diff --git a/editor/src/messages/input_mapper/default_mapping.rs b/editor/src/messages/input_mapper/default_mapping.rs
index bb3ae6d0..ed504c26 100644
--- a/editor/src/messages/input_mapper/default_mapping.rs
+++ b/editor/src/messages/input_mapper/default_mapping.rs
@@ -302,7 +302,7 @@ pub fn default_mapping() -> Mapping {
 		entry!(KeyDown(KeyJ); modifiers=[Accel], action_dispatch=DocumentMessage::DuplicateSelectedLayers),
 		entry!(KeyDown(KeyG); modifiers=[Accel], action_dispatch=DocumentMessage::GroupSelectedLayers),
 		entry!(KeyDown(KeyG); modifiers=[Accel, Shift], action_dispatch=DocumentMessage::UngroupSelectedLayers),
-		entry!(KeyDown(KeyN); modifiers=[Accel, Shift], action_dispatch=DocumentMessage::CreateEmptyFolder { parent: LayerNodeIdentifier::ROOT }),
+		entry!(KeyDown(KeyN); modifiers=[Accel, Shift], action_dispatch=DocumentMessage::CreateEmptyFolder),
 		entry!(KeyDown(Digit0); modifiers=[Accel], action_dispatch=DocumentMessage::ZoomCanvasToFitAll),
 		entry!(KeyDown(Digit1); modifiers=[Accel], action_dispatch=DocumentMessage::ZoomCanvasTo100Percent),
 		entry!(KeyDown(Digit2); modifiers=[Accel], action_dispatch=DocumentMessage::ZoomCanvasTo200Percent),
diff --git a/editor/src/messages/portfolio/document/document_message.rs b/editor/src/messages/portfolio/document/document_message.rs
index 90646ea3..4b880d6e 100644
--- a/editor/src/messages/portfolio/document/document_message.rs
+++ b/editor/src/messages/portfolio/document/document_message.rs
@@ -40,9 +40,7 @@ pub enum DocumentMessage {
 	ClearArtboards,
 	ClearLayersPanel,
 	CommitTransaction,
-	CreateEmptyFolder {
-		parent: LayerNodeIdentifier,
-	},
+	CreateEmptyFolder,
 	DebugPrintDocument,
 	DeleteLayer {
 		id: NodeId,
diff --git a/editor/src/messages/portfolio/document/document_message_handler.rs b/editor/src/messages/portfolio/document/document_message_handler.rs
index b8873247..c2e31ac1 100644
--- a/editor/src/messages/portfolio/document/document_message_handler.rs
+++ b/editor/src/messages/portfolio/document/document_message_handler.rs
@@ -355,14 +355,25 @@ impl MessageHandler<DocumentMessage, DocumentInputs<'_>> for DocumentMessageHand
 				});
 			}
 			CommitTransaction => (),
-			CreateEmptyFolder { parent } => {
+			CreateEmptyFolder => {
 				let id = NodeId(generate_uuid());
 
+				let parent = self
+					.metadata()
+					.deepest_common_ancestor(self.selected_nodes.selected_layers(self.metadata()), true)
+					.unwrap_or(LayerNodeIdentifier::ROOT);
+
+				let insert_index = parent
+					.children(self.metadata())
+					.enumerate()
+					.find_map(|(index, item)| self.selected_nodes.selected_layers(self.metadata()).any(|x| x == item).then_some(index as isize))
+					.unwrap_or(-1);
+
 				responses.add(GraphOperationMessage::NewCustomLayer {
 					id,
 					nodes: HashMap::new(),
 					parent,
-					insert_index: -1,
+					insert_index,
 					alias: String::new(),
 				});
 				responses.add(NodeGraphMessage::SelectedNodesSet { nodes: vec![id] });
@@ -1470,7 +1481,7 @@ impl DocumentMessageHandler {
 				IconButton::new("Folder", 24)
 					.tooltip("New Folder")
 					.tooltip_shortcut(action_keys!(DocumentMessageDiscriminant::CreateEmptyFolder))
-					.on_update(|_| DocumentMessage::CreateEmptyFolder { parent: LayerNodeIdentifier::ROOT }.into())
+					.on_update(|_| DocumentMessage::CreateEmptyFolder.into())
 					.widget_holder(),
 				IconButton::new("Trash", 24)
 					.tooltip("Delete Selected")