diff --git a/components/sidebar/CategorySection.tsx b/components/sidebar/CategorySection.tsx
new file mode 100644
index 0000000..59579dc
--- /dev/null
+++ b/components/sidebar/CategorySection.tsx
@@ -0,0 +1,113 @@
+/**
+ * @file components/sidebar/CategorySection.tsx
+ * @description Sub-component for rendering a category group and its list of channels.
+ */
+
+"use client";
+
+import { useState } from "react";
+import { ChevronDown, ChevronRight, Plus, Settings } from "lucide-react";
+import { ChannelItem } from "./ChannelItem";
+import type { Channel } from "@/db/schema";
+
+/** Props for the CategorySection component. */
+interface CategorySectionProps {
+  title: string;
+  channels: Channel[];
+  currentChannelId: string;
+  serverId: string;
+  onCloseNav: () => void;
+  onCreateChannel: () => void;
+  onEditChannel: (channel: Channel) => void;
+  onEditCategory?: () => void;
+}
+
+/** Renders a collapsible category section containing channels and contextual actions. */
+export function CategorySection({
+  title,
+  channels,
+  currentChannelId,
+  serverId,
+  onCloseNav,
+  onCreateChannel,
+  onEditChannel,
+  onEditCategory,
+}: CategorySectionProps) {
+  const [isCollapsed, setIsCollapsed] = useState(false);
+
+  /** Handles closing mobile navigation when clicking a channel. */
+  const handleChannelClick = () => {
+    if (!window.matchMedia("(min-width: 768px)").matches) {
+      onCloseNav();
+    }
+  };
+
+  /** Opens settings for a specific channel. */
+  const handleOpenChannelSettings = (e: React.MouseEvent, channel: Channel) => {
+    e.preventDefault();
+    e.stopPropagation();
+    onEditChannel(channel);
+  };
+
+  /** Opens settings for the current category. */
+  const handleOpenCategorySettings = (e: React.MouseEvent) => {
+    e.preventDefault();
+    e.stopPropagation();
+    onEditCategory?.();
+  };
+
+  return (
+    <div className="space-y-1">
+      <div className="flex items-center justify-between text-xs font-semibold text-muted px-1 py-1 uppercase tracking-wider group">
+        <button
+          type="button"
+          onClick={() => setIsCollapsed((prev) => !prev)}
+          className="flex items-center gap-1 hover:text-white transition-colors cursor-pointer min-w-0 truncate"
+        >
+          {isCollapsed ? (
+            <ChevronRight className="w-3.5 h-3.5 shrink-0" />
+          ) : (
+            <ChevronDown className="w-3.5 h-3.5 shrink-0" />
+          )}
+          <span className="truncate">{title}</span>
+        </button>
+
+        <div className="flex items-center gap-1 opacity-0 group-hover:opacity-100 transition-opacity">
+          {onEditCategory && (
+            <button
+              type="button"
+              onClick={handleOpenCategorySettings}
+              className="p-0.5 rounded text-muted hover:text-white hover:bg-surface transition-colors cursor-pointer"
+              aria-label="Edit category"
+            >
+              <Settings className="w-3.5 h-3.5" />
+            </button>
+          )}
+          <button
+            type="button"
+            onClick={onCreateChannel}
+            className="p-0.5 rounded text-muted hover:text-white hover:bg-surface transition-colors cursor-pointer"
+            aria-label="Create channel in category"
+          >
+            <Plus className="w-3.5 h-3.5" />
+          </button>
+        </div>
+      </div>
+
+      {!isCollapsed && (
+        <div className="space-y-0.5 pl-2">
+          {channels.map((channel) => (
+            <ChannelItem
+              key={channel.id}
+              channel={channel}
+              serverId={serverId}
+              isActive={currentChannelId === channel.id}
+              onChannelClick={handleChannelClick}
+              onOpenSettings={handleOpenChannelSettings}
+            />
+          ))}
+        </div>
+      )}
+    </div>
+  );
+}
diff --git a/components/sidebar/ChannelItem.tsx b/components/sidebar/ChannelItem.tsx
new file mode 100644
index 0000000..c76a80a
--- /dev/null
+++ b/components/sidebar/ChannelItem.tsx
@@ -0,0 +1,59 @@
+/**
+ * @file components/sidebar/ChannelItem.tsx
+ * @description Channel item component rendering channel links with active state styling and settings action.
+ */
+
+"use client";
+
+import Link from "next/link";
+import { Settings } from "lucide-react";
+import type { Channel } from "@/db/schema";
+
+/** Props for the ChannelItem component. */
+interface ChannelItemProps {
+  channel: Channel;
+  serverId: string;
+  isActive: boolean;
+  onChannelClick: () => void;
+  onOpenSettings: (e: React.MouseEvent, channel: Channel) => void;
+}
+
+/** Renders an individual channel item link with an optional settings trigger. */
+export function ChannelItem({
+  channel,
+  serverId,
+  isActive,
+  onChannelClick,
+  onOpenSettings,
+}: ChannelItemProps) {
+  return (
+    <Link
+      href={`/servers/${serverId}/channels/${channel.id}`}
+      onClick={onChannelClick}
+      prefetch={false}
+      className={`flex items-center justify-between w-full px-2 py-1.5 rounded-md text-sm transition-all group min-w-0 overflow-hidden ${
+        isActive
+          ? "bg-accent/50 text-white font-medium"
+          : "text-muted hover:bg-surface hover:text-white"
+      }`}
+    >
+      <div className="flex items-center gap-2 min-w-0 flex-1 overflow-hidden">
+        <span className="text-muted group-hover:text-white text-base shrink-0">
+          #
+        </span>
+        <span className="truncate">{channel.name}</span>
+      </div>
+
+      {!channel.isDefault && (
+        <button
+          type="button"
+          onClick={(e) => onOpenSettings(e, channel)}
+          className="opacity-0 group-hover:opacity-100 p-1 text-muted hover:text-white focus:outline-none transition-all cursor-pointer shrink-0 ml-2"
+          aria-label="Channel Settings"
+        >
+          <Settings className="w-3.5 h-3.5" />
+        </button>
+      )}
+    </Link>
+  );
+}
diff --git a/components/sidebar/ChannelSidebar.tsx b/components/sidebar/ChannelSidebar.tsx
index 1b1e57d..a31a50a 100644
--- a/components/sidebar/ChannelSidebar.tsx
+++ b/components/sidebar/ChannelSidebar.tsx
@@ -1,6 +1,6 @@
 /**
  * @file components/sidebar/ChannelSidebar.tsx
- * @description Channel sidebar component listing categories and channels with actions for creation and editing.
+ * @description Channel sidebar component rendering categories, channels, and modals for creation and editing.
  */
 
