diff --git a/app/src/workspace/view.rs b/app/src/workspace/view.rs
index 1805ccbd80d..501f4908be4 100644
--- a/app/src/workspace/view.rs
+++ b/app/src/workspace/view.rs
@@ -4011,6 +4011,14 @@ impl Workspace {
             .get(self.active_tab_index)
             .and_then(|tab| tab.group_id);
 
+        // A tab that joins a group in the loop below expands it, so re-collapse these afterwards.
+        let collapsed_groups: Vec<TabGroupId> = self
+            .tab_groups
+            .iter()
+            .filter(|(_, group)| group.collapsed)
+            .map(|(id, _)| *id)
+            .collect();
+
         window
             .tabs
             .iter()
@@ -4034,6 +4042,12 @@ impl Workspace {
                     .and_then(|group_index| group_ids.get(group_index).copied().flatten());
             });
 
+        for group_id in &collapsed_groups {
+            if let Some(group) = self.tab_groups.get_mut(group_id) {
+                group.collapsed = true;
+            }
+        }
+
         // A pinned group makes its members effectively pinned, and the pinned
         // region is a prefix of the tab list. The inserts above ran while the
         // tabs were still ungrouped, so `NewTabPlacement` could leave the block
diff --git a/app/src/workspace/view_tests.rs b/app/src/workspace/view_tests.rs
index 19da532594e..853e2798659 100644
--- a/app/src/workspace/view_tests.rs
+++ b/app/src/workspace/view_tests.rs
@@ -48,6 +48,9 @@ use crate::cloud_object::model::view::CloudViewModel;
 use crate::context_chips::prompt::Prompt;
 use crate::editor::Event;
 use crate::gpu_state::GPUState;
+use crate::launch_configs::launch_config::{
+    PaneMode, PaneTemplateType, TabGroupTemplate, TabTemplate,
+};
 use crate::menu::MenuAction;
 use crate::network::NetworkStatus;
 use crate::notebooks::editor::keys::NotebookKeybindings;
@@ -5272,6 +5275,97 @@ fn test_new_tab_in_group_expands_collapsed_group_member_active() {
     });
 }
 
+fn launch_config_tab(group: Option<usize>) -> TabTemplate {
+    TabTemplate {
+        title: None,
+        layout: PaneTemplateType::PaneTemplate {
+            cwd: std::env::temp_dir(),
+            commands: vec![],
+            is_focused: Some(true),
+            pane_mode: PaneMode::Terminal,
+            shell: None,
+        },
+        commands: vec![],
+        color: None,
+        group,
+    }
+}
+
+#[test]
+fn test_launch_config_keeps_tab_group_collapsed() {
+    let _grouped_tabs_guard = FeatureFlag::GroupedTabs.override_enabled(true);
+
+    App::test((), |mut app| async move {
+        initialize_app(&mut app);
+
+        let workspace = mock_workspace(&mut app);
+        workspace.update(&mut app, |workspace, ctx| {
+            let window = WindowTemplate {
+                active_tab_index: Some(0),
+                tabs: vec![launch_config_tab(Some(0)), launch_config_tab(Some(0))],
+                tab_groups: vec![TabGroupTemplate {
+                    name: Some("Collapsed group".to_string()),
+                    color: None,
+                    collapsed: true,
+                    pinned: false,
+                }],
+            };
+            workspace.open_launch_config_window(window, ctx);
+
+            let group_id = workspace
+                .tabs
+                .iter()
+                .find_map(|tab| tab.group_id)
+                .expect("launch config should create the group");
+            assert_eq!(
+                workspace
+                    .tabs
+                    .iter()
+                    .filter(|tab| tab.group_id == Some(group_id))
+                    .count(),
+                2
+            );
+            assert!(
+                workspace.tab_groups[&group_id].collapsed,
+                "group saved as collapsed should open collapsed"
+            );
+        });
+    });
+}
+
+#[test]
+fn test_launch_config_keeps_active_collapsed_group_collapsed() {
+    let _grouped_tabs_guard = FeatureFlag::GroupedTabs.override_enabled(true);
+
+    App::test((), |mut app| async move {
+        initialize_app(&mut app);
+
+        let workspace = mock_workspace(&mut app);
+        workspace.update(&mut app, |workspace, ctx| {
+            workspace.handle_action(
+                &WorkspaceAction::SelectNewSessionMenuItem(NewSessionMenuItem::CreateNewTabGroup),
+                ctx,
+            );
+            let group_id = workspace.tabs[workspace.active_tab_index()]
+                .group_id
+                .expect("active tab should be in a group");
+            workspace.handle_action(&WorkspaceAction::ToggleTabGroupCollapsed(group_id), ctx);
+
+            let window = WindowTemplate {
+                active_tab_index: Some(0),
+                tabs: vec![launch_config_tab(None)],
+                tab_groups: vec![],
+            };
+            workspace.open_launch_config_window(window, ctx);
+
+            assert!(
+                workspace.tab_groups[&group_id].collapsed,
+                "opening a launch config should not expand an existing group"
+            );
+        });
+    });
+}
+
 #[test]
 fn test_pin_unpin_ungrouped_tab_moves_to_and_from_boundary() {
     let _pinned_guard = FeatureFlag::PinnedTabs.override_enabled(true);