diff --git a/launcher/icons/IconList.cpp b/launcher/icons/IconList.cpp
index e4157ea2d..faeb3f2c7 100644
--- a/launcher/icons/IconList.cpp
+++ b/launcher/icons/IconList.cpp
@@ -47,24 +47,24 @@
 
 #define MAX_SIZE 1024
 
-IconList::IconList(const QStringList& builtinPaths, QString path, QObject* parent) : QAbstractListModel(parent)
+IconList::IconList(const QStringList& builtinPaths, const QString& path, QObject* parent) : QAbstractListModel(parent)
 {
     QSet<QString> builtinNames;
 
     // add builtin icons
-    for (auto& builtinPath : builtinPaths) {
-        QDir instance_icons(builtinPath);
-        auto file_info_list = instance_icons.entryInfoList(QDir::Files, QDir::Name);
-        for (auto file_info : file_info_list) {
-            builtinNames.insert(file_info.completeBaseName());
+    for (const auto& builtinPath : builtinPaths) {
+        QDir instanceIcons(builtinPath);
+        auto fileInfoList = instanceIcons.entryInfoList(QDir::Files, QDir::Name);
+        for (const auto& fileInfo : fileInfoList) {
+            builtinNames.insert(fileInfo.baseName());
         }
     }
-    for (auto& builtinName : builtinNames) {
+    for (const auto& builtinName : builtinNames) {
         addThemeIcon(builtinName);
     }
 
     m_watcher.reset(new QFileSystemWatcher());
-    is_watching = false;
+    m_isWatching = false;
     connect(m_watcher.get(), &QFileSystemWatcher::directoryChanged, this, &IconList::directoryChanged);
     connect(m_watcher.get(), &QFileSystemWatcher::fileChanged, this, &IconList::fileChanged);
 
@@ -77,91 +77,130 @@ IconList::IconList(const QStringList& builtinPaths, QString path, QObject* paren
 void IconList::sortIconList()
 {
     qDebug() << "Sorting icon list...";
-    std::sort(icons.begin(), icons.end(), [](const MMCIcon& a, const MMCIcon& b) { return a.m_key.localeAwareCompare(b.m_key) < 0; });
+    std::sort(m_icons.begin(), m_icons.end(), [](const MMCIcon& a, const MMCIcon& b) {
+        bool aIsSubdir = a.m_key.contains(QDir::separator());
+        bool bIsSubdir = b.m_key.contains(QDir::separator());
+        if (aIsSubdir != bIsSubdir) {
+            return !aIsSubdir;  // root-level icons come first
+        }
+        return a.m_key.localeAwareCompare(b.m_key) < 0;
+    });
     reindex();
 }
 
