diff --git a/extensions/intellij/src/main/kotlin/com/github/continuedev/continueintellijextension/continue/UriUtils.kt b/extensions/intellij/src/main/kotlin/com/github/continuedev/continueintellijextension/continue/UriUtils.kt
index d2030280f28..b7adf31a535 100644
--- a/extensions/intellij/src/main/kotlin/com/github/continuedev/continueintellijextension/continue/UriUtils.kt
+++ b/extensions/intellij/src/main/kotlin/com/github/continuedev/continueintellijextension/continue/UriUtils.kt
@@ -23,10 +23,16 @@ object UriUtils {
         // Remove query parameters if present
         val uriStr = uri.substringBefore("?")
 
-        // Handle Windows file paths with authority component
+        // Handle Windows file paths with authority component.
+        // URI(scheme, authority, path, query) treats path as decoded and re-encodes `%`,
+        // so already-encoded paths (Unity%20Projects) must be parsed as a URI string.
         if (uriStr.startsWith("file://") && !uriStr.startsWith("file:///")) {
             val path = uriStr.substringAfter("file://")
-            return URI("file", "", "/$path", null)
+            return try {
+                URI("file:///$path")
+            } catch (e: Exception) {
+                URI("file", "", "/$path", null)
+            }
         }
 
         return try {
diff --git a/extensions/intellij/src/main/kotlin/com/github/continuedev/continueintellijextension/continue/file/FileUtils.kt b/extensions/intellij/src/main/kotlin/com/github/continuedev/continueintellijextension/continue/file/FileUtils.kt
index 6aac270cdfb..73603046101 100644
--- a/extensions/intellij/src/main/kotlin/com/github/continuedev/continueintellijextension/continue/file/FileUtils.kt
+++ b/extensions/intellij/src/main/kotlin/com/github/continuedev/continueintellijextension/continue/file/FileUtils.kt
@@ -2,6 +2,7 @@ package com.github.continuedev.continueintellijextension.`continue`.file
 
 import com.github.continuedev.continueintellijextension.FileStats
 import com.github.continuedev.continueintellijextension.FileType
+import com.github.continuedev.continueintellijextension.`continue`.UriUtils
 import com.intellij.openapi.application.runReadAction
 import com.intellij.openapi.application.runWriteAction
 import com.intellij.openapi.diagnostic.Logger
@@ -23,7 +24,8 @@ class FileUtils(
         findFile(fileUri) != null
 
     fun writeFile(fileUri: String, content: String) {
-        val path = VfsUtilCore.urlToPath(fileUri)
+        val path = toLocalPath(fileUri)
+            ?: return
         val pathDirectory = VfsUtil.getParentDir(path)
             ?: return LOG.warn("Parent directory is null for $path")
         val vfsDirectory = VfsUtil.createDirectories(pathDirectory)
@@ -91,12 +93,22 @@ class FileUtils(
         }.toMap()
 
     private fun findFile(fileUri: String): VirtualFile? {
-        val noParams = fileUri.substringBefore("?")
-        val normalizedAuthority = normalizeWindowsAuthority(noParams)
+        val path = toLocalPath(fileUri)
+            ?: return null
         return VirtualFileManager.getInstance()
-            .refreshAndFindFileByUrl(normalizedAuthority)
+            .refreshAndFindFileByUrl(VfsUtilCore.pathToUrl(path))
     }
 
+    // VfsUtilCore.urlToPath does not percent-decode, so file://.../Unity%20Projects
+    // would create/find a literal "%20" directory. UriUtils.uriToFile uses java.net.URI.
+    private fun toLocalPath(fileUri: String): String? =
+        try {
+            UriUtils.uriToFile(fileUri).path.replace('\\', '/')
+        } catch (e: Exception) {
+            LOG.warn("Could not resolve path for $fileUri", e)
+            null
+        }
+
     private fun readDocument(file: VirtualFile, maxLength: Int): String? {
         val document = FileDocumentManager.getInstance().getDocument(file)
             ?: return null
@@ -108,16 +120,6 @@ class FileUtils(
         text.replace("\r\n", "\n")
             .replace("\r", "\n")
 
