diff --git a/frontend/src/components/Modals/MangeWorkspace/Documents/Directory/NewFolderModal/index.jsx b/frontend/src/components/Modals/MangeWorkspace/Documents/Directory/NewFolderModal/index.jsx
new file mode 100644
index 00000000..c3f7a8d2
--- /dev/null
+++ b/frontend/src/components/Modals/MangeWorkspace/Documents/Directory/NewFolderModal/index.jsx
@@ -0,0 +1,90 @@
+import React, { useState } from "react";
+import { X } from "@phosphor-icons/react";
+import Document from "@/models/document";
+
+export default function NewFolderModal({ closeModal, files, setFiles }) {
+  const [error, setError] = useState(null);
+  const [folderName, setFolderName] = useState("");
+
+  const handleCreate = async (e) => {
+    e.preventDefault();
+    setError(null);
+    if (folderName.trim() !== "") {
+      const newFolder = {
+        name: folderName,
+        type: "folder",
+        items: [],
+      };
+      const { success } = await Document.createFolder(folderName);
+      if (success) {
+        setFiles({
+          ...files,
+          items: [...files.items, newFolder],
+        });
+        closeModal();
+      } else {
+        setError("Failed to create folder");
+      }
+    }
+  };
+
+  return (
+    <div className="relative w-full max-w-2xl max-h-full">
+      <div className="relative bg-main-gradient rounded-lg shadow">
+        <div className="flex items-start justify-between p-4 border-b rounded-t border-gray-500/50">
+          <h3 className="text-xl font-semibold text-white">
+            Create New Folder
+          </h3>
+          <button
+            onClick={closeModal}
+            type="button"
+            className="transition-all duration-300 text-gray-400 bg-transparent hover:border-white/60 rounded-lg text-sm p-1.5 ml-auto inline-flex items-center bg-sidebar-button hover:bg-menu-item-selected-gradient hover:border-slate-100 hover:border-opacity-50 border-transparent border"
+            data-modal-hide="staticModal"
+          >
+            <X className="text-gray-300 text-lg" />
+          </button>
+        </div>
+        <form onSubmit={handleCreate}>
+          <div className="p-6 space-y-6 flex h-full w-full">
+            <div className="w-full flex flex-col gap-y-4">
+              <div>
+                <label
+                  htmlFor="folderName"
+                  className="block mb-2 text-sm font-medium text-white"
+                >
+                  Folder Name
+                </label>
+                <input
+                  name="folderName"
+                  type="text"
+                  className="bg-zinc-900 placeholder:text-white/20 border-gray-500 text-white text-sm rounded-lg focus:ring-blue-500 focus:border-blue-500 block w-full p-2.5"
+                  placeholder="Enter folder name"
+                  required={true}
+                  autoComplete="off"
+                  value={folderName}
+                  onChange={(e) => setFolderName(e.target.value)}
+                />
+              </div>
+              {error && <p className="text-red-400 text-sm">Error: {error}</p>}
+            </div>
+          </div>
+          <div className="flex w-full justify-between items-center p-6 space-x-2 border-t rounded-b border-gray-500/50">
+            <button
+              onClick={closeModal}
+              type="button"
+              className="px-4 py-2 rounded-lg text-white hover:bg-stone-900 transition-all duration-300"
+            >
+              Cancel
+            </button>
+            <button
+              type="submit"
+              className="transition-all duration-300 border border-slate-200 px-4 py-2 rounded-lg text-white text-sm items-center flex gap-x-2 hover:bg-slate-200 hover:text-slate-800 focus:ring-gray-800"
+            >
+              Create Folder
+            </button>
+          </div>
+        </form>
+      </div>
+    </div>
+  );
+}
diff --git a/frontend/src/components/Modals/MangeWorkspace/Documents/Directory/index.jsx b/frontend/src/components/Modals/MangeWorkspace/Documents/Directory/index.jsx
index d479a6cc..7dc4cfb9 100644
--- a/frontend/src/components/Modals/MangeWorkspace/Documents/Directory/index.jsx
+++ b/frontend/src/components/Modals/MangeWorkspace/Documents/Directory/index.jsx
@@ -3,11 +3,15 @@ import PreLoader from "@/components/Preloader";
 import { memo, useEffect, useState } from "react";
 import FolderRow from "./FolderRow";
 import System from "@/models/system";
-import { Plus, Trash } from "@phosphor-icons/react";
+import { MagnifyingGlass, Plus, Trash } from "@phosphor-icons/react";
 import Document from "@/models/document";
 import showToast from "@/utils/toast";
 import FolderSelectionPopup from "./FolderSelectionPopup";
 import MoveToFolderIcon from "./MoveToFolderIcon";
+import { useModal } from "@/hooks/useModal";
+import ModalWrapper from "@/components/ModalWrapper";
+import NewFolderModal from "./NewFolderModal";
+import debounce from "lodash.debounce";
 
 function Directory({
   files,
@@ -24,9 +28,14 @@ function Directory({
   loadingMessage,
 }) {
   const [amountSelected, setAmountSelected] = useState(0);
-  const [newFolderName, setNewFolderName] = useState("");
-  const [showNewFolderInput, setShowNewFolderInput] = useState(false);
   const [showFolderSelection, setShowFolderSelection] = useState(false);
+  const [searchTerm, setSearchTerm] = useState("");
+  const [isSearching, setIsSearching] = useState(false);
+  const {
+    isOpen: isFolderModalOpen,
+    openModal: openFolderModal,
+    closeModal: closeFolderModal,
+  } = useModal();
 
   useEffect(() => {
     setAmountSelected(Object.keys(selectedItems).length);
@@ -121,32 +130,6 @@ function Directory({
     return !!selectedItems[id];
   };
 
