diff --git a/cmake/LYTestWrappers.cmake b/cmake/LYTestWrappers.cmake
index 4f8d0bc169..73a212ee0b 100644
--- a/cmake/LYTestWrappers.cmake
+++ b/cmake/LYTestWrappers.cmake
@@ -213,8 +213,14 @@ function(ly_add_test)
             add_custom_target(${unaliased_test_name} COMMAND ${CMAKE_COMMAND} -E true ${args_TEST_COMMAND} ${args_TEST_ARGUMENTS})
 
             file(RELATIVE_PATH project_path ${LY_ROOT_FOLDER} ${CMAKE_CURRENT_SOURCE_DIR})
+            set(ide_path ${project_path})
+            # Visual Studio doesn't support a folder layout that starts with ".."
+            # So strip away the parent directory of a relative path
+            if (${project_path} MATCHES [[^(\.\./)+(.*)]])
+                set(ide_path "${CMAKE_MATCH_2}")
+            endif()
             set_target_properties(${unaliased_test_name} PROPERTIES 
-                FOLDER "${project_path}"
+                FOLDER "${ide_path}"
                 VS_DEBUGGER_COMMAND ${test_command}
                 VS_DEBUGGER_COMMAND_ARGUMENTS "${test_arguments_line}"
             )