diff --git a/krusader/FileSystem/defaultfilesystem.cpp b/krusader/FileSystem/defaultfilesystem.cpp
--- a/krusader/FileSystem/defaultfilesystem.cpp
+++ b/krusader/FileSystem/defaultfilesystem.cpp
@@ -39,6 +39,7 @@
 #include <KCoreAddons/KUrlMimeData>
 #include <KI18n/KLocalizedString>
 #include <KIO/DropJob>
+#include <KIO/MkpathJob>
 #include <KIO/FileUndoManager>
 #include <KIO/JobUiDelegate>
 #include <KIO/ListJob>
@@ -128,7 +129,7 @@
 
 void DefaultFileSystem::mkDir(const QString &name)
 {
-    KIO::SimpleJob* job = KIO::mkdir(getUrl(name));
+    KJob *job = KIO::mkpath(getUrl(name));
     connectJobToDestination(job, currentDirectory());
 }
 
@@ -150,7 +151,11 @@
         return fileItem->getUrl();
 
     QUrl absoluteUrl(_currentDirectory);
-    absoluteUrl.setPath(absoluteUrl.path() + '/' + name);
+    if (name.startsWith('/')) {
+        absoluteUrl.setPath(name);
+    } else {
+        absoluteUrl.setPath(absoluteUrl.path() + '/' + name);
+    }
     return absoluteUrl;
 }
 
diff --git a/krusader/Panel/panelfunc.cpp b/krusader/Panel/panelfunc.cpp
--- a/krusader/Panel/panelfunc.cpp
+++ b/krusader/Panel/panelfunc.cpp
@@ -650,41 +650,22 @@
     if (!suggestedName.isEmpty() && !files()->getFileItem(suggestedName)->isDir())
         suggestedName = QFileInfo(suggestedName).completeBaseName();
 
-    QString dirName = QInputDialog::getText(krMainWindow, i18n("New folder"), i18n("Folder's name:"), QLineEdit::Normal, suggestedName);
+    const QString dirName = QInputDialog::getText(krMainWindow, i18n("New folder"), i18n("Folder's name:"), QLineEdit::Normal, suggestedName);
 
-    // if the user canceled - quit
-    if (dirName.isEmpty())
-        return;
+    const QString firstName = dirName.section('/', 0, 1, QString::SectionIncludeLeadingSep);
 
-    QStringList dirTree = dirName.split('/');
+    // if the user canceled or the name was composed of slashes - quit
+    if (!dirName.startsWith('/') && firstName.isEmpty())
+        return;
 
-    for (QStringList::Iterator it = dirTree.begin(); it != dirTree.end(); ++it) {
-        if (*it == ".")
-            continue;
-        if (*it == "..") {
-            immediateOpenUrl(QUrl::fromUserInput(*it, QString(), QUrl::AssumeLocalFile));
-            continue;
-        }
-        // check if the name is already taken
-        if (files()->getFileItem(*it)) {
-            // if it is the last dir to be created - quit
-            if (*it == dirTree.last()) {
-                KMessageBox::sorry(krMainWindow, i18n("A folder or a file with this name already exists."));
-                return;
-            }
-            // else go into this dir
-            else {
-                immediateOpenUrl(QUrl::fromUserInput(*it, QString(), QUrl::AssumeLocalFile));
-                continue;
-            }
-        }
+    // notify user about existing folder if only single directory was given
+    if (!dirName.contains('/') && files()->getFileItem(firstName)) {
+        KMessageBox::sorry(krMainWindow, i18n("A folder or a file with this name already exists."));
+        return;
+    }
 
-        panel->view->setNameToMakeCurrent(*it);
-        // as always - the filesystem does the job
-        files()->mkDir(*it);
-        if (dirTree.count() > 1)
-            immediateOpenUrl(QUrl::fromUserInput(*it, QString(), QUrl::AssumeLocalFile));
-    } // for
+    // create new directory (along with underlying directories if necessary)
+    files()->mkDir(dirName);
 }
 
 void ListPanelFunc::defaultOrAlternativeDeleteFiles(bool invert)