diff --git a/Cargo.lock b/Cargo.lock
index 9e0d4e4..f754ff4 100644
--- a/Cargo.lock
+++ b/Cargo.lock
@@ -1776,6 +1776,7 @@ dependencies = [
  "image",
  "infer",
  "jxl-oxide",
+ "notify",
  "tokio",
  "tracing",
  "walkdir",
diff --git a/cosmic-settings/src/pages/desktop/wallpaper/config.rs b/cosmic-settings/src/pages/desktop/wallpaper/config.rs
index 7ab6978..733e537 100644
--- a/cosmic-settings/src/pages/desktop/wallpaper/config.rs
+++ b/cosmic-settings/src/pages/desktop/wallpaper/config.rs
@@ -120,6 +120,30 @@ impl Config {
 
     #[must_use]
     pub fn default_folder() -> PathBuf {
+        // Check user directories first
+        if let Some(home) = env::var_os("HOME") {
+            let home_path = PathBuf::from(home);
+            
+            // Check ~/.local/share/backgrounds (XDG standard)
+            let local_backgrounds = home_path.join(".local/share/backgrounds");
+            if local_backgrounds.exists() {
+                return local_backgrounds;
+            }
+            
+            // Check ~/Images
+            let images_dir = home_path.join("Images");
+            if images_dir.exists() {
+                return images_dir;
+            }
+            
+            // Check ~/Pictures
+            let pictures_dir = home_path.join("Pictures");
+            if pictures_dir.exists() {
+                return pictures_dir;
+            }
+        }
+        
+        // Check system directories
         if let Some(data_dirs) = env::var_os("XDG_DATA_DIRS")
             && let Some(data_dirs) = data_dirs.to_str()
         {
diff --git a/cosmic-settings/src/subscription/wallpapers.rs b/cosmic-settings/src/subscription/wallpapers.rs
index b424219..532c73f 100644
--- a/cosmic-settings/src/subscription/wallpapers.rs
+++ b/cosmic-settings/src/subscription/wallpapers.rs
@@ -1,9 +1,13 @@
 use std::path::PathBuf;
+use std::time::Duration;
 
 use cosmic::iced::futures::channel::mpsc::Sender;
 use cosmic::iced::futures::{SinkExt, StreamExt, future};
 use cosmic::iced::{Subscription, stream};
 use image::{ImageBuffer, Rgba};
+use notify::{Config, Event, RecommendedWatcher, RecursiveMode, Watcher};
+use tokio::sync::mpsc;
+use tokio::time;
 
 #[derive(Clone, Debug)]
 /// Event emitted by the wallpaper subscription
@@ -35,9 +39,72 @@ pub fn wallpapers(current_dir: PathBuf) -> cosmic::iced::Subscription<WallpaperE
     })
 }
 
+/// Spawn a file watcher that sends reload signals when directory changes
+fn spawn_watcher(current_dir: PathBuf, tx: mpsc::Sender<()>) -> anyhow::Result<()> {
+    let (event_tx, event_rx) = std::sync::mpsc::channel();
+
+    let mut watcher: RecommendedWatcher = RecommendedWatcher::new(
+        move |res: Result<Event, notify::Error>| {
+            if let Ok(event) = res {
+                // Only send reload for relevant events
+                if matches!(
+                    event.kind,
+                    notify::EventKind::Create(_) | notify::EventKind::Modify(_) | notify::EventKind::Remove(_)
+                ) {
+                    let _ = event_tx.send(event);
+                }
+            }
+        },
+        Config::default().with_poll_interval(Duration::from_secs(1)),
+    )?;
+
+    watcher.watch(&current_dir, RecursiveMode::Recursive)?;
+
+    tokio::spawn(async move {
+        let mut debounce_timer = None;
+        loop {
+            match event_rx.recv() {
+                Ok(_) => {
+                    // Debounce: wait 500ms before reloading to avoid multiple rapid events
+                    if debounce_timer.is_none() {
+                        let tx_clone = tx.clone();
+                        debounce_timer = Some(tokio::spawn(async move {
+                            time::sleep(Duration::from_millis(500)).await;
+                            let _ = tx_clone.send(());
+                        }));
+                    }
+                }
+                Err(_) => break,
+            }
+        }
+    });
+
+    Ok(())
+}
+
 async fn inner(tx: Sender<WallpaperEvent>, current_dir: PathBuf) -> anyhow::Result<()> {
     tx.clone().send(WallpaperEvent::Loading).await?;
 
+    // Load initial wallpapers
+    load_wallpapers(&tx, current_dir.clone()).await?;
+    tx.clone().send(WallpaperEvent::Loaded).await?;
+
+    // Set up file watcher for automatic reload
+    let (reload_tx, mut reload_rx) = mpsc::channel::<()>(1);
+    
+    // Spawn watcher in background
+    let _ = spawn_watcher(current_dir.clone(), reload_tx);
+
+    // Watch for reload signals
+    while let Some(_) = reload_rx.recv().await {
+        tracing::debug!("Reloading wallpapers due to directory change");
+        load_wallpapers(&tx, current_dir.clone()).await?;
+    }
+
+    Ok(())
+}
+
+async fn load_wallpapers(tx: &Sender<WallpaperEvent>, current_dir: PathBuf) -> anyhow::Result<()> {
     let mut stream = cosmic_settings_wallpaper::load_each_from_path(current_dir).await;
 
     while let Some((path, display, selection)) = stream.next().await {
@@ -54,7 +121,5 @@ async fn inner(tx: Sender<WallpaperEvent>, current_dir: PathBuf) -> anyhow::Resu
         }
     }
 
-    tx.clone().send(WallpaperEvent::Loaded).await?;
-
     Ok(())
 }
diff --git a/pages/wallpapers/Cargo.toml b/pages/wallpapers/Cargo.toml
index b148edb..6dea7dd 100644
--- a/pages/wallpapers/Cargo.toml
+++ b/pages/wallpapers/Cargo.toml
@@ -22,3 +22,4 @@ jxl-oxide = { version = "0.12.5", features = ["image"] }
 tokio = { workspace = true, features = ["sync"] }
 tracing = "0.1.44"
 walkdir = "=2.5.0"
+notify = "8.2.0"