diff --git a/renku/ui/service/cache/models/project.py b/renku/ui/service/cache/models/project.py
index 070cadb3a8..55be10ac63 100644
--- a/renku/ui/service/cache/models/project.py
+++ b/renku/ui/service/cache/models/project.py
@@ -29,6 +29,7 @@
 
 MAX_CONCURRENT_PROJECT_REQUESTS = 10
 LOCK_TIMEOUT = 15
+NO_BRANCH_FOLDER = "__default_branch__"
 
 
 class Project(Model):
@@ -57,7 +58,10 @@ class Project(Model):
     @property
     def abs_path(self) -> Path:
         """Full path of cached project."""
-        return CACHE_PROJECTS_PATH / self.user_id / self.owner / self.slug
+        branch = self.branch
+        if not self.branch:
+            branch = NO_BRANCH_FOLDER
+        return CACHE_PROJECTS_PATH / self.user_id / self.owner / self.slug / branch
 
     def read_lock(self, timeout: Optional[float] = None):
         """Shared read lock on the project."""
diff --git a/renku/ui/service/utils/__init__.py b/renku/ui/service/utils/__init__.py
index 7260efdd81..e9756068f4 100644
--- a/renku/ui/service/utils/__init__.py
+++ b/renku/ui/service/utils/__init__.py
@@ -17,6 +17,7 @@
 """Renku service utility functions."""
 
 from renku.core.util.git import push_changes
+from renku.ui.service.cache.models.project import NO_BRANCH_FOLDER
 from renku.ui.service.config import CACHE_PROJECTS_PATH, CACHE_UPLOADS_PATH
 
 
@@ -26,7 +27,13 @@ def make_project_path(user, project):
     valid_project = project and "owner" in project and "name" in project and "project_id" in project
 
     if valid_user and valid_project:
-        return CACHE_PROJECTS_PATH / user["user_id"] / project["owner"] / project["slug"]
+        return (
+            CACHE_PROJECTS_PATH
+            / user["user_id"]
+            / project["owner"]
+            / project["slug"]
+            / project.get("branch", NO_BRANCH_FOLDER)
+        )
 
 
 def make_file_path(user, cached_file):
diff --git a/tests/service/controllers/test_templates_create_project.py b/tests/service/controllers/test_templates_create_project.py
index d2ab69c80c..e38320ee33 100644
--- a/tests/service/controllers/test_templates_create_project.py
+++ b/tests/service/controllers/test_templates_create_project.py
@@ -39,7 +39,7 @@ def test_template_create_project_ctrl(ctrl_init, svc_client_templates_creation,
 
     # Check ctrl_mock.
     assert ctrl_mock.call_count == 1
-    assert response.json["result"]["slug"] == ctrl_mock.call_args[0][0].name
+    assert response.json["result"]["slug"] == ctrl_mock.call_args[0][0].parent.name
 
     # Ctrl state.
     expected_context = {
@@ -165,6 +165,8 @@ def test_template_create_project_with_custom_cli_ctrl(
     ctrl_init, svc_cache_dir, svc_client_templates_creation, mocker, monkeypatch
 ):
     """Test template create project controller."""
+    from renku.ui.service.cache.models.project import NO_BRANCH_FOLDER
+
     monkeypatch.setenv("RENKU_PROJECT_DEFAULT_CLI_VERSION", "9.9.9rc9")
     from renku.ui.service.controllers.templates_create_project import TemplatesCreateProjectCtrl
 
@@ -182,7 +184,11 @@ def test_template_create_project_with_custom_cli_ctrl(
     cache_dir, _ = svc_cache_dir
 
     project_path = (
-        cache_dir / user_data["user_id"] / response.json["result"]["namespace"] / response.json["result"]["slug"]
+        cache_dir
+        / user_data["user_id"]
+        / response.json["result"]["namespace"]
+        / response.json["result"]["slug"]
+        / NO_BRANCH_FOLDER
     )
 
     with open(project_path / "Dockerfile") as f:
diff --git a/tests/service/views/test_templates_views.py b/tests/service/views/test_templates_views.py
index eeff9937de..3e26292fc5 100644
--- a/tests/service/views/test_templates_views.py
+++ b/tests/service/views/test_templates_views.py
@@ -124,6 +124,7 @@ def test_read_manifest_from_wrong_template(svc_client_with_templates, template_u
 @retry_failed
 def test_create_project_from_template(svc_client_templates_creation, with_injection):
     """Check creating project from a valid template."""
+    from renku.ui.service.cache.models.project import NO_BRANCH_FOLDER
     from renku.ui.service.serializers.headers import RenkuHeaders
     from renku.ui.service.utils import CACHE_PROJECTS_PATH
 
@@ -142,7 +143,9 @@ def test_create_project_from_template(svc_client_templates_creation, with_inject
 
     # NOTE: assert correct git user is set on new project
     user_data = RenkuHeaders.decode_user(headers["Renku-User"])
-    project_path = CACHE_PROJECTS_PATH / user_data["user_id"] / payload["project_namespace"] / stripped_name
+    project_path = (
+        CACHE_PROJECTS_PATH / user_data["user_id"] / payload["project_namespace"] / stripped_name / NO_BRANCH_FOLDER
+    )
     reader = Repository(project_path).get_configuration()
     assert reader.get_value("user", "email") == user_data["email"]
     assert reader.get_value("user", "name") == user_data["name"]