diff --git a/src/bonsai/bonsai/bim/module/project/operator.py b/src/bonsai/bonsai/bim/module/project/operator.py
index 995c96725d..212cf0ff80 100644
--- a/src/bonsai/bonsai/bim/module/project/operator.py
+++ b/src/bonsai/bonsai/bim/module/project/operator.py
@@ -759,21 +759,22 @@ class EditProjectLibrary(bpy.types.Operator):
         attributes = bonsai.bim.helper.export_attributes(props.project_library_attributes)
         ifcopenshell.api.attribute.edit_attributes(library_file, project_library, attributes)
 
-        # Update parent library.
+        # Update parent library. Tear down the old IfcRelDeclares/IfcRelNests before
+        # creating the new one; a library must have exactly one of the two, never both.
         previous_parent_library = tool.Project.get_parent_library(project_library)
         new_parent_library = library_file.by_id(int(props.parent_library))
         if previous_parent_library != new_parent_library:
-            if previous_parent_library is None:
-                # Edited library was a root in a library-only file; nest it under the new parent.
+            if previous_parent_library is not None:
+                if previous_parent_library.is_a("IfcProject"):
+                    ifcopenshell.api.project.unassign_declaration(
+                        library_file, [project_library], previous_parent_library
+                    )
+                else:
+                    ifcopenshell.api.nest.unassign_object(library_file, [project_library])
+            if new_parent_library.is_a("IfcProject"):
+                ifcopenshell.api.project.assign_declaration(library_file, [project_library], new_parent_library)
+            else:
                 ifcopenshell.api.nest.assign_object(library_file, [project_library], new_parent_library)
-            elif previous_parent_library.is_a("IfcProject"):
-                # Then new one is IfcProjectLibrary.
-                ifcopenshell.api.nest.assign_object(library_file, [project_library], new_parent_library)
-            else:  # Previous is IfcProjectLibrary.
-                ifcopenshell.api.nest.unassign_object(library_file, [project_library])
-                # If new one is IfcProject, then it's already assigned by default.
-                if new_parent_library.is_a("IfcProjectLibrary"):
-                    ifcopenshell.api.nest.assign_object(library_file, [project_library], new_parent_library)
 
         props.is_editing_project_library = False
         bpy.ops.bim.refresh_library()
diff --git a/src/bonsai/test/bim/module/project/test_project_library_data.py b/src/bonsai/test/bim/module/project/test_project_library_data.py
index 699e8a31b3..df9192aa6d 100644
--- a/src/bonsai/test/bim/module/project/test_project_library_data.py
+++ b/src/bonsai/test/bim/module/project/test_project_library_data.py
@@ -75,6 +75,13 @@ class TestLibraryFile(NewIfc):
 
         assert tool.Project.get_parent_library(root) == project
 
+    def test_get_parent_library_returns_the_library_for_a_nested_sub_library(self):
+        library_file = _make_library_file(with_child=True)
+        root = next(lib for lib in library_file.by_type("IfcProjectLibrary") if lib.Name == "RootLib")
+        child = next(lib for lib in library_file.by_type("IfcProjectLibrary") if lib.Name == "ChildLib")
+
+        assert tool.Project.get_parent_library(child) == root
+
     def test_get_parent_library_returns_none_for_an_orphaned_library(self):
         library_file = ifcopenshell.api.project.create_file(version="IFC4")
         orphan = ifcopenshell.api.root.create_entity(library_file, ifc_class="IfcProjectLibrary", name="Orphan")
@@ -117,6 +124,58 @@ class TestLibraryFile(NewIfc):
             IfcStore.library_file = None
             ProjectLibraryData.is_loaded = False
 
+    def test_edit_project_library_moves_a_project_declared_library_under_another_library(self):
+        import bpy
+
+        library_file = _make_library_file()
+        project = library_file.by_type("IfcProject")[0]
+        root = library_file.by_type("IfcProjectLibrary")[0]
+        target = ifcopenshell.api.root.create_entity(library_file, ifc_class="IfcProjectLibrary", name="TargetLib")
+        ifcopenshell.api.project.assign_declaration(library_file, definitions=[target], relating_context=project)
+        IfcStore.library_file = library_file
+        try:
+            props = tool.Project.get_project_props()
+            props.selected_project_library = str(root.id())
+            props.is_editing_project_library = True
+            props.parent_library = str(target.id())
+
+            result = bpy.ops.bim.edit_project_library()
+
+            assert result == {"FINISHED"}
+            assert tool.Project.get_parent_library(root) == target
+            assert root.Nests and root.Nests[0].RelatingObject == target
+            assert not root.HasContext
+        finally:
+            if props.is_editing_project_library:
+                props.is_editing_project_library = False
+            IfcStore.library_file = None
+            ProjectLibraryData.is_loaded = False
+
+    def test_edit_project_library_moves_a_nested_library_back_under_the_project(self):
+        import bpy
+
+        library_file = _make_library_file(with_child=True)
+        project = library_file.by_type("IfcProject")[0]
+        child = next(lib for lib in library_file.by_type("IfcProjectLibrary") if lib.Name == "ChildLib")
+        IfcStore.library_file = library_file
+        try:
+            props = tool.Project.get_project_props()
+            props.selected_project_library = str(child.id())
+            props.is_editing_project_library = True
+            props.parent_library = str(project.id())
+
+            result = bpy.ops.bim.edit_project_library()
+
+            assert result == {"FINISHED"}
+            assert tool.Project.get_parent_library(child) == project
+            assert child.HasContext and child.HasContext[0].RelatingContext == project
+            assert not child.Nests
+        finally:
+            if props.is_editing_project_library:
+                props.is_editing_project_library = False
+            IfcStore.library_file = None
+            ProjectLibraryData.is_loaded = False
+
     def test_add_project_library_declares_new_library_under_the_project_root(self):
         import bpy