diff --git a/src/features/file-system/controllers/store.ts b/src/features/file-system/controllers/store.ts
index c71a5ec7..55f598e6 100644
--- a/src/features/file-system/controllers/store.ts
+++ b/src/features/file-system/controllers/store.ts
@@ -418,8 +418,51 @@ export const useFileSystemStore = createSelectors(
           fileName = prompt("Enter the name for the new file:") ?? undefined;
           if (!fileName) return;
         }
+        // Split the input path into parts
+        const parts = fileName.split("/").filter(Boolean);
+        // Validate input
+        if (parts.length === 0) {
+          alert("Invalid file name");
+          return;
+        }
+
+        const finalFileName = parts.pop()!;
+
+        // Block path traversal and illegal separators
+        const hasIllegalCharacters = (segment: string) =>
+          segment === ".." || segment === "." || segment.includes("\\") || segment.includes("/");
+
+        // Check all directory parts AND the final filename
+        if (parts.some(hasIllegalCharacters) || hasIllegalCharacters(finalFileName)) {
+          alert("Invalid file name: path traversal and special characters are not allowed");
+          return;
+        }
 
-        return get().createFile(dirPath, fileName);
+        let currentPath = dirPath;
+        // Create intermediate folders if they don't exist
+        try {
+          for (const folder of parts) {
+            const potentialPath = await join(currentPath, folder);
+            // Check if directory already exists in the file tree
+            const existingFolder = findFileInTree(get().files, potentialPath);
+
+            if (existingFolder?.isDir) {
+              // Directory already exists, just use its path
+              currentPath = potentialPath;
+            } else {
+              // Create the directory if it doesn't exist
+              currentPath = await get().createDirectory(currentPath, folder);
+            }
+          }
+          // Finally create the file inside the deepest folder
+          return await get().createFile(currentPath, finalFileName);
+        } catch (error) {
+          console.error("Failed to create nested file:", error);
+          alert(
+            `Failed to create file: ${error instanceof Error ? error.message : "Unknown error"}`,
+          );
+          return;
+        }
       },
 
       handleCreateNewFolder: async () => {