diff --git a/apps/web/src/components/Sidebar.tsx b/apps/web/src/components/Sidebar.tsx
index 4b4093e2120..431968cbaee 100644
--- a/apps/web/src/components/Sidebar.tsx
+++ b/apps/web/src/components/Sidebar.tsx
@@ -145,15 +145,7 @@ import {
   DialogTitle,
 } from "./ui/dialog";
 import { Input } from "./ui/input";
-import {
-  Menu,
-  MenuGroup,
-  MenuPopup,
-  MenuRadioGroup,
-  MenuRadioItem,
-  MenuSeparator,
-  MenuTrigger,
-} from "./ui/menu";
+import { Menu, MenuGroup, MenuPopup, MenuRadioGroup, MenuRadioItem, MenuTrigger } from "./ui/menu";
 import {
   NumberField,
   NumberFieldDecrement,
@@ -2601,20 +2593,16 @@ type SortableProjectHandleProps = Pick<
 function ProjectSortMenu({
   projectSortOrder,
   threadSortOrder,
-  projectGroupingMode,
   threadPreviewCount,
   onProjectSortOrderChange,
   onThreadSortOrderChange,
-  onProjectGroupingModeChange,
   onThreadPreviewCountChange,
 }: {
   projectSortOrder: SidebarProjectSortOrder;
   threadSortOrder: SidebarThreadSortOrder;
-  projectGroupingMode: SidebarProjectGroupingMode;
   threadPreviewCount: SidebarThreadPreviewCount;
   onProjectSortOrderChange: (sortOrder: SidebarProjectSortOrder) => void;
   onThreadSortOrderChange: (sortOrder: SidebarThreadSortOrder) => void;
-  onProjectGroupingModeChange: (mode: SidebarProjectGroupingMode) => void;
   onThreadPreviewCountChange: (count: SidebarThreadPreviewCount) => void;
 }) {
   const handleThreadPreviewCountChange = useCallback(
@@ -2718,30 +2706,6 @@ function ProjectSortMenu({
             </NumberField>
           </div>
         </MenuGroup>
-        <MenuSeparator />
-        <MenuGroup>
-          <div className="px-2 pt-2 pb-1 font-medium text-muted-foreground sm:text-xs">
-            Group projects
-          </div>
-          <MenuRadioGroup
-            value={projectGroupingMode}
-            onValueChange={(value) => {
-              if (value === "repository" || value === "repository_path" || value === "separate") {
-                onProjectGroupingModeChange(value);
-              }
-            }}
-          >
-            {(
-              Object.entries(PROJECT_GROUPING_MODE_LABELS) as Array<
-                [SidebarProjectGroupingMode, string]
-              >
-            ).map(([value, label]) => (
-              <MenuRadioItem key={value} value={value} className="min-h-7 py-1 sm:text-xs">
-                {label}
-              </MenuRadioItem>
-            ))}
-          </MenuRadioGroup>
-        </MenuGroup>
       </MenuPopup>
     </Menu>
   );
@@ -2792,7 +2756,6 @@ interface SidebarProjectsContentProps {
   handleDesktopUpdateButtonClick: () => void;
   projectSortOrder: SidebarProjectSortOrder;
   threadSortOrder: SidebarThreadSortOrder;
-  projectGroupingMode: SidebarProjectGroupingMode;
   threadPreviewCount: SidebarThreadPreviewCount;
   updateSettings: ReturnType<typeof useUpdateClientSettings>;
   openAddProject: () => void;
@@ -2833,7 +2796,6 @@ const SidebarProjectsContent = memo(function SidebarProjectsContent(
     handleDesktopUpdateButtonClick,
     projectSortOrder,
     threadSortOrder,
-    projectGroupingMode,
     threadPreviewCount,
     updateSettings,
     openAddProject,
@@ -2875,12 +2837,6 @@ const SidebarProjectsContent = memo(function SidebarProjectsContent(
     },
     [updateSettings],
   );
-  const handleProjectGroupingModeChange = useCallback(
-    (groupingMode: SidebarProjectGroupingMode) => {
-      updateSettings({ sidebarProjectGroupingMode: groupingMode });
-    },
-    [updateSettings],
-  );
   const handleThreadPreviewCountChange = useCallback(
     (count: SidebarThreadPreviewCount) => {
       updateSettings({ sidebarThreadPreviewCount: count });
@@ -2944,11 +2900,9 @@ const SidebarProjectsContent = memo(function SidebarProjectsContent(
             <ProjectSortMenu
               projectSortOrder={projectSortOrder}
               threadSortOrder={threadSortOrder}
-              projectGroupingMode={projectGroupingMode}
               threadPreviewCount={threadPreviewCount}
               onProjectSortOrderChange={handleProjectSortOrderChange}
               onThreadSortOrderChange={handleThreadSortOrderChange}
-              onProjectGroupingModeChange={handleProjectGroupingModeChange}
