diff --git a/apps/web/src/hooks/useFolderNavigation.ts b/apps/web/src/hooks/useFolderNavigation.ts
index 36b8f26a67..a5c10eea52 100644
--- a/apps/web/src/hooks/useFolderNavigation.ts
+++ b/apps/web/src/hooks/useFolderNavigation.ts
@@ -267,8 +267,17 @@ export function useFolderNavigation(): UseFolderNavigationReturn {
         console.error('Failed to load subfolder:', err);
         // Only clean up if this is still the latest navigation
         if (latestNavTarget.current !== targetFolderId) return;
-        // Remove the loading placeholder so the user can retry
+        // Remove the loading placeholder and navigate back to parent.
+        // Without this navigation, the URL stays at /files/<uuid> with no
+        // folder in the store, rendering a broken empty ~/root fallback.
         useFolderStore.getState().removeFolder(targetFolderId);
+        setIsLoading(false);
+        latestNavTarget.current = parentId ?? 'root';
+        if (parentId) {
+          navigate(`/files/${parentId}`);
+        } else {
+          navigate('/files');
+        }
       } finally {
         // Only clear loading if this is still the latest navigation
         if (latestNavTarget.current === targetFolderId) {
diff --git a/tests/e2e/tests/full-workflow.spec.ts b/tests/e2e/tests/full-workflow.spec.ts
index 3fa94fe2d3..e3cb8cea3d 100644
--- a/tests/e2e/tests/full-workflow.spec.ts
+++ b/tests/e2e/tests/full-workflow.spec.ts
@@ -174,11 +174,23 @@ test.describe.serial('Full Workflow', () => {
    * Phase 6.3: Uses breadcrumb path to verify navigation (~/root/foldername format).
    */
   async function navigateIntoFolder(name: string): Promise<void> {
-    await fileList.doubleClickFolder(name);
-    // Wait for breadcrumb path to include the folder name.
-    // Post-reload navigation requires cold IPNS resolve which can be slow in CI.
-    await breadcrumbs.waitForPathToContain(name, { timeout: 30000 });
-    navigationStack.push(name);
+    // Retry once if navigation fails (transient IPNS resolution failures in CI
+    // cause the app to navigate back to parent; the folder row reappears and
+    // a second attempt usually succeeds).
+    for (let attempt = 0; attempt < 2; attempt++) {
+      await fileList.doubleClickFolder(name);
+      try {
+        await breadcrumbs.waitForPathToContain(name, { timeout: 30000 });
+        navigationStack.push(name);
+        return;
+      } catch {
+        if (attempt === 1) throw new Error(`navigateIntoFolder("${name}") failed after 2 attempts`);
+        // Wait for the app to settle after a failed navigation (it navigates back to parent)
+        await page.waitForTimeout(2000);
+        // Verify the folder row is still visible before retrying
+        await fileList.waitForItemToAppear(name, { timeout: 10000 });
+      }
+    }
   }
 
   /**