-  const createNewFolder = () => {
-    setShowNewFolderInput(true);
-  };
-
-  const confirmNewFolder = async () => {
-    if (newFolderName.trim() !== "") {
-      const newFolder = {
-        name: newFolderName,
-        type: "folder",
-        items: [],
-      };
-
-      // If folder failed to create - silently fail.
-      const { success } = await Document.createFolder(newFolderName);
-      if (success) {
-        setFiles({
-          ...files,
-          items: [...files.items, newFolder],
-        });
-      }
-
-      setNewFolderName("");
-      setShowNewFolderInput(false);
-    }
-  };
-
   const moveToFolder = async (folder) => {
     const toMove = [];
     for (const itemId of Object.keys(selectedItems)) {
@@ -183,40 +166,61 @@ function Directory({
     setLoading(false);
   };
 
+  const filterFiles = (item) => {
+    if (item.type === "folder") {
+      return (
+        item.name.toLowerCase().includes(searchTerm.toLowerCase()) ||
+        item.items.some((file) =>
+          file.name.toLowerCase().includes(searchTerm.toLowerCase())
+        )
+      );
+    } else {
+      return item.name.toLowerCase().includes(searchTerm.toLowerCase());
+    }
+  };
+
+  const debouncedSearch = debounce((value) => {
+    setSearchTerm(value);
+    setIsSearching(false);
+  }, 500);
+
+  const handleSearch = (e) => {
+    const searchValue = e.target.value;
+    setSearchTerm(searchValue);
+    setIsSearching(true);
+    debouncedSearch(searchValue);
+  };
+
+  const filteredFiles =
+    files && files.items ? files.items.filter((item) => filterFiles(item)) : [];
+
   return (
     <div className="px-8 pb-8">
       <div className="flex flex-col gap-y-6">
         <div className="flex items-center justify-between w-[560px] px-5 relative">
           <h3 className="text-white text-base font-bold">My Documents</h3>
-          {showNewFolderInput ? (
-            <div className="flex items-center gap-x-2 z-50">
-              <input
-                type="text"
-                placeholder="Folder name"
-                value={newFolderName}
-                onChange={(e) => setNewFolderName(e.target.value)}
-                className="bg-zinc-900 text-white placeholder-white/20 text-sm rounded-md p-2.5 w-[150px] h-[32px]"
-              />
-              <div className="flex gap-x-2">
-                <button
-                  onClick={confirmNewFolder}
-                  className="text-sky-400 rounded-md text-sm font-bold hover:text-sky-500"
-                >
-                  Create
-                </button>
-              </div>
+          <div className="relative">
+            <input
+              type="text"
+              placeholder="Search"
+              onChange={handleSearch}
+              className="bg-zinc-900 text-white placeholder-white/80 text-sm rounded-lg pl-9 pr-2.5 py-2 w-[250px] h-[32px]"
+            />
+            <MagnifyingGlass
+              size={14}
+              className="absolute left-3 top-1/2 transform -translate-y-1/2 text-white"
+              weight="bold"
+            />
+          </div>
+          <button
+            className="flex items-center gap-x-2 cursor-pointer px-[14px] py-[7px] -mr-[14px] rounded-lg hover:bg-[#222628]/60"
+            onClick={openFolderModal}
+          >
+            <Plus size={18} weight="bold" color="#D3D4D4" />
+            <div className="text-[#D3D4D4] text-xs font-bold leading-[18px]">
+              New Folder
             </div>
-          ) : (
-            <button
-              className="flex items-center gap-x-2 cursor-pointer px-[14px] py-[7px] -mr-[14px] rounded-lg hover:bg-[#222628]/60"
-              onClick={createNewFolder}
-            >
-              <Plus size={18} weight="bold" color="#D3D4D4" />
-              <div className="text-[#D3D4D4] text-xs font-bold leading-[18px]">
-                New Folder
-              </div>
-            </button>
-          )}
+          </button>
         </div>
 
         <div className="relative w-[560px] h-[310px] bg-zinc-900 rounded-2xl overflow-hidden">
@@ -234,8 +238,12 @@ function Directory({
                   {loadingMessage}
                 </p>
               </div>
-            ) : files.items ? (
-              files.items.map(
+            ) : isSearching && searchTerm !== "" ? (
+              <div className="w-full h-full flex items-center justify-center">
+                <PreLoader />
+              </div>
+            ) : filteredFiles.length > 0 ? (
+              filteredFiles.map(
                 (item, index) =>
                   item.type === "folder" && (
                     <FolderRow
@@ -302,6 +310,7 @@ function Directory({
             </div>
           )}
         </div>
+
         <UploadFile
           workspace={workspace}
           fetchKeys={fetchKeys}
@@ -309,6 +318,14 @@ function Directory({
           setLoadingMessage={setLoadingMessage}
         />
       </div>
+
+      <ModalWrapper isOpen={isFolderModalOpen}>
+        <NewFolderModal
+          closeModal={closeFolderModal}
+          files={files}
+          setFiles={setFiles}
+        />
+      </ModalWrapper>
     </div>
   );
 }