               onThreadPreviewCountChange={handleThreadPreviewCountChange}
             />
             <Tooltip>
@@ -3064,7 +3018,6 @@ export default function Sidebar() {
   const isOnSettings = pathname.startsWith("/settings");
   const sidebarThreadSortOrder = useClientSettings((s) => s.sidebarThreadSortOrder);
   const sidebarProjectSortOrder = useClientSettings((s) => s.sidebarProjectSortOrder);
-  const sidebarProjectGroupingMode = useClientSettings((s) => s.sidebarProjectGroupingMode);
   const projectGroupingSettings = useClientSettings(selectProjectGroupingSettings);
   const sidebarThreadPreviewCount = useClientSettings((s) => s.sidebarThreadPreviewCount);
   const updateSettings = useUpdateClientSettings();
@@ -3674,7 +3627,6 @@ export default function Sidebar() {
             handleDesktopUpdateButtonClick={handleDesktopUpdateButtonClick}
             projectSortOrder={sidebarProjectSortOrder}
             threadSortOrder={sidebarThreadSortOrder}
-            projectGroupingMode={sidebarProjectGroupingMode}
             threadPreviewCount={sidebarThreadPreviewCount}
             updateSettings={updateSettings}
             openAddProject={openAddProjectCommandPalette}
diff --git a/apps/web/src/components/settings/SettingsPanels.logic.test.ts b/apps/web/src/components/settings/SettingsPanels.logic.test.ts
index d783d16c7ad..077991f8de0 100644
--- a/apps/web/src/components/settings/SettingsPanels.logic.test.ts
+++ b/apps/web/src/components/settings/SettingsPanels.logic.test.ts
@@ -8,8 +8,25 @@ import { describe, expect, it } from "vite-plus/test";
 import {
   buildProviderInstanceUpdatePatch,
   formatDiagnosticsDescription,
+  isProjectGroupingEnabled,
+  projectGroupingModeFromToggle,
 } from "./SettingsPanels.logic";
 
+describe("project grouping toggle", () => {
+  it("enables repository grouping and disables into separate projects", () => {
+    expect(isProjectGroupingEnabled("repository")).toBe(true);
+    expect(isProjectGroupingEnabled("repository_path")).toBe(true);
+    expect(isProjectGroupingEnabled("separate")).toBe(false);
+    expect(projectGroupingModeFromToggle(true)).toBe("repository");
+    expect(projectGroupingModeFromToggle(false)).toBe("separate");
+  });
+
+  it("restores repository path grouping when the toggle is cycled", () => {
+    expect(projectGroupingModeFromToggle(false, "repository_path")).toBe("separate");
+    expect(projectGroupingModeFromToggle(true, "repository_path")).toBe("repository_path");
+  });
+});
+
 describe("formatDiagnosticsDescription", () => {
   it("collapses trace and metric URLs that share the same OTEL base path", () => {
     expect(
diff --git a/apps/web/src/components/settings/SettingsPanels.logic.ts b/apps/web/src/components/settings/SettingsPanels.logic.ts
index 99d7052965a..51e318225ae 100644
--- a/apps/web/src/components/settings/SettingsPanels.logic.ts
+++ b/apps/web/src/components/settings/SettingsPanels.logic.ts
@@ -3,10 +3,44 @@ import type {
   ProviderInstanceConfig,
   ProviderInstanceId,
   ServerSettings,
+  SidebarProjectGroupingMode,
   UnifiedSettings,
 } from "@t3tools/contracts";
 import { DEFAULT_UNIFIED_SETTINGS } from "@t3tools/contracts/settings";
 
+export function isProjectGroupingEnabled(mode: SidebarProjectGroupingMode): boolean {
+  return mode !== "separate";
+}
+
+export function projectGroupingModeFromToggle(
+  enabled: boolean,
+  lastEnabledMode: SidebarProjectGroupingMode = "repository",
+): SidebarProjectGroupingMode {
+  if (!enabled) return "separate";
+  return lastEnabledMode === "repository_path" ? "repository_path" : "repository";
+}
+
+const LAST_ENABLED_PROJECT_GROUPING_MODE_KEY = "t3code:last-enabled-project-grouping-mode";
+
+export function readLastEnabledProjectGroupingMode(): SidebarProjectGroupingMode {
+  try {
+    return localStorage.getItem(LAST_ENABLED_PROJECT_GROUPING_MODE_KEY) === "repository_path"
+      ? "repository_path"
+      : "repository";
+  } catch {
+    return "repository";
+  }
+}
+
+export function rememberEnabledProjectGroupingMode(mode: SidebarProjectGroupingMode): void {
+  if (mode === "separate") return;
+  try {
+    localStorage.setItem(LAST_ENABLED_PROJECT_GROUPING_MODE_KEY, mode);
+  } catch {
+    // Storage can be unavailable in restricted browser contexts.