+// Helper function to add directories recursively
+bool IconList::addPathRecursively(const QString& path)
+{
+    QDir dir(path);
+    if (!dir.exists())
+        return false;
+
+    // Add the directory itself
+    bool watching = m_watcher->addPath(path);
+
+    // Add all subdirectories
+    QFileInfoList entries = dir.entryInfoList(QDir::Dirs | QDir::NoDotAndDotDot);
+    for (const QFileInfo& entry : entries) {
+        if (addPathRecursively(entry.absoluteFilePath())) {
+            watching = true;
+        }
+    }
+    return watching;
+}
+
+QStringList IconList::getIconFilePaths() const
+{
+    QStringList iconFiles{};
+    QStringList directories{ m_dir.absolutePath() };
+    while (!directories.isEmpty()) {
+        QString first = directories.takeFirst();
+        QDir dir(first);
+        for (QFileInfo& fileInfo : dir.entryInfoList(QDir::AllDirs | QDir::Files | QDir::NoDotAndDotDot, QDir::Name)) {
+            if (fileInfo.isDir())
+                directories.push_back(fileInfo.absoluteFilePath());
+            else
+                iconFiles.push_back(fileInfo.absoluteFilePath());
+        }
+    }
+    return iconFiles;
+}
+
+QString formatName(const QDir& iconsDir, const QFileInfo& iconFile)
+{
+    if (iconFile.dir() == iconsDir)
+        return iconFile.baseName();
+
+    constexpr auto delimiter = " » ";
+    QString relativePathWithoutExtension = iconsDir.relativeFilePath(iconFile.dir().path()) + QDir::separator() + iconFile.baseName();
+    return relativePathWithoutExtension.replace(QDir::separator(), delimiter);
+}
+
+/// Split into a separate function because the preprocessing impedes readability
+QSet<QString> toStringSet(const QList<QString>& list)
+{
+#if QT_VERSION >= QT_VERSION_CHECK(5, 14, 0)
+    QSet<QString> set(list.begin(), list.end());
+#else
+    QSet<QString> set = list.toSet();
+#endif
+    return set;
+}
+
 void IconList::directoryChanged(const QString& path)
 {
-    QDir new_dir(path);
-    if (m_dir.absolutePath() != new_dir.absolutePath()) {
-        m_dir.setPath(path);
+    QDir newDir(path);
+    if (m_dir.absolutePath() != newDir.absolutePath()) {
+        if (!path.startsWith(m_dir.absolutePath()))
+            m_dir.setPath(path);
         m_dir.refresh();
-        if (is_watching)
+        if (m_isWatching)
             stopWatching();
         startWatching();
     }
-    if (!m_dir.exists())
-        if (!FS::ensureFolderPathExists(m_dir.absolutePath()))
-            return;
+    if (!m_dir.exists() && !FS::ensureFolderPathExists(m_dir.absolutePath()))
+        return;
     m_dir.refresh();
-    auto new_list = m_dir.entryList(QDir::Files, QDir::Name);
-    for (auto it = new_list.begin(); it != new_list.end(); it++) {
-        QString& foo = (*it);
-        foo = m_dir.filePath(foo);
-    }
-#if QT_VERSION >= QT_VERSION_CHECK(5, 14, 0)
-    QSet<QString> new_set(new_list.begin(), new_list.end());
-#else
-    auto new_set = new_list.toSet();
-#endif
-    QList<QString> current_list;
-    for (auto& it : icons) {
+    const QStringList newFileNamesList = getIconFilePaths();
+    const QSet<QString> newSet = toStringSet(newFileNamesList);
+    QSet<QString> currentSet;
+    for (const MMCIcon& it : m_icons) {
         if (!it.has(IconType::FileBased))
             continue;
-        current_list.push_back(it.m_images[IconType::FileBased].filename);
+        currentSet.insert(it.m_images[IconType::FileBased].filename);
     }
-#if QT_VERSION >= QT_VERSION_CHECK(5, 14, 0)
-    QSet<QString> current_set(current_list.begin(), current_list.end());
-#else
-    QSet<QString> current_set = current_list.toSet();
-#endif
+    QSet<QString> toRemove = currentSet - newSet;
+    QSet<QString> toAdd = newSet - currentSet;
 
-    QSet<QString> to_remove = current_set;
-    to_remove -= new_set;
-
-    QSet<QString> to_add = new_set;
-    to_add -= current_set;
-
-    for (auto remove : to_remove) {
-        qDebug() << "Removing " << remove;
-        QFileInfo rmfile(remove);
-        QString key = rmfile.completeBaseName();
-
-        QString suffix = rmfile.suffix();
-        // The icon doesnt have a suffix, but it can have other .s in the name, so we account for those as well
-        if (!IconUtils::isIconSuffix(suffix))
-            key = rmfile.fileName();
+    for (const QString& removedPath : toRemove) {
+        qDebug() << "Removing icon " << removedPath;
+        QFileInfo removedFile(removedPath);
+        QString key = m_dir.relativeFilePath(removedFile.absoluteFilePath());
 
         int idx = getIconIndex(key);
         if (idx == -1)
             continue;
-        icons[idx].remove(IconType::FileBased);
-        if (icons[idx].type() == IconType::ToBeDeleted) {
+        m_icons[idx].remove(FileBased);
+        if (m_icons[idx].type() == ToBeDeleted) {
             beginRemoveRows(QModelIndex(), idx, idx);
-            icons.remove(idx);
+            m_icons.remove(idx);
             reindex();
             endRemoveRows();
         } else {
             dataChanged(index(idx), index(idx));
         }
-        m_watcher->removePath(remove);
+        m_watcher->removePath(removedPath);
         emit iconUpdated(key);
     }
 
