diff --git a/crates/project_panel/src/project_panel.rs b/crates/project_panel/src/project_panel.rs
index 4d38eb2810..acf7c7973c 100644
--- a/crates/project_panel/src/project_panel.rs
+++ b/crates/project_panel/src/project_panel.rs
@@ -1389,63 +1389,81 @@ impl ProjectPanel {
     }
 
     fn add_entry(&mut self, is_dir: bool, window: &mut Window, cx: &mut Context<Self>) {
-        if let Some(SelectedEntry {
-            worktree_id,
-            entry_id,
-        }) = self.selection
+        let Some((worktree_id, entry_id)) = self
+            .selection
+            .map(|entry| (entry.worktree_id, entry.entry_id))
+            .or_else(|| {
+                let entry_id = self.last_worktree_root_id?;
+                let worktree_id = self
+                    .project
+                    .read(cx)
+                    .worktree_for_entry(entry_id, cx)?
+                    .read(cx)
+                    .id();
+
+                self.selection = Some(SelectedEntry {
+                    worktree_id,
+                    entry_id,
+                });
+
+                Some((worktree_id, entry_id))
+            })
+        else {
+            return;
+        };
+
+        let directory_id;
+        let new_entry_id = self.resolve_entry(entry_id);
+        if let Some((worktree, expanded_dir_ids)) = self
+            .project
+            .read(cx)
+            .worktree_for_id(worktree_id, cx)
+            .zip(self.expanded_dir_ids.get_mut(&worktree_id))
         {
-            let directory_id;
-            let new_entry_id = self.resolve_entry(entry_id);
-            if let Some((worktree, expanded_dir_ids)) = self
-                .project
-                .read(cx)
-                .worktree_for_id(worktree_id, cx)
-                .zip(self.expanded_dir_ids.get_mut(&worktree_id))
-            {
-                let worktree = worktree.read(cx);
-                if let Some(mut entry) = worktree.entry_for_id(new_entry_id) {
-                    loop {
-                        if entry.is_dir() {
-                            if let Err(ix) = expanded_dir_ids.binary_search(&entry.id) {
-                                expanded_dir_ids.insert(ix, entry.id);
-                            }
-                            directory_id = entry.id;
-                            break;
-                        } else {
-                            if let Some(parent_path) = entry.path.parent() {
-                                if let Some(parent_entry) = worktree.entry_for_path(parent_path) {
-                                    entry = parent_entry;
-                                    continue;
-                                }
-                            }
-                            return;
+            let worktree = worktree.read(cx);
+            if let Some(mut entry) = worktree.entry_for_id(new_entry_id) {
+                loop {
+                    if entry.is_dir() {
+                        if let Err(ix) = expanded_dir_ids.binary_search(&entry.id) {
+                            expanded_dir_ids.insert(ix, entry.id);
                         }
+                        directory_id = entry.id;
+                        break;
+                    } else {
+                        if let Some(parent_path) = entry.path.parent() {
+                            if let Some(parent_entry) = worktree.entry_for_path(parent_path) {
+                                entry = parent_entry;
+                                continue;
+                            }
+                        }
+                        return;
                     }
-                } else {
-                    return;
-                };
+                }
             } else {
                 return;
             };
-            self.marked_entries.clear();
-            self.edit_state = Some(EditState {
-                worktree_id,
-                entry_id: directory_id,
-                leaf_entry_id: None,
-                is_dir,
-                processing_filename: None,
-                previously_focused: self.selection,
-                depth: 0,
-                validation_state: ValidationState::None,
-            });
-            self.filename_editor.update(cx, |editor, cx| {
-                editor.clear(window, cx);
-                window.focus(&editor.focus_handle(cx));
-            });
-            self.update_visible_entries(Some((worktree_id, NEW_ENTRY_ID)), cx);
-            self.autoscroll(cx);
-            cx.notify();
-        }
+        } else {
+            return;
+        };
+
+        self.marked_entries.clear();
+        self.edit_state = Some(EditState {
+            worktree_id,
+            entry_id: directory_id,
+            leaf_entry_id: None,
+            is_dir,
+            processing_filename: None,
+            previously_focused: self.selection,
+            depth: 0,
+            validation_state: ValidationState::None,
+        });
+        self.filename_editor.update(cx, |editor, cx| {
+            editor.clear(window, cx);
+            window.focus(&editor.focus_handle(cx));
+        });
+        self.update_visible_entries(Some((worktree_id, NEW_ENTRY_ID)), cx);
+        self.autoscroll(cx);
+        cx.notify();
     }
 
     fn unflatten_entry_id(&self, leaf_entry_id: ProjectEntryId) -> ProjectEntryId {
diff --git a/crates/project_panel/src/project_panel_tests.rs b/crates/project_panel/src/project_panel_tests.rs
index 990b446dcb..65eeae795e 100644
--- a/crates/project_panel/src/project_panel_tests.rs
+++ b/crates/project_panel/src/project_panel_tests.rs
@@ -4948,6 +4948,71 @@ async fn test_collapse_all_for_entry(cx: &mut gpui::TestAppContext) {
     }
 }
 
+#[gpui::test]
+async fn test_create_entries_without_selection(cx: &mut gpui::TestAppContext) {
+    init_test(cx);
+
+    let fs = FakeFs::new(cx.executor().clone());
+    fs.insert_tree(
+        path!("/root"),
+        json!({
+            "dir1": {
+                "file1.txt": "",
+            },
+        }),
+    )
+    .await;
+
+    let project = Project::test(fs.clone(), [path!("/root").as_ref()], cx).await;
+    let workspace = cx.add_window(|window, cx| Workspace::test_new(project.clone(), window, cx));
+    let cx = &mut VisualTestContext::from_window(*workspace, cx);
+
+    let panel = workspace
+        .update(cx, |workspace, window, cx| {
+            let panel = ProjectPanel::new(workspace, window, cx);
+            workspace.add_panel(panel.clone(), window, cx);
+            panel
+        })
+        .unwrap();
+
+    #[rustfmt::skip]
+    assert_eq!(
+        visible_entries_as_strings(&panel, 0..20, cx),
+        &[
+            separator!("v root"),
+            separator!("    > dir1"),
+        ],
+        "Initial state with nothing selected"
+    );
+
+    panel.update_in(cx, |panel, window, cx| {
+        panel.new_file(&NewFile, window, cx);
+    });
+    panel.update_in(cx, |panel, window, cx| {
+        assert!(panel.filename_editor.read(cx).is_focused(window));
+    });
+    panel
+        .update_in(cx, |panel, window, cx| {
+            panel.filename_editor.update(cx, |editor, cx| {
+                editor.set_text("hello_from_no_selections", window, cx)
+            });
+            panel.confirm_edit(window, cx).unwrap()
+        })
+        .await
+        .unwrap();
+
+    #[rustfmt::skip]
+    assert_eq!(
+        visible_entries_as_strings(&panel, 0..20, cx),
+        &[
+            separator!("v root"),
+            separator!("    > dir1"),
+            separator!("      hello_from_no_selections  <== selected  <== marked"),
+        ],
+        "A new file is created under the root directory"
+    );
+}
+
 fn select_path(panel: &Entity<ProjectPanel>, path: impl AsRef<Path>, cx: &mut VisualTestContext) {
     let path = path.as_ref();
     panel.update(cx, |panel, cx| {