diff --git a/app/src/processing/app/Base.java b/app/src/processing/app/Base.java
index dee3103de6d..6545b6ed222 100644
--- a/app/src/processing/app/Base.java
+++ b/app/src/processing/app/Base.java
@@ -1277,20 +1277,6 @@ protected void rebuildSketchbookMenu(JMenu menu) {
     }
   }
 
-  public LibraryList getIDELibs() {
-    if (libraries == null)
-      return new LibraryList();
-    LibraryList res = new LibraryList(libraries);
-    res.removeAll(getUserLibs());
-    return res;
-  }
-
-  public LibraryList getUserLibs() {
-    if (libraries == null)
-      return new LibraryList();
-    return libraries.filterLibrariesInSubfolder(getSketchbookFolder());
-  }
-
   public void rebuildImportMenu(JMenu importMenu) {
     importMenu.removeAll();
 
@@ -1304,34 +1290,10 @@ public void actionPerformed(ActionEvent e) {
       }
     });
     importMenu.add(addLibraryMenuItem);
-    importMenu.addSeparator();
     
-    // Split between user supplied libraries and IDE libraries
-    TargetPlatform targetPlatform = getTargetPlatform();
-    
-    if (targetPlatform != null) {
-      LibraryList ideLibs = getIDELibs();
-      LibraryList userLibs = getUserLibs();
+    if (libraries != null) {
       try {
-        // Find the current target. Get the platform, and then select the
-        // correct name and core path.
-        PreferencesMap prefs = targetPlatform.getPreferences();
-        if (prefs != null) {
-          String platformName = prefs.get("name");
-          if (platformName != null) {
-            JMenuItem platformItem = new JMenuItem(_(platformName));
-            platformItem.setEnabled(false);
-            importMenu.add(platformItem);
-          }
-        }
-        if (ideLibs.size() > 0) {
-          importMenu.addSeparator();
-          addLibraries(importMenu, ideLibs);
-        }
-        if (userLibs.size() > 0) {
-          importMenu.addSeparator();
-          addLibraries(importMenu, userLibs);
-        }
+        addLibraries(importMenu, libraries);
       } catch (IOException e) {
         e.printStackTrace();
       }
@@ -1344,101 +1306,137 @@ public void rebuildExamplesMenu(JMenu menu) {
 
       // Add examples from distribution "example" folder
       boolean found = addSketches(menu, examplesFolder, false);
-      if (found) menu.addSeparator();
+      if (found) {
+        // Prepend a label
+        JMenuItem label = new JMenuItem(_("Core examples"));
+        label.setEnabled(false);
+        menu.add(label, 0);
+      }
 
       // Add examples from libraries
-      LibraryList ideLibs = getIDELibs();
-      ideLibs.sort();
-      for (Library lib : ideLibs)
-        addSketchesSubmenu(menu, lib, false);
-
-      LibraryList userLibs = getUserLibs();
-      if (userLibs.size()>0) {
-        menu.addSeparator();
-        userLibs.sort();
-        for (Library lib : userLibs)
-          addSketchesSubmenu(menu, lib, false);
+      if (libraries != null && !libraries.isEmpty()) {
+        for (LibraryList sub : libraries.getSubs()) {
+          if (found)
+            menu.addSeparator();
+
+          // Prepend a label
+          JMenuItem label = new JMenuItem(sub.getName());
+          label.setEnabled(false);
+          menu.add(label);
+
+          addLibraryExamples(menu, sub);
+
+          found = true;
+        }
       }
     } catch (IOException e) {
       e.printStackTrace();
     }
   }
 
-  public LibraryList scanLibraries(List<File> folders) throws IOException {
-    LibraryList res = new LibraryList();
-    for (File folder : folders)
-      res.addOrReplaceAll(scanLibraries(folder));
-    return res;
+  protected void addLibraryExamples(JMenu menu, LibraryList libs) throws IOException {
+    // Add any subdirectories first
+    for (LibraryList sub : libs.getSubs()) {
+      if (sub.isEmpty())
+        continue;
+
+      JMenu submenu = new JMenu(sub.getName());
+      addLibraryExamples(submenu, sub);
+      menu.add(submenu);
+      MenuScroller.setScrollerFor(submenu);
+    }
+
+    // Then add the libraries directly in this folder
+    for (Library lib : libs.getLibs()) {
+      addSketchesSubmenu(menu, lib, false);
+    }
   }
 
