diff --git a/extensions/sql-database-projects/src/models/project.ts b/extensions/sql-database-projects/src/models/project.ts
index 369016dde7..1eebc064db 100644
--- a/extensions/sql-database-projects/src/models/project.ts
+++ b/extensions/sql-database-projects/src/models/project.ts
@@ -263,7 +263,7 @@ export class Project {
 	 * Adds a folder to the project, and saves the project file
 	 * @param relativeFolderPath Relative path of the folder
 	 */
-	public async addFolderItem(relativeFolderPath: string): Promise<ProjectEntry> {
+	public async addFolderItem(relativeFolderPath: string): Promise<FileProjectEntry> {
 		const absoluteFolderPath = path.join(this.projectFolderPath, relativeFolderPath);
 
 		//If folder doesn't exist, create it
@@ -347,13 +347,10 @@ export class Project {
 	public async deleteFileFolder(entry: FileProjectEntry): Promise<void> {
 		// compile a list of folder contents to delete; if entry is a file, contents will contain only itself
 		const toDeleteFiles: FileProjectEntry[] = this.files.concat(this.preDeployScripts).concat(this.postDeployScripts).concat(this.noneDeployScripts).filter(x => x.fsUri.fsPath.startsWith(entry.fsUri.fsPath) && x.type === EntryType.File);
-		const toDeleteFolders: FileProjectEntry[] = this.files.filter(x => x.fsUri.fsPath.startsWith(entry.fsUri.fsPath) && x.type === EntryType.Folder).sort(x => -x.relativePath.length);
+		const toDeleteFolders: FileProjectEntry[] = this.files.filter(x => x.fsUri.fsPath.startsWith(entry.fsUri.fsPath) && x.type === EntryType.Folder);
 
 		await Promise.all(toDeleteFiles.map(x => fs.unlink(x.fsUri.fsPath)));
-
-		for (const folder of toDeleteFolders) {
-			await fs.rmdir(folder.fsUri.fsPath); // TODO: replace .sort() and iteration with rmdir recursive flag once that's unbugged
-		}
+		await Promise.all(toDeleteFolders.map(x => fs.rmdir(x.fsUri.fsPath, { recursive: true })));
 
 		await this.exclude(entry);
 	}
diff --git a/extensions/sql-database-projects/src/test/projectController.test.ts b/extensions/sql-database-projects/src/test/projectController.test.ts
index 148d6c3c84..436fc04c39 100644
--- a/extensions/sql-database-projects/src/test/projectController.test.ts
+++ b/extensions/sql-database-projects/src/test/projectController.test.ts
@@ -245,6 +245,33 @@ describe('ProjectsController', function (): void {
 				should(await exists(noneEntry.fsUri.fsPath)).equal(true, 'none entry pre-deployment script is supposed to still exist on disk');
 			});
 
+			it('Should delete folders with excluded items', async function (): Promise<void> {
+				let proj = await testUtils.createTestProject(templates.newSqlProjectTemplate);
+				const setupResult = await setupDeleteExcludeTest(proj);
+
+				const scriptEntry = setupResult[0], projTreeRoot = setupResult[1];
+				const upperFolder = projTreeRoot.children.find(x => x.friendlyName === 'UpperFolder')!;
+				const lowerFolder = upperFolder.children.find(x => x.friendlyName === 'LowerFolder')!;
+
+				const projController = new ProjectsController();
+
+				// Exclude files under LowerFolder
+				await projController.exclude(createWorkspaceTreeItem(<FileNode>lowerFolder.children.find(x => x.friendlyName === 'someScript.sql')!));
+				await projController.exclude(createWorkspaceTreeItem(<FileNode>lowerFolder.children.find(x => x.friendlyName === 'someOtherScript.sql')!));
+
+				// Delete UpperFolder
+				await projController.delete(createWorkspaceTreeItem(<FolderNode>projTreeRoot.children.find(x => x.friendlyName === 'UpperFolder')!));
+
+				// Reload edited sqlproj from disk
+				proj = await Project.openProject(proj.projectFilePath);
+
+				// Confirm result
+				should(proj.files.some(x => x.relativePath === 'UpperFolder')).equal(false, 'UpperFolder should not be part of proj file any more');
+				should(await exists(scriptEntry.fsUri.fsPath)).equal(false, 'script is supposed to be deleted from disk');
+				should(await exists(lowerFolder.uri.fsPath)).equal(false, 'LowerFolder is supposed to be deleted from disk');
+				should(await exists(upperFolder.uri.fsPath)).equal(false, 'UpperFolder is supposed to be deleted from disk');
+			});
+
 			it('Should reload correctly after changing sqlproj file', async function (): Promise<void> {
 				// create project
 				const folderPath = await testUtils.generateTestFolderPath();