diff --git a/lua/rustaceanvim/neotest/init.lua b/lua/rustaceanvim/neotest/init.lua
index 253fc9f5..860a997a 100644
--- a/lua/rustaceanvim/neotest/init.lua
+++ b/lua/rustaceanvim/neotest/init.lua
@@ -41,6 +41,14 @@ NeotestAdapter.root = function(file_name)
   return cargo.get_root_dir(file_name)
 end
 
+-- ---@param name string Name of directory
+---@param rel_path string Path to directory, relative to root
+-- ---@param root string Root directory of project
+---@return boolean
+NeotestAdapter.filter_dir = function(_, rel_path, _)
+  return rel_path ~= 'target'
+end
+
 ---@param file_path string
 ---@return boolean
 NeotestAdapter.is_test_file = function(file_path)
@@ -69,80 +77,125 @@ NeotestAdapter.discover_positions = function(file_path)
     ---@diagnostic disable-next-line: missing-parameter
     return lib.positions.parse_tree(positions)
   end
-  ---@diagnostic disable-next-line: cast-type-mismatch
-  ---@cast runnables RARunnable[]
-  -- We need a runnable for the 'file' position, so we pick the first 'namespace' one
-  -- Typically, a file only has one test module
-  ---@type RARunnable
-  local crate_runnable = nil
+
   local max_end_row = 0
   for _, runnable in pairs(runnables) do
     local pos = trans.runnable_to_position(file_path, runnable)
     if pos then
       max_end_row = math.max(max_end_row, pos.range[3])
-      if pos.type == 'dir' then
-        crate_runnable = runnable
-      else
+      if pos.type ~= 'dir' then
         table.insert(positions, pos)
       end
     end
   end
-  -- parse_tree expects sorted positions, with the parent first
-  ---@type rustaceanvim.neotest.Position[]
-  local sorted_positions = {}
+  ---@diagnostic disable-next-line: cast-type-mismatch
+  ---@cast runnables RARunnable[]
+
   ---@type { [string]: neotest.Position }
   local tests_by_name = {}
-  -- If there's only one module in a file, we use it as the file runnable
-  local namespace_runnable
-  local namespace_count = 0
+  ---@type rustaceanvim.neotest.Position[]
+  local namespaces = {}
   for _, pos in pairs(positions) do
     if pos.type == 'test' then
       tests_by_name[pos.name] = pos
+    elseif pos.type == 'namespace' then
+      table.insert(namespaces, pos)
     end
   end
-  local test_names = vim.tbl_keys(tests_by_name)
-  for _, namespace_pos in pairs(positions) do
-    if namespace_pos.type == 'namespace' then
-      namespace_runnable = namespace_runnable or namespace_pos.runnable
-      namespace_count = namespace_count + 1
-      table.insert(sorted_positions, namespace_pos)
+
+  -- sort namespaces by name from longest to shortest
+  table.sort(namespaces, function(a, b)
+    return #a.name > #b.name
+  end)
+
+  ---@type { [string]: rustaceanvim.neotest.Position[] }
+  local positions_by_namespace = {}
+  -- group tests by their longest matching namespace
+  for _, namespace in ipairs(namespaces) do
+    if namespace.name ~= '' then
       ---@type string[]
       local child_keys = vim.tbl_filter(function(name)
-        return vim.startswith(name, namespace_pos.name)
-      end, test_names)
-      for _, key in pairs(child_keys) do
+        return vim.startswith(name, namespace.name .. '::')
+      end, vim.tbl_keys(tests_by_name))
+      local children = { namespace }
+      for _, key in ipairs(child_keys) do
         local child_pos = tests_by_name[key]
-        --- strip the namespace and "::" from the name so neotest can build the Tree
-        child_pos.name = child_pos.name:sub(namespace_pos.name:len() + 3, child_pos.name:len())
-        table.insert(sorted_positions, child_pos)
+        tests_by_name[key] = nil
+        --- strip the namespace and "::" from the name
+        child_pos.name = child_pos.name:sub(#namespace.name + 3, #child_pos.name)
+        table.insert(children, child_pos)
       end
+      positions_by_namespace[namespace.name] = children
     end
   end
-  if namespace_runnable then
+
+  -- nest child namespaces in their parent namespace
+  for i, namespace in ipairs(namespaces) do
+    ---@type rustaceanvim.neotest.Position?
