diff --git a/crates/analyzer/src/lib.rs b/crates/analyzer/src/lib.rs
index 31c218f..1777d9e 100644
--- a/crates/analyzer/src/lib.rs
+++ b/crates/analyzer/src/lib.rs
@@ -346,6 +346,8 @@ impl Backend {
         let src_root = ws.join("src");
         let package_mist = read_mist_package(&ws);
 
+        self.ensure_implicit_packages(&src_root).await;
+
         // Collect sources first to avoid holding locks during transpile
         let sources: Vec<(PathBuf, String, String)> = {
             let docs = self.documents.lock().await;
@@ -366,6 +368,13 @@ impl Backend {
         }
     }
 
+    /// Create synthetic `package.mist` documents for subdirectories that contain
+    /// .mist files but no real package.mist (implicit packages).
+    async fn ensure_implicit_packages(&self, src_root: &Path) {
+        let mut docs = self.documents.lock().await;
+        ensure_implicit_packages_impl(&mut *docs, src_root);
+    }
+
     async fn publish_diagnostics(&self, uri: Url, diagnostics: Vec<Diagnostic>) {
         let key = uri.clone();
         let prev = self.previous_diagnostics.lock().await.get(&key).cloned();
@@ -471,6 +480,8 @@ impl LanguageServer for Backend {
 
                 eprintln!("Loaded {} mist files", files.len());
 
+                ensure_implicit_packages_impl(&mut *documents.lock().await, &src_root);
+
                 // Compute mod_decls before any transpile so the root file gets its
                 // child module declarations from the very first didOpen.
                 let package_mist = read_mist_package(root);
@@ -510,6 +521,41 @@ impl LanguageServer for Backend {
                     }
                 }
 
+                // Also transpile synthetic package.mist files (implicit packages)
+                // so rust-analyzer has their content from the start.
+                let synthetic_paths: Vec<PathBuf> = documents
+                    .lock()
+                    .await
+                    .keys()
+                    .filter(|p| {
+                        !files.contains(p)
+                            && p.file_name().and_then(|n| n.to_str()) == Some("package.mist")
+                    })
+                    .cloned()
+                    .collect();
+                for syn_path in &synthetic_paths {
+                    let decl = mod_decls.get(syn_path).map(String::as_str).unwrap_or("");
+                    let source = documents
+                        .lock()
+                        .await
+                        .get(syn_path)
+                        .map(|r| r.to_string())
+                        .unwrap_or_default();
+                    if let Ok(transpiled) = transpile_mist(syn_path, &source, decl) {
+                        if let Some(rust_uri) = clean_lsp_url(&transpiled.rust_path) {
+                            let _ = ra
+                                .lock()
+                                .await
+                                .did_open(rust_uri, &transpiled.rust_content)
+                                .await;
+                            mapping
+                                .lock()
+                                .await
+                                .insert(transpiled.rust_path, transpiled.mapping);
+                        }
+                    }
+                }
+
                 if let Some(rx) = notification_rx.lock().await.take() {
                     tokio::spawn(handle_ra_notifications(
                         rx,
@@ -1099,10 +1145,15 @@ fn compute_mod_decls(
                 Some(s) => s,
                 None => continue,
             };
-            // Skip the root package file itself
+            // Skip the root package entry file (e.g. main.mist)
             if *file == package_path {
                 continue;
             }
+            // Skip any subdirectory package.mist — it's the directory's own
+            // entry file, not a sibling submodule.
+            if stem == "package" {
+                continue;
+            }
             mod_decl.push_str(&format!("pub mod {};\n", stem));
         }
 
@@ -1118,9 +1169,68 @@ fn compute_mod_decls(
         }
     }
 
+    // For each subdirectory that is a Mist module, add pub mod <dirname>;
+    // to the parent directory's declarations so the parent's transpiled Rust
+    // output includes the child module declaration.
+    for dir in dirs.keys() {
+        if dir == src_root {
+            continue;
+        }
+        let dirname = match dir.file_name().and_then(|n| n.to_str()) {
+            Some(n) => n,
+            None => continue,
+        };
+        let parent = dir.parent().unwrap();
+        let parent_target = if parent == src_root {
+            package_path.clone()
+        } else {
+            let pkg = parent.join("package.mist");
+            if !documents.contains_key(&pkg) {
+                continue;
+            }
+            pkg
+        };
+        result
+            .entry(parent_target)
+            .or_default()
+            .push_str(&format!("pub mod {};\n", dirname));
+    }
+
     result
 }
 
