diff --git a/packages/app/src/components/dialog-select-directory.tsx b/packages/app/src/components/dialog-select-directory.tsx
index bf4a1f9edd4..85196f90a80 100644
--- a/packages/app/src/components/dialog-select-directory.tsx
+++ b/packages/app/src/components/dialog-select-directory.tsx
@@ -30,8 +30,18 @@ export function DialogSelectDirectory(props: DialogSelectDirectoryProps) {
   }
 
   function display(rel: string) {
-    const full = join(root(), rel)
+    // If already in display format (~/...), return as-is
+    if (rel.startsWith("~/")) return rel
+    // If absolute path, convert to ~/ format if under home
     const h = home()
+    if (rel.startsWith("/")) {
+      if (h && (rel === h || rel.startsWith(h + "/") || rel.startsWith(h + "\\"))) {
+        return "~" + rel.slice(h.length)
+      }
+      return rel
+    }
+    // Relative path - convert to display format
+    const full = join(root(), rel)
     if (!h) return full
     if (full === h) return "~"
     if (full.startsWith(h + "/") || full.startsWith(h + "\\")) {
@@ -70,12 +80,34 @@ export function DialogSelectDirectory(props: DialogSelectDirectoryProps) {
   }
 
   const directories = async (filter: string) => {
-    const query = normalizeQuery(filter.trim())
-    return fetchDirs(query)
+    const trimmed = filter.trim()
+    const query = normalizeQuery(trimmed)
+    const results = await fetchDirs(query)
+
+    // Transform results to match user's input format
+    const h = home()
+    if (trimmed.startsWith("~/")) {
+      // User typed ~/... so prefix results with ~/
+      return results.map((r) => "~/" + r)
+    }
+    if (h && trimmed.toLowerCase().startsWith(h.toLowerCase())) {
+      // User typed absolute path like /Users/huy/... so prefix with home
+      return results.map((r) => h + "/" + r)
+    }
+    return results
   }
 
   function resolve(rel: string) {
-    const absolute = join(root(), rel)
+    // Handle paths that are already absolute or start with ~/
+    const h = home()
+    let absolute: string
+    if (rel.startsWith("~/") && h) {
+      absolute = h + rel.slice(1) // Replace ~ with home path
+    } else if (rel.startsWith("/")) {
+      absolute = rel // Already absolute
+    } else {
+      absolute = join(root(), rel)
+    }
     props.onSelect(props.multiple ? [absolute] : absolute)
     dialog.close()
   }
@@ -87,6 +119,7 @@ export function DialogSelectDirectory(props: DialogSelectDirectoryProps) {
         emptyMessage="No folders found"
         items={directories}
         key={(x) => x}
+        skipClientFilter
         onSelect={(path) => {
           if (!path) return
           resolve(path)
diff --git a/packages/opencode/src/file/index.ts b/packages/opencode/src/file/index.ts
index d2ff1d0b14c..a0198ac5128 100644
--- a/packages/opencode/src/file/index.ts
+++ b/packages/opencode/src/file/index.ts
@@ -369,11 +369,18 @@ export namespace File {
     })
   }
 
-  export async function search(input: { query: string; limit?: number; dirs?: boolean; type?: "file" | "directory" }) {
+  export async function search(input: {
+    directory?: string
+    query: string
+    limit?: number
+    dirs?: boolean
+    type?: "file" | "directory"
+  }) {
+    const directory = input.directory ?? Instance.directory
     const query = input.query.trim()
     const limit = input.limit ?? 100
     const kind = input.type ?? (input.dirs === false ? "file" : "all")
-    log.info("search", { query, kind })
+    log.info("search", { directory, query, kind })
 
     const result = await state().then((x) => x.files())
 
@@ -405,6 +412,34 @@ export namespace File {
     const sorted = fuzzysort.go(query, items, { limit: searchLimit }).map((r) => r.target)
     const output = kind === "directory" ? sortHiddenLast(sorted).slice(0, limit) : sorted
 
+    // If searching for directories and query looks like a path,
+    // check if it actually exists on disk and list its subdirectories
+    if (kind === "directory" && query.includes("/")) {
+      const normalizedQuery = query.replace(/\/+$/, "")
+      const fullPath = path.join(directory, normalizedQuery)
+      try {
+        const stat = await fs.promises.stat(fullPath)
+        if (stat.isDirectory()) {
+          // Add the directory itself if not already in results
+          if (!output.includes(normalizedQuery + "/")) {
+            output.unshift(normalizedQuery + "/")
+          }
+          // Also list immediate subdirectories
+          const children = await fs.promises.readdir(fullPath, { withFileTypes: true }).catch(() => [])
+          for (const child of children) {
+            if (!child.isDirectory()) continue
+            if (child.name.startsWith(".")) continue // Skip hidden dirs
+            const childPath = normalizedQuery + "/" + child.name + "/"
+            if (!output.includes(childPath)) {
+              output.push(childPath)
+            }
+          }
+        }
+      } catch {
+        // Path doesn't exist, ignore
+      }
+    }
+
     log.info("search", { query, kind, results: output.length })
     return output
   }
diff --git a/packages/opencode/src/server/server.ts b/packages/opencode/src/server/server.ts
index 04ec4673ec4..a3ccb170585 100644
--- a/packages/opencode/src/server/server.ts
+++ b/packages/opencode/src/server/server.ts
@@ -1936,6 +1936,7 @@ export namespace Server {
         validator(
           "query",
           z.object({
+            directory: z.string().optional(),
             query: z.string(),
             dirs: z.enum(["true", "false"]).optional(),
             type: z.enum(["file", "directory"]).optional(),
@@ -1943,11 +1944,13 @@ export namespace Server {
           }),
         ),
         async (c) => {
+          const directory = c.req.valid("query").directory
           const query = c.req.valid("query").query
           const dirs = c.req.valid("query").dirs
           const type = c.req.valid("query").type
           const limit = c.req.valid("query").limit
           const results = await File.search({
+            directory,
             query,
             limit: limit ?? 10,
             dirs: dirs !== "false",
diff --git a/packages/ui/src/hooks/use-filtered-list.tsx b/packages/ui/src/hooks/use-filtered-list.tsx
index 416f030ef49..52660ccd7b6 100644
--- a/packages/ui/src/hooks/use-filtered-list.tsx
+++ b/packages/ui/src/hooks/use-filtered-list.tsx
@@ -13,6 +13,7 @@ export interface FilteredListProps<T> {
   sortBy?: (a: T, b: T) => number
   sortGroupsBy?: (a: { category: string; items: T[] }, b: { category: string; items: T[] }) => number
   onSelect?: (value: T | undefined, index: number) => void
+  skipClientFilter?: boolean
 }
 
 export function useFilteredList<T>(props: FilteredListProps<T>) {
@@ -25,11 +26,14 @@ export function useFilteredList<T>(props: FilteredListProps<T>) {
     }),
     async ({ filter, items }) => {
       const needle = filter?.toLowerCase()
+      const isAsync = typeof props.items === "function"
       const all = (items ?? (await (props.items as (filter: string) => T[] | Promise<T[]>)(needle))) || []
       const result = pipe(
         all,
         (x) => {
-          if (!needle) return x
+          // Skip client-side filtering for async items when skipClientFilter is true
+          // (server already filtered the results)
+          if (!needle || (isAsync && props.skipClientFilter)) return x
           if (!props.filterKeys && Array.isArray(x) && x.every((e) => typeof e === "string")) {
             return fuzzysort.go(needle, x).map((x) => x.target) as T[]
           }