diff --git a/editor/editor_asset_installer.cpp b/editor/editor_asset_installer.cpp
index 27833ea4999..3404e6501d5 100644
--- a/editor/editor_asset_installer.cpp
+++ b/editor/editor_asset_installer.cpp
@@ -36,19 +36,18 @@
 #include "editor/editor_file_system.h"
 #include "editor/editor_node.h"
 #include "editor/editor_string_names.h"
+#include "editor/gui/editor_toaster.h"
 #include "editor/progress_dialog.h"
+#include "scene/gui/check_box.h"
+#include "scene/gui/label.h"
 
-void EditorAssetInstaller::_item_edited() {
-	if (updating) {
-		return;
-	}
-
-	TreeItem *item = tree->get_edited();
-	if (!item) {
+void EditorAssetInstaller::_item_checked() {
+	if (updating || !tree->get_edited()) {
 		return;
 	}
 
 	updating = true;
+	TreeItem *item = tree->get_edited();
 	item->propagate_check(0);
 	updating = false;
 }
@@ -61,16 +60,16 @@ void EditorAssetInstaller::_check_propagated_to_item(Object *p_obj, int column)
 	}
 }
 
-void EditorAssetInstaller::open(const String &p_path, int p_depth) {
+void EditorAssetInstaller::open_asset(const String &p_path, bool p_autoskip_toplevel) {
 	package_path = p_path;
-	HashSet<String> files_sorted;
+	asset_files.clear();
 
 	Ref<FileAccess> io_fa;
 	zlib_filefunc_def io = zipio_create_io(&io_fa);
 
 	unzFile pkg = unzOpen2(p_path.utf8().get_data(), &io);
 	if (!pkg) {
-		error->set_text(vformat(TTR("Error opening asset file for \"%s\" (not in ZIP format)."), asset_name));
+		EditorToaster::get_singleton()->popup_str(vformat(TTR("Error opening asset file for \"%s\" (not in ZIP format)."), asset_name), EditorToaster::SEVERITY_ERROR);
 		return;
 	}
 
@@ -82,181 +81,213 @@ void EditorAssetInstaller::open(const String &p_path, int p_depth) {
 		char fname[16384];
 		unzGetCurrentFileInfo(pkg, &info, fname, 16384, nullptr, 0, nullptr, 0);
 
-		String name = String::utf8(fname);
-		files_sorted.insert(name);
+		String source_name = String::utf8(fname);
+
+		// Create intermediate directories if they aren't reported by unzip.
+		// We are only interested in subfolders, so skip the root slash.
+		int separator = source_name.find("/", 1);
+		while (separator != -1) {
+			String dir_name = source_name.substr(0, separator + 1);
+			if (!dir_name.is_empty() && !asset_files.has(dir_name)) {
+				asset_files.insert(dir_name);
+			}
+
+			separator = source_name.find("/", separator + 1);
+		}
+
+		if (!source_name.is_empty() && !asset_files.has(source_name)) {
+			asset_files.insert(source_name);
+		}
 
