diff --git a/src/git.ts b/src/git.ts
index 0a735d1..5077205 100644
--- a/src/git.ts
+++ b/src/git.ts
@@ -143,13 +143,20 @@ export async function currentBranch(cwd: string): Promise<string> {
   return out.trim()
 }
 
-/** Working-tree status (untracked included). */
+/**
+ * Working-tree status (untracked included). `--untracked-files=all` lists
+ * the CONTENTS of new directories as individual entries (`?? newdir/a.ts`
+ * rather than a collapsed `?? newdir/`), so every row in the source-control
+ * panel is a real file whose diff tab can load. With `=normal`, git folds a
+ * new folder into one trailing-slash entry that has no diff output and
+ * cannot be read as a file.
+ */
 export async function status(cwd: string): Promise<GitStatusResult> {
   const repo = await isGitRepo(cwd)
   if (!repo) return { isRepo: false, entries: [] }
   const [branch, raw] = await Promise.all([
     currentBranch(cwd).catch(() => 'HEAD'),
-    runGit(cwd, ['status', '--porcelain=v1', '-z', '--untracked-files=normal']),
+    runGit(cwd, ['status', '--porcelain=v1', '-z', '--untracked-files=all']),
   ])
   return { isRepo: true, branch, entries: parsePorcelainZ(raw) }
 }
diff --git a/tests/git.spec.ts b/tests/git.spec.ts
index cee7996..ed14b5a 100644
--- a/tests/git.spec.ts
+++ b/tests/git.spec.ts
@@ -1,6 +1,10 @@
+import { execFileSync } from 'node:child_process'
+import { mkdirSync, mkdtempSync, rmSync, writeFileSync } from 'node:fs'
+import { tmpdir } from 'node:os'
+import { join } from 'node:path'
 import { describe, expect, it } from 'vitest'
 import { parseUnifiedDiff } from '../src/client/DiffView.tsx'
-import { parseLogLines, parsePorcelainZ } from '../src/git.ts'
+import { parseLogLines, parsePorcelainZ, status } from '../src/git.ts'
 
 describe('git parsing', () => {
   it('parses porcelain -z entries including renames', () => {
@@ -14,6 +18,36 @@ describe('git parsing', () => {
     ])
   })
 
+  it('keeps untracked files inside new directories as individual rows (status --untracked-files=all)', () => {
+    // status() runs with --untracked-files=all, so a new folder must surface
+    // as one entry PER FILE (?? newdir/a.ts), never a collapsed ?? newdir/
+    // row that has no diff and cannot be read (regression: new folders showed
+    // as a single folder row whose diff tab failed with "is a directory").
+    const output = ['?? newdir/a.ts', '?? newdir/sub/b.ts', ''].join('\0')
+    expect(parsePorcelainZ(output)).toEqual([
+      { path: 'newdir/a.ts', xy: '??' },
+      { path: 'newdir/sub/b.ts', xy: '??' },
+    ])
+  })
+
+  it('keeps untracked files inside new directories as individual rows (real git)', async () => {
+    const root = mkdtempSync(join(tmpdir(), 'dsh-git-status-'))
+    try {
+      execFileSync('git', ['init', '-q'], { cwd: root })
+      execFileSync('git', ['config', 'user.email', 't@t'], { cwd: root })
+      execFileSync('git', ['config', 'user.name', 't'], { cwd: root })
+      execFileSync('git', ['commit', '-q', '--allow-empty', '-m', 'init'], { cwd: root })
+      mkdirSync(join(root, 'newdir'))
+      writeFileSync(join(root, 'newdir', 'a.ts'), 'x')
+      const result = await status(root)
+      const paths = result.entries.map(entry => entry.path)
+      expect(paths).toContain('newdir/a.ts')
+      expect(paths.some(path => path.endsWith('/'))).toBe(false)
+    } finally {
+      rmSync(root, { recursive: true, force: true })
+    }
+  })
+
   it('parses log rows with unit separators (full hash + refs)', () => {
     const rows = parseLogLines(
       'abc1234\x1fFirst subject\x1fAlice\x1f2024-01-01 10:00:00 +0800\x1fabc1234def5678abc1234def5678abc1234def5678\x1fHEAD -> main, origin/main\n'