diff --git a/crates/worktree/src/worktree.rs b/crates/worktree/src/worktree.rs
index 2f8b618494fe8a206d0d62f8d0683fbff0738280..03f461177a77ad36f530fde05c77c572bf6315be 100644
--- a/crates/worktree/src/worktree.rs
+++ b/crates/worktree/src/worktree.rs
@@ -267,6 +267,7 @@ struct BackgroundScannerState {
     removed_entries: HashMap<u64, Entry>,
     changed_paths: Vec<Arc<RelPath>>,
     prev_snapshot: Snapshot,
+    scanning_enabled: bool,
 }
 
 #[derive(Debug, Clone)]
@@ -447,7 +448,11 @@ impl Worktree {
                     snapshot.root_char_bag,
                     None,
                 );
-                if !metadata.is_dir {
+                if metadata.is_dir {
+                    if !scanning_enabled {
+                        entry.kind = EntryKind::UnloadedDir;
+                    }
+                } else {
                     if let Some(file_name) = abs_path.file_name()
                         && let Some(file_name) = file_name.to_str()
                         && let Ok(path) = RelPath::unix(file_name)
@@ -1101,6 +1106,7 @@ impl LocalWorktree {
                         prev_snapshot: snapshot.snapshot.clone(),
                         snapshot,
                         scanned_dirs: Default::default(),
+                        scanning_enabled,
                         path_prefixes_to_scan: Default::default(),
                         paths_to_scan: Default::default(),
                         removed_entries: Default::default(),
@@ -1108,7 +1114,6 @@ impl LocalWorktree {
                     }),
                     phase: BackgroundScannerPhase::InitialScan,
                     share_private_files,
-                    scanning_enabled,
                     settings,
                     watcher,
                 };
@@ -2777,7 +2782,7 @@ impl LocalSnapshot {
 
 impl BackgroundScannerState {
     fn should_scan_directory(&self, entry: &Entry) -> bool {
-        (!entry.is_external && (!entry.is_ignored || entry.is_always_included))
+        (self.scanning_enabled && !entry.is_external && (!entry.is_ignored || entry.is_always_included))
             || entry.path.file_name() == Some(DOT_GIT)
             || entry.path.file_name() == Some(local_settings_folder_name())
             || entry.path.file_name() == Some(local_vscode_folder_name())
@@ -3726,7 +3731,6 @@ struct BackgroundScanner {
     watcher: Arc<dyn Watcher>,
     settings: WorktreeSettings,
     share_private_files: bool,
-    scanning_enabled: bool,
 }
 
 #[derive(Copy, Clone, PartialEq)]
@@ -3738,12 +3742,18 @@ enum BackgroundScannerPhase {
 
 impl BackgroundScanner {
     async fn run(&mut self, mut fs_events_rx: Pin<Box<dyn Send + Stream<Item = Vec<PathEvent>>>>) {
+        let root_abs_path;
+        let scanning_enabled;
+        {
+            let state = self.state.lock().await;
+            root_abs_path = state.snapshot.abs_path.clone();
+            scanning_enabled = state.scanning_enabled;
+        }
+
         // If the worktree root does not contain a git repository, then find
         // the git repository in an ancestor directory. Find any gitignore files
         // in ancestor directories.
-        let root_abs_path = self.state.lock().await.snapshot.abs_path.clone();
-
-        let repo = if self.scanning_enabled {
+        let repo = if scanning_enabled {
             let (ignores, exclude, repo) =
                 discover_ancestor_git_repo(self.fs.clone(), &root_abs_path).await;
             self.state
@@ -3767,7 +3777,7 @@ impl BackgroundScanner {
         };
 
         let containing_git_repository = if let Some((ancestor_dot_git, work_directory)) = repo
-            && self.scanning_enabled
+            && scanning_enabled
         {
             maybe!(async {
                 self.state
@@ -3792,7 +3802,7 @@ impl BackgroundScanner {
 
         let mut global_gitignore_events = if let Some(global_gitignore_path) =
             &paths::global_gitignore_path()
-            && self.scanning_enabled
+            && scanning_enabled
         {
             let is_file = self.fs.is_file(&global_gitignore_path).await;
             self.state.lock().await.snapshot.global_gitignore = if is_file {
@@ -3835,7 +3845,7 @@ impl BackgroundScanner {
                         .insert_entry(root_entry, self.fs.as_ref(), self.watcher.as_ref())
                         .await;
                 }
-                if root_entry.is_dir() && self.scanning_enabled {
+                if root_entry.is_dir() && state.scanning_enabled {
                     state
                         .enqueue_scan_dir(
                             root_abs_path.as_path().into(),
diff --git a/crates/worktree/src/worktree_tests.rs b/crates/worktree/src/worktree_tests.rs
index 45d39710c6ea825aded4d29f447124ee4c2ecb33..e8c7180b47d890097004682668ee3c2c235fc01f 100644
--- a/crates/worktree/src/worktree_tests.rs
+++ b/crates/worktree/src/worktree_tests.rs
@@ -2843,3 +2843,84 @@ async fn test_write_file_encoding(cx: &mut gpui::TestAppContext) {
         );
     }
 }
+
+#[gpui::test]
+async fn test_refresh_entries_for_paths_creates_ancestors(cx: &mut TestAppContext) {
+    init_test(cx);
+    let fs = FakeFs::new(cx.background_executor.clone());
+    fs.insert_tree(
+        "/root",
+        json!({
+            "a": {
+                "b": {
+                    "c": {
+                        "deep_file.txt": "content",
+                        "sibling.txt": "content"
+                    },
+                    "d": {
+                        "under_sibling_dir.txt": "content"
+                    }
+                }
+            }
+        }),
+    )
+    .await;
+
+    let tree = Worktree::local(
+        Path::new("/root"),
+        true,
+        fs.clone(),
+        Default::default(),
+        false, // Disable scanning so the initial scan doesn't discover any entries
+        &mut cx.to_async(),
+    )
+    .await
+    .unwrap();
+
+    cx.read(|cx| tree.read(cx).as_local().unwrap().scan_complete())
+        .await;
+
+    tree.read_with(cx, |tree, _| {
+        assert_eq!(
+            tree.entries(true, 0)
+                .map(|e| e.path.as_ref())
+                .collect::<Vec<_>>(),
+            &[rel_path("")],
+            "Only root entry should exist when scanning is disabled"
+        );
+
+        assert!(tree.entry_for_path(rel_path("a")).is_none());
+        assert!(tree.entry_for_path(rel_path("a/b")).is_none());
+        assert!(tree.entry_for_path(rel_path("a/b/c")).is_none());
+        assert!(
+            tree.entry_for_path(rel_path("a/b/c/deep_file.txt"))
+                .is_none()
+        );
+    });
+
+    tree.read_with(cx, |tree, _| {
+        tree.as_local()
+            .unwrap()
+            .refresh_entries_for_paths(vec![rel_path("a/b/c/deep_file.txt").into()])
+    })
+    .recv()
+    .await;
+
+    tree.read_with(cx, |tree, _| {
+        assert_eq!(
+            tree.entries(true, 0)
+                .map(|e| e.path.as_ref())
+                .collect::<Vec<_>>(),
+            &[
+                rel_path(""),
+                rel_path("a"),
+                rel_path("a/b"),
+                rel_path("a/b/c"),
+                rel_path("a/b/c/deep_file.txt"),
+                rel_path("a/b/c/sibling.txt"),
+                rel_path("a/b/d"),
+            ],
+            "All ancestors should be created when refreshing a deeply nested path"
+        );
+    });
+}