 		ret = unzGoToNextFile(pkg);
 	}
 
-	HashMap<String, Ref<Texture2D>> extension_guess;
-	{
-		extension_guess["bmp"] = tree->get_editor_theme_icon(SNAME("ImageTexture"));
-		extension_guess["dds"] = tree->get_editor_theme_icon(SNAME("ImageTexture"));
-		extension_guess["exr"] = tree->get_editor_theme_icon(SNAME("ImageTexture"));
-		extension_guess["hdr"] = tree->get_editor_theme_icon(SNAME("ImageTexture"));
-		extension_guess["jpg"] = tree->get_editor_theme_icon(SNAME("ImageTexture"));
-		extension_guess["jpeg"] = tree->get_editor_theme_icon(SNAME("ImageTexture"));
-		extension_guess["png"] = tree->get_editor_theme_icon(SNAME("ImageTexture"));
-		extension_guess["svg"] = tree->get_editor_theme_icon(SNAME("ImageTexture"));
-		extension_guess["tga"] = tree->get_editor_theme_icon(SNAME("ImageTexture"));
-		extension_guess["webp"] = tree->get_editor_theme_icon(SNAME("ImageTexture"));
-
-		extension_guess["wav"] = tree->get_editor_theme_icon(SNAME("AudioStreamWAV"));
-		extension_guess["ogg"] = tree->get_editor_theme_icon(SNAME("AudioStreamOggVorbis"));
-		extension_guess["mp3"] = tree->get_editor_theme_icon(SNAME("AudioStreamMP3"));
-
-		extension_guess["scn"] = tree->get_editor_theme_icon(SNAME("PackedScene"));
-		extension_guess["tscn"] = tree->get_editor_theme_icon(SNAME("PackedScene"));
-		extension_guess["escn"] = tree->get_editor_theme_icon(SNAME("PackedScene"));
-		extension_guess["dae"] = tree->get_editor_theme_icon(SNAME("PackedScene"));
-		extension_guess["gltf"] = tree->get_editor_theme_icon(SNAME("PackedScene"));
-		extension_guess["glb"] = tree->get_editor_theme_icon(SNAME("PackedScene"));
-
-		extension_guess["gdshader"] = tree->get_editor_theme_icon(SNAME("Shader"));
-		extension_guess["gdshaderinc"] = tree->get_editor_theme_icon(SNAME("TextFile"));
-		extension_guess["gd"] = tree->get_editor_theme_icon(SNAME("GDScript"));
-		if (Engine::get_singleton()->has_singleton("GodotSharp")) {
-			extension_guess["cs"] = tree->get_editor_theme_icon(SNAME("CSharpScript"));
-		} else {
-			// Mark C# support as unavailable.
-			extension_guess["cs"] = tree->get_editor_theme_icon(SNAME("ImportFail"));
-		}
-
-		extension_guess["res"] = tree->get_editor_theme_icon(SNAME("Resource"));
-		extension_guess["tres"] = tree->get_editor_theme_icon(SNAME("Resource"));
-		extension_guess["atlastex"] = tree->get_editor_theme_icon(SNAME("AtlasTexture"));
-		// By default, OBJ files are imported as Mesh resources rather than PackedScenes.
-		extension_guess["obj"] = tree->get_editor_theme_icon(SNAME("Mesh"));
-
-		extension_guess["txt"] = tree->get_editor_theme_icon(SNAME("TextFile"));
-		extension_guess["md"] = tree->get_editor_theme_icon(SNAME("TextFile"));
-		extension_guess["rst"] = tree->get_editor_theme_icon(SNAME("TextFile"));
-		extension_guess["json"] = tree->get_editor_theme_icon(SNAME("TextFile"));
-		extension_guess["yml"] = tree->get_editor_theme_icon(SNAME("TextFile"));
-		extension_guess["yaml"] = tree->get_editor_theme_icon(SNAME("TextFile"));
-		extension_guess["toml"] = tree->get_editor_theme_icon(SNAME("TextFile"));
-		extension_guess["cfg"] = tree->get_editor_theme_icon(SNAME("TextFile"));
-		extension_guess["ini"] = tree->get_editor_theme_icon(SNAME("TextFile"));
-	}
-
-	Ref<Texture2D> generic_extension = tree->get_editor_theme_icon(SNAME("Object"));
-
 	unzClose(pkg);
 
+	_check_has_toplevel();
+	// Default to false, unless forced.
+	skip_toplevel = p_autoskip_toplevel;
+	skip_toplevel_check->set_pressed(!skip_toplevel_check->is_disabled() && skip_toplevel);
+
+	_rebuild_tree();
+}
+
+void EditorAssetInstaller::_rebuild_tree() {
 	updating = true;
 	tree->clear();
+
 	TreeItem *root = tree->create_item();
 	root->set_cell_mode(0, TreeItem::CELL_MODE_CHECK);
 	root->set_checked(0, true);
-	root->set_icon(0, tree->get_theme_icon(SNAME("folder"), SNAME("FileDialog")));
+	root->set_icon(0, get_theme_icon(SNAME("folder"), SNAME("FileDialog")));
 	root->set_text(0, "res://");
 	root->set_editable(0, true);
-	HashMap<String, TreeItem *> dir_map;
 
