diff --git a/scripts/migrate_to_folders.py b/scripts/migrate_to_folders.py
new file mode 100644
index 00000000..70906519
--- /dev/null
+++ b/scripts/migrate_to_folders.py
@@ -0,0 +1,67 @@
+"""Script to migrate entity files into type-based folders."""
+import re
+import asyncio
+from pathlib import Path
+
+from basic_memory.models import Entity
+
+async def migrate_files(entities_path: Path):
+    """Move entity files into type-based directories."""
+    
+    # Get all markdown files
+    files = list(entities_path.glob("*.md"))
+    print(f"Found {len(files)} markdown files")
+    
+    # Track progress
+    moved = []
+    errors = []
+    
+    for file in files:
+        try:
+            # Read file
+            content = file.read_text()
+            
+            # Extract type using regex
+            type_match = re.search(r'^type:\s*(.+?)$', content, re.MULTILINE)
+            if not type_match:
+                errors.append((file, "No type found"))
+                continue
+                
+            entity_type = type_match.group(1).strip()
+            
+            # Create type directory
+            type_dir = entities_path / entity_type
+            type_dir.mkdir(exist_ok=True)
+            
+            # Move the file
+            new_path = type_dir / file.name
+            file.rename(new_path)
+            
+            moved.append((file, new_path))
+            print(f"Moved {file.name} to {entity_type}/")
+            
+        except Exception as e:
+            errors.append((file, str(e)))
+            print(f"Error processing {file}: {e}")
+    
+    # Print summary
+    print("\nMigration complete!")
+    print(f"Successfully moved: {len(moved)}")
+    if errors:
+        print("\nErrors:")
+        for file, error in errors:
+            print(f"  {file.name}: {error}")
+
+if __name__ == "__main__":
+    import sys
+    
+    if len(sys.argv) != 2:
+        print("Usage: python migrate_to_folders.py <entities_path>")
+        sys.exit(1)
+        
+    entities_path = Path(sys.argv[1])
+    if not entities_path.exists():
+        print(f"Entities directory not found: {entities_path}")
+        sys.exit(1)
+        
+    asyncio.run(migrate_files(entities_path))