diff --git a/CHANGELOG.md b/CHANGELOG.md
index 3e7af68..096c565 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -1,5 +1,11 @@
 # What's New?
 
+## 2.1.6
+
+- [#79](https://github.com/denis-shienkov/vscode-qbs/issues/79)
+Fixed that, artifacts with a long paths are displayed as a view
+with the hierarchical subfolders in the project tree.
+
 ## 2.1.5
 
  - Added new **Qbs: Export Build Profiles** command to
diff --git a/src/projectexplorer/qbsbasenode.ts b/src/projectexplorer/qbsbasenode.ts
index 40289a9..06a4925 100644
--- a/src/projectexplorer/qbsbasenode.ts
+++ b/src/projectexplorer/qbsbasenode.ts
@@ -13,6 +13,7 @@ export enum QbsBaseNodeContext {
     RootProject = 'root-project-node',
     SourceArtifact = 'source-artifact-node',
     SubProject = 'sub-project-node',
+    Folder = 'folder-node',
 }
 
 export enum QbsBaseNodeTheme {
diff --git a/src/projectexplorer/qbsfolderdata.ts b/src/projectexplorer/qbsfolderdata.ts
new file mode 100644
index 0000000..c253de9
--- /dev/null
+++ b/src/projectexplorer/qbsfolderdata.ts
@@ -0,0 +1,43 @@
+import * as path from 'path';
+
+import { isChildOf } from '../qbsutils';
+
+import { QbsProtocolSourceArtifactData } from '../protocol/qbsprotocolsourceartifactdata';
+
+export class QbsFolderData {
+    private readonly folders: QbsFolderData[]
+    private readonly sources: QbsProtocolSourceArtifactData[]
+
+    public constructor(
+        allSources: QbsProtocolSourceArtifactData[],
+        private readonly fsPath: string) {
+
+        this.folders = allSources
+            .map(artifactData => {
+                return path.dirname(artifactData.getFilePath() || "");
+            })
+            .filter(fsPath => {
+                if (fsPath && (fsPath.length > 0))
+                    return isChildOf(fsPath, this.fsPath);
+            })
+            .map(fsPath => {
+                const parts = path.relative(this.fsPath, fsPath).split(path.sep);
+                return (parts.length > 0) ? path.join(this.fsPath, parts[0]) : "";
+            }).filter((fsPath, index, self) => {
+                return (fsPath && (index === self.indexOf(fsPath)));
+            }).map(fsPath => {
+                return new QbsFolderData(allSources, fsPath);
+            });
+
+        this.sources = allSources.filter(artifactData => {
+            const fsPath = artifactData.getFilePath();
+            if (fsPath)
+                return (path.normalize(path.dirname(fsPath)) === path.normalize(this.fsPath));
+        });
+    }
+
+    public getFolders(): QbsFolderData[] { return this.folders; }
+    public getSources(): QbsProtocolSourceArtifactData[] { return this.sources; }
+    public getPath(): string { return this.fsPath; }
+    public getName(): string { return path.basename(this.fsPath); }
+}
diff --git a/src/projectexplorer/qbsfoldernode.ts b/src/projectexplorer/qbsfoldernode.ts
new file mode 100644
index 0000000..6e4d39b
--- /dev/null
+++ b/src/projectexplorer/qbsfoldernode.ts
@@ -0,0 +1,51 @@
+import * as vscode from 'vscode';
+
+import { QbsBaseNode } from './qbsbasenode';
+import { QbsFolderData } from './qbsfolderdata';
+import { QbsProtocolSourceArtifactData } from '../protocol/qbsprotocolsourceartifactdata';
+import { QbsSourceArtifactNode } from './qbssourceartifactnode';
+
+enum QbsFolderNodeIcon {
+    Folder = 'folder',
+}
+
+/** The data type encapsulates the Qbs files folder object to display in the project tree. */
+export class QbsFolderNode extends QbsBaseNode {
+    private readonly name: string
+    private readonly folders: QbsFolderData[]
+    private readonly sources: QbsProtocolSourceArtifactData[]
+
+    public constructor(
+        resourcesPath: string,
+        showDisabledNodes: boolean,
+        folderData: QbsFolderData,
+        private readonly isEnabled: boolean) {
+        super(resourcesPath, showDisabledNodes);
+
+        const name = folderData.getName();
+        if (!name)
+            throw new Error('Unable to create folder node because the name is undefined');
+        this.name = name;
+
+        this.folders = folderData.getFolders();
+        this.sources = folderData.getSources();
+    }
+
+    public getTreeItem(): vscode.TreeItem {
+        const item = new vscode.TreeItem(this.getLabel(), vscode.TreeItemCollapsibleState.Collapsed);
+        item.id = this.uuid;
+        item.iconPath = new vscode.ThemeIcon(QbsFolderNodeIcon.Folder);
+        return item;
+    }
+
+    public getChildren(): QbsBaseNode[] {
+        return [
+            ...this.folders.map(folderData => new QbsFolderNode(
+                this.resourcesPath, this.showDisabledNodes, folderData, this.isEnabled)),
+            ...this.sources.map(artifactData => new QbsSourceArtifactNode(
+                this.resourcesPath, this.showDisabledNodes, artifactData, this.isEnabled))
+        ];
+    }
+
+    private getLabel(): string { return QbsBaseNode.createLabel(this.name, this.isEnabled); }
+}
diff --git a/src/projectexplorer/qbsgroupnode.ts b/src/projectexplorer/qbsgroupnode.ts
index 6e9b396..9ec100b 100644
--- a/src/projectexplorer/qbsgroupnode.ts
+++ b/src/projectexplorer/qbsgroupnode.ts
@@ -1,13 +1,15 @@
+import * as path from 'path';
 import * as vscode from 'vscode';
 
