diff --git a/cli/src/main/java/net/neoforged/jst/cli/intellij/ClasspathSetup.java b/cli/src/main/java/net/neoforged/jst/cli/intellij/ClasspathSetup.java
index ad19d4c..662e03f 100644
--- a/cli/src/main/java/net/neoforged/jst/cli/intellij/ClasspathSetup.java
+++ b/cli/src/main/java/net/neoforged/jst/cli/intellij/ClasspathSetup.java
@@ -104,7 +104,8 @@ public static void addLibrary(Logger logger, Path libraryPath, IntelliJEnvironme
         if (!Files.exists(libraryPath)) {
             throw new UncheckedIOException(new NoSuchFileException(libraryPath.toString()));
         }
-        ijEnv.addJarToClassPath(libraryPath);
+        if (Files.isDirectory(libraryPath)) ijEnv.addFolderToClasspath(libraryPath);
+        else ijEnv.addJarToClassPath(libraryPath);
         logger.debug("Added %s", libraryPath);
     }
 }
diff --git a/tests/data/accesstransformer/folder_classpath_entry/accesstransformer.cfg b/tests/data/accesstransformer/folder_classpath_entry/accesstransformer.cfg
new file mode 100644
index 0000000..14e8cc6
--- /dev/null
+++ b/tests/data/accesstransformer/folder_classpath_entry/accesstransformer.cfg
@@ -0,0 +1 @@
+public C1 get()La/b/c/Reference;
diff --git a/tests/data/accesstransformer/folder_classpath_entry/deps/a/b/c/Reference.java b/tests/data/accesstransformer/folder_classpath_entry/deps/a/b/c/Reference.java
new file mode 100644
index 0000000..3de7dfc
--- /dev/null
+++ b/tests/data/accesstransformer/folder_classpath_entry/deps/a/b/c/Reference.java
@@ -0,0 +1,5 @@
+package a.b.c;
+
+public record Reference(int a) {
+
+}
\ No newline at end of file
diff --git a/tests/data/accesstransformer/folder_classpath_entry/expected/C1.java b/tests/data/accesstransformer/folder_classpath_entry/expected/C1.java
new file mode 100644
index 0000000..dd66ac2
--- /dev/null
+++ b/tests/data/accesstransformer/folder_classpath_entry/expected/C1.java
@@ -0,0 +1,7 @@
+import a.b.c.Reference;
+
+public class C1 {
+    public Reference get() {
+        return new Reference(1);
+    }
+}
\ No newline at end of file
diff --git a/tests/data/accesstransformer/folder_classpath_entry/source/C1.java b/tests/data/accesstransformer/folder_classpath_entry/source/C1.java
new file mode 100644
index 0000000..3fe93a3
--- /dev/null
+++ b/tests/data/accesstransformer/folder_classpath_entry/source/C1.java
@@ -0,0 +1,7 @@
+import a.b.c.Reference;
+
+public class C1 {
+    private Reference get() {
+        return new Reference(1);
+    }
+}
\ No newline at end of file
diff --git a/tests/src/test/java/net/neoforged/jst/tests/EmbeddedTest.java b/tests/src/test/java/net/neoforged/jst/tests/EmbeddedTest.java
index bc8e05f..f0d5cd8 100644
--- a/tests/src/test/java/net/neoforged/jst/tests/EmbeddedTest.java
+++ b/tests/src/test/java/net/neoforged/jst/tests/EmbeddedTest.java
@@ -302,6 +302,11 @@ void testMethodsInheritance() throws Exception {
         void testHiddenPrefixes() throws Exception {
             runATTest("hidden_prefix", "--hidden-prefix=other");
         }
+
+        @Test
+        void testFolderClasspathEntries() throws Exception {
+            runATTest("folder_classpath_entry", "--classpath=" + testDataRoot.resolve("accesstransformer/folder_classpath_entry/deps"));
+        }
     }
 
     @Nested