-  public LibraryList scanLibraries(File folder) throws IOException {
-    LibraryList res = new LibraryList();
+  public void updateLibraries() throws IOException {
+    // Calculate paths for libraries and examples
+    examplesFolder = getContentFile("examples");
+    toolsFolder = getContentFile("tools");
 
-    String list[] = folder.list(new OnlyDirs());
-    // if a bad folder or something like that, this might come back null
-    if (list == null)
-      return res;
+    libraries = new LibraryList(null);
+    librariesFolders = new ArrayList<File>();
 
-    for (String libName : list) {
-      File subfolder = new File(folder, libName);
-      if (!Sketch.isSanitaryName(libName)) {
-        String mess = I18n.format(_("The library \"{0}\" cannot be used.\n"
-            + "Library names must contain only basic letters and numbers.\n"
-            + "(ASCII only and no spaces, and it cannot start with a number)"),
-                                  libName);
-        Base.showMessage(_("Ignoring bad library name"), mess);
-        continue;
+    File ideLibs = getContentFile("libraries");
+    libraries.addSub(scanLibraries(ideLibs, _("Libraries for all boards"), true));
+    librariesFolders.add(ideLibs);
+
+    TargetPlatform targetPlatform = getTargetPlatform();
+    if (targetPlatform != null) {
+      File platformFolder = targetPlatform.getFolder();
+      File platformLibs = new File(platformFolder, "libraries");
+      librariesFolders.add(platformLibs);
+      libraries.addSub(scanLibraries(platformLibs, I18n.format(_("Libraries for {0}"), targetPlatform.getName()), true));
+
+      String core = getBoardPreferences().get("build.core");
+      TargetPlatform referencedPlatform = null;
+      if (core.contains(":")) {
+        String referencedCore = core.split(":")[0];
+        referencedPlatform = Base.getTargetPlatform(referencedCore, targetPlatform.getId());
+        if (referencedPlatform != null) {
+          File referencedPlatformFolder = referencedPlatform.getFolder();
+          File referencedLibs = new File(referencedPlatformFolder, "libraries");
+          librariesFolders.add(referencedLibs);
+          libraries.addSub(scanLibraries(referencedLibs, I18n.format(_("Libraries for {0}"), referencedPlatform.getName()), true));
+        }
       }
+    }
+
+    File sketchbookLibs = getSketchbookLibrariesFolder();
+    librariesFolders.add(sketchbookLibs);
+    libraries.addSub(scanLibraries(sketchbookLibs, _("Libraries from your sketchbook"), true));
+  }
+
+  public LibraryList scanLibraries(File folder, String name, boolean allow_legacy) throws IOException {
+    LibraryList res = new LibraryList(name != null ? name : folder.getName());
 
+    File[] subfolders = folder.listFiles(new OnlyDirs());
+    if (subfolders != null) {
+      for (File subfolder : subfolders)
+        scanLibraryFolder(res, subfolder, allow_legacy);
+    }
+
+    res.sort();
+
+    return res;
+  }
+
+  public void scanLibraryFolder(LibraryList list, File folder, boolean allow_legacy) throws IOException {
+    if (Library.isLibrary(folder)) {
+      // This looks like a library, add it
       try {
-        Library lib = Library.create(subfolder);
+        Library lib = Library.create(folder);
         // (also replace previously found libs with the same name)
         if (lib != null)
-          res.addOrReplace(lib);
+          list.addOrReplace(lib);
       } catch (IOException e) {
         System.out.println(I18n.format(_("Invalid library found in {0}: {1}"),
-                                       subfolder, e.getMessage()));
+                                       folder, e.getMessage()));
       }
+    } else {
+      // This didn't look like a library, see if we can find libraries
+      // in the subdirectories
+      LibraryList sub = scanLibraries(folder, null, false);
+
+      if (!sub.isEmpty())
+        list.addSub(sub);
     }
-    return res;
   }
 
