diff --git a/packages/cli/src/services/folder.service.ts b/packages/cli/src/services/folder.service.ts
index 6f09e49931..3b4a9f3696 100644
--- a/packages/cli/src/services/folder.service.ts
+++ b/packages/cli/src/services/folder.service.ts
@@ -148,6 +148,17 @@ export class FolderService {
 		});
 	}
 
+	async transferFoldersToProject(fromProjectId: string, toProjectId: string) {
+		return await this.folderRepository.update(
+			{
+				homeProject: { id: fromProjectId },
+			},
+			{
+				homeProject: { id: toProjectId },
+			},
+		);
+	}
+
 	private transformFolderPathToTree(flatPath: FolderPathRow[]): SimpleFolderNode[] {
 		if (!flatPath || flatPath.length === 0) {
 			return [];
diff --git a/packages/cli/src/services/project.service.ee.ts b/packages/cli/src/services/project.service.ee.ts
index 95306bddf7..4ebaf86a0a 100644
--- a/packages/cli/src/services/project.service.ee.ts
+++ b/packages/cli/src/services/project.service.ee.ts
@@ -61,6 +61,12 @@ export class ProjectService {
 		);
 	}
 
+	private get folderService() {
+		return import('@/services/folder.service').then(({ FolderService }) =>
+			Container.get(FolderService),
+		);
+	}
+
 	async deleteProject(
 		user: User,
 		projectId: string,
@@ -134,16 +140,22 @@ export class ProjectService {
 			}
 		}
 
-		// 3. delete shared credentials into this project
+		// 3. Move folders over to the target project, before deleting the project else cascading will delete workflows
+		if (targetProject) {
+			const folderService = await this.folderService;
+			await folderService.transferFoldersToProject(project.id, targetProject.id);
+		}
+
+		// 4. delete shared credentials into this project
 		// Cascading deletes take care of this.
 
-		// 4. delete shared workflows into this project
+		// 5. delete shared workflows into this project
 		// Cascading deletes take care of this.
 
-		// 5. delete project
+		// 6. delete project
 		await this.projectRepository.remove(project);
 
-		// 6. delete project relations
+		// 7. delete project relations
 		// Cascading deletes take care of this.
 	}
 
diff --git a/packages/cli/test/integration/project.api.test.ts b/packages/cli/test/integration/project.api.test.ts
index 5f7c7e1b27..8e59fcdb49 100644
--- a/packages/cli/test/integration/project.api.test.ts
+++ b/packages/cli/test/integration/project.api.test.ts
@@ -6,6 +6,7 @@ import { EntityNotFoundError } from '@n8n/typeorm';
 import { ActiveWorkflowManager } from '@/active-workflow-manager';
 import type { Project } from '@/databases/entities/project';
 import type { GlobalRole } from '@/databases/entities/user';
+import { FolderRepository } from '@/databases/repositories/folder.repository';
 import { ProjectRelationRepository } from '@/databases/repositories/project-relation.repository';
 import { ProjectRepository } from '@/databases/repositories/project.repository';
 import { SharedCredentialsRepository } from '@/databases/repositories/shared-credentials.repository';
@@ -13,6 +14,7 @@ import { SharedWorkflowRepository } from '@/databases/repositories/shared-workfl
 import { getWorkflowById } from '@/public-api/v1/handlers/workflows/workflows.service';
 import { CacheService } from '@/services/cache/cache.service';
 import { RoleService } from '@/services/role.service';
+import { createFolder } from '@test-integration/db/folders';
 
 import {
 	getCredentialById,
@@ -1048,7 +1050,7 @@ describe('DELETE /project/:projectId', () => {
 			.expect(404);
 	});
 
-	test('migrates workflows and credentials to another project if `migrateToProject` is passed', async () => {
+	test('migrates folders, workflows and credentials to another project if `migrateToProject` is passed', async () => {
 		//
 		// ARRANGE
 		//
@@ -1071,6 +1073,11 @@ describe('DELETE /project/:projectId', () => {
 			{ project: otherProject, role: 'workflow:editor' },
 		]);
 
+		await createFolder(projectToBeDeleted, { name: 'folder1' });
+		await createFolder(projectToBeDeleted, { name: 'folder2' });
+		await createFolder(targetProject, { name: 'folder1' });
+		await createFolder(otherProject, { name: 'folder3' });
+
 		//
 		// ACT
 		//
@@ -1128,6 +1135,22 @@ describe('DELETE /project/:projectId', () => {
 				role: 'credential:user',
 			}),
 		).resolves.toBeDefined();
+
+		// folders are in the target project
+		const foldersInTargetProject = await Container.get(FolderRepository).findBy({
+			homeProject: { id: targetProject.id },
+		});
+
+		const foldersInDeletedProject = await Container.get(FolderRepository).findBy({
+			homeProject: { id: projectToBeDeleted.id },
+		});
+
+		expect(foldersInDeletedProject).toHaveLength(0);
+
+		expect(foldersInTargetProject).toHaveLength(3);
+		expect(foldersInTargetProject.map((f) => f.name)).toEqual(
+			expect.arrayContaining(['folder1', 'folder1', 'folder2']),
+		);
 	});
 
 	// This test is testing behavior that is explicitly not enabled right now,