-    for (auto add : to_add) {
-        qDebug() << "Adding " << add;
+    for (const QString& addedPath : toAdd) {
+        qDebug() << "Adding icon " << addedPath;
 
-        QFileInfo addfile(add);
-        QString key = addfile.completeBaseName();
+        QFileInfo addfile(addedPath);
+        QString key = m_dir.relativeFilePath(addfile.absoluteFilePath());
+        QString name = formatName(m_dir, addfile);
 
-        QString suffix = addfile.suffix();
-        // The icon doesnt have a suffix, but it can have other .s in the name, so we account for those as well
-        if (!IconUtils::isIconSuffix(suffix))
-            key = addfile.fileName();
-
-        if (addIcon(key, QString(), addfile.filePath(), IconType::FileBased)) {
-            m_watcher->addPath(add);
+        if (addIcon(key, name, addfile.filePath(), IconType::FileBased)) {
+            m_watcher->addPath(addedPath);
             emit iconUpdated(key);
         }
     }
@@ -171,24 +210,24 @@ void IconList::directoryChanged(const QString& path)
 
 void IconList::fileChanged(const QString& path)
 {
-    qDebug() << "Checking " << path;
+    qDebug() << "Checking icon " << path;
     QFileInfo checkfile(path);
     if (!checkfile.exists())
         return;
-    QString key = checkfile.completeBaseName();
+    QString key = m_dir.relativeFilePath(checkfile.absoluteFilePath());
     int idx = getIconIndex(key);
     if (idx == -1)
         return;
     QIcon icon(path);
-    if (!icon.availableSizes().size())
+    if (icon.availableSizes().empty())
         return;
 
-    icons[idx].m_images[IconType::FileBased].icon = icon;
+    m_icons[idx].m_images[IconType::FileBased].icon = icon;
     dataChanged(index(idx), index(idx));
     emit iconUpdated(key);
 }
 
-void IconList::SettingChanged(const Setting& setting, QVariant value)
+void IconList::SettingChanged(const Setting& setting, const QVariant& value)
 {
     if (setting.id() != "IconsDir")
         return;
@@ -200,8 +239,8 @@ void IconList::startWatching()
 {
     auto abs_path = m_dir.absolutePath();
     FS::ensureFolderPathExists(abs_path);
-    is_watching = m_watcher->addPath(abs_path);
-    if (is_watching) {
+    m_isWatching = addPathRecursively(abs_path);
+    if (m_isWatching) {
         qDebug() << "Started watching " << abs_path;
     } else {
         qDebug() << "Failed to start watching " << abs_path;
@@ -212,7 +251,7 @@ void IconList::stopWatching()
 {
     m_watcher->removePaths(m_watcher->files());
     m_watcher->removePaths(m_watcher->directories());
-    is_watching = false;
+    m_isWatching = false;
 }
 
 QStringList IconList::mimeTypes() const
@@ -242,7 +281,7 @@ bool IconList::dropMimeData(const QMimeData* data,
     if (data->hasUrls()) {
         auto urls = data->urls();
         QStringList iconFiles;
-        for (auto url : urls) {
+        for (const auto& url : urls) {
             // only local files may be dropped...
             if (!url.isLocalFile())
                 continue;
@@ -263,33 +302,33 @@ Qt::ItemFlags IconList::flags(const QModelIndex& index) const
 QVariant IconList::data(const QModelIndex& index, int role) const
 {
     if (!index.isValid())
-        return QVariant();
+        return {};
 
     int row = index.row();
 