-    private fun normalizeWindowsAuthority(fileUri: String): String {
-        val authorityPrefix = "file://"
-        val noAuthorityPrefix = "file:///"
-        if (fileUri.startsWith(authorityPrefix) && !fileUri.startsWith(noAuthorityPrefix)) {
-            val path = fileUri.substringAfter(authorityPrefix)
-            return "$noAuthorityPrefix$path"
-        }
-        return fileUri
-    }
-
     private companion object {
         private val LOG = Logger.getInstance(FileUtils::class.java)
     }
diff --git a/extensions/intellij/src/test/kotlin/com/github/continuedev/continueintellijextension/unit/FileUtilsTest.kt b/extensions/intellij/src/test/kotlin/com/github/continuedev/continueintellijextension/unit/FileUtilsTest.kt
index 338cb6fdafd..80da5c61125 100644
--- a/extensions/intellij/src/test/kotlin/com/github/continuedev/continueintellijextension/unit/FileUtilsTest.kt
+++ b/extensions/intellij/src/test/kotlin/com/github/continuedev/continueintellijextension/unit/FileUtilsTest.kt
@@ -41,6 +41,11 @@ class FileUtilsTest : UsefulTestCase() {
         assertFalse(fileUtils.fileExists("file://dir/missing.txt"))
     }
 
+    fun `test fileExists decodes percent-encoded path`() {
+        myFixture.createTempFile("Unity Projects/foo.txt")
+        assertTrue(fileUtils.fileExists("file://$tmp/Unity%20Projects/foo.txt"))
+    }
+
     fun `test writeFile creates missing file`() {
         fileUtils.writeFile("file://$tmp/file.txt", "text")
         assertEquals("text", myFixture.readTempFile("file.txt"))
@@ -57,6 +62,12 @@ class FileUtilsTest : UsefulTestCase() {
         assertEquals("new_text", myFixture.readTempFile("overwrite.txt"))
     }
 
+    fun `test writeFile decodes percent-encoded path`() {
+        fileUtils.writeFile("file://$tmp/Unity%20Projects/foo.txt", "text")
+        assertEquals("text", myFixture.readTempFile("Unity Projects/foo.txt"))
+        assertNull(myFixture.tempDirFixture.getFile("Unity%20Projects/foo.txt"))
+    }
+
     fun `test readFile`() {
         myFixture.createTempFile("file.txt", "text")
         assertEquals("text", fileUtils.readFile("file://$tmp/file.txt"))
@@ -77,6 +88,11 @@ class FileUtilsTest : UsefulTestCase() {
         assertEmpty(fileUtils.readFile("file://missing.txt"))
     }
 
+    fun `test readFile decodes percent-encoded path`() {
+        myFixture.createTempFile("Unity Projects/foo.txt", "text")
+        assertEquals("text", fileUtils.readFile("file://$tmp/Unity%20Projects/foo.txt"))
+    }
+
     fun `test readFile normalizes line endings`() {
         myFixture.createTempFile("file.txt", "line\r\nline\rline\nline")
         val normalized = fileUtils.readFile("file://$tmp/file.txt")
diff --git a/extensions/intellij/src/test/kotlin/com/github/continuedev/continueintellijextension/unit/UriUtilsTest.kt b/extensions/intellij/src/test/kotlin/com/github/continuedev/continueintellijextension/unit/UriUtilsTest.kt
index 8295abfe607..4ba0b07a573 100644
--- a/extensions/intellij/src/test/kotlin/com/github/continuedev/continueintellijextension/unit/UriUtilsTest.kt
+++ b/extensions/intellij/src/test/kotlin/com/github/continuedev/continueintellijextension/unit/UriUtilsTest.kt
@@ -75,4 +75,12 @@ class UriUtilsTest : TestCase() {
         assertEquals("/C:/Users/user/projects/[gamemode]/file.lua", parsed.path)
         assertEquals("file:///C:/Users/user/projects/%5Bgamemode%5D/file.lua", parsed.toString())
     }
+
+    // file://C:/... (two slashes). URI(scheme, authority, path, query) re-encodes `%`.
+    fun `test Windows path with percent-encoded spaces`() {
+        val uri = "file://C:/Unity%20Projects/My%20Project/foo.txt"
+        val parsed = UriUtils.parseUri(uri)
+        assertEquals("file", parsed.scheme)
+        assertEquals("/C:/Unity Projects/My Project/foo.txt", parsed.path)
+    }
 }