+	HashMap<String, TreeItem *> directory_item_map;
 	int num_file_conflicts = 0;
 
-	for (const String &E : files_sorted) {
-		String path = E;
-		int depth = p_depth;
-		bool skip = false;
-		while (depth > 0) {
-			int pp = path.find("/");
-			if (pp == -1) {
-				skip = true;
-				break;
+	bool first = true;
+	for (const String &E : asset_files) {
+		if (first) {
+			first = false;
+
+			if (!toplevel_prefix.is_empty() && skip_toplevel) {
+				continue;
 			}
-			path = path.substr(pp + 1, path.length());
-			depth--;
 		}
 
-		if (skip || path.is_empty()) {
-			continue;
+		String path = E; // We're going to mutate it.
+		if (!toplevel_prefix.is_empty() && skip_toplevel) {
+			path = path.trim_prefix(toplevel_prefix);
 		}
 
-		bool isdir = false;
-
+		bool is_directory = false;
 		if (path.ends_with("/")) {
-			//a directory
-			path = path.substr(0, path.length() - 1);
-			isdir = true;
+			// Directory.
+			path = path.trim_suffix("/");
+			is_directory = true;
 		}
 
-		int pp = path.rfind("/");
-
 		TreeItem *parent_item;
-		if (pp == -1) {
+
+		int separator = path.rfind("/");
+		if (separator == -1) {
 			parent_item = root;
 		} else {
-			String ppath = path.substr(0, pp);
-			ERR_CONTINUE(!dir_map.has(ppath));
-			parent_item = dir_map[ppath];
+			String parent_path = path.substr(0, separator);
+			HashMap<String, TreeItem *>::Iterator I = directory_item_map.find(parent_path);
+			ERR_CONTINUE(!I);
+			parent_item = I->value;
 		}
 
-		TreeItem *ti = tree->create_item(parent_item);
-		ti->set_cell_mode(0, TreeItem::CELL_MODE_CHECK);
-		ti->set_checked(0, true);
-		ti->set_editable(0, true);
-		if (isdir) {
-			dir_map[path] = ti;
-			ti->set_text(0, path.get_file() + "/");
-			ti->set_icon(0, tree->get_theme_icon(SNAME("folder"), SNAME("FileDialog")));
-			ti->set_metadata(0, String());
+		TreeItem *ti;
+		if (is_directory) {
+			ti = _create_dir_item(parent_item, path, directory_item_map);
 		} else {
-			String file = path.get_file();
-			String extension = file.get_extension().to_lower();
-			if (extension_guess.has(extension)) {
-				ti->set_icon(0, extension_guess[extension]);
-			} else {
-				ti->set_icon(0, generic_extension);
-			}
-			ti->set_text(0, file);
-
-			String res_path = "res://" + path;
-			if (FileAccess::exists(res_path)) {
-				num_file_conflicts += 1;
-				ti->set_custom_color(0, tree->get_theme_color(SNAME("error_color"), EditorStringName(Editor)));
-				ti->set_tooltip_text(0, vformat(TTR("%s (already exists)"), res_path));
-				ti->set_checked(0, false);
-				ti->propagate_check(0);
-			} else {
-				ti->set_tooltip_text(0, res_path);
-			}
-
-			ti->set_metadata(0, res_path);
+			ti = _create_file_item(parent_item, path, &num_file_conflicts);
 		}
-
-		status_map[E] = ti;
+		file_item_map[E] = ti;
 	}
 
