diff --git a/crates/fs/src/fs_watcher.rs b/crates/fs/src/fs_watcher.rs
index fec8b03bfe1..ef676e9ed02 100644
--- a/crates/fs/src/fs_watcher.rs
+++ b/crates/fs/src/fs_watcher.rs
@@ -227,20 +227,61 @@ struct WatcherRegistrationState {
     mode: WatcherMode,
 }
 
+struct PathRegistrationState {
+    count: u32,
+    has_os_watcher: bool,
+}
+
 struct WatcherState {
     watchers: HashMap<WatcherRegistrationId, WatcherRegistrationState>,
-    native_path_registrations: HashMap<Arc<std::path::Path>, u32>,
-    poll_path_registrations: HashMap<Arc<std::path::Path>, u32>,
+    native_path_registrations: HashMap<Arc<std::path::Path>, PathRegistrationState>,
+    poll_path_registrations: HashMap<Arc<std::path::Path>, PathRegistrationState>,
     last_registration: WatcherRegistrationId,
 }
 
 impl WatcherState {
-    fn path_registrations(&mut self, mode: WatcherMode) -> &mut HashMap<Arc<std::path::Path>, u32> {
+    fn path_registrations(
+        &mut self,
+        mode: WatcherMode,
+    ) -> &mut HashMap<Arc<std::path::Path>, PathRegistrationState> {
         match mode {
             WatcherMode::Native => &mut self.native_path_registrations,
             WatcherMode::Poll => &mut self.poll_path_registrations,
         }
     }
+
+    fn remove_registration(
+        &mut self,
+        id: WatcherRegistrationId,
+    ) -> Option<(Arc<std::path::Path>, WatcherMode)> {
+        let registration_state = self.watchers.remove(&id)?;
+        let path_registrations = self.path_registrations(registration_state.mode);
+        let count = path_registrations.get_mut(&registration_state.path)?;
+        count.count -= 1;
+        if count.count != 0 {
+            return None;
+        }
+
+        let was_actually_watched = count.has_os_watcher;
+        path_registrations.remove(&registration_state.path);
+
+        was_actually_watched.then_some((registration_state.path, registration_state.mode))
+    }
+}
+
+trait WatchBackend: Send {
+    fn watch(&mut self, path: &Path, mode: notify::RecursiveMode) -> notify::Result<()>;
+    fn unwatch(&mut self, path: &Path) -> notify::Result<()>;
+}
+
+impl<T: notify::Watcher + Send> WatchBackend for T {
+    fn watch(&mut self, path: &Path, mode: notify::RecursiveMode) -> notify::Result<()> {
+        notify::Watcher::watch(self, path, mode)
+    }
+
+    fn unwatch(&mut self, path: &Path) -> notify::Result<()> {
+        notify::Watcher::unwatch(self, path)
+    }
 }
 
 pub struct GlobalWatcher {
@@ -248,8 +289,8 @@ pub struct GlobalWatcher {
 
     // DANGER: never keep state lock while holding watcher lock
     // two mutexes because calling watcher.add triggers watcher.event, which needs watchers.
-    native_watcher: Mutex<Option<notify::RecommendedWatcher>>,
-    poll_watcher: Mutex<Option<notify::PollWatcher>>,
+    native_watcher: Mutex<Option<Box<dyn WatchBackend>>>,
+    poll_watcher: Mutex<Option<Box<dyn WatchBackend>>>,
 }
 
 impl GlobalWatcher {
@@ -280,41 +321,28 @@ impl GlobalWatcher {
             mode,
         };
         state.watchers.insert(id, registration_state);
-        *state.path_registrations(mode).entry(path).or_insert(0) += 1;
+        state
+            .path_registrations(mode)
+            .entry(path)
+            .and_modify(|registration| registration.count += 1)
+            .or_insert(PathRegistrationState {
+                count: 1,
+                has_os_watcher: !path_already_covered,
+            });
 
         Ok(id)
     }
 
     pub fn remove(&self, id: WatcherRegistrationId) {
         let mut state = self.state.lock();
-        let Some(registration_state) = state.watchers.remove(&id) else {
+        let Some((path, mode)) = state.remove_registration(id) else {
             return;
         };
-
-        let path_registrations = state.path_registrations(registration_state.mode);
-        let Some(count) = path_registrations.get_mut(&registration_state.path) else {
-            return;
-        };
-        *count -= 1;
-        if *count == 0 {
-            path_registrations.remove(&registration_state.path);
-            let path_still_covered = path_already_covered(
-                registration_state.path.as_ref(),
-                path_registrations,
-                registration_state.mode,
-            );
-
-            if !path_still_covered {
-                drop(state);
-                self.unwatch(&registration_state.path, registration_state.mode)
-                    .log_err();
-            }
-        }
+        drop(state);
+        self.unwatch(&path, mode).log_err();
     }
 
