diff --git a/src/ProjectTemplates/Microsoft.Extensions.AI.Templates/src/ChatWithCustomData/.template.config/template.json b/src/ProjectTemplates/Microsoft.Extensions.AI.Templates/src/ChatWithCustomData/.template.config/template.json
index c0b15d31c0a..a6b719ad592 100644
--- a/src/ProjectTemplates/Microsoft.Extensions.AI.Templates/src/ChatWithCustomData/.template.config/template.json
+++ b/src/ProjectTemplates/Microsoft.Extensions.AI.Templates/src/ChatWithCustomData/.template.config/template.json
@@ -11,6 +11,7 @@
   // TODO: When we support multi-project output, this needs to change to ChatWithCustomData, then we need some other
   // technique to make it avoid emitting a .Web suffix in the single-project case.
   "sourceName": "ChatWithCustomData.Web-CSharp",
+  "preferNameDirectory": true,
   "tags": {
     "language": "C#",
     "type": "project"