+	asset_title_label->set_text(asset_name);
 	if (num_file_conflicts >= 1) {
-		asset_contents->set_text(vformat(TTR("Contents of asset \"%s\" - %d file(s) conflict with your project:"), asset_name, num_file_conflicts));
+		asset_conflicts_label->set_text(vformat(TTRN("%d file conflicts with your project", "%d files conflict with your project", num_file_conflicts), num_file_conflicts));
+		asset_conflicts_label->add_theme_color_override("font_color", get_theme_color(SNAME("error_color"), EditorStringName(Editor)));
 	} else {
-		asset_contents->set_text(vformat(TTR("Contents of asset \"%s\" - No files conflict with your project:"), asset_name));
+		asset_conflicts_label->set_text(TTR("No files conflict with your project"));
+		asset_conflicts_label->remove_theme_color_override("font_color");
 	}
 
 	popup_centered_ratio(0.5);
 	updating = false;
 }
 
+TreeItem *EditorAssetInstaller::_create_dir_item(TreeItem *p_parent, const String &p_path, HashMap<String, TreeItem *> &p_item_map) {
+	TreeItem *ti = tree->create_item(p_parent);
+	ti->set_cell_mode(0, TreeItem::CELL_MODE_CHECK);
+	ti->set_checked(0, true);
+	ti->set_editable(0, true);
+
+	ti->set_text(0, p_path.get_file() + "/");
+	ti->set_icon(0, get_theme_icon(SNAME("folder"), SNAME("FileDialog")));
+	ti->set_metadata(0, String());
+
+	p_item_map[p_path] = ti;
+	return ti;
+}
+
+TreeItem *EditorAssetInstaller::_create_file_item(TreeItem *p_parent, const String &p_path, int *r_conflicts) {
+	TreeItem *ti = tree->create_item(p_parent);
+	ti->set_cell_mode(0, TreeItem::CELL_MODE_CHECK);
+	ti->set_checked(0, true);
+	ti->set_editable(0, true);
+
+	String file = p_path.get_file();
+	String extension = file.get_extension().to_lower();
+	if (extension_icon_map.has(extension)) {
+		ti->set_icon(0, extension_icon_map[extension]);
+	} else {
+		ti->set_icon(0, generic_extension_icon);
+	}
+	ti->set_text(0, file);
+
+	String res_path = "res://" + p_path;
+	if (FileAccess::exists(res_path)) {
+		*r_conflicts += 1;
+		ti->set_custom_color(0, get_theme_color(SNAME("error_color"), EditorStringName(Editor)));
+		ti->set_tooltip_text(0, vformat(TTR("%s (already exists)"), res_path));
+		ti->set_checked(0, false);
+		ti->propagate_check(0);
+	} else {
+		ti->set_tooltip_text(0, res_path);
+	}
+
+	ti->set_metadata(0, res_path);
+
+	return ti;
+}
+
+void EditorAssetInstaller::_check_has_toplevel() {
+	// Check if the file structure has a distinct top-level directory. This is typical
+	// for archives generated by GitHub, etc, but not for manually created ZIPs.
+
+	toplevel_prefix = "";
+	skip_toplevel_check->set_pressed(false);
+	skip_toplevel_check->set_disabled(true);
+	skip_toplevel_check->set_tooltip_text(TTR("This asset doesn't have a root directory, so it can't be ignored."));
+
+	if (asset_files.is_empty()) {
+		return;
+	}
+
+	String first_asset;
+	for (const String &E : asset_files) {
+		if (first_asset.is_empty()) { // Checking the first file/directory.
+			if (!E.ends_with("/")) {
+				return; // No directories in this asset.
+			}
+
+			// We will match everything else against this directory.
+			first_asset = E;
+			continue;
+		}
+
+		if (!E.begins_with(first_asset)) {
+			return; // Found a file or a directory that doesn't share the same base path.
+		}
+	}
+
+	toplevel_prefix = first_asset;
+	skip_toplevel_check->set_disabled(false);
+	skip_toplevel_check->set_tooltip_text("");
+}
+
+void EditorAssetInstaller::_set_skip_toplevel(bool p_checked) {
+	skip_toplevel = p_checked;
+	_rebuild_tree();
+}
+
 void EditorAssetInstaller::ok_pressed() {
+	_install_asset();
+}
+
+void EditorAssetInstaller::_install_asset() {
 	Ref<FileAccess> io_fa;
 	zlib_filefunc_def io = zipio_create_io(&io_fa);
 