 import { QbsBaseNode } from './qbsbasenode';
+import { QbsFolderData } from './qbsfolderdata';
+import { QbsFolderNode } from './qbsfoldernode';
 import { QbsLocationNode } from './qbslocationnode';
 import { QbsProtocolGroupData } from '../protocol/qbsprotocolgroupdata';
-import { QbsProtocolSourceArtifactData } from '../protocol/qbsprotocolsourceartifactdata';
-import { QbsSourceArtifactNode } from './qbssourceartifactnode';
 import { QbsProtocolLocationData } from '../protocol/qbsprotocollocationdata';
+import { QbsSourceArtifactNode } from './qbssourceartifactnode';
 
-enum QbsPGroupNodeIcon {
+enum QbsGroupNodeIcon {
     Group = 'files',
 }
 
@@ -15,9 +17,7 @@ enum QbsPGroupNodeIcon {
 export class QbsGroupNode extends QbsBaseNode {
     private readonly name: string
     private readonly location: QbsProtocolLocationData
-    private readonly fsPath: string
-    private readonly sources: QbsProtocolSourceArtifactData[];
-    private readonly wildcards: QbsProtocolSourceArtifactData[];
+    private readonly folder: QbsFolderData
     private readonly isEnabled: boolean
 
     public constructor(
@@ -39,17 +39,17 @@ export class QbsGroupNode extends QbsBaseNode {
         const fsPath = location.getFilePath();
         if (!fsPath)
             throw new Error('Unable to create group node because the file path is undefined');
-        this.fsPath = fsPath;
+        const fsParent = path.dirname(fsPath);
 
-        this.sources = groupData.getSourceArtifacts();
-        this.wildcards = groupData.getSourceWildcardArtifacts();
+        const allSources = [...groupData.getSourceArtifacts(), ...groupData.getSourceWildcardArtifacts()];
+        this.folder = new QbsFolderData(allSources, fsParent);
         this.isEnabled = groupData.getIsEnabled() || false;
     }
 
     public getTreeItem(): vscode.TreeItem {
         const item = new vscode.TreeItem(this.getLabel(), vscode.TreeItemCollapsibleState.Collapsed);
         item.id = this.uuid;
-        item.iconPath = new vscode.ThemeIcon(QbsPGroupNodeIcon.Group);
+        item.iconPath = new vscode.ThemeIcon(QbsGroupNodeIcon.Group);
         return item;
     }
 
@@ -57,9 +57,9 @@ export class QbsGroupNode extends QbsBaseNode {
         return [
             ...[new QbsLocationNode(
                 this.resourcesPath, this.showDisabledNodes, this.location, this.isEnabled, true)],
-            ...this.sources.map(artifactData => new QbsSourceArtifactNode(
-                this.resourcesPath, this.showDisabledNodes, artifactData, this.isEnabled)),
-            ...this.wildcards.map(artifactData => new QbsSourceArtifactNode(
+            ...this.folder.getFolders().map(folderData => new QbsFolderNode(
+                this.resourcesPath, this.showDisabledNodes, folderData, this.isEnabled)),
+            ...this.folder.getSources().map(artifactData => new QbsSourceArtifactNode(
                 this.resourcesPath, this.showDisabledNodes, artifactData, this.isEnabled))
         ];
     }