 "use client";
@@ -13,32 +13,20 @@ import { CreateChannelModal } from "@/components/modals/CreateChannelModal";
 import { CreateCategoryModal } from "@/components/modals/CreateCategoryModal";
 import { EditChannelModal } from "@/components/modals/EditChannelModal";
 import { EditCategoryModal } from "@/components/modals/EditCategoryModal";
-import {
-  ChevronDown,
-  ChevronRight,
-  FolderPlus,
-  PanelLeftClose,
-  Plus,
-  Settings,
-} from "lucide-react";
+import { CategorySection } from "./CategorySection";
+import { FolderPlus, PanelLeftClose } from "lucide-react";
 import type { Category, Channel } from "@/db/schema";
-import Link from "next/link";
 
-/** Renders the channel navigation sidebar for the active server. */
+/** Renders the channel sidebar navigation for the active server. */
 export function ChannelSidebar() {
-  const [isCreateModalOpen, setIsCreateModalOpen] = useState(false);
-  const [isCreateCategoryModalOpen, setIsCreateCategoryModalOpen] =
-    useState(false);
+  const [isCreateChannelOpen, setIsCreateChannelOpen] = useState(false);
+  const [isCreateCategoryOpen, setIsCreateCategoryOpen] = useState(false);
   const [editingChannel, setEditingChannel] = useState<Channel | null>(null);
   const [editingCategory, setEditingCategory] = useState<Category | null>(null);
   const [selectedCategoryId, setSelectedCategoryId] = useState<string | null>(
     null,
   );
 
-  const [collapsedCategories, setCollapsedCategories] = useState<
-    Record<string, boolean>
-  >({});
-
   const params = useParams();
   const currentChannelId = params?.channelId as string;
   const { activeServer } = useActiveServer();
@@ -46,100 +34,30 @@ export function ChannelSidebar() {
 
   if (!activeServer) return null;
 