 	unzFile pkg = unzOpen2(package_path.utf8().get_data(), &io);
 	if (!pkg) {
-		error->set_text(vformat(TTR("Error opening asset file for \"%s\" (not in ZIP format)."), asset_name));
+		EditorToaster::get_singleton()->popup_str(vformat(TTR("Error opening asset file for \"%s\" (not in ZIP format)."), asset_name), EditorToaster::SEVERITY_ERROR);
 		return;
 	}
 
+	Vector<String> failed_files;
 	int ret = unzGoToFirstFile(pkg);
 
-	Vector<String> failed_files;
+	ProgressDialog::get_singleton()->add_task("uncompress", TTR("Uncompressing Assets"), file_item_map.size());
 
-	ProgressDialog::get_singleton()->add_task("uncompress", TTR("Uncompressing Assets"), status_map.size());
-
-	int idx = 0;
-	while (ret == UNZ_OK) {
-		//get filename
+	Ref<DirAccess> da = DirAccess::create(DirAccess::ACCESS_RESOURCES);
+	for (int idx = 0; ret == UNZ_OK; ret = unzGoToNextFile(pkg), idx++) {
 		unz_file_info info;
 		char fname[16384];
 		ret = unzGetCurrentFileInfo(pkg, &info, fname, 16384, nullptr, 0, nullptr, 0);
@@ -264,47 +295,47 @@ void EditorAssetInstaller::ok_pressed() {
 			break;
 		}
 
-		String name = String::utf8(fname);
-
-		if (status_map.has(name) && (status_map[name]->is_checked(0) || status_map[name]->is_indeterminate(0))) {
-			String path = status_map[name]->get_metadata(0);
-			if (path.is_empty()) { // a dir
-
-				String dirpath;
-				TreeItem *t = status_map[name];
-				while (t) {
-					dirpath = t->get_text(0) + dirpath;
-					t = t->get_parent();
-				}
-
-				if (dirpath.ends_with("/")) {
-					dirpath = dirpath.substr(0, dirpath.length() - 1);
-				}
-
-				Ref<DirAccess> da = DirAccess::create(DirAccess::ACCESS_RESOURCES);
-				da->make_dir(dirpath);
-			} else {
-				Vector<uint8_t> uncomp_data;
-				uncomp_data.resize(info.uncompressed_size);
-
-				//read
-				unzOpenCurrentFile(pkg);
-				unzReadCurrentFile(pkg, uncomp_data.ptrw(), uncomp_data.size());
-				unzCloseCurrentFile(pkg);
-
-				Ref<FileAccess> f = FileAccess::open(path, FileAccess::WRITE);
-				if (f.is_valid()) {
-					f->store_buffer(uncomp_data.ptr(), uncomp_data.size());
-				} else {
-					failed_files.push_back(path);
-				}
-
-				ProgressDialog::get_singleton()->task_step("uncompress", path, idx);
-			}
+		String source_name = String::utf8(fname);
+		if (!file_item_map.has(source_name) || (!file_item_map[source_name]->is_checked(0) && !file_item_map[source_name]->is_indeterminate(0))) {
+			continue;
 		}
 
