diff --git a/src/vs/base/browser/ui/tree/indexTreeModel.ts b/src/vs/base/browser/ui/tree/indexTreeModel.ts
index 28f3129cad7a13c5afea9d8bcd5eec8b8a385115..b57ffece854597a9cf1dee9574af99b8d456d8c8 100644
--- a/src/vs/base/browser/ui/tree/indexTreeModel.ts
+++ b/src/vs/base/browser/ui/tree/indexTreeModel.ts
@@ -89,14 +89,11 @@ export class IndexTreeModel<T, TFilterData = void> implements ITreeModel<T, TFil
 		const lastIndex = location[location.length - 1];
 		const deletedNodes = parentNode.children.splice(lastIndex, deleteCount, ...nodesToInsert);
 
-		if (!parentNode.collapsed) {
+		if (revealed) {
 			const visibleDeleteCount = deletedNodes.reduce((r, node) => r + node.revealedCount, 0);
 
 			this._updateAncestorsRevealedCount(parentNode, revealedCount - visibleDeleteCount);
-
-			if (revealed) {
-				this.list.splice(listIndex, visibleDeleteCount, treeListElementsToInsert);
-			}
+			this.list.splice(listIndex, visibleDeleteCount, treeListElementsToInsert);
 		}
 
 		if (deletedNodes.length > 0 && onDidDeleteNode) {
diff --git a/src/vs/base/test/browser/ui/tree/objectTreeModel.test.ts b/src/vs/base/test/browser/ui/tree/objectTreeModel.test.ts
index 75e64172640bf09e27019f3bf4f0c6e14b260ce9..4fc0edf0f12b08d43f898866fd71e116b69ffc6a 100644
--- a/src/vs/base/test/browser/ui/tree/objectTreeModel.test.ts
+++ b/src/vs/base/test/browser/ui/tree/objectTreeModel.test.ts
@@ -114,4 +114,30 @@ suite('ObjectTreeModel', function () {
 		model.setCollapsed(0, false);
 		assert.deepEqual(toArray(list), [0, 1, 2]);
 	});
+
+	test('setChildren on expanded, unrevealed node', () => {
+		const list = [] as ITreeNode<number>[];
+		const model = new ObjectTreeModel<number>(toSpliceable(list));
+
+		model.setChildren(null, [
+			{
+				element: 1, collapsed: true, children: [
+					{ element: 11, collapsed: false }
+				]
+			},
+			{ element: 2 }
+		]);
+
+		assert.deepEqual(toArray(list), [1, 2]);
+
+		model.setChildren(11, [
+			{ element: 111 },
+			{ element: 112 }
+		]);
+
+		assert.deepEqual(toArray(list), [1, 2]);
+
+		model.setCollapsed(1, false);
+		assert.deepEqual(toArray(list), [1, 11, 111, 112, 2]);
+	});
 });
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