diff --git a/src/plugins/qmldesigner/components/componentcore/modelnodeoperations.cpp b/src/plugins/qmldesigner/components/componentcore/modelnodeoperations.cpp
index 1c07e0ea2f0..c13080c8f1f 100644
--- a/src/plugins/qmldesigner/components/componentcore/modelnodeoperations.cpp
+++ b/src/plugins/qmldesigner/components/componentcore/modelnodeoperations.cpp
@@ -82,6 +82,8 @@
 #include <QPushButton>
 #include <QGridLayout>
 #include <QPointer>
+#include <QMessageBox>
+#include <QPair>
 
 #include <algorithm>
 #include <functional>
@@ -980,9 +982,30 @@ static bool addFilesToProject(const QStringList &fileNames, const QString &defau
         return true;
 
     bool allSuccessful = true;
+    QList<QPair<QString, QString>> copyList;
+    QStringList removeList;
     for (const QString &fileName : fileNames) {
         const QString targetFile = directory + "/" + QFileInfo(fileName).fileName();
-        const bool success = QFile::copy(fileName, targetFile);
+        if (QFileInfo::exists(targetFile)) {
+            const QString title = QCoreApplication::translate(
+                        "ModelNodeOperations", "Overwrite Existing File?");
+            const QString question = QCoreApplication::translate(
+                        "ModelNodeOperations", "File already exists. Overwrite?\n\"%1\"").arg(targetFile);
+            if (QMessageBox::question(qobject_cast<QWidget *>(Core::ICore::dialogParent()),
+                                      title, question, QMessageBox::Yes | QMessageBox::No)
+                    != QMessageBox::Yes) {
+                continue;
+            }
+            removeList.append(targetFile);
+        }
+        copyList.append({fileName, targetFile});
+    }
+    // Defer actual file operations after we have dealt with possible popup dialogs to avoid
+    // unnecessarily refreshing file models multiple times during the operation
+    for (const auto &file : qAsConst(removeList))
+        QFile::remove(file);
+    for (const auto &filePair : qAsConst(copyList)) {
+        const bool success = QFile::copy(filePair.first, filePair.second);
 
         auto document = QmlDesignerPlugin::instance()->currentDesignDocument();
 
@@ -993,7 +1016,7 @@ static bool addFilesToProject(const QStringList &fileNames, const QString &defau
             if (node) {
                 ProjectExplorer::FolderNode *containingFolder = node->parentFolderNode();
                 if (containingFolder)
-                    containingFolder->addFiles(QStringList(targetFile));
+                    containingFolder->addFiles(QStringList(filePair.second));
             }
         } else {
             allSuccessful = false;
diff --git a/src/plugins/qmldesigner/components/itemlibrary/customfilesystemmodel.cpp b/src/plugins/qmldesigner/components/itemlibrary/customfilesystemmodel.cpp
index db16051072a..9873963411c 100644
--- a/src/plugins/qmldesigner/components/itemlibrary/customfilesystemmodel.cpp
+++ b/src/plugins/qmldesigner/components/itemlibrary/customfilesystemmodel.cpp
@@ -39,7 +39,6 @@
 #include <QImageReader>
 #include <QPainter>
 #include <QRawFont>
-#include <QPair>
 #include <qmath.h>
 #include <condition_variable>
 #include <mutex>
@@ -111,17 +110,23 @@ QString fontFamily(const QFileInfo &info)
 class ItemLibraryFileIconProvider : public QFileIconProvider
 {
 public:
-    ItemLibraryFileIconProvider(SynchronousImageCache &fontImageCache)
+    ItemLibraryFileIconProvider(SynchronousImageCache &fontImageCache,
+                                QHash<QString, QPair<QDateTime, QIcon>> &iconCache)
         : QFileIconProvider()
         , m_fontImageCache(fontImageCache)
+        , m_iconCache(iconCache)
     {
     }
 
     QIcon icon( const QFileInfo & info ) const override
     {
+        const QString filePath = info.absoluteFilePath();
+        QPair<QDateTime, QIcon> &cachedIcon = m_iconCache[filePath];
+        if (!cachedIcon.second.isNull() && cachedIcon.first == info.lastModified())
+            return cachedIcon.second;
+
         QIcon icon;
         const QString suffix = info.suffix().toLower();
-        const QString filePath = info.absoluteFilePath();
 
         // Provide icon depending on suffix
         QPixmap origPixmap;
@@ -150,6 +155,8 @@ public:
             icon.addPixmap(pixmap);
         }
 
+        cachedIcon.first = info.lastModified();
+        cachedIcon.second = icon;
         return icon;
     }
 
@@ -163,6 +170,7 @@ public:
                                                         "Abc"});
     }
 
+private:
     // Generated icon sizes should contain all ItemLibraryResourceView needed icon sizes, and their
     // x2 versions for HDPI sceens
     std::vector<QSize> iconSizes = {{384, 384},
@@ -175,18 +183,29 @@ public:
                                     {32, 32}}; // List
 
     SynchronousImageCache &m_fontImageCache;
+    QHash<QString, QPair<QDateTime, QIcon>> &m_iconCache;
 };
 
