diff --git a/crates/memofs/src/lib.rs b/crates/memofs/src/lib.rs
index bb6ae5a1..e9ce26c4 100644
--- a/crates/memofs/src/lib.rs
+++ b/crates/memofs/src/lib.rs
@@ -584,9 +584,10 @@ impl VfsLock<'_> {
 
 #[cfg(test)]
 mod test {
-    use crate::{InMemoryFs, StdBackend, Vfs, VfsSnapshot};
+    use crate::{InMemoryFs, StdBackend, Vfs, VfsEvent, VfsSnapshot};
     use std::io;
-    use std::path::PathBuf;
+    use std::path::{Path, PathBuf};
+    use std::time::{Duration, Instant};
 
     /// https://github.com/rojo-rbx/rojo/issues/899
     #[test]
@@ -687,6 +688,73 @@ mod test {
         );
     }
 
+    fn saw_event_for(vfs: &Vfs, path: &Path, timeout: Duration) -> bool {
+        let receiver = vfs.event_receiver();
+        let deadline = Instant::now() + timeout;
+        loop {
+            match receiver.recv_deadline(deadline) {
+                Ok(VfsEvent::Create(event_path) | VfsEvent::Write(event_path))
+                    if event_path == path =>
+                {
+                    return true
+                }
+                Ok(_) => continue,
+                Err(_) => return false,
+            }
+        }
+    }
+
+    /// Package managers replace a package by moving its directory aside and
+    /// creating a new one at the same path. The move reaches the change
+    /// processor as a `Remove` for that path, which it commits after the new
+    /// directory already exists and is being watched. Only notify's inotify
+    /// backend splits a recursive watch into per-directory entries shared by
+    /// every root, so this fails before the fix on Linux alone.
+    fn assert_watches_directory_recreated_at_removed_path(watch_package_first: bool) {
+        let dir = tempfile::tempdir().unwrap();
+        let root = dunce::canonicalize(dir.path()).unwrap();
+        let package = root.join("package");
+        fs_err::create_dir_all(package.join("src")).unwrap();
+
+        let vfs = Vfs::new(StdBackend::new().unwrap());
+        if watch_package_first {
+            vfs.read_dir(&package).unwrap();
+        }
+        vfs.read_dir(&root).unwrap();
+
+        fs_err::rename(&package, root.join(".package-old")).unwrap();
+        fs_err::create_dir_all(package.join("src")).unwrap();
+        // Files written before the watcher reaches a new directory raise no
+        // events, so rewrite a probe until one arrives.
+        let probe = package.join("src").join("probe.luau");
+        let watched = (0..50).any(|_| {
+            fs_err::write(&probe, "return {}").unwrap();
+            saw_event_for(&vfs, &probe, Duration::from_millis(100))
+        });
+        assert!(watched, "the recreated directory was never watched");
+
+        vfs.commit_event(&VfsEvent::Remove(package.clone()))
+            .unwrap();
+
+        let module = package.join("src").join("module.luau");
+        fs_err::write(&module, "return {}").unwrap();
+        assert!(
+            saw_event_for(&vfs, &module, Duration::from_secs(5)),
+            "no event for {} after the removal of its old directory was committed",
+            module.display()
+        );
+    }
+
+    #[test]
+    fn std_backend_watches_directory_recreated_at_removed_path() {
+        assert_watches_directory_recreated_at_removed_path(false);
+    }
+
+    #[test]
+    fn std_backend_watches_recreated_directory_watched_before_its_parent() {
+        assert_watches_directory_recreated_at_removed_path(true);
+    }
+
     #[test]
     fn canonicalize_std_backend_missing_errors() {
         let dir = tempfile::tempdir().unwrap();
diff --git a/rojo-test/serve-tests/recreated_directory/default.project.json b/rojo-test/serve-tests/recreated_directory/default.project.json
new file mode 100644
index 00000000..deaceca2
--- /dev/null
+++ b/rojo-test/serve-tests/recreated_directory/default.project.json
@@ -0,0 +1,12 @@
+{
+  "name": "recreated_directory",
+  "tree": {
+    "$className": "Folder",
+    "Loader": {
+      "$path": "deps/package"
+    },
+    "Packages": {
+      "$path": "deps"
+    }
+  }
+}
diff --git a/rojo-test/serve-tests/recreated_directory/deps/package/Old.luau b/rojo-test/serve-tests/recreated_directory/deps/package/Old.luau
new file mode 100644
index 00000000..bf545338
--- /dev/null
+++ b/rojo-test/serve-tests/recreated_directory/deps/package/Old.luau
@@ -0,0 +1 @@
+return "old"
diff --git a/tests/tests/serve.rs b/tests/tests/serve.rs
index 0d6f75cc..f8910766 100644
--- a/tests/tests/serve.rs
+++ b/tests/tests/serve.rs
@@ -1,13 +1,20 @@
-use std::fs;
+use std::{
+    collections::HashMap,
+    fs, thread,
+    time::{Duration, Instant},
+};
 
