diff --git a/crates/lsp/src/lsp.rs b/crates/lsp/src/lsp.rs
index 361c5665d2..31554edd34 100644
--- a/crates/lsp/src/lsp.rs
+++ b/crates/lsp/src/lsp.rs
@@ -57,6 +57,25 @@ pub const DEFAULT_LSP_REQUEST_TIMEOUT: Duration =
 /// The shutdown timeout for LSP servers (including Prettier/Copilot).
 const SERVER_SHUTDOWN_TIMEOUT: Duration = Duration::from_secs(5);
 
+pub fn workspace_folder_for_uri(uri: Uri) -> WorkspaceFolder {
+    let name = uri
+        .to_file_path()
+        .ok()
+        .map(|path| {
+            let name = path.file_name().unwrap_or(path.as_os_str());
+            name.to_string_lossy().into_owned()
+        })
+        .filter(|name| !name.is_empty())
+        .or_else(|| {
+            uri.path_segments()
+                .and_then(|mut segments| segments.rfind(|segment| !segment.is_empty()))
+                .map(str::to_owned)
+        })
+        .unwrap_or_else(|| uri.as_str().to_owned());
+
+    WorkspaceFolder { uri, name }
+}
+
 type NotificationHandler = Box<dyn Send + FnMut(Option<RequestId>, Value, &mut AsyncApp)>;
 type PendingRespondTasks = Arc<Mutex<HashMap<RequestId, Task<()>>>>;
 type ResponseHandler = Box<dyn Send + FnOnce(Result<String, Error>) -> Task<()>>;
@@ -747,21 +766,13 @@ impl LanguageServer {
         cx: &App,
     ) -> InitializeParams {
         let workspace_folders = self.workspace_folders.as_ref().map_or_else(
-            || {
-                vec![WorkspaceFolder {
-                    name: Default::default(),
-                    uri: self.root_uri.clone(),
-                }]
-            },
+            || vec![workspace_folder_for_uri(self.root_uri.clone())],
             |folders| {
                 folders
                     .lock()
                     .iter()
                     .cloned()
-                    .map(|uri| WorkspaceFolder {
-                        name: Default::default(),
-                        uri,
-                    })
+                    .map(workspace_folder_for_uri)
                     .collect()
             },
         );
@@ -1625,10 +1636,7 @@ impl LanguageServer {
         if is_new_folder {
             let params = DidChangeWorkspaceFoldersParams {
                 event: WorkspaceFoldersChangeEvent {
-                    added: vec![WorkspaceFolder {
-                        uri,
-                        name: String::default(),
-                    }],
+                    added: vec![workspace_folder_for_uri(uri)],
                     removed: vec![],
                 },
             };
@@ -1660,10 +1668,7 @@ impl LanguageServer {
             let params = DidChangeWorkspaceFoldersParams {
                 event: WorkspaceFoldersChangeEvent {
                     added: vec![],
-                    removed: vec![WorkspaceFolder {
-                        uri,
-                        name: String::default(),
-                    }],
+                    removed: vec![workspace_folder_for_uri(uri)],
                 },
             };
             self.notify::<DidChangeWorkspaceFolders>(params).ok();
@@ -1678,18 +1683,14 @@ impl LanguageServer {
         let old_workspace_folders = std::mem::take(&mut *workspace_folders);
         let added: Vec<_> = folders
             .difference(&old_workspace_folders)
-            .map(|uri| WorkspaceFolder {
-                uri: uri.clone(),
-                name: String::default(),
-            })
+            .cloned()
+            .map(workspace_folder_for_uri)
             .collect();
 
         let removed: Vec<_> = old_workspace_folders
             .difference(&folders)
-            .map(|uri| WorkspaceFolder {
-                uri: uri.clone(),
-                name: String::default(),
-            })
+            .cloned()
+            .map(workspace_folder_for_uri)
             .collect();
         *workspace_folders = folders;
         let should_notify = !added.is_empty() || !removed.is_empty();
@@ -2291,7 +2292,7 @@ mod tests {
     }
 
     #[gpui::test]
-    async fn test_initialize_params_has_root_path_and_root_uri(cx: &mut TestAppContext) {
+    async fn test_default_initialize_params(cx: &mut TestAppContext) {
         cx.update(|cx| {
             release_channel::init(semver::Version::new(0, 0, 0), cx);
         });
@@ -2306,6 +2307,9 @@ mod tests {
             Default::default(),
             &mut cx.to_async(),
         );
+        let project_uri = Uri::from_file_path(std::env::temp_dir().join("my project"))
+            .expect("workspace folder URI should be valid");
+        server.set_workspace_folders(BTreeSet::from_iter([project_uri.clone()]));
 
         let params = cx.update(|cx| server.default_initialize_params(false, false, cx));
 
@@ -2322,5 +2326,14 @@ mod tests {
             expected_path.to_string_lossy(),
             "root_path should be derived from root_uri"
         );
+        let workspace_folders = params
+            .workspace_folders
+            .expect("workspace folders should be set");
+
+        let expected_workspace_folders = vec![WorkspaceFolder {
+            uri: project_uri,
+            name: "my project".to_string(),
+        }];
+        assert_eq!(workspace_folders, expected_workspace_folders);
     }
 }
diff --git a/crates/project/src/lsp_store.rs b/crates/project/src/lsp_store.rs
index c1e5ca31f5..fee9666ec7 100644
--- a/crates/project/src/lsp_store.rs
+++ b/crates/project/src/lsp_store.rs
@@ -99,7 +99,7 @@ use lsp::{
     LanguageServerBinary, LanguageServerBinaryOptions, LanguageServerId, LanguageServerName,
     LanguageServerSelector, LspRequestFuture, MessageActionItem, MessageType, OneOf,
     RenameFilesParams, TextDocumentSyncSaveOptions, TextEdit, Uri, WillRenameFiles,
-    WorkDoneProgressCancelParams, WorkspaceFolder, notification::DidRenameFiles,
+    WorkDoneProgressCancelParams, notification::DidRenameFiles,
 };
 use node_runtime::read_package_installed_version;
 use parking_lot::Mutex;
@@ -984,10 +984,7 @@ impl LocalLspStore {
                         let root = server.workspace_folders();
                         Ok(Some(
                             root.into_iter()
-                                .map(|uri| WorkspaceFolder {
-                                    uri,
-                                    name: Default::default(),
-                                })
+                                .map(lsp::workspace_folder_for_uri)
                                 .collect(),
                         ))
                     }