-    if (row < 0 || row >= icons.size())
-        return QVariant();
+    if (row < 0 || row >= m_icons.size())
+        return {};
 
     switch (role) {
         case Qt::DecorationRole:
-            return icons[row].icon();
+            return m_icons[row].icon();
         case Qt::DisplayRole:
-            return icons[row].name();
+            return m_icons[row].name();
         case Qt::UserRole:
-            return icons[row].m_key;
+            return m_icons[row].m_key;
         default:
-            return QVariant();
+            return {};
     }
 }
 
 int IconList::rowCount(const QModelIndex& parent) const
 {
-    return parent.isValid() ? 0 : icons.size();
+    return parent.isValid() ? 0 : m_icons.size();
 }
 
 void IconList::installIcons(const QStringList& iconFiles)
 {
-    for (QString file : iconFiles)
+    for (const QString& file : iconFiles)
         installIcon(file, {});
 }
 
@@ -312,12 +351,13 @@ bool IconList::iconFileExists(const QString& key) const
     return iconEntry && iconEntry->has(IconType::FileBased);
 }
 
+/// Returns the icon with the given key or nullptr if it doesn't exist.
 const MMCIcon* IconList::icon(const QString& key) const
 {
     int iconIdx = getIconIndex(key);
     if (iconIdx == -1)
         return nullptr;
-    return &icons[iconIdx];
+    return &m_icons[iconIdx];
 }
 
 bool IconList::deleteIcon(const QString& key)
@@ -332,22 +372,22 @@ bool IconList::trashIcon(const QString& key)
 
 bool IconList::addThemeIcon(const QString& key)
 {
-    auto iter = name_index.find(key);
-    if (iter != name_index.end()) {
-        auto& oldOne = icons[*iter];
+    auto iter = m_nameIndex.find(key);
+    if (iter != m_nameIndex.end()) {
+        auto& oldOne = m_icons[*iter];
         oldOne.replace(Builtin, key);
         dataChanged(index(*iter), index(*iter));
         return true;
     }
     // add a new icon
-    beginInsertRows(QModelIndex(), icons.size(), icons.size());
+    beginInsertRows(QModelIndex(), m_icons.size(), m_icons.size());
     {
         MMCIcon mmc_icon;
         mmc_icon.m_name = key;
         mmc_icon.m_key = key;
         mmc_icon.replace(Builtin, key);
-        icons.push_back(mmc_icon);
-        name_index[key] = icons.size() - 1;
+        m_icons.push_back(mmc_icon);
+        m_nameIndex[key] = m_icons.size() - 1;
     }
     endInsertRows();
     return true;
@@ -359,22 +399,22 @@ bool IconList::addIcon(const QString& key, const QString& name, const QString& p
     QIcon icon(path);
     if (icon.isNull())
         return false;
-    auto iter = name_index.find(key);
-    if (iter != name_index.end()) {
-        auto& oldOne = icons[*iter];
+    auto iter = m_nameIndex.find(key);
+    if (iter != m_nameIndex.end()) {
+        auto& oldOne = m_icons[*iter];
         oldOne.replace(type, icon, path);
         dataChanged(index(*iter), index(*iter));
         return true;
     }
     // add a new icon
-    beginInsertRows(QModelIndex(), icons.size(), icons.size());
+    beginInsertRows(QModelIndex(), m_icons.size(), m_icons.size());
     {
         MMCIcon mmc_icon;
         mmc_icon.m_name = name;
         mmc_icon.m_key = key;
         mmc_icon.replace(type, icon, path);
-        icons.push_back(mmc_icon);
-        name_index[key] = icons.size() - 1;
+        m_icons.push_back(mmc_icon);
+        m_nameIndex[key] = m_icons.size() - 1;
     }
     endInsertRows();
     return true;
@@ -389,33 +429,32 @@ void IconList::saveIcon(const QString& key, const QString& path, const char* for
 
 void IconList::reindex()
 {
-    name_index.clear();
-    int i = 0;
-    for (auto& iter : icons) {
-        name_index[iter.m_key] = i;
-        i++;
+    m_nameIndex.clear();
+    for (int i = 0; i < m_icons.size(); i++) {
+        m_nameIndex[m_icons[i].m_key] = i;
+        emit iconUpdated(m_icons[i].m_key);  // prevents incorrect indices with proxy model
     }
 }
 
