diff --git a/plugins/kotlin/util/test-generator-api/test/org/jetbrains/kotlin/testGenerator/generator/SuiteElement.kt b/plugins/kotlin/util/test-generator-api/test/org/jetbrains/kotlin/testGenerator/generator/SuiteElement.kt
index d0bcb0544505..fc3f67bdcb87 100644
--- a/plugins/kotlin/util/test-generator-api/test/org/jetbrains/kotlin/testGenerator/generator/SuiteElement.kt
+++ b/plugins/kotlin/util/test-generator-api/test/org/jetbrains/kotlin/testGenerator/generator/SuiteElement.kt
@@ -17,12 +17,9 @@ import java.io.File
 import java.util.*
 import javax.lang.model.element.Modifier
 
-fun File.toRelativeStringSystemIndependent(base: File): String {
-    val path = this.toRelativeString(base)
-    return if (File.separatorChar == '\\') {
-        path.replace('\\', '/')
-    } else path
-}
+fun File.toRelativeStringSystemIndependent(base: File): String = toRelativeString(base).toStringSystemIndependent()
+
+fun String.toStringSystemIndependent(): String = if (File.separatorChar == '\\') this.replace('\\', '/') else this
 
 interface TestMethod : RenderElement {
     val methodName: String
@@ -56,7 +53,7 @@ class SuiteElement private constructor(
             val nestedSuites = mutableListOf<SuiteElement>()
 
             for (file in rootFile.listFiles().orEmpty()) {
-                if (depth > 0 && file.isDirectory && file.name !in model.excludedDirectories) {
+                if (depth > 0 && !file.isExcluded(model)) {
                     val nestedClassName = file.toJavaIdentifier().capitalizeAsciiOnly()
                     val nestedModel = model.copy(
                         path = file.toRelativeStringSystemIndependent(group.testDataRoot),
@@ -74,10 +71,9 @@ class SuiteElement private constructor(
                     }
                 }
 
-                val match = model.matcher(file.name) ?: continue
+                if (file.isExcluded(model)) continue
 
-                // Don't generate a directory-based test if the directory is excluded.
-                if (file.isDirectory && file.name in model.excludedDirectories) continue
+                val match = model.matcher(file.name) ?: continue
 
                 val methodNameBase = getTestMethodNameBase(match.methodName)
                 val path = file.toRelativeStringSystemIndependent(group.moduleRoot)
@@ -147,6 +143,20 @@ class SuiteElement private constructor(
             return createElement(className, isNested, methods, nestedSuites)
         }
 
+        private fun File.isExcluded(model: TModel): Boolean {
+            if (model.excludedDirectories.isNotEmpty()) {
+                // Don't generate a directory-based test if the directory is excluded.
+                if (isDirectory && name in model.excludedDirectories) return true
+
+                // Don't generate a file-based test if its parent directory is excluded.
+                if (isFile) {
+                    val p = parentFile.path.toStringSystemIndependent()
+                    if (model.excludedDirectories.any { p.contains(it) }) return true
+                }
+            }
+            return false
+        }
+
         private fun createStatements(
             group: TGroup,
             model: TModel,
diff --git a/plugins/kotlin/util/test-generator-fir/test/org/jetbrains/kotlin/fir/testGenerator/FirGenerateTests.kt b/plugins/kotlin/util/test-generator-fir/test/org/jetbrains/kotlin/fir/testGenerator/FirGenerateTests.kt
index b17eae97d261..6380f46c0e74 100644
--- a/plugins/kotlin/util/test-generator-fir/test/org/jetbrains/kotlin/fir/testGenerator/FirGenerateTests.kt
+++ b/plugins/kotlin/util/test-generator-fir/test/org/jetbrains/kotlin/fir/testGenerator/FirGenerateTests.kt
@@ -193,7 +193,7 @@ private fun assembleWorkspace(): TWorkspace = workspace(KotlinPluginMode.K2) {
 
         testClass<AbstractFirParameterInfoTest> {
             model(
-                "parameterInfo", pattern = Patterns.forRegex("^([\\w\\-_]+)\\.kt$"), isRecursive = true,
+                "parameterInfo", pattern = Patterns.forRegex("^([\\w\\-_]+)\\.(kt|java)$"), isRecursive = true,
                 excludedDirectories = listOf("withLib1/sharedLib", "withLib2/sharedLib", "withLib3/sharedLib")
             )
         }