diff --git a/CMakeLists.txt b/CMakeLists.txt
index dec502b04..f5ec0f6b6 100644
--- a/CMakeLists.txt
+++ b/CMakeLists.txt
@@ -173,15 +173,33 @@ MACRO(CMAKE_SETUP_TESTING)
 ENDMACRO(CMAKE_SETUP_TESTING)
 
 
+# Provide a way for Visual Studio Express users to turn OFF the new FOLDER
+# organization feature. Default to ON for non-Express users. Express users must
+# explicitly turn off this option to build CMake in the Express IDE...
+#
+OPTION(CMAKE_USE_FOLDERS "Enable folder grouping of projects in IDEs." ON)
+MARK_AS_ADVANCED(CMAKE_USE_FOLDERS)
+
+
+#-----------------------------------------------------------------------
+# a macro that only sets the FOLDER target property if it's
+# "appropriate"
+#-----------------------------------------------------------------------
 MACRO(CMAKE_SET_TARGET_FOLDER tgt folder)
-  # Really, I just want this to be an "if(TARGET ${tgt})" ...
-  # but I'm not sure that our min req'd., CMake 2.4.5 can handle
-  # that... so I'm just activating this for now, with a version
-  # compare, and only for MSVC builds.
-  IF(MSVC)
-    IF(NOT ${CMAKE_MAJOR_VERSION}.${CMAKE_MINOR_VERSION} LESS 2.8)
-      SET_PROPERTY(TARGET "${tgt}" PROPERTY FOLDER "${folder}")
+  IF(CMAKE_USE_FOLDERS)
+    SET_PROPERTY(GLOBAL PROPERTY USE_FOLDERS ON)
+
+    # Really, I just want this to be an "if(TARGET ${tgt})" ...
+    # but I'm not sure that our min req'd., CMake 2.4.5 can handle
+    # that... so I'm just activating this for now, with a version
+    # compare, and only for MSVC builds.
+    IF(MSVC)
+      IF(NOT ${CMAKE_MAJOR_VERSION}.${CMAKE_MINOR_VERSION} LESS 2.8)
+        SET_PROPERTY(TARGET "${tgt}" PROPERTY FOLDER "${folder}")
+      ENDIF()
     ENDIF()
+  ELSE()
+    SET_PROPERTY(GLOBAL PROPERTY USE_FOLDERS OFF)
   ENDIF()
 ENDMACRO(CMAKE_SET_TARGET_FOLDER)
 
diff --git a/Source/cmGlobalGenerator.cxx b/Source/cmGlobalGenerator.cxx
index 8e77294ae..b9deaef90 100644
--- a/Source/cmGlobalGenerator.cxx
+++ b/Source/cmGlobalGenerator.cxx
@@ -1863,9 +1863,10 @@ bool cmGlobalGenerator::UseFolderProperty()
     return cmSystemTools::IsOn(prop);
     }
 
-  // By default, this feature is ON:
+  // By default, this feature is OFF, since it is not supported in the
+  // Visual Studio Express editions:
   //
-  return true;
+  return false;
 }
 
 //----------------------------------------------------------------------------
diff --git a/Source/cmGlobalVisualStudio7Generator.cxx b/Source/cmGlobalVisualStudio7Generator.cxx
index f455810c2..e08b1ef2c 100644
--- a/Source/cmGlobalVisualStudio7Generator.cxx
+++ b/Source/cmGlobalVisualStudio7Generator.cxx
@@ -323,7 +323,7 @@ void cmGlobalVisualStudio7Generator::WriteTargetsToSolution(
 
               if (cumulativePath.empty())
                 {
-                cumulativePath = *iter;
+                cumulativePath = "CMAKE_FOLDER_GUID_" + *iter;
                 }
               else
                 {
@@ -431,14 +431,22 @@ void cmGlobalVisualStudio7Generator
 //----------------------------------------------------------------------------
 void cmGlobalVisualStudio7Generator::WriteFolders(std::ostream& fout)
 {
+  const char *prefix = "CMAKE_FOLDER_GUID_";
+  const std::string::size_type skip_prefix = strlen(prefix);
   std::string guidProjectTypeFolder = "2150E333-8FDC-42A3-9474-1A3956D46DE8";
   for(std::map<std::string,std::set<std::string> >::iterator iter =
     VisualStudioFolders.begin(); iter != VisualStudioFolders.end(); ++iter)
     {
     std::string fullName = iter->first;
     std::string guid = this->GetGUID(fullName.c_str());
-    std::string nameOnly = cmSystemTools::GetFilenameName(fullName);
+
     cmSystemTools::ReplaceString(fullName, "/", "\\");
+    if (cmSystemTools::StringStartsWith(fullName.c_str(), prefix))
+      {
+      fullName = fullName.substr(skip_prefix);
+      }
+
+    std::string nameOnly = cmSystemTools::GetFilenameName(fullName);
 
     fout << "Project(\"{" <<
       guidProjectTypeFolder << "}\") = \"" <<
diff --git a/Source/cmake.cxx b/Source/cmake.cxx
index 37ff7c56d..db26b7334 100644
--- a/Source/cmake.cxx
+++ b/Source/cmake.cxx
@@ -3486,7 +3486,7 @@ void cmake::DefineProperties(cmake *cm)
   cm->DefineProperty
     ("USE_FOLDERS", cmProperty::GLOBAL,
      "Use the FOLDER target property to organize targets into folders.",
-     "If not set, CMake treats this property as ON by default. "
+     "If not set, CMake treats this property as OFF by default. "
      "CMake generators that are capable of organizing into a "
      "hierarchy of folders use the values of the FOLDER target "
      "property to name those folders. See also the documentation "
diff --git a/Tests/ExternalProject/CMakeLists.txt b/Tests/ExternalProject/CMakeLists.txt
index 00db5d484..45c114988 100644
--- a/Tests/ExternalProject/CMakeLists.txt
+++ b/Tests/ExternalProject/CMakeLists.txt
@@ -7,6 +7,13 @@ find_package(CVS)
 find_package(Subversion)
 find_package(Git)
 
+option(ExternalProjectTest_USE_FOLDERS "Enable folder grouping in IDEs." ON)
+if(ExternalProjectTest_USE_FOLDERS)
+  set_property(GLOBAL PROPERTY USE_FOLDERS ON)
+else()
+  set_property(GLOBAL PROPERTY USE_FOLDERS OFF)
+endif()
+
 set_property(GLOBAL PROPERTY PREDEFINED_TARGETS_FOLDER
   "CMakePredefinedTargets-in-ExternalProjectTest")
 
@@ -60,6 +67,15 @@ ExternalProject_Add(${proj}
   INSTALL_COMMAND ""
 )
 
+set(proj TargetNameSameAsFolder)
+ExternalProject_Add(${proj}
+  BUILD_COMMAND ""
+  CONFIGURE_COMMAND ""
+  DOWNLOAD_COMMAND ""
+  INSTALL_COMMAND ""
+)
+set_property(TARGET ${proj} PROPERTY FOLDER "${proj}")
+
 set(proj MinimalNoOpProject)
 ExternalProject_Add(${proj}
   BUILD_COMMAND ""