diff --git a/crates/editor/src/display_map.rs b/crates/editor/src/display_map.rs
index 610e30f4e1538fa1eb91768a91bd816b3cbd00dd..57b8eb8ef6c1b29cb99da3e2a4e731d0c828038e 100644
--- a/crates/editor/src/display_map.rs
+++ b/crates/editor/src/display_map.rs
@@ -1003,6 +1003,10 @@ impl DisplayMap {
         &self.block_map.folded_buffers
     }
 
+    pub(super) fn clear_folded_buffer(&mut self, buffer_id: language::BufferId) {
+        self.block_map.folded_buffers.remove(&buffer_id);
+    }
+
     #[instrument(skip_all)]
     pub fn insert_creases(
         &mut self,
diff --git a/crates/editor/src/editor.rs b/crates/editor/src/editor.rs
index eb8601d59e1c9970f367177f3f365f4feb30811e..6f1961a97880e0f5f55577c406b77e3796568a8e 100644
--- a/crates/editor/src/editor.rs
+++ b/crates/editor/src/editor.rs
@@ -24145,6 +24145,7 @@ impl Editor {
                     self.display_map.update(cx, |display_map, cx| {
                         display_map.invalidate_semantic_highlights(*buffer_id);
                         display_map.clear_lsp_folding_ranges(*buffer_id, cx);
+                        display_map.clear_folded_buffer(*buffer_id);
                     });
                 }
                 jsx_tag_auto_close::refresh_enabled_in_any_buffer(self, multibuffer, cx);
diff --git a/crates/editor/src/editor_tests.rs b/crates/editor/src/editor_tests.rs
index 525910ed276cdfe5fb5c3c2b784269d834c70316..2898954b75a97c7d7d0a922eae8e71c8b598a7d5 100644
--- a/crates/editor/src/editor_tests.rs
+++ b/crates/editor/src/editor_tests.rs
@@ -24308,6 +24308,77 @@ async fn test_folding_buffers(cx: &mut TestAppContext) {
     );
 }
 
+#[gpui::test]
+async fn test_folded_buffers_cleared_on_excerpts_removed(cx: &mut TestAppContext) {
+    init_test(cx, |_| {});
+
+    let fs = FakeFs::new(cx.executor());
+    fs.insert_tree(
+        path!("/root"),
+        json!({
+            "file_a.txt": "File A\nFile A\nFile A",
+            "file_b.txt": "File B\nFile B\nFile B",
+        }),
+    )
+    .await;
+
+    let project = Project::test(fs, [path!("/root").as_ref()], cx).await;
+    let window = cx.add_window(|window, cx| MultiWorkspace::test_new(project.clone(), window, cx));
+    let cx = &mut VisualTestContext::from_window(*window, cx);
+    let worktree = project.update(cx, |project, cx| {
+        let mut worktrees = project.worktrees(cx).collect::<Vec<_>>();
+        assert_eq!(worktrees.len(), 1);
+        worktrees.pop().unwrap()
+    });
+    let worktree_id = worktree.update(cx, |worktree, _| worktree.id());
+
+    let buffer_a = project
+        .update(cx, |project, cx| {
+            project.open_buffer((worktree_id, rel_path("file_a.txt")), cx)
+        })
+        .await
+        .unwrap();
+    let buffer_b = project
+        .update(cx, |project, cx| {
+            project.open_buffer((worktree_id, rel_path("file_b.txt")), cx)
+        })
+        .await
+        .unwrap();
+
+    let multi_buffer = cx.new(|cx| {
+        let mut multi_buffer = MultiBuffer::new(ReadWrite);
+        let range_a = Point::new(0, 0)..Point::new(2, 4);
+        let range_b = Point::new(0, 0)..Point::new(2, 4);
+
+        multi_buffer.set_excerpts_for_path(PathKey::sorted(0), buffer_a.clone(), [range_a], 0, cx);
+        multi_buffer.set_excerpts_for_path(PathKey::sorted(1), buffer_b.clone(), [range_b], 0, cx);
+        multi_buffer
+    });
+
+    let editor = cx.new_window_entity(|window, cx| {
+        Editor::new(
+            EditorMode::full(),
+            multi_buffer.clone(),
+            Some(project.clone()),
+            window,
+            cx,
+        )
+    });
+
+    editor.update(cx, |editor, cx| {
+        editor.fold_buffer(buffer_a.read(cx).remote_id(), cx);
+    });
+    assert!(editor.update(cx, |editor, cx| editor.has_any_buffer_folded(cx)));
+
+    // When the excerpts for `buffer_a` are removed, a
+    // `multi_buffer::Event::ExcerptsRemoved` event is emitted, which should be
+    // picked up by the editor and update the display map accordingly.
+    multi_buffer.update(cx, |multi_buffer, cx| {
+        multi_buffer.remove_excerpts_for_path(PathKey::sorted(0), cx)
+    });
+    assert!(!editor.update(cx, |editor, cx| editor.has_any_buffer_folded(cx)));
+}
+
 #[gpui::test]
 async fn test_folding_buffers_with_one_excerpt(cx: &mut TestAppContext) {
     init_test(cx, |_| {});
diff --git a/crates/multi_buffer/src/multi_buffer.rs b/crates/multi_buffer/src/multi_buffer.rs
index a593280d245fd01d623051953e48128c9935df45..c991fd9a5cbfe451b3f86ff016f8467395373564 100644
--- a/crates/multi_buffer/src/multi_buffer.rs
+++ b/crates/multi_buffer/src/multi_buffer.rs
@@ -105,6 +105,8 @@ pub enum Event {
     },
     ExcerptsRemoved {
         ids: Vec<ExcerptId>,
+        /// Contains only buffer IDs for which all excerpts have been removed.
+        /// Buffers that still have remaining excerpts are never included.
         removed_buffer_ids: Vec<BufferId>,
     },
     ExcerptsExpanded {