-		idx++;
-		ret = unzGoToNextFile(pkg);
+		String path = file_item_map[source_name]->get_metadata(0);
+		if (path.is_empty()) { // Directory.
+			// TODO: Metadata can be used to store the entire path of directories too,
+			// so this tree iteration can be avoided.
+			String dir_path;
+			TreeItem *t = file_item_map[source_name];
+			while (t) {
+				dir_path = t->get_text(0) + dir_path;
+				t = t->get_parent();
+			}
+
+			if (dir_path.ends_with("/")) {
+				dir_path = dir_path.substr(0, dir_path.length() - 1);
+			}
+
+			da->make_dir_recursive(dir_path);
+		} else {
+			Vector<uint8_t> uncomp_data;
+			uncomp_data.resize(info.uncompressed_size);
+
+			unzOpenCurrentFile(pkg);
+			unzReadCurrentFile(pkg, uncomp_data.ptrw(), uncomp_data.size());
+			unzCloseCurrentFile(pkg);
+
+			// Ensure that the target folder exists.
+			da->make_dir_recursive(path.get_base_dir());
+
+			Ref<FileAccess> f = FileAccess::open(path, FileAccess::WRITE);
+			if (f.is_valid()) {
+				f->store_buffer(uncomp_data.ptr(), uncomp_data.size());
+			} else {
+				failed_files.push_back(path);
+			}
+
+			ProgressDialog::get_singleton()->task_step("uncompress", path, idx);
+		}
 	}
 
 	ProgressDialog::get_singleton()->end_task("uncompress");
@@ -313,11 +344,11 @@ void EditorAssetInstaller::ok_pressed() {
 	if (failed_files.size()) {
 		String msg = vformat(TTR("The following files failed extraction from asset \"%s\":"), asset_name) + "\n\n";
 		for (int i = 0; i < failed_files.size(); i++) {
-			if (i > 15) {
+			if (i > 10) {
 				msg += "\n" + vformat(TTR("(and %s more files)"), itos(failed_files.size() - i));
 				break;
 			}
-			msg += failed_files[i];
+			msg += "\n" + failed_files[i];
 		}
 		if (EditorNode::get_singleton() != nullptr) {
 			EditorNode::get_singleton()->show_warning(msg);
@@ -338,6 +369,65 @@ String EditorAssetInstaller::get_asset_name() const {
 	return asset_name;
 }
 
