diff --git a/src/emulation/watchers.ts b/src/emulation/watchers.ts
index 861a4987..9577081a 100644
--- a/src/emulation/watchers.ts
+++ b/src/emulation/watchers.ts
@@ -4,7 +4,7 @@ import type * as fs from 'node:fs';
 import { ErrnoError } from '../error.js';
 import { isStatsEqual, type Stats } from '../stats.js';
 import { normalizePath } from '../utils.js';
-import { dirname, basename } from './path.js';
+import { basename, dirname } from './path.js';
 import { statSync } from './sync.js';
 
 /**
@@ -171,23 +171,24 @@ export function removeWatcher(path: string, watcher: FSWatcher) {
 }
 
 export function emitChange(eventType: fs.WatchEventType, filename: string) {
-	let normalizedFilename: string = normalizePath(filename);
+	filename = normalizePath(filename);
 	// Notify watchers on the specific file
-	if (watchers.has(normalizedFilename)) {
-		for (const watcher of watchers.get(normalizedFilename)!) {
+	if (watchers.has(filename)) {
+		for (const watcher of watchers.get(filename)!) {
 			watcher.emit('change', eventType, basename(filename));
 		}
 	}
 
 	// Notify watchers on parent directories if they are watching recursively
-	let parent = dirname(normalizedFilename);
-	while (parent !== normalizedFilename && parent !== '/') {
+	let parent = filename,
+		normalizedFilename;
+	while (parent !== normalizedFilename) {
+		normalizedFilename = parent;
+		parent = dirname(parent);
 		if (watchers.has(parent)) {
 			for (const watcher of watchers.get(parent)!) {
-				watcher.emit('change', eventType, basename(filename));
+				watcher.emit('change', eventType, filename.slice(parent.length + (parent == '/' ? 0 : 1)));
 			}
 		}
-		normalizedFilename = parent;
-		parent = dirname(parent);
 	}
 }
diff --git a/tests/fs/watch.test.ts b/tests/fs/watch.test.ts
index b335d880..43dc6d83 100644
--- a/tests/fs/watch.test.ts
+++ b/tests/fs/watch.test.ts
@@ -115,6 +115,27 @@ suite('Watch Features', () => {
 			resolve();
 		})();
 
+		await fs.promises.unlink(tempFile);
+		await promise;
+	});
+	test('fs.promises.watch should detect file creations recursively', async () => {
+		const rootDir = '/';
+		const subDir = `${testDir}sub-dir`;
+		const tempFile = `${subDir}/tempFile.txt`;
+		await fs.promises.mkdir(subDir);
+		const watcher = fs.promises.watch(rootDir);
+
+		await fs.promises.writeFile(tempFile, 'Temporary content');
+		const { promise, resolve } = Promise.withResolvers<void>();
+		(async () => {
+			for await (const event of watcher) {
+				assert.equal(event.eventType, 'rename');
+				assert.equal(event.filename, tempFile.substring(rootDir.length));
+				break;
+			}
+			resolve();
+		})();
+
 		await fs.promises.unlink(tempFile);
 		await promise;
 	});