diff --git a/frontend/playwright/ui/specs/tokens/sets.spec.js b/frontend/playwright/ui/specs/tokens/sets.spec.js
index 9f1f3ed3f4..7aba083163 100644
--- a/frontend/playwright/ui/specs/tokens/sets.spec.js
+++ b/frontend/playwright/ui/specs/tokens/sets.spec.js
@@ -186,6 +186,61 @@ test.describe("Tokens: Sets Tab", () => {
     await expect(darkSet).toHaveCount(0);
   });
 
+  test("Folding a group after reordering collapses only that group", async ({
+    page,
+  }) => {
+    const { tokenThemesSetsSidebar, tokenSetGroupItems } =
+      await setupTokensFileRender(page);
+
+    // The reorder swaps two groups, so every tree index changes while the DOM
+    // nodes keep their positions.
+    await createSet(tokenThemesSetsSidebar, "Colors/primary");
+
+    const lightDarkGroup = tokenSetGroupItems.filter({ hasText: "LightDark" });
+    const colorsGroup = tokenSetGroupItems.filter({ hasText: "Colors" });
+
+    await expect(tokenSetGroupItems).toHaveCount(2);
+    await expect(tokenSetGroupItems.first()).toContainText("LightDark");
+
+    // Drag the Colors group above the LightDark group. The sets list is a small
+    // scroll container, so both groups cannot be under the pointer at once and
+    // the HTML5 drag events are dispatched directly.
+    const target = await lightDarkGroup.boundingBox();
+    const dataTransfer = await page.evaluateHandle(() => new DataTransfer());
+
+    await colorsGroup.dispatchEvent("dragstart", { dataTransfer });
+    await lightDarkGroup.dispatchEvent("dragenter", { dataTransfer });
+    await lightDarkGroup.dispatchEvent("dragover", {
+      dataTransfer,
+      clientX: target.x + 100,
+      clientY: target.y + 2,
+    });
+    await lightDarkGroup.dispatchEvent("drop", {
+      dataTransfer,
+      clientX: target.x + 100,
+      clientY: target.y + 2,
+    });
+    await colorsGroup.dispatchEvent("dragend", { dataTransfer });
+
+    await expect(tokenSetGroupItems.first()).toContainText("Colors");
+
+    // Folding the first group hides only its own children.
+    await tokenSetGroupItems
+      .first()
+      .getByTestId("tokens-set-group-collapse")
+      .click();
+
+    await expect(
+      tokenThemesSetsSidebar.getByRole("button", {
+        name: "primary",
+        exact: true,
+      }),
+    ).toHaveCount(0);
+    await expect(
+      tokenThemesSetsSidebar.getByRole("button", { name: "dark", exact: true }),
+    ).toBeVisible();
+  });
+
   test("Change current theme", async ({ page }) => {
     const { tokenThemesSetsSidebar, tokenSetItems } =
       await setupTokensFileRender(page);
diff --git a/frontend/src/app/main/ui/workspace/tokens/sets/lists.cljs b/frontend/src/app/main/ui/workspace/tokens/sets/lists.cljs
index 358d611703..0ee9c45400 100644
--- a/frontend/src/app/main/ui/workspace/tokens/sets/lists.cljs
+++ b/frontend/src/app/main/ui/workspace/tokens/sets/lists.cljs
@@ -10,6 +10,7 @@
   (:require
    [app.common.data.macros :as dm]
    [app.common.types.tokens-lib :as ctob]
+   [app.common.uuid :as uuid]
    [app.main.data.workspace.tokens.library-edit :as dwtl]
    [app.main.store :as st]
    [app.main.ui.context :as ctx]
@@ -134,13 +135,16 @@
 
         on-collapse-click
         (mf/use-fn
+         (mf/deps path on-toggle-collapse)
          (fn [event]
            (dom/prevent-default event)
            (dom/stop-propagation event)
            (on-toggle-collapse path)))
 
         on-double-click
-        (mf/use-fn (mf/deps id) #(on-start-edition id))
+        (mf/use-fn
+         (mf/deps id on-start-edition)
+         #(on-start-edition id))
 
         on-checkbox-click
         (mf/use-fn
@@ -240,7 +244,7 @@
 
         on-double-click
         (mf/use-fn
-         (mf/deps id is-new)
+         (mf/deps id is-new on-start-edition)
          (fn []
            (when-not is-new
              (on-start-edition id))))
@@ -358,7 +362,13 @@
          (fn [path]
            (swap! collapsed-paths* #(if (contains? % path)
                                       (disj % path)
-                                      (conj % path)))))]
+                                      (conj % path)))))
+
+        ;; The set being created is not persisted yet, so its id is generated
+        ;; on every walk of the tree. Keep one for the lifetime of this
+        ;; creation so the node can be keyed by identity like the rest.
+        new-node-id
+        (mf/use-memo (mf/deps new-path) #(dm/str (uuid/next)))]
 
     (mf/with-effect []
       (let [sub (rx/subs! (fn [paths']
@@ -378,7 +388,7 @@
         (cond
           ^boolean is-group
           [:> sets-tree-set-group*
-           {:key index
+           {:key id
             :id id
             :label (peek path)
             :is-editing (= edition-id id)
@@ -400,7 +410,7 @@
 
           ^boolean is-new
           [:> sets-tree-set*
-           {:key index
+           {:key new-node-id
             :id id
             :set token-set
             :label ""
@@ -420,7 +430,7 @@
 
           :else
           [:> sets-tree-set*
-           {:key index
+           {:key id
             :id id
             :set token-set
             :label (peek path)