   public void onBoardOrPortChange() {
-    TargetPlatform targetPlatform = getTargetPlatform();
-    if (targetPlatform == null)
-      return;
-
-    // Calculate paths for libraries and examples
-    examplesFolder = getContentFile("examples");
-    toolsFolder = getContentFile("tools");
-
-    File platformFolder = targetPlatform.getFolder();
-    librariesFolders = new ArrayList<File>();
-    librariesFolders.add(getContentFile("libraries"));
-    String core = getBoardPreferences().get("build.core");
-    if (core.contains(":")) {
-      String referencedCore = core.split(":")[0];
-      TargetPlatform referencedPlatform = Base.getTargetPlatform(referencedCore, targetPlatform.getId());
-      if (referencedPlatform != null) {
-      File referencedPlatformFolder = referencedPlatform.getFolder();
-        librariesFolders.add(new File(referencedPlatformFolder, "libraries"));
-      }
-    }
-    librariesFolders.add(new File(platformFolder, "libraries"));
-    librariesFolders.add(getSketchbookLibrariesFolder());
-
-    // Scan for libraries in each library folder.
-    // Libraries located in the latest folders on the list can override
-    // other libraries with the same name.
+    // Scan for libraries
     try {
-      libraries = scanLibraries(librariesFolders);
+      updateLibraries();
     } catch (IOException e) {
       showWarning(_("Error"), _("Error loading libraries"), e);
     }
 
     // Populate importToLibraryTable
     importToLibraryTable = new HashMap<String, Library>();
-    for (Library lib : libraries) {
+    for (Library lib : getLibraries()) {
       try {
         String headers[] = headerListFromIncludePath(lib.getSrcFolder());
         for (String header : headers) {
@@ -1493,9 +1491,8 @@ public void rebuildBoardsMenu(JMenu toolsMenu, Editor editor) throws Exception {
         first = false;
 
         // Add a title for each platform
-        String platformLabel = targetPlatform.getPreferences().get("name"); 
-        if (platformLabel != null && !targetPlatform.getBoards().isEmpty()) {
-          JMenuItem menuLabel = new JMenuItem(_(platformLabel));
+        if (!targetPlatform.getBoards().isEmpty()) {
+          JMenuItem menuLabel = new JMenuItem(_(targetPlatform.getName()));
           menuLabel.setEnabled(false);
           boardsMenu.add(menuLabel);
         }
@@ -1838,11 +1835,31 @@ public void actionPerformed(ActionEvent e) {
   }
 
   protected void addLibraries(JMenu menu, LibraryList libs) throws IOException {
+    for (LibraryList sub : libs.getSubs()) {
+      menu.addSeparator();
 
-    LibraryList list = new LibraryList(libs);
-    list.sort();
+      // Prepend a label
+      JMenuItem label = new JMenuItem(sub.getName());
+      label.setEnabled(false);
+      menu.add(label);
 
-    for (Library lib : list) {
+      addLibrariesRecursive(menu, sub);
+    }
+  }
+
+  protected void addLibrariesRecursive(JMenu menu, LibraryList libs) throws IOException {
+    // Add any subdirectories first
+    for (LibraryList sub : libs.getSubs()) {
+      if (sub.isEmpty())
+        continue;
+
+      JMenu submenu = new JMenu(sub.getName());
+      addLibrariesRecursive(submenu, sub);
+      menu.add(submenu);
+      MenuScroller.setScrollerFor(submenu);
+    }
+    // Then add the libraries directly in this folder
+    for (Library lib : libs.getLibs()) {
       @SuppressWarnings("serial")
       AbstractAction action = new AbstractAction(lib.getName()) {
         public void actionPerformed(ActionEvent event) {
@@ -1860,8 +1877,6 @@ public void actionPerformed(ActionEvent event) {
       JMenuItem item = new JMenuItem(action);
       item.putClientProperty("library", lib);
       menu.add(item);
-
-      // XXX: DAM: should recurse here so that library folders can be nested
     }
   }
 
@@ -1899,7 +1914,7 @@ protected void loadHardware(File folder) {
       try {
         packages.put(target, new TargetPackage(target, subfolder));
       } catch (TargetPlatformException e) {
-        System.out.println("WARNING: Error loading hardware folder " + target);
+        System.out.println("WARNING: Error loading hardware folder " + target + " from " + subfolder);
         System.out.println("  " + e.getMessage());
       }
     }
@@ -2137,8 +2152,8 @@ static public File createTempFolder(String name) {
   }
 