     fn watch(&self, path: &Path, mode: WatcherMode) -> anyhow::Result<()> {
-        use notify::Watcher;
-
         match mode {
             WatcherMode::Native => {
                 self.ensure_native_watcher()?;
@@ -345,8 +373,6 @@ impl GlobalWatcher {
     }
 
     fn unwatch(&self, path: &Path, mode: WatcherMode) -> anyhow::Result<()> {
-        use notify::Watcher;
-
         match mode {
             WatcherMode::Native => {
                 if let Some(watcher) = self.native_watcher.lock().as_mut() {
@@ -369,7 +395,7 @@ impl GlobalWatcher {
         }
 
         let watcher = notify::recommended_watcher(handle_native_event)?;
-        *self.native_watcher.lock() = Some(watcher);
+        *self.native_watcher.lock() = Some(Box::new(watcher));
         Ok(())
     }
 
@@ -380,14 +406,14 @@ impl GlobalWatcher {
 
         let config = notify::Config::default().with_poll_interval(*POLL_INTERVAL);
         let watcher = notify::PollWatcher::new(handle_poll_event, config)?;
-        *self.poll_watcher.lock() = Some(watcher);
+        *self.poll_watcher.lock() = Some(Box::new(watcher));
         Ok(())
     }
 }
 
 fn path_already_covered(
     path: &Path,
-    path_registrations: &HashMap<Arc<std::path::Path>, u32>,
+    path_registrations: &HashMap<Arc<std::path::Path>, PathRegistrationState>,
     mode: WatcherMode,
 ) -> bool {
     (mode == WatcherMode::Poll || cfg!(any(target_os = "windows", target_os = "macos")))
@@ -470,7 +496,7 @@ fn handle_event(mode: WatcherMode, event: Result<notify::Event, notify::Error>)
 #[cfg(test)]
 mod tests {
     use super::*;
-    use std::path::PathBuf;
+    use std::{collections::HashSet, path::PathBuf};
 
     fn rescan(path: &str) -> PathEvent {
         PathEvent {
@@ -486,6 +512,49 @@ mod tests {
         }
     }
 
+    #[derive(Default)]
+    struct FakeWatchBackend {
+        watched_paths: HashSet<PathBuf>,
+        watch_calls: Vec<PathBuf>,
+        unwatch_calls: Vec<PathBuf>,
+    }
+
+    struct SharedFakeWatchBackend(Arc<Mutex<FakeWatchBackend>>);
+
+    impl WatchBackend for SharedFakeWatchBackend {
+        fn watch(&mut self, path: &Path, _mode: notify::RecursiveMode) -> notify::Result<()> {
+            let path = path.to_path_buf();
+            let mut backend = self.0.lock();
+            backend.watch_calls.push(path.clone());
+            backend.watched_paths.insert(path);
+            Ok(())
+        }
+
+        fn unwatch(&mut self, path: &Path) -> notify::Result<()> {
+            let path = path.to_path_buf();
+            let mut backend = self.0.lock();
+            backend.unwatch_calls.push(path.clone());
+            if backend.watched_paths.remove(&path) {
+                Ok(())
+            } else {
+                Err(notify::Error::generic("path was not watched"))
+            }
+        }
+    }
+
+    fn test_watcher(poll_watcher: Arc<Mutex<FakeWatchBackend>>) -> GlobalWatcher {
+        GlobalWatcher {
+            state: Mutex::new(WatcherState {
+                watchers: Default::default(),
+                native_path_registrations: Default::default(),
+                poll_path_registrations: Default::default(),
+                last_registration: Default::default(),
+            }),
+            native_watcher: Mutex::new(None),
+            poll_watcher: Mutex::new(Some(Box::new(SharedFakeWatchBackend(poll_watcher)))),
+        }
+    }
+
     struct TestCase {
         name: &'static str,
         pending_paths: Vec<PathEvent>,
@@ -494,6 +563,28 @@ mod tests {
         expected_path_events: Vec<PathEvent>,
     }
 
+    #[test]
+    fn covered_child_registration_is_not_unwatched_after_parent_is_removed() {
+        let backend = Arc::new(Mutex::new(FakeWatchBackend::default()));
+        let watcher = test_watcher(backend.clone());
+        let parent = Arc::<Path>::from(Path::new("/repo"));
+        let child = Arc::<Path>::from(Path::new("/repo/foo.csproj"));
+
+        let parent_registration = watcher
+            .add(parent.as_ref().into(), WatcherMode::Poll, |_| {})
+            .expect("add parent watch");
+        let child_registration = watcher
+            .add(child.as_ref().into(), WatcherMode::Poll, |_| {})
+            .expect("add covered child watch");
+
+        watcher.remove(parent_registration);
+        watcher.remove(child_registration);
+
+        let backend = backend.lock();
+        assert_eq!(backend.watch_calls, &[parent.to_path_buf()]);
+        assert_eq!(backend.unwatch_calls, &[parent.to_path_buf()]);
+    }
+
     #[test]
     fn test_coalesce_pending_rescans() {
         let test_cases = [