProjectsExpanded: (projectIds: readonly ProjectId[], expanded: boolean) => void;
   reorderProjects: (draggedProjectId: ProjectId, targetProjectId: ProjectId) => void;
 }
 
@@ -404,6 +433,8 @@ export const useUiStateStore = create<UiStateStore>((set) => ({
   toggleProject: (projectId) => set((state) => toggleProject(state, projectId)),
   setProjectExpanded: (projectId, expanded) =>
     set((state) => setProjectExpanded(state, projectId, expanded)),
+  setAllProjectsExpanded: (projectIds, expanded) =>
+    set((state) => setAllProjectsExpanded(state, projectIds, expanded)),
   reorderProjects: (draggedProjectId, targetProjectId) =>
     set((state) => reorderProjects(state, draggedProjectId, targetProjectId)),
 }));