diff --git a/thumbnail/thumbnail.cpp b/thumbnail/thumbnail.cpp
index 502b2d17..bc3f6aa3 100644
--- a/thumbnail/thumbnail.cpp
+++ b/thumbnail/thumbnail.cpp
@@ -467,11 +467,17 @@ QImage ThumbnailProtocol::thumbForDirectory(const QUrl& directory)
     QString localFile = directory.path();
 
     KFileItem item(QUrl::fromLocalFile(localFile));
-    const QPixmap folder = QIcon::fromTheme(item.iconName()).pixmap(qMin(m_width, m_height));
+    const int extent = qMin(m_width, m_height);
+    QPixmap folder = QIcon::fromTheme(item.iconName()).pixmap(extent);
+
+    // Scale up base image to ensure overlays are rendered with
+    // the best quality possible even for low-res custom folder icons
+    if (folder.width() < extent || folder.height() < extent) {
+        folder = folder.scaled(extent, extent, Qt::KeepAspectRatio, Qt::SmoothTransformation);
+    }
 
     const int folderWidth  = folder.width();
     const int folderHeight = folder.height();
-
     const int topMargin = folderHeight * 30 / 100;
     const int bottomMargin = folderHeight / 6;
     const int leftMargin = folderWidth / 13;