+  }
+}
+
 function collapseOtelSignalsUrl(input: {
   readonly tracesUrl: string;
   readonly metricsUrl: string;
diff --git a/apps/web/src/components/settings/SettingsPanels.tsx b/apps/web/src/components/settings/SettingsPanels.tsx
index ebf4aed6234..03ac84405fa 100644
--- a/apps/web/src/components/settings/SettingsPanels.tsx
+++ b/apps/web/src/components/settings/SettingsPanels.tsx
@@ -11,6 +11,7 @@ import {
   type ProviderInstanceConfig,
   type ProviderInstanceId,
   type ScopedThreadRef,
+  type SidebarProjectGroupingMode,
 } from "@t3tools/contracts";
 import { scopeThreadRef } from "@t3tools/client-runtime/environment";
 import { safeErrorLogAttributes } from "@t3tools/client-runtime/errors";
@@ -83,6 +84,10 @@ import { DRIVER_OPTIONS, getDriverOption } from "./providerDriverMeta";
 import {
   buildProviderInstanceUpdatePatch,
   formatDiagnosticsDescription,
+  isProjectGroupingEnabled,
+  projectGroupingModeFromToggle,
+  readLastEnabledProjectGroupingMode,
+  rememberEnabledProjectGroupingMode,
 } from "./SettingsPanels.logic";
 import {
   SettingResetButton,
@@ -401,6 +406,10 @@ export function useSettingsRestore(onRestored?: () => void) {
       ...(settings.sidebarThreadPreviewCount !== DEFAULT_UNIFIED_SETTINGS.sidebarThreadPreviewCount
         ? ["Visible threads"]
         : []),
+      ...(settings.sidebarProjectGroupingMode !==
+      DEFAULT_UNIFIED_SETTINGS.sidebarProjectGroupingMode
+        ? ["Project Grouping"]
+        : []),
       ...(settings.wordWrap !== DEFAULT_UNIFIED_SETTINGS.wordWrap ? ["Word wrap"] : []),
       ...(settings.diffIgnoreWhitespace !== DEFAULT_UNIFIED_SETTINGS.diffIgnoreWhitespace
         ? ["Diff whitespace changes"]
@@ -450,6 +459,7 @@ export function useSettingsRestore(onRestored?: () => void) {
       settings.automaticGitFetchInterval,
       settings.enableAssistantStreaming,
       settings.enableProviderUpdateChecks,
+      settings.sidebarProjectGroupingMode,
       settings.sidebarThreadPreviewCount,
       settings.timestampFormat,
       settings.wordWrap,
@@ -474,6 +484,7 @@ export function useSettingsRestore(onRestored?: () => void) {
       diffIgnoreWhitespace: DEFAULT_UNIFIED_SETTINGS.diffIgnoreWhitespace,
       glassOpacity: DEFAULT_UNIFIED_SETTINGS.glassOpacity,
       sidebarThreadPreviewCount: DEFAULT_UNIFIED_SETTINGS.sidebarThreadPreviewCount,
+      sidebarProjectGroupingMode: DEFAULT_UNIFIED_SETTINGS.sidebarProjectGroupingMode,
       autoOpenPlanSidebar: DEFAULT_UNIFIED_SETTINGS.autoOpenPlanSidebar,
       enableAssistantStreaming: DEFAULT_UNIFIED_SETTINGS.enableAssistantStreaming,
       enableProviderUpdateChecks: DEFAULT_UNIFIED_SETTINGS.enableProviderUpdateChecks,
@@ -498,6 +509,9 @@ export function GeneralSettingsPanel() {
   const { theme, setTheme } = useTheme();
   const settings = usePrimarySettings();
   const updateSettings = useUpdatePrimarySettings();
+  const lastEnabledProjectGroupingMode = useRef<SidebarProjectGroupingMode>(
+    readLastEnabledProjectGroupingMode(),
+  );
   const observability = useAtomValue(primaryServerObservabilityAtom);
   const serverProviders = useAtomValue(primaryServerProvidersAtom);
   const glassOpacityRatio =
@@ -619,6 +633,42 @@ export function GeneralSettingsPanel() {
           }
         />
 
+        <SettingsRow
+          title="Project Grouping"
+          description="Combine matching repositories across environments."
+          resetAction={
+            settings.sidebarProjectGroupingMode !==
+            DEFAULT_UNIFIED_SETTINGS.sidebarProjectGroupingMode ? (
+              <SettingResetButton
+                label="project grouping"
+                onClick={() =>
+                  updateSettings({
+                    sidebarProjectGroupingMode: DEFAULT_UNIFIED_SETTINGS.sidebarProjectGroupingMode,
+                  })
+                }
+              />
+            ) : null
+          }
+          control={
+            <Switch
+              checked={isProjectGroupingEnabled(settings.sidebarProjectGroupingMode)}
+              onCheckedChange={(checked) => {
+                if (!checked && settings.sidebarProjectGroupingMode !== "separate") {
+                  lastEnabledProjectGroupingMode.current = settings.sidebarProjectGroupingMode;
+                  rememberEnabledProjectGroupingMode(settings.sidebarProjectGroupingMode);
+                }
+                updateSettings({
+                  sidebarProjectGroupingMode: projectGroupingModeFromToggle(
+                    checked,
+                    lastEnabledProjectGroupingMode.current,
+                  ),
+                });
+              }}
+              aria-label="Project Grouping"
+            />
+          }
+        />
+
         <SettingsRow
           title="Time format"
           description="System default follows your browser or OS clock preference."