 use insta::{assert_snapshot, assert_yaml_snapshot, with_settings};
-use rbx_dom_weak::types::Ref;
+use rbx_dom_weak::{
+    types::{Ref, Variant},
+    ustr,
+};
 use reqwest::StatusCode;
 use tempfile::tempdir;
 
 use crate::rojo_test::{
     internable::InternAndRedact,
-    serve_util::{deserialize_msgpack, run_serve_test, serialize_to_xml_model},
+    serve_util::{deserialize_msgpack, run_serve_test, serialize_to_xml_model, TestServeSession},
 };
 
 use librojo::web_api::{SerializeResponse, SocketPacketType};
@@ -276,6 +283,90 @@ fn move_folder_of_stuff() {
     });
 }
 
+#[test]
+fn recreated_directory() {
+    run_serve_test("recreated_directory", |session, _redactions| {
+        let root_id = session.get_api_rojo().unwrap().root_instance_id;
+        let package = session.path().join("deps/package");
+
+        fs::write(package.join("Old.luau"), "return 0").unwrap();
+        wait_for_sources(&session, root_id, |sources| {
+            sources["Loader/Old"] == "return 0" && sources["Packages/package/Old"] == "return 0"
+        });
+
+        // Package managers replace a package by moving its directory aside and
+        // creating a new one at the same path. `Loader` sorts before
+        // `Packages`, so the package directory is watched before its parent.
+        // The moved copy is kept, because deleting it hits a separate panic in
+        // the change processor.
+        fs::rename(&package, session.path().join("deps/.package-old")).unwrap();
+        fs::create_dir(&package).unwrap();
+        wait_for_sources(&session, root_id, |sources| {
+            sources.contains_key("Packages/.package-old/Old")
+        });
+
+        let module = package.join("New.luau");
+        fs::write(&module, "return 1").unwrap();
+        wait_for_sources(&session, root_id, |sources| {
+            !sources.contains_key("Loader/Old")
+                && sources.contains_key("Loader/New")
+                && sources.contains_key("Packages/package/New")
+        });
+
+        // Creating the directory can still be pending when `New` is written,
+        // and handling it rereads the directory. Only a live watch reports an
+        // edit to a file that already exists.
+        fs::write(&module, "return 2").unwrap();
+        wait_for_sources(&session, root_id, |sources| {
+            sources["Loader/New"] == "return 2" && sources["Packages/package/New"] == "return 2"
+        });
+    });
+}
+
+/// Polls the served tree until `ready` accepts it. The tree is given as a map
+/// from each instance's path below `root_id`, written as names joined by `/`,
+/// to its `Source`, or an empty string if it has none.
+fn wait_for_sources(
+    session: &TestServeSession,
+    root_id: Ref,
+    ready: impl Fn(&HashMap<String, String>) -> bool,
+) {
+    let deadline = Instant::now() + Duration::from_secs(10);
+    loop {
+        let read_response = session.get_api_read(root_id).unwrap();
+        let instances = &read_response.instances;
+        let sources: HashMap<String, String> = instances
+            .values()
+            .filter(|instance| instance.id != root_id)
+            .map(|instance| {
+                let mut names = vec![instance.name.to_string()];
+                let mut parent = instance.parent;
+                while parent != root_id {
+                    let ancestor = &instances[&parent];
+                    names.push(ancestor.name.to_string());
+                    parent = ancestor.parent;
+                }
+                names.reverse();
+
+                let source = match instance.properties.get(&ustr("Source")).map(AsRef::as_ref) {
+                    Some(Variant::String(source)) => source.clone(),
+                    _ => String::new(),
+                };
+                (names.join("/"), source)
+            })
+            .collect();
+
+        if ready(&sources) {
+            return;
+        }
+        assert!(
+            Instant::now() < deadline,
+            "served tree never reached the expected state: {sources:?}"
+        );
+        thread::sleep(Duration::from_millis(100));
+    }
+}
+
 #[test]
 fn empty_json_model() {
     run_serve_test("empty_json_model", |session, mut redactions| {