diff --git a/extensions/sql-database-projects/src/models/tree/fileFolderTreeItem.ts b/extensions/sql-database-projects/src/models/tree/fileFolderTreeItem.ts
index a25838eccd..a00b0e5d12 100644
--- a/extensions/sql-database-projects/src/models/tree/fileFolderTreeItem.ts
+++ b/extensions/sql-database-projects/src/models/tree/fileFolderTreeItem.ts
@@ -29,7 +29,7 @@ export class FolderNode extends BaseProjectTreeItem {
 	}
 
 	public get treeItem(): vscode.TreeItem {
-		const folderItem = new vscode.TreeItem(this.uri, vscode.TreeItemCollapsibleState.Collapsed);
+		const folderItem = new vscode.TreeItem(this.fileSystemUri, vscode.TreeItemCollapsibleState.Collapsed);
 		folderItem.contextValue = DatabaseProjectItemType.folder;
 		folderItem.iconPath = IconPathHelper.folder;
 
@@ -57,7 +57,7 @@ export class FileNode extends BaseProjectTreeItem {
 	}
 
 	public get treeItem(): vscode.TreeItem {
-		const treeItem = new vscode.TreeItem(this.uri, vscode.TreeItemCollapsibleState.None);
+		const treeItem = new vscode.TreeItem(this.fileSystemUri, vscode.TreeItemCollapsibleState.None);
 
 		treeItem.command = {
 			title: 'Open file',
diff --git a/extensions/sql-database-projects/src/models/tree/projectTreeItem.ts b/extensions/sql-database-projects/src/models/tree/projectTreeItem.ts
index d9fd265471..332d635a82 100644
--- a/extensions/sql-database-projects/src/models/tree/projectTreeItem.ts
+++ b/extensions/sql-database-projects/src/models/tree/projectTreeItem.ts
@@ -25,7 +25,7 @@ export class ProjectRootTreeItem extends BaseProjectTreeItem {
 	fileSystemUri: vscode.Uri;
 
 	constructor(project: Project) {
-		super(vscode.Uri.parse(path.basename(project.projectFilePath, sqlprojExtension)), undefined);
+		super(vscode.Uri.file(project.projectFilePath), undefined);
 
 		this.project = project;
 		this.fileSystemUri = vscode.Uri.file(project.projectFilePath);
@@ -48,6 +48,7 @@ export class ProjectRootTreeItem extends BaseProjectTreeItem {
 		const projectItem = new vscode.TreeItem(this.uri, vscode.TreeItemCollapsibleState.Expanded);
 		projectItem.contextValue = DatabaseProjectItemType.project;
 		projectItem.iconPath = IconPathHelper.databaseProject;
+		projectItem.label = path.basename(this.uri.fsPath, sqlprojExtension);
 
 		return projectItem;
 	}
diff --git a/extensions/sql-database-projects/src/test/projectTree.test.ts b/extensions/sql-database-projects/src/test/projectTree.test.ts
index 21ef0c059f..4272e50e0a 100644
--- a/extensions/sql-database-projects/src/test/projectTree.test.ts
+++ b/extensions/sql-database-projects/src/test/projectTree.test.ts
@@ -68,16 +68,16 @@ describe('Project Tree tests', function (): void {
 
 		const tree = new ProjectRootTreeItem(proj);
 		should(tree.children.map(x => x.uri.path)).deepEqual([
-			'/TestProj/Database References',
-			'/TestProj/duplicateFolder',
-			'/TestProj/someFolder',
-			'/TestProj/duplicate.sql']);
+			'/TestProj.sqlproj/Database References',
+			'/TestProj.sqlproj/duplicateFolder',
+			'/TestProj.sqlproj/someFolder',
+			'/TestProj.sqlproj/duplicate.sql']);
 
-		should(tree.children.find(x => x.uri.path === '/TestProj/someFolder')?.children.map(y => y.uri.path)).deepEqual([
-			'/TestProj/someFolder/aNestedFolder',
-			'/TestProj/someFolder/bNestedFolder',
-			'/TestProj/someFolder/aNestedTest.sql',
-			'/TestProj/someFolder/bNestedTest.sql']);
+		should(tree.children.find(x => x.uri.path === '/TestProj.sqlproj/someFolder')?.children.map(y => y.uri.path)).deepEqual([
+			'/TestProj.sqlproj/someFolder/aNestedFolder',
+			'/TestProj.sqlproj/someFolder/bNestedFolder',
+			'/TestProj.sqlproj/someFolder/aNestedTest.sql',
+			'/TestProj.sqlproj/someFolder/bNestedTest.sql']);
 
 		should(tree.children.map(x => x.treeItem.contextValue)).deepEqual([
 			DatabaseProjectItemType.referencesRoot,
@@ -85,7 +85,7 @@ describe('Project Tree tests', function (): void {
 			DatabaseProjectItemType.folder,
 			DatabaseProjectItemType.file]);
 
-		should(tree.children.find(x => x.uri.path === '/TestProj/someFolder')?.children.map(y => y.treeItem.contextValue)).deepEqual([
+		should(tree.children.find(x => x.uri.path === '/TestProj.sqlproj/someFolder')?.children.map(y => y.treeItem.contextValue)).deepEqual([
 			DatabaseProjectItemType.folder,
 			DatabaseProjectItemType.folder,
 			DatabaseProjectItemType.file,
@@ -104,11 +104,11 @@ describe('Project Tree tests', function (): void {
 
 		const tree = new ProjectRootTreeItem(proj);
 		should(tree.children.map(x => x.uri.path)).deepEqual([
-			'/TestProj/Database References',
-			'/TestProj/someFolder1']);
+			'/TestProj.sqlproj/Database References',
+			'/TestProj.sqlproj/someFolder1']);
 
 		// Why are we only matching names - https://github.com/microsoft/azuredatastudio/issues/11026
-		should(tree.children.find(x => x.uri.path === '/TestProj/someFolder1')?.children.map(y => path.basename(y.uri.path))).deepEqual([
+		should(tree.children.find(x => x.uri.path === '/TestProj.sqlproj/someFolder1')?.children.map(y => path.basename(y.uri.path))).deepEqual([
 			'MyNestedFolder1',
 			'MyNestedFolder2',
 			'MyFile2.sql']);
@@ -126,8 +126,8 @@ describe('Project Tree tests', function (): void {
 
 		const tree = new ProjectRootTreeItem(proj);
 		should(tree.children.map(x => x.uri.path)).deepEqual([
-			'/TestProj/Database References',
-			'/TestProj/MyFile1.sql',
-			'/TestProj/MyFile2.sql']);
+			'/Root/Level1/Level2/TestProj.sqlproj/Database References',
+			'/Root/Level1/Level2/TestProj.sqlproj/MyFile1.sql',
+			'/Root/Level1/Level2/TestProj.sqlproj/MyFile2.sql']);
 	});
 });