diff --git a/src/sql/workbench/services/connection/browser/connectionManagementService.ts b/src/sql/workbench/services/connection/browser/connectionManagementService.ts
index 56aa4cb884..4d4ec0c78d 100644
--- a/src/sql/workbench/services/connection/browser/connectionManagementService.ts
+++ b/src/sql/workbench/services/connection/browser/connectionManagementService.ts
@@ -1237,6 +1237,8 @@ export class ConnectionManagementService extends Disposable implements IConnecti
 			if (id && targetGroupId) {
 				source.groupId = targetGroupId;
 			}
+			// change the connection uri with the new group so that connection does not appear as disconnected in OE.
+			this.changeConnectionUri(Utils.generateUri(source), id);
 		});
 	}