-  /** Toggles the collapsed state of a channel category. */
-  const toggleCategory = (categoryId: string) => {
-    setCollapsedCategories((prev) => ({
-      ...prev,
-      [categoryId]: !prev[categoryId],
-    }));
-  };
-
-  /** Handles mobile navigation closure when clicking a channel link. */
-  const handleChannelClick = () => {
-    if (!window.matchMedia("(min-width: 768px)").matches) {
-      closeNav();
-    }
-  };
-
-  /** Opens the edit channel modal for a specific channel. */
-  const handleOpenChannelSettings = (e: React.MouseEvent, channel: Channel) => {
-    e.preventDefault();
-    e.stopPropagation();
-    setEditingChannel(channel);
-  };
-
-  /** Opens the edit category modal for a specific category. */
-  const handleOpenCategorySettings = (
-    e: React.MouseEvent,
-    category: Category,
-  ) => {
-    e.preventDefault();
-    e.stopPropagation();
-    setEditingCategory(category);
-  };
-
-  /** Opens the create channel modal for a specific category or uncategorized. */
-  const handleOpenCreateModal = (categoryId: string | null = null) => {
-    setSelectedCategoryId(categoryId);
-    setIsCreateModalOpen(true);
+  /** Opens the create channel modal for an optional category. */
+  const openCreateChannel = (catId: string | null = null) => {
+    setSelectedCategoryId(catId);
+    setIsCreateChannelOpen(true);
   };
 
   const uncategorizedChannels = activeServer.channels.filter(
     (c) => !c.categoryId,
   );
-
-  const categoriesList = (activeServer.categories || []).map((cat) => ({
+  const categories = (activeServer.categories || []).map((cat) => ({
     ...cat,
     channels: activeServer.channels.filter((c) => c.categoryId === cat.id),
   }));
 
-  /** Renders an individual channel item in the list. */
-  const renderChannelItem = (channel: Channel) => {
-    const isActive = currentChannelId === channel.id;
-    return (
-      <Link
-        key={channel.id}
-        href={`/servers/${activeServer.id}/channels/${channel.id}`}
-        onClick={handleChannelClick}
-        prefetch={false}
-        className={`flex items-center justify-between w-full px-2 py-1.5 rounded-md text-sm transition-all group min-w-0 overflow-hidden ${
-          isActive
-            ? "bg-accent/50 text-white font-medium"
-            : "text-muted hover:bg-surface hover:text-white"
-        }`}
-      >
-        <div className="flex items-center gap-2 min-w-0 flex-1 overflow-hidden">
-          <span className="text-muted group-hover:text-white text-base shrink-0">
-            #
-          </span>
-          <span className="truncate">{channel.name}</span>
-        </div>
-
-        {!channel.isDefault && (
-          <button
-            type="button"
-            onClick={(e) => handleOpenChannelSettings(e, channel)}
-            className="opacity-0 group-hover:opacity-100 p-1 text-muted hover:text-white focus:outline-none transition-all cursor-pointer shrink-0 ml-2"
-            aria-label="Channel Settings"
-          >
-            <Settings className="w-3.5 h-3.5" />
-          </button>
-        )}
-      </Link>
-    );
-  };
-
   return (
     <>
       <div className="flex-1 w-full bg-surface/50 border-r border-background flex flex-col h-full min-w-0 overflow-hidden">
-        {/* Server Header */}
+        {/* Header */}
         <div className="h-14 border-b border-background flex items-center justify-between px-4 font-bold text-white shadow-sm shrink-0">
           <span className="truncate">{activeServer.name}</span>
           <div className="flex items-center gap-1">
             <button
               type="button"
-              onClick={() => setIsCreateCategoryModalOpen(true)}
-              title="Create Category"
+              onClick={() => setIsCreateCategoryOpen(true)}
               className="p-1.5 rounded-md text-muted hover:text-white hover:bg-surface transition-colors cursor-pointer shrink-0"
             >
               <FolderPlus className="w-4 h-4" />
@@ -147,7 +65,6 @@ export function ChannelSidebar() {
             <button
               type="button"
               onClick={toggleNav}
-              title="Collapse the sidebar"
               className="p-1.5 rounded-md text-muted hover:text-white hover:bg-surface transition-colors cursor-pointer shrink-0"
             >
               <PanelLeftClose className="w-5 h-5" />
@@ -155,111 +72,51 @@ export function ChannelSidebar() {
           </div>
         </div>
 