 CustomFileSystemModel::CustomFileSystemModel(SynchronousImageCache &fontImageCache, QObject *parent)
     : QAbstractListModel(parent)
     , m_fileSystemModel(new QFileSystemModel(this))
     , m_fileSystemWatcher(new Utils::FileSystemWatcher(this))
+    , m_fontImageCache(fontImageCache)
 {
-    m_fileSystemModel->setIconProvider(new ItemLibraryFileIconProvider(fontImageCache));
-
-    connect(m_fileSystemWatcher, &Utils::FileSystemWatcher::directoryChanged, [this] {
+    m_updatePathTimer.setInterval(200);
+    m_updatePathTimer.setSingleShot(true);
+    m_updatePathTimer.callOnTimeout([this]() {
         updatePath(m_fileSystemModel->rootPath());
     });
+
+    // If project directory contents change, or one of the asset files is modified, we must
+    // reconstruct the model to update the icons
+    connect(m_fileSystemWatcher, &Utils::FileSystemWatcher::directoryChanged, [this] {
+        m_updatePathTimer.start();
+    });
+    connect(m_fileSystemWatcher, &Utils::FileSystemWatcher::fileChanged, [this] {
+        m_updatePathTimer.start();
+    });
 }
 
 void CustomFileSystemModel::setFilter(QDir::Filters)
@@ -351,9 +370,17 @@ void CustomFileSystemModel::appendIfNotFiltered(const QString &file)
 QModelIndex CustomFileSystemModel::updatePath(const QString &newPath)
 {
     beginResetModel();
+
+    // We must recreate icon provider to ensure modified icons are recreated
+    auto newProvider = new ItemLibraryFileIconProvider(m_fontImageCache, m_iconCache);
+    m_fileSystemModel->setIconProvider(newProvider);
+    delete m_fileIconProvider;
+    m_fileIconProvider = newProvider;
+
     m_fileSystemModel->setRootPath(newPath);
 
     m_fileSystemWatcher->removeDirectories(m_fileSystemWatcher->directories());
+    m_fileSystemWatcher->removeFiles(m_fileSystemWatcher->files());
 
     m_fileSystemWatcher->addDirectory(newPath, Utils::FileSystemWatcher::WatchAllChanges);
 
@@ -385,11 +412,19 @@ QModelIndex CustomFileSystemModel::updatePath(const QString &newPath)
     while (fileIterator.hasNext())
         appendIfNotFiltered(fileIterator.next());
 
-    QDirIterator dirIterator(newPath, {}, QDir::Dirs | QDir::NoDotAndDotDot, QDirIterator::Subdirectories);
-    while (dirIterator.hasNext())
-        m_fileSystemWatcher->addDirectory(dirIterator.next(), Utils::FileSystemWatcher::WatchAllChanges);
+    QDirIterator dirIterator(newPath, {}, QDir::Files | QDir::Dirs | QDir::NoDotAndDotDot,
+                             QDirIterator::Subdirectories);
+    while (dirIterator.hasNext()) {
+        const QString entry = dirIterator.next();
+        QFileInfo fi{entry};
+        if (fi.isDir())
+            m_fileSystemWatcher->addDirectory(entry, Utils::FileSystemWatcher::WatchAllChanges);
+        else if (supportedSuffixes().contains(fi.suffix()))
+            m_fileSystemWatcher->addFile(entry, Utils::FileSystemWatcher::WatchAllChanges);
+    }
 
     endResetModel();
+
     return QAbstractListModel::index(0, 0);
 }
 
diff --git a/src/plugins/qmldesigner/components/itemlibrary/customfilesystemmodel.h b/src/plugins/qmldesigner/components/itemlibrary/customfilesystemmodel.h
index 1051dec1ce1..eabd6c1e23b 100644
--- a/src/plugins/qmldesigner/components/itemlibrary/customfilesystemmodel.h
+++ b/src/plugins/qmldesigner/components/itemlibrary/customfilesystemmodel.h
@@ -26,9 +26,13 @@
 #pragma once
 
 #include <QAbstractTableModel>
+#include <QDateTime>
 #include <QDir>
+#include <QHash>
+#include <QIcon>
 #include <QPair>
 #include <QSet>
+#include <QTimer>
 
 QT_BEGIN_NAMESPACE
 class QFileIconProvider;
@@ -40,6 +44,7 @@ namespace Utils { class FileSystemWatcher; }
 namespace QmlDesigner {
 
 class SynchronousImageCache;
+class ItemLibraryFileIconProvider;
 
 class CustomFileSystemModel : public QAbstractListModel
 {
@@ -78,6 +83,10 @@ private:
     QStringList m_files;
     QString m_searchFilter;
     Utils::FileSystemWatcher *m_fileSystemWatcher;
+    SynchronousImageCache &m_fontImageCache;
+    ItemLibraryFileIconProvider *m_fileIconProvider = nullptr;
+    QHash<QString, QPair<QDateTime, QIcon>> m_iconCache;
+    QTimer m_updatePathTimer;
 };
 
 } //QmlDesigner