diff --git a/src/appDiscovery.ts b/src/appDiscovery.ts
index f225adc..d7b42cf 100644
--- a/src/appDiscovery.ts
+++ b/src/appDiscovery.ts
@@ -62,15 +62,18 @@ async function parsePyprojectForEntryPoint(
       return null
     }
 
-    // Parse "my_app.main:app" format (variable name after : is optional)
+    // Parse "my_app.main:app" or "api.py:app" format (variable name after : is optional)
     const colonIndex = entrypointValue.indexOf(":")
     const modulePath =
       colonIndex === -1 ? entrypointValue : entrypointValue.slice(0, colonIndex)
     const variableName =
       colonIndex === -1 ? undefined : entrypointValue.slice(colonIndex + 1)
 
-    // Convert module path to file path: my_app.main -> my_app/main.py
-    const relativePath = `${modulePath.replace(/\./g, "/")}.py`
+    // Handle both module format (api.module) and file format (api.py)
+    const relativePath =
+      modulePath.endsWith(".py") && !modulePath.includes("/")
+        ? modulePath // Simple file path: api.py -> api.py
+        : `${modulePath.replace(/\./g, "/")}.py` // Module path: my_app.main -> my_app/main.py
     const fullUri = vscode.Uri.joinPath(folderUri, relativePath)
 
     return (await vscodeFileSystem.exists(fullUri.toString()))
diff --git a/src/extension.ts b/src/extension.ts
index dd4ca8d..cd8cb30 100644
--- a/src/extension.ts
+++ b/src/extension.ts
@@ -7,7 +7,7 @@ import { discoverFastAPIApps } from "./appDiscovery"
 import { clearImportCache } from "./core/importResolver"
 import { Parser } from "./core/parser"
 import { stripLeadingDynamicSegments } from "./core/pathUtils"
-import type { SourceLocation } from "./core/types"
+import type { AppDefinition, SourceLocation } from "./core/types"
 import {
   type EndpointTreeItem,
   EndpointTreeProvider,
@@ -63,7 +63,31 @@ export async function activate(context: vscode.ExtensionContext) {
 
   // Discover apps and create providers
   const apps = await discoverFastAPIApps(parserService)
-  const endpointProvider = new EndpointTreeProvider(apps)
+
+  // Create grouping function that groups by workspace folder if there are multiple folders
+  const groupApps = (apps: AppDefinition[]) => {
+    const workspaceFolders = vscode.workspace.workspaceFolders
+    if (!workspaceFolders || workspaceFolders.length <= 1) {
+      // Single workspace folder: show apps directly at root
+      return apps.map((app) => ({ type: "app" as const, app }))
+    }
+
+    // Multi-root workspace: group by workspace folder
+    const grouped = apps.reduce((acc, app) => {
+      const existing = acc.get(app.workspaceFolder) ?? []
+      acc.set(app.workspaceFolder, [...existing, app])
+      return acc
+    }, new Map<string, AppDefinition[]>())
+
+    // Create workspace items with folder names
+    return Array.from(grouped.entries()).map(([folderPath, apps]) => {
+      const folder = workspaceFolders.find((f) => f.uri.fsPath === folderPath)
+      const label = folder?.name ?? folderPath.split("/").pop() ?? folderPath
+      return { type: "workspace" as const, label, apps }
+    })
+  }
+
+  const endpointProvider = new EndpointTreeProvider(apps, groupApps)
   const codeLensProvider = new TestCodeLensProvider(parserService, apps)
 
   // File watcher for auto-refresh
@@ -73,7 +97,7 @@ export async function activate(context: vscode.ExtensionContext) {
     refreshTimeout = setTimeout(async () => {
       if (!parserService) return
       const newApps = await discoverFastAPIApps(parserService)
-      endpointProvider.setApps(newApps)
+      endpointProvider.setApps(newApps, groupApps)
       codeLensProvider.setApps(newApps)
     }, 300)
   }