diff --git a/src/commands/testExplorerCommands.ts b/src/commands/testExplorerCommands.ts
index b35f66f6..6a7c21f2 100644
--- a/src/commands/testExplorerCommands.ts
+++ b/src/commands/testExplorerCommands.ts
@@ -1,9 +1,9 @@
 // Copyright (c) Microsoft Corporation. All rights reserved.
 // Licensed under the MIT license.
 
-import { DebugConfiguration, TestItem, TestRunRequest } from 'vscode';
+import { DebugConfiguration, TestItem, TestRunRequest, Uri } from 'vscode';
 import { sendInfo } from 'vscode-extension-telemetry-wrapper';
-import { runTests, testController } from '../controller/testController';
+import { loadChildren, runTests, testController } from '../controller/testController';
 import { loadJavaProjects } from '../controller/utils';
 import { showTestItemsInCurrentFile } from '../extension';
 
@@ -39,10 +39,46 @@ export async function runTestsFromTestExplorer(testItem: TestItem, launchConfigu
 
 export async function refreshExplorer(): Promise<void> {
     sendInfo('', { name: 'refreshTests' });
+
+    await loadJavaProjects();
+
+    // Force re-resolution of all existing project roots
+    const loadPromises: Promise<void>[] = [];
     testController?.items.forEach((root: TestItem) => {
-        testController?.items.delete(root.id);
+        loadPromises.push(loadChildren(root));
     });
+    await Promise.all(loadPromises);
 
-    await loadJavaProjects();
+    await showTestItemsInCurrentFile();
+}
+
+/**
+ * Refresh only the project subtree that matches the given classpath-change URI.
+ * Falls back to a full (incremental) refresh if no matching project is found.
+ */
+export async function refreshProject(classpathUri: Uri): Promise<void> {
+    sendInfo('', { name: 'refreshProject' });
+    const uriString: string = classpathUri.toString();
+
+    // Find the project root with the longest matching URI prefix (most specific match)
+    let matchedProject: TestItem | undefined;
+    let matchedUriLength: number = 0;
+    testController?.items.forEach((root: TestItem) => {
+        if (root.uri) {
+            const rootUriString: string = root.uri.toString();
+            if (uriString.startsWith(rootUriString) && rootUriString.length > matchedUriLength) {
+                matchedProject = root;
+                matchedUriLength = rootUriString.length;
+            }
+        }
+    });
+
+    if (matchedProject) {
+        // Re-resolve only the matched project's children
+        await loadChildren(matchedProject);
+    } else {
+        // No matching project found – do incremental full refresh
+        await loadJavaProjects();
+    }
     await showTestItemsInCurrentFile();
 }
diff --git a/src/controller/utils.ts b/src/controller/utils.ts
index af54caeb..946d4c97 100644
--- a/src/controller/utils.ts
+++ b/src/controller/utils.ts
@@ -34,6 +34,14 @@ export async function loadJavaProjects(): Promise<void> {
         return project.testKind !== TestKind.None;
     });
 
+    // Remove projects that no longer exist
+    const projectIds: Set<string> = new Set(testProjects.map((p: IJavaTestItem) => p.id));
+    testController?.items.forEach((root: TestItem) => {
+        if (!projectIds.has(root.id)) {
+            testController?.items.delete(root.id);
+        }
+    });
+
     for (const project of testProjects) {
         if (testController?.items.get(project.id)) {
             continue;
diff --git a/src/extension.ts b/src/extension.ts
index 24051eb2..18a786c7 100644
--- a/src/extension.ts
+++ b/src/extension.ts
@@ -7,7 +7,7 @@ import { dispose as disposeTelemetryWrapper, initializeFromJsonFile, instrumentO
 import { navigateToTestOrTarget } from './commands/navigation/navigationCommands';
 import { generateTests } from './commands/generationCommands';
 import { runTestsFromJavaProjectExplorer } from './commands/projectExplorerCommands';
-import { refreshExplorer, runTestsFromTestExplorer } from './commands/testExplorerCommands';
+import { refreshExplorer, refreshProject, runTestsFromTestExplorer } from './commands/testExplorerCommands';
 import { openStackTrace } from './commands/testReportCommands';
 import { Context, ExtensionName, JavaTestRunnerCommands, VSCodeCommands } from './constants';
 import { createTestController, testController, watchers } from './controller/testController';
@@ -76,11 +76,11 @@ async function doActivate(_operationId: string, context: ExtensionContext): Prom
 
         if (extensionApi.onDidClasspathUpdate) {
             const onDidClasspathUpdate: Event<Uri> = extensionApi.onDidClasspathUpdate;
-            context.subscriptions.push(onDidClasspathUpdate(async () => {
+            context.subscriptions.push(onDidClasspathUpdate(async (uri: Uri) => {
                 // workaround: wait more time to make sure Language Server has updated all caches
                 setTimeout(() => {
                     testSourceProvider.clear();
-                    refreshExplorer();
+                    refreshProject(uri);
                 }, 1000 /* ms */);
             }));
         }