+void EditorAssetInstaller::_notification(int p_what) {
+	switch (p_what) {
+		case NOTIFICATION_THEME_CHANGED: {
+			generic_extension_icon = get_editor_theme_icon(SNAME("Object"));
+
+			extension_icon_map.clear();
+			{
+				extension_icon_map["bmp"] = get_editor_theme_icon(SNAME("ImageTexture"));
+				extension_icon_map["dds"] = get_editor_theme_icon(SNAME("ImageTexture"));
+				extension_icon_map["exr"] = get_editor_theme_icon(SNAME("ImageTexture"));
+				extension_icon_map["hdr"] = get_editor_theme_icon(SNAME("ImageTexture"));
+				extension_icon_map["jpg"] = get_editor_theme_icon(SNAME("ImageTexture"));
+				extension_icon_map["jpeg"] = get_editor_theme_icon(SNAME("ImageTexture"));
+				extension_icon_map["png"] = get_editor_theme_icon(SNAME("ImageTexture"));
+				extension_icon_map["svg"] = get_editor_theme_icon(SNAME("ImageTexture"));
+				extension_icon_map["tga"] = get_editor_theme_icon(SNAME("ImageTexture"));
+				extension_icon_map["webp"] = get_editor_theme_icon(SNAME("ImageTexture"));
+
+				extension_icon_map["wav"] = get_editor_theme_icon(SNAME("AudioStreamWAV"));
+				extension_icon_map["ogg"] = get_editor_theme_icon(SNAME("AudioStreamOggVorbis"));
+				extension_icon_map["mp3"] = get_editor_theme_icon(SNAME("AudioStreamMP3"));
+
+				extension_icon_map["scn"] = get_editor_theme_icon(SNAME("PackedScene"));
+				extension_icon_map["tscn"] = get_editor_theme_icon(SNAME("PackedScene"));
+				extension_icon_map["escn"] = get_editor_theme_icon(SNAME("PackedScene"));
+				extension_icon_map["dae"] = get_editor_theme_icon(SNAME("PackedScene"));
+				extension_icon_map["gltf"] = get_editor_theme_icon(SNAME("PackedScene"));
+				extension_icon_map["glb"] = get_editor_theme_icon(SNAME("PackedScene"));
+
+				extension_icon_map["gdshader"] = get_editor_theme_icon(SNAME("Shader"));
+				extension_icon_map["gdshaderinc"] = get_editor_theme_icon(SNAME("TextFile"));
+				extension_icon_map["gd"] = get_editor_theme_icon(SNAME("GDScript"));
+				if (Engine::get_singleton()->has_singleton("GodotSharp")) {
+					extension_icon_map["cs"] = get_editor_theme_icon(SNAME("CSharpScript"));
+				} else {
+					// Mark C# support as unavailable.
+					extension_icon_map["cs"] = get_editor_theme_icon(SNAME("ImportFail"));
+				}
+
+				extension_icon_map["res"] = get_editor_theme_icon(SNAME("Resource"));
+				extension_icon_map["tres"] = get_editor_theme_icon(SNAME("Resource"));
+				extension_icon_map["atlastex"] = get_editor_theme_icon(SNAME("AtlasTexture"));
+				// By default, OBJ files are imported as Mesh resources rather than PackedScenes.
+				extension_icon_map["obj"] = get_editor_theme_icon(SNAME("Mesh"));
+
+				extension_icon_map["txt"] = get_editor_theme_icon(SNAME("TextFile"));
+				extension_icon_map["md"] = get_editor_theme_icon(SNAME("TextFile"));
+				extension_icon_map["rst"] = get_editor_theme_icon(SNAME("TextFile"));
+				extension_icon_map["json"] = get_editor_theme_icon(SNAME("TextFile"));
+				extension_icon_map["yml"] = get_editor_theme_icon(SNAME("TextFile"));
+				extension_icon_map["yaml"] = get_editor_theme_icon(SNAME("TextFile"));
+				extension_icon_map["toml"] = get_editor_theme_icon(SNAME("TextFile"));
+				extension_icon_map["cfg"] = get_editor_theme_icon(SNAME("TextFile"));
+				extension_icon_map["ini"] = get_editor_theme_icon(SNAME("TextFile"));
+			}
+		} break;
+	}
+}
+
 void EditorAssetInstaller::_bind_methods() {
 }
 
@@ -345,19 +435,36 @@ EditorAssetInstaller::EditorAssetInstaller() {
 	VBoxContainer *vb = memnew(VBoxContainer);
 	add_child(vb);
 
-	asset_contents = memnew(Label);
-	vb->add_child(asset_contents);
+	HBoxContainer *asset_status = memnew(HBoxContainer);
+	vb->add_child(asset_status);
+
+	Label *asset_label = memnew(Label);
+	asset_label->set_text(TTR("Contents of asset:"));
+	asset_status->add_child(asset_label);
+
+	asset_title_label = memnew(Label);
+	asset_title_label->set_theme_type_variation("HeaderSmall");
+	asset_status->add_child(asset_title_label);
+
+	asset_status->add_spacer();
+
+	asset_conflicts_label = memnew(Label);
+	asset_conflicts_label->set_theme_type_variation("HeaderSmall");
+	asset_status->add_child(asset_conflicts_label);
+
+	skip_toplevel_check = memnew(CheckBox);
+	skip_toplevel_check->set_text(TTR("Ignore the root directory when extracting files"));
+	skip_toplevel_check->set_h_size_flags(Control::SIZE_SHRINK_BEGIN);
+	skip_toplevel_check->connect("toggled", callable_mp(this, &EditorAssetInstaller::_set_skip_toplevel));
+	vb->add_child(skip_toplevel_check);
 
 	tree = memnew(Tree);
 	tree->set_v_size_flags(Control::SIZE_EXPAND_FILL);
-	tree->connect("item_edited", callable_mp(this, &EditorAssetInstaller::_item_edited));
+	tree->connect("item_edited", callable_mp(this, &EditorAssetInstaller::_item_checked));
 	tree->connect("check_propagated_to_item", callable_mp(this, &EditorAssetInstaller::_check_propagated_to_item));
 	vb->add_child(tree);
 