 
-  static public LibraryList getLibraries() {
-    return libraries;
+  static public List<Library> getLibraries() {
+    return libraries.getAll();
   }
 
 
diff --git a/app/src/processing/app/Sketch.java b/app/src/processing/app/Sketch.java
index 4b2c6b44b4c..56fff7f8f16 100644
--- a/app/src/processing/app/Sketch.java
+++ b/app/src/processing/app/Sketch.java
@@ -33,7 +33,6 @@
 import processing.app.helpers.PreferencesMap;
 import processing.app.helpers.FileUtils;
 import processing.app.packages.Library;
-import processing.app.packages.LibraryList;
 import processing.app.preproc.*;
 import processing.core.*;
 import static processing.app.I18n._;
@@ -94,7 +93,7 @@ public class Sketch {
   /**
    * List of library folders.
    */
-  private LibraryList importedLibraries;
+  private ArrayList<Library> importedLibraries;
 
   /**
    * File inside the build directory that contains the build options
@@ -1386,7 +1385,7 @@ public void preprocess(String buildPath, PdePreprocessor preprocessor) throws Ru
 
     // grab the imports from the code just preproc'd
 
-    importedLibraries = new LibraryList();
+    importedLibraries = new ArrayList<Library>();
     for (String item : preprocessor.getExtraImports()) {
       Library lib = Base.importToLibraryTable.get(item);
       if (lib != null && !importedLibraries.contains(lib)) {
@@ -1419,7 +1418,7 @@ public void preprocess(String buildPath, PdePreprocessor preprocessor) throws Ru
   }
 
 
-  public LibraryList getImportedLibraries() {
+  public List<Library> getImportedLibraries() {
     return importedLibraries;
   }
 
diff --git a/app/src/processing/app/debug/TargetPlatform.java b/app/src/processing/app/debug/TargetPlatform.java
index 2666347fac4..9a715e4cfbd 100644
--- a/app/src/processing/app/debug/TargetPlatform.java
+++ b/app/src/processing/app/debug/TargetPlatform.java
@@ -141,6 +141,13 @@ public String getId() {
     return id;
   }
 
+  public String getName() {
+    String name = preferences.get("name");
+    if (name == null)
+      return containerPackage.getId() + ":" + id;
+    return name;
+  }
+
   public File getFolder() {
     return folder;
   }
diff --git a/app/src/processing/app/packages/Library.java b/app/src/processing/app/packages/Library.java
index 9c505fe4e41..f1fb9bcd83c 100644
--- a/app/src/processing/app/packages/Library.java
+++ b/app/src/processing/app/packages/Library.java
@@ -9,6 +9,11 @@
 
 import processing.app.helpers.FileUtils;
 import processing.app.helpers.PreferencesMap;
+import processing.app.helpers.filefilters.OnlyFilesWithExtension;
+import processing.app.Sketch;
+
+import static processing.app.I18n._;
+import processing.app.I18n;
 
 public class Library {
 
@@ -36,6 +41,36 @@ public class Library {
       "Device Control", "Timing", "Data Storage", "Data Processing", "Other",
       "Uncategorized" });
 
+  /**
+   * Check a folder to see if it contains a proper (non-legacy) library.
+   */
+  public static boolean isProperLibrary(File libFolder) throws IOException {
+    // A library is considered "new" if it contains a file called
+    // "library.properties"
+    File check = new File(libFolder, "library.properties");
+    return check.exists() && check.isFile();
+  }
+
+  /**
+   * Check a folder to see if it is a proper library, or looks like a
+   * legacy library (we can never tell for sure, though).
+   */
+  public static boolean isLibrary(File libFolder) throws IOException {
+    if (isProperLibrary(libFolder))
+      return true;
+
+    // If it has a utility folder, then it's probably a legacy library
+    File utilFolder = new File(libFolder, "utility");
+    if (utilFolder.exists() && utilFolder.isDirectory())
+      return true;
+
+    // If it his some .h files, it's probably a legacy library
+    if (libFolder.list(new OnlyFilesWithExtension(".h")).length > 0)
+      return true;
+
+    return false;
+  }
+
   /**
    * Scans inside a folder and create a Library object out of it. Automatically
    * detects legacy libraries. Automatically fills metadata from
@@ -45,10 +80,15 @@ public class Library {
    * @return
    */
   static public Library create(File libFolder) throws IOException {
-    // A library is considered "new" if it contains a file called
-    // "library.properties"
-    File check = new File(libFolder, "library.properties");
-    if (!check.exists() || !check.isFile())
+    if (!Sketch.isSanitaryName(libFolder.getName())) {
+      String mess = I18n.format(_("The library \"{0}\" cannot be used.\n"
+          + "Library names must contain only basic letters and numbers.\n"
+          + "(ASCII only and no spaces, and it cannot start with a number)"),
+                                libFolder.getName());
+      throw new IOException(mess);
+    }
+
+    if (!isProperLibrary(libFolder))
       return createLegacyLibrary(libFolder);
     else
       return createLibrary(libFolder);
diff --git a/app/src/processing/app/packages/LibraryList.java b/app/src/processing/app/packages/LibraryList.java
index 343ff4bde6a..ad6ab9f14d0 100644
--- a/app/src/processing/app/packages/LibraryList.java
+++ b/app/src/processing/app/packages/LibraryList.java
@@ -2,24 +2,28 @@
 