 QIcon IconList::getIcon(const QString& key) const
 {
-    int icon_index = getIconIndex(key);
+    int iconIndex = getIconIndex(key);
 
-    if (icon_index != -1)
-        return icons[icon_index].icon();
+    if (iconIndex != -1)
+        return m_icons[iconIndex].icon();
 
-    // Fallback for icons that don't exist.
-    icon_index = getIconIndex("grass");
+    // Fallback for icons that don't exist.b
+    iconIndex = getIconIndex("grass");
 
-    if (icon_index != -1)
-        return icons[icon_index].icon();
-    return QIcon();
+    if (iconIndex != -1)
+        return m_icons[iconIndex].icon();
+    return {};
 }
 
 int IconList::getIconIndex(const QString& key) const
 {
-    auto iter = name_index.find(key == "default" ? "grass" : key);
-    if (iter != name_index.end())
+    auto iter = m_nameIndex.find(key == "default" ? "grass" : key);
+    if (iter != m_nameIndex.end())
         return *iter;
 
     return -1;
@@ -425,3 +464,15 @@ QString IconList::getDirectory() const
 {
     return m_dir.absolutePath();
 }
+
+/// Returns the directory of the icon with the given key or the default directory if it's a builtin icon.
+QString IconList::iconDirectory(const QString& key) const
+{
+    for (const auto& mmcIcon : m_icons) {
+        if (mmcIcon.m_key == key && mmcIcon.has(IconType::FileBased)) {
+            QFileInfo iconFile(mmcIcon.getFilePath());
+            return iconFile.dir().path();
+        }
+    }
+    return getDirectory();
+}
diff --git a/launcher/icons/IconList.h b/launcher/icons/IconList.h
index 553946c42..8936195c3 100644
--- a/launcher/icons/IconList.h
+++ b/launcher/icons/IconList.h
@@ -51,7 +51,7 @@ class QFileSystemWatcher;
 class IconList : public QAbstractListModel {
     Q_OBJECT
    public:
-    explicit IconList(const QStringList& builtinPaths, QString path, QObject* parent = 0);
+    explicit IconList(const QStringList& builtinPaths, const QString& path, QObject* parent = 0);
     virtual ~IconList() {};
 
     QIcon getIcon(const QString& key) const;
@@ -72,6 +72,7 @@ class IconList : public QAbstractListModel {
     bool deleteIcon(const QString& key);
     bool trashIcon(const QString& key);
     bool iconFileExists(const QString& key) const;
+    QString iconDirectory(const QString& key) const;
 
     void installIcons(const QStringList& iconFiles);
     void installIcon(const QString& file, const QString& name);
@@ -91,18 +92,20 @@ class IconList : public QAbstractListModel {
     IconList& operator=(const IconList&) = delete;
     void reindex();
     void sortIconList();
+    bool addPathRecursively(const QString& path);
+    QStringList getIconFilePaths() const;
 
    public slots:
     void directoryChanged(const QString& path);
 
    protected slots:
     void fileChanged(const QString& path);
-    void SettingChanged(const Setting& setting, QVariant value);
+    void SettingChanged(const Setting& setting, const QVariant& value);
 
    private:
     shared_qobject_ptr<QFileSystemWatcher> m_watcher;
-    bool is_watching;
-    QMap<QString, int> name_index;
-    QVector<MMCIcon> icons;
+    bool m_isWatching;
+    QMap<QString, int> m_nameIndex;
+    QVector<MMCIcon> m_icons;
     QDir m_dir;
 };
diff --git a/launcher/ui/dialogs/IconPickerDialog.cpp b/launcher/ui/dialogs/IconPickerDialog.cpp
index a7b44eab0..b6e928a3d 100644
--- a/launcher/ui/dialogs/IconPickerDialog.cpp
+++ b/launcher/ui/dialogs/IconPickerDialog.cpp
@@ -15,7 +15,9 @@
 