+fn ensure_implicit_packages_impl(
+    docs: &mut HashMap<PathBuf, Rope>,
+    src_root: &Path,
+) {
+    let mut dirs_with_mist: HashMap<PathBuf, Vec<PathBuf>> = HashMap::new();
+    for mist_path in docs.keys() {
+        if let Ok(rel) = mist_path.strip_prefix(src_root) {
+            if let Some(parent) = rel.parent() {
+                if !parent.as_os_str().is_empty() {
+                    dirs_with_mist
+                        .entry(src_root.join(parent))
+                        .or_default()
+                        .push(mist_path.clone());
+                }
+            }
+        }
+    }
+
+    for dir in dirs_with_mist.keys() {
+        let pkg_path = dir.join("package.mist");
+        if !docs.contains_key(&pkg_path) {
+            let dirname = dir
+                .file_name()
+                .and_then(|n| n.to_str())
+                .unwrap_or("module")
+                .to_string();
+            let content = format!("pub module {dirname};\n");
+            docs.insert(pkg_path, Rope::from_str(&content));
+        }
+    }
+}
+
 fn clean_completion_item(mut item: CompletionItem) -> CompletionItem {
     item.text_edit = None;
     item.additional_text_edits = None;
diff --git a/crates/analyzer/src/transpiler.rs b/crates/analyzer/src/transpiler.rs
index 763674c..581ae12 100644
--- a/crates/analyzer/src/transpiler.rs
+++ b/crates/analyzer/src/transpiler.rs
@@ -1,8 +1,8 @@
 use std::path::{Path, PathBuf};
 
-use mist_codegen::{GetRust, RustCodegen};
+use mist_codegen::RustCodegen;
 use mist_parser::rev_mapper::Mapping;
-use mist_parser::{parse, parse_module};
+use mist_parser::parse;
 
 pub struct TranspiledFile {
     pub mist_path: PathBuf,
@@ -16,8 +16,13 @@ pub fn transpile_mist(
     source: &str,
     extra_mod_decl: &str,
 ) -> Result<TranspiledFile, String> {
-    let module_decl = parse_module(source).map_err(|e| format!("parse module error: {e:?}"))?;
-    let rust_path = crate::from_mist_to_rust(mist_path.to_path_buf());
+    let mut rust_path = crate::from_mist_to_rust(mist_path.to_path_buf());
+    // Package files (package.mist) must output as <dir>/mod.rs so the Rust module
+    // hierarchy resolves correctly (pub mod <child>; declarations look for sibling
+    // .rs files, and the parent module declaration looks for <dir>/mod.rs).
+    if mist_path.file_name().and_then(|n| n.to_str()) == Some("package.mist") {
+        rust_path.set_file_name("mod.rs");
+    }
 
     let parsed = parse(source).map_err(|e| format!("parse error: {e:?}"))?;
 
@@ -29,19 +34,12 @@ pub fn transpile_mist(
     let mut codegen = RustCodegen::new(mist_path.to_path_buf());
     let output = codegen.generate(parsed);
 
-    let self_mod_prefix = module_decl
-        .as_ref()
-        .map(|(vis, name)| format!("{}mod {};\n", vis.get_rust(), name.get_rust()))
-        .unwrap_or_default();
-
-    let combined_prefix = format!("{}{}", extra_mod_decl, self_mod_prefix);
-
-    codegen.mapping.shift_rust(combined_prefix.lines().count() as isize, 0);
+    codegen.mapping.shift_rust(extra_mod_decl.lines().count() as isize, 0);
 
     Ok(TranspiledFile {
         mist_path: mist_path.to_path_buf(),
         rust_path,
-        rust_content: format!("{}{}", combined_prefix, output),
+        rust_content: format!("{}{}", extra_mod_decl, output),
         mapping: codegen.mapping,
     })
 }