 import java.io.File;
 import java.util.ArrayList;
+import java.util.Comparator;
+import java.util.List;
 import java.util.Collection;
 import java.util.Collections;
 
 import processing.app.helpers.FileUtils;
 
 @SuppressWarnings("serial")
-public class LibraryList extends ArrayList<Library> {
+public class LibraryList {
+  protected ArrayList<LibraryList> subs;
+  protected ArrayList<Library> libs;
+  protected String name;
 
-  public LibraryList(LibraryList libs) {
-    super(libs);
-  }
-
-  public LibraryList() {
+  public LibraryList(String name) {
     super();
+    this.name = name;
+    this.subs = new ArrayList<LibraryList>();
+    this.libs = new ArrayList<Library>();
   }
 
   public Library getByName(String name) {
-    for (Library l : this)
+    for (Library l : libs)
       if (l.getName().equals(name))
         return l;
     return null;
@@ -28,8 +32,8 @@ public Library getByName(String name) {
   public void addOrReplace(Library lib) {
     Library l = getByName(lib.getName());
     if (l != null)
-      remove(l);
-    add(lib);
+      libs.remove(l);
+    libs.add(lib);
   }
 
   public void addOrReplaceAll(Collection<? extends Library> c) {
@@ -37,34 +41,62 @@ public void addOrReplaceAll(Collection<? extends Library> c) {
       addOrReplace(l);
   }
 
+  public void addSub(LibraryList sub) {
+    subs.add(sub);
+  }
+
+  public List<LibraryList> getSubs() {
+    return subs;
+  }
+
+  public List<Library> getLibs() {
+    return libs;
+  }
+
+  public List<Library> getAll() {
+    ArrayList<Library> list = new ArrayList<Library>();
+
+    for (LibraryList sub : subs)
+      list.addAll(sub.getAll());
+
+    list.addAll(libs);
+
+    return list;
+  }
+
   public void sort() {
-    Collections.sort(this, Library.CASE_INSENSITIVE_ORDER);
+    Collections.sort(libs, Library.CASE_INSENSITIVE_ORDER);
+    Collections.sort(subs, LibraryList.CASE_INSENSITIVE_ORDER);
   }
 
   public Library search(String name, String arch) {
-    for (Library lib : this) {
+    for (Library lib : libs) {
       if (!lib.getName().equals(name))
         continue;
       if (!lib.supportsArchitecture(arch))
         continue;
       return lib;
     }
+    for (LibraryList sub : subs) {
+      Library lib = sub.search(name, arch);
+      if (lib != null)
+        return lib;
+    }
     return null;
   }
 
-  public LibraryList filterByArchitecture(String reqArch) {
-    LibraryList res = new LibraryList();
-    for (Library lib : this)
-      if (lib.supportsArchitecture(reqArch))
-        res.add(lib);
-    return res;
+  public static final Comparator<LibraryList> CASE_INSENSITIVE_ORDER = new Comparator<LibraryList>() {
+    @Override
+    public int compare(LibraryList o1, LibraryList o2) {
+      return o1.getName().compareToIgnoreCase(o2.getName());
+    }
+  };
+
+  public String getName() {
+    return name;
   }
 
-  public LibraryList filterLibrariesInSubfolder(File subFolder) {
-    LibraryList res = new LibraryList();
-    for (Library lib : this)
-      if (FileUtils.isSubDirectory(subFolder, lib.getFolder()))
-        res.add(lib);
-    return res;
+  public boolean isEmpty() {
+    return libs.isEmpty() && subs.isEmpty();
   }
 }