diff --git a/src/vs/base/browser/ui/tree/asyncDataTree.ts b/src/vs/base/browser/ui/tree/asyncDataTree.ts
index db3316f7158..04e11a90415 100644
--- a/src/vs/base/browser/ui/tree/asyncDataTree.ts
+++ b/src/vs/base/browser/ui/tree/asyncDataTree.ts
@@ -954,7 +954,6 @@ export class AsyncDataTree<TInput, T, TFilterData = void> implements IDisposable
 
 				asyncDataTreeNode.element = element;
 				asyncDataTreeNode.hasChildren = hasChildren;
-				asyncDataTreeNode.collapsedByDefault = this.collapseByDefault?.(element);
 
 				if (recursive) {
 					if (result.collapsed) {
@@ -964,7 +963,8 @@ export class AsyncDataTree<TInput, T, TFilterData = void> implements IDisposable
 					} else {
 						childrenToRefresh.push(asyncDataTreeNode);
 					}
-				} else if (hasChildren && !asyncDataTreeNode.collapsedByDefault) {
+				} else if (hasChildren && this.collapseByDefault && !this.collapseByDefault(element)) {
+					asyncDataTreeNode.collapsedByDefault = false;
 					childrenToRefresh.push(asyncDataTreeNode);
 				}
 
diff --git a/src/vs/base/test/browser/ui/tree/asyncDataTree.test.ts b/src/vs/base/test/browser/ui/tree/asyncDataTree.test.ts
index 11f4be82fee..9a552a91b83 100644
--- a/src/vs/base/test/browser/ui/tree/asyncDataTree.test.ts
+++ b/src/vs/base/test/browser/ui/tree/asyncDataTree.test.ts
@@ -5,10 +5,8 @@
 
 import * as assert from 'assert';
 import { IIdentityProvider, IListVirtualDelegate } from 'vs/base/browser/ui/list/list';
-import { AsyncDataTree, CompressibleAsyncDataTree, ITreeCompressionDelegate } from 'vs/base/browser/ui/tree/asyncDataTree';
-import { ICompressedTreeNode } from 'vs/base/browser/ui/tree/compressedObjectTreeModel';
-import { ICompressibleTreeRenderer } from 'vs/base/browser/ui/tree/objectTree';
-import { IAsyncDataSource, ITreeNode } from 'vs/base/browser/ui/tree/tree';
+import { AsyncDataTree } from 'vs/base/browser/ui/tree/asyncDataTree';
+import { IAsyncDataSource, ITreeNode, ITreeRenderer } from 'vs/base/browser/ui/tree/tree';
 import { timeout } from 'vs/base/common/async';
 import { Iterable } from 'vs/base/common/iterator';
 import { ensureNoDisposablesAreLeakedInTestSuite } from 'vs/base/test/common/utils';
@@ -39,7 +37,7 @@ function find(element: Element, id: string): Element | undefined {
 	return undefined;
 }
 
-class Renderer implements ICompressibleTreeRenderer<Element, void, HTMLElement> {
+class Renderer implements ITreeRenderer<Element, void, HTMLElement> {
 	readonly templateId = 'default';
 	renderTemplate(container: HTMLElement): HTMLElement {
 		return container;
@@ -50,15 +48,6 @@ class Renderer implements ICompressibleTreeRenderer<Element, void, HTMLElement>
 	disposeTemplate(templateData: HTMLElement): void {
 		// noop
 	}
-	renderCompressedElements(node: ITreeNode<ICompressedTreeNode<Element>, void>, index: number, templateData: HTMLElement, height: number | undefined): void {
-		const result: string[] = [];
-
-		for (const element of node.element.elements) {
-			result.push(element.id + (element.suffix || ''));
-		}
-
-		templateData.textContent = result.join('/');
-	}
 }
 
 class IdentityProvider implements IIdentityProvider<Element> {
@@ -506,49 +495,4 @@ suite('AsyncDataTree', function () {
 		assert(tree.isCollapsible(a), 'a is still collapsible');
 		assert(!tree.isCollapsed(a), 'a is expanded');
 	});
-
-	test('issue #199441', async () => {
-		const container = document.createElement('div');
-
-		const dataSource = new class implements IAsyncDataSource<Element, Element> {
-			hasChildren(element: Element): boolean {
-				return !!element.children && element.children.length > 0;
-			}
-			async getChildren(element: Element) {
-				return element.children ?? Iterable.empty();
-			}
-		};
-
-		const compressionDelegate = new class implements ITreeCompressionDelegate<Element> {
-			isIncompressible(element: Element): boolean {
-				return !dataSource.hasChildren(element);
-			}
-		};
-
-		const model = new Model({
-			id: 'root',
-			children: [{
-				id: 'a', children: [{
-					id: 'b',
-					children: [{ id: 'b.txt' }]
-				}]
-			}]
-		});
-
-		const collapseByDefault = (element: Element) => false;
-
-		const tree = store.add(new CompressibleAsyncDataTree<Element, Element>('test', container, new VirtualDelegate(), compressionDelegate, [new Renderer()], dataSource, { identityProvider: new IdentityProvider(), collapseByDefault }));
-		tree.layout(200);
-
-		await tree.setInput(model.root);
-		assert.deepStrictEqual(Array.from(container.querySelectorAll('.monaco-list-row')).map(e => e.textContent), ['a/b', 'b.txt']);
-
-		model.get('a').children!.push({
-			id: 'c',
-			children: [{ id: 'c.txt' }]
-		});
-
-		await tree.updateChildren(model.root, true);
-		assert.deepStrictEqual(Array.from(container.querySelectorAll('.monaco-list-row')).map(e => e.textContent), ['a', 'b', 'b.txt', 'c', 'c.txt']);
-	});
 });