-	error = memnew(AcceptDialog);
-	add_child(error);
+	set_title(TTR("Select Asset Files to Install"));
 	set_ok_button_text(TTR("Install"));
-	set_title(TTR("Asset Installer"));
-
 	set_hide_on_ok(true);
 }
diff --git a/editor/editor_asset_installer.h b/editor/editor_asset_installer.h
index 70f0b3b6ec8..f5e094f8d58 100644
--- a/editor/editor_asset_installer.h
+++ b/editor/editor_asset_installer.h
@@ -33,25 +33,49 @@
 
 #include "scene/gui/dialogs.h"
 #include "scene/gui/tree.h"
+
+class CheckBox;
+class Label;
+
 class EditorAssetInstaller : public ConfirmationDialog {
 	GDCLASS(EditorAssetInstaller, ConfirmationDialog);
 
 	Tree *tree = nullptr;
-	Label *asset_contents = nullptr;
+	Label *asset_title_label = nullptr;
+	Label *asset_conflicts_label = nullptr;
+	CheckBox *skip_toplevel_check = nullptr;
+
 	String package_path;
 	String asset_name;
-	AcceptDialog *error = nullptr;
-	HashMap<String, TreeItem *> status_map;
+	HashSet<String> asset_files;
+	HashMap<String, TreeItem *> file_item_map;
+
+	Ref<Texture2D> generic_extension_icon;
+	HashMap<String, Ref<Texture2D>> extension_icon_map;
+
 	bool updating = false;
-	void _item_edited();
+	String toplevel_prefix;
+	bool skip_toplevel = false;
+
+	void _check_has_toplevel();
+	void _set_skip_toplevel(bool p_checked);
+
+	void _rebuild_tree();
+	TreeItem *_create_dir_item(TreeItem *p_parent, const String &p_path, HashMap<String, TreeItem *> &p_item_map);
+	TreeItem *_create_file_item(TreeItem *p_parent, const String &p_path, int *r_conflicts);
+
+	void _item_checked();
 	void _check_propagated_to_item(Object *p_obj, int column);
+
+	void _install_asset();
 	virtual void ok_pressed() override;
 
 protected:
+	void _notification(int p_what);
 	static void _bind_methods();
 
 public:
-	void open(const String &p_path, int p_depth = 0);
+	void open_asset(const String &p_path, bool p_autoskip_toplevel = false);
 
 	void set_asset_name(const String &p_asset_name);
 	String get_asset_name() const;
diff --git a/editor/plugins/asset_library_editor_plugin.cpp b/editor/plugins/asset_library_editor_plugin.cpp
index 5611296019c..ae9497116d5 100644
--- a/editor/plugins/asset_library_editor_plugin.cpp
+++ b/editor/plugins/asset_library_editor_plugin.cpp
@@ -480,7 +480,7 @@ void EditorAssetLibraryItemDownload::install() {
 	}
 
 	asset_installer->set_asset_name(title->get_text());
-	asset_installer->open(file, 1);
+	asset_installer->open_asset(file, true);
 }
 
 void EditorAssetLibraryItemDownload::_make_request() {
@@ -1377,9 +1377,9 @@ void EditorAssetLibrary::_asset_file_selected(const String &p_file) {
 	}
 
 	asset_installer = memnew(EditorAssetInstaller);
-	asset_installer->set_asset_name(p_file.get_basename());
+	asset_installer->set_asset_name(p_file);
 	add_child(asset_installer);
-	asset_installer->open(p_file);
+	asset_installer->open_asset(p_file);
 }
 
 void EditorAssetLibrary::_asset_open() {