-        {/* Channel List */}
+        {/* Content */}
         <div className="flex-1 overflow-y-auto p-3 space-y-4 min-w-0">
-          <div className="space-y-1">
-            <div className="flex items-center justify-between text-xs font-semibold text-muted px-1 py-1 uppercase tracking-wider group">
-              <button
-                type="button"
-                onClick={() => toggleCategory("uncategorized")}
-                className="flex items-center gap-1 hover:text-white transition-colors cursor-pointer min-w-0 truncate"
-              >
-                {collapsedCategories["uncategorized"] ? (
-                  <ChevronRight className="w-3.5 h-3.5 shrink-0" />
-                ) : (
-                  <ChevronDown className="w-3.5 h-3.5 shrink-0" />
-                )}
-                <span className="truncate">Text Channels</span>
-              </button>
+          <CategorySection
+            title="Text Channels"
+            channels={uncategorizedChannels}
+            currentChannelId={currentChannelId}
+            serverId={activeServer.id}
+            onCloseNav={closeNav}
+            onCreateChannel={() => openCreateChannel(null)}
+            onEditChannel={setEditingChannel}
+          />
 
-              <button
-                type="button"
-                onClick={() => handleOpenCreateModal(null)}
-                className="opacity-0 group-hover:opacity-100 p-0.5 rounded text-muted hover:text-white hover:bg-surface transition-colors cursor-pointer"
-                aria-label="Create channel"
-              >
-                <Plus className="w-3.5 h-3.5" />
-              </button>
-            </div>
-
-            {!collapsedCategories["uncategorized"] && (
-              <div className="space-y-0.5 pl-2">
-                {uncategorizedChannels.map(renderChannelItem)}
-              </div>
-            )}
-          </div>
-
-          {/* Custom Categories */}
-          {categoriesList.map((category) => {
-            const isCollapsed = collapsedCategories[category.id];
-
-            return (
-              <div key={category.id} className="space-y-1">
-                <div className="flex items-center justify-between text-xs font-semibold text-muted px-1 py-1 uppercase tracking-wider group">
-                  <button
-                    type="button"
-                    onClick={() => toggleCategory(category.id)}
-                    className="flex items-center gap-1 hover:text-white transition-colors cursor-pointer min-w-0 truncate"
-                  >
-                    {isCollapsed ? (
-                      <ChevronRight className="w-3.5 h-3.5 shrink-0" />
-                    ) : (
-                      <ChevronDown className="w-3.5 h-3.5 shrink-0" />
-                    )}
-                    <span className="truncate">{category.name}</span>
-                  </button>
-
-                  <div className="flex items-center gap-1 opacity-0 group-hover:opacity-100 transition-opacity">
-                    <button
-                      type="button"
-                      onClick={(e) => handleOpenCategorySettings(e, category)}
-                      className="p-0.5 rounded text-muted hover:text-white hover:bg-surface transition-colors cursor-pointer"
-                      aria-label="Edit category"
-                    >
-                      <Settings className="w-3.5 h-3.5" />
-                    </button>
-                    <button
-                      type="button"
-                      onClick={() => handleOpenCreateModal(category.id)}
-                      className="p-0.5 rounded text-muted hover:text-white hover:bg-surface transition-colors cursor-pointer"
-                      aria-label="Create channel in category"
-                    >
-                      <Plus className="w-3.5 h-3.5" />
-                    </button>
-                  </div>
-                </div>
-
-                {!isCollapsed && (
-                  <div className="space-y-0.5 pl-2">
-                    {category.channels.map(renderChannelItem)}
-                  </div>
-                )}
-              </div>
-            );
-          })}
+          {categories.map((category) => (
+            <CategorySection
+              key={category.id}
+              title={category.name}
+              channels={category.channels}
+              currentChannelId={currentChannelId}
+              serverId={activeServer.id}
+              onCloseNav={closeNav}
+              onCreateChannel={() => openCreateChannel(category.id)}
+              onEditChannel={setEditingChannel}
+              onEditCategory={() => setEditingCategory(category)}
+            />
+          ))}
         </div>
       </div>
 
       {/* Modals */}
       <CreateCategoryModal
-        isOpen={isCreateCategoryModalOpen}
-        onClose={() => setIsCreateCategoryModalOpen(false)}
+        isOpen={isCreateCategoryOpen}
+        onClose={() => setIsCreateCategoryOpen(false)}
         serverId={activeServer.id}
       />
-
       <EditCategoryModal
         isOpen={!!editingCategory}
         onClose={() => setEditingCategory(null)}
         category={editingCategory}
       />
-
       <CreateChannelModal
-        isOpen={isCreateModalOpen}
-        onClose={() => setIsCreateModalOpen(false)}
+        isOpen={isCreateChannelOpen}
+        onClose={() => setIsCreateChannelOpen(false)}
         serverId={activeServer.id}
         defaultCategoryId={selectedCategoryId}
       />
-
       <EditChannelModal
         isOpen={!!editingChannel}
         onClose={() => setEditingChannel(null)}