+    local parent = nil
+    -- search remaning namespaces for the longest matching parent namespace
+    for _, other_namespace in ipairs { unpack(namespaces, i + 1) } do
+      if vim.startswith(namespace.name, other_namespace.name .. '::') then
+        parent = other_namespace
+        break
+      end
+    end
+    if parent ~= nil then
+      local namespace_name = namespace.name
+      local children = positions_by_namespace[namespace_name]
+      -- strip parent namespace + "::"
+      children[1].name = children[1].name:sub(#parent.name + 3, #namespace_name)
+      table.insert(positions_by_namespace[parent.name], children)
+      positions_by_namespace[namespace_name] = nil
+    end
+  end
+
+  local sorted_positions = {}
+  for _, namespace_positions in pairs(positions_by_namespace) do
+    table.insert(sorted_positions, namespace_positions)
+  end
+  -- any remaning tests had no parent namespace
+  vim.list_extend(sorted_positions, vim.tbl_values(tests_by_name))
+
+  -- sort positions by their start range
+  local function sort_positions(to_sort)
+    for _, item in ipairs(to_sort) do
+      if vim.tbl_islist(item) then
+        sort_positions(item)
+      end
+    end
+
+    -- pop header from the list before sorting since it's used to sort in its parent's context
+    local header = table.remove(to_sort, 1)
+    table.sort(to_sort, function(a, b)
+      local a_item = vim.tbl_islist(a) and a[1] or a
+      local b_item = vim.tbl_islist(b) and b[1] or b
+      if a_item.range[1] == b_item.range[1] then
+        return a_item.name < b_item.name
+      else
+        return a_item.range[1] < b_item.range[1]
+      end
+    end)
+    table.insert(to_sort, 1, header)
+  end
+  sort_positions(sorted_positions)
+
+  if #namespaces > 0 then
     local file_pos = {
       id = file_path,
-      name = file_path,
+      name = vim.fn.fnamemodify(file_path, ':t'),
       type = 'file',
       path = file_path,
       range = { 0, 0, max_end_row, 0 },
-      runnable = namespace_runnable,
+      -- use the shortest namespace for the file runnable
+      runnable = namespaces[#namespaces].runnable,
     }
     table.insert(sorted_positions, 1, file_pos)
   end
-  if crate_runnable and #sorted_positions > 0 then
-    -- Only insert a crate runnable position if there exist positions
-    local crate_pos = {
-      id = 'rustaceanvim:' .. crate_runnable.args.workspaceRoot,
-      name = 'suite',
-      type = 'dir',
-      path = crate_runnable.args.workspaceRoot,
-      range = { 0, 0, 0, 0 },
-      runnable = crate_runnable,
-    }
-    table.insert(sorted_positions, 1, crate_pos)
-  end
-  ---@diagnostic disable-next-line: missing-parameter
-  return lib.positions.parse_tree(sorted_positions)
+
+  return require('neotest.types.tree').from_list(sorted_positions, function(x)
+    return x.name
+  end)
 end
 
 ---@class rustaceanvim.neotest.RunSpec: neotest.RunSpec
diff --git a/lua/rustaceanvim/neotest/trans.lua b/lua/rustaceanvim/neotest/trans.lua
index 5916e863..6b74cd92 100644
--- a/lua/rustaceanvim/neotest/trans.lua
+++ b/lua/rustaceanvim/neotest/trans.lua
@@ -41,6 +41,13 @@ function M.runnable_to_position(file_path, runnable)
       end_col = location.targetRange['end'].character
     end
     local test_path = get_test_path(runnable)
+    -- strip the file module prefix from the name
+    if test_path then
+      local mod_name = vim.fn.fnamemodify(file_path, ':t:r')
+      if vim.startswith(test_path, mod_name .. '::') then
+        test_path = test_path:sub(#mod_name + 3, #test_path)
+      end
+    end
     ---@type rustaceanvim.neotest.Position
     local pos = {
       id = M.get_position_id(file_path, runnable),