 #include <QFileDialog>
 #include <QKeyEvent>
+#include <QLineEdit>
 #include <QPushButton>
+#include <QSortFilterProxyModel>
 
 #include "Application.h"
 
@@ -33,6 +35,15 @@ IconPickerDialog::IconPickerDialog(QWidget* parent) : QDialog(parent), ui(new Ui
     ui->setupUi(this);
     setWindowModality(Qt::WindowModal);
 
+    searchBar = new QLineEdit(this);
+    searchBar->setPlaceholderText(tr("Search..."));
+    ui->verticalLayout->insertWidget(0, searchBar);
+
+    proxyModel = new QSortFilterProxyModel(this);
+    proxyModel->setSourceModel(APPLICATION->icons().get());
+    proxyModel->setFilterCaseSensitivity(Qt::CaseInsensitive);
+    ui->iconView->setModel(proxyModel);
+
     auto contentsWidget = ui->iconView;
     contentsWidget->setViewMode(QListView::IconMode);
     contentsWidget->setFlow(QListView::LeftToRight);
@@ -57,7 +68,7 @@ IconPickerDialog::IconPickerDialog(QWidget* parent) : QDialog(parent), ui(new Ui
 
     contentsWidget->installEventFilter(this);
 
-    contentsWidget->setModel(APPLICATION->icons().get());
+    contentsWidget->setModel(proxyModel);
 
     // NOTE: ResetRole forces the button to be on the left, while the OK/Cancel ones are on the right. We win.
     auto buttonAdd = ui->buttonBox->addButton(tr("Add Icon"), QDialogButtonBox::ResetRole);
@@ -76,6 +87,9 @@ IconPickerDialog::IconPickerDialog(QWidget* parent) : QDialog(parent), ui(new Ui
 
     auto buttonFolder = ui->buttonBox->addButton(tr("Open Folder"), QDialogButtonBox::ResetRole);
     connect(buttonFolder, &QPushButton::clicked, this, &IconPickerDialog::openFolder);
+    connect(searchBar, &QLineEdit::textChanged, this, &IconPickerDialog::filterIcons);
+    // Prevent incorrect indices from e.g. filesystem changes
+    connect(APPLICATION->icons().get(), &IconList::iconUpdated, this, [this]() { proxyModel->invalidate(); });
 }
 
 bool IconPickerDialog::eventFilter(QObject* obj, QEvent* evt)
@@ -162,5 +176,10 @@ IconPickerDialog::~IconPickerDialog()
 
 void IconPickerDialog::openFolder()
 {
-    DesktopServices::openPath(APPLICATION->icons()->getDirectory(), true);
+    DesktopServices::openPath(APPLICATION->icons()->iconDirectory(selectedIconKey), true);
 }
+
+void IconPickerDialog::filterIcons(const QString& query)
+{
+    proxyModel->setFilterFixedString(query);
+}
\ No newline at end of file
diff --git a/launcher/ui/dialogs/IconPickerDialog.h b/launcher/ui/dialogs/IconPickerDialog.h
index 37e53dcce..db1315338 100644
--- a/launcher/ui/dialogs/IconPickerDialog.h
+++ b/launcher/ui/dialogs/IconPickerDialog.h
@@ -16,6 +16,8 @@
 #pragma once
 #include <QDialog>
 #include <QItemSelection>
+#include <QLineEdit>
+#include <QSortFilterProxyModel>
 
 namespace Ui {
 class IconPickerDialog;
@@ -36,6 +38,8 @@ class IconPickerDialog : public QDialog {
    private:
     Ui::IconPickerDialog* ui;
     QPushButton* buttonRemove;
+    QLineEdit* searchBar;
+    QSortFilterProxyModel* proxyModel;
 
    private slots:
     void selectionChanged(QItemSelection, QItemSelection);
@@ -44,4 +48,5 @@ class IconPickerDialog : public QDialog {
     void addNewIcon();
     void removeSelectedIcon();
     void openFolder();
+    void filterIcons(const QString& text);
 };