diff --git a/src/com/magento/idea/magento2plugin/actions/generation/NewModuleAction.java b/src/com/magento/idea/magento2plugin/actions/generation/NewModuleAction.java
index 9a4ea61c2..0e9f0ca26 100644
--- a/src/com/magento/idea/magento2plugin/actions/generation/NewModuleAction.java
+++ b/src/com/magento/idea/magento2plugin/actions/generation/NewModuleAction.java
@@ -19,6 +19,7 @@
 import com.magento.idea.magento2plugin.actions.generation.util.IsClickedDirectoryInsideProject;
 import com.magento.idea.magento2plugin.project.Settings;
 import com.magento.idea.magento2plugin.util.magento.GetModuleNameByDirectoryUtil;
+import com.magento.idea.magento2plugin.util.magento.MagentoBasePathUtil;
 import org.jetbrains.annotations.NotNull;
 
 public class NewModuleAction extends com.intellij.openapi.actionSystem.AnAction {
@@ -89,6 +90,16 @@ public void update(final AnActionEvent event) {
             final String moduleName = GetModuleNameByDirectoryUtil
                     .execute((PsiDirectory) psiElement, project);
             if (moduleName == null) {
+                final String sourceDirPath = ((PsiDirectory) psiElement).getVirtualFile().getPath();
+                final boolean isCustomCodeSourceDirValid =
+                        MagentoBasePathUtil.isCustomCodeSourceDirValid(sourceDirPath);
+                final boolean isCustomVendorDirValid =
+                        MagentoBasePathUtil.isCustomVendorDirValid(sourceDirPath);
+
+                if (!isCustomCodeSourceDirValid && !isCustomVendorDirValid) { //NOPMD
+                    event.getPresentation().setVisible(false);
+                    return;
+                }
                 event.getPresentation().setVisible(true);
                 return;
             }
diff --git a/src/com/magento/idea/magento2plugin/actions/generation/dialog/NewModuleDialog.java b/src/com/magento/idea/magento2plugin/actions/generation/dialog/NewModuleDialog.java
index e03a60350..407e4d99c 100644
--- a/src/com/magento/idea/magento2plugin/actions/generation/dialog/NewModuleDialog.java
+++ b/src/com/magento/idea/magento2plugin/actions/generation/dialog/NewModuleDialog.java
@@ -6,6 +6,7 @@
 package com.magento.idea.magento2plugin.actions.generation.dialog;//NOPMD
 
 import com.intellij.openapi.project.Project;
+import com.intellij.openapi.vfs.VirtualFile;
 import com.intellij.psi.PsiDirectory;
 import com.intellij.psi.PsiFile;
 import com.magento.idea.magento2plugin.actions.generation.NewModuleAction;
@@ -23,9 +24,9 @@
 import com.magento.idea.magento2plugin.indexes.ModuleIndex;
 import com.magento.idea.magento2plugin.magento.files.ComposerJson;
 import com.magento.idea.magento2plugin.magento.packages.Licenses;
-import com.magento.idea.magento2plugin.magento.packages.Package;
 import com.magento.idea.magento2plugin.project.Settings;
 import com.magento.idea.magento2plugin.util.CamelCaseToHyphen;
+import com.magento.idea.magento2plugin.util.magento.MagentoBasePathUtil;
 import com.magento.idea.magento2plugin.util.magento.MagentoVersionUtil;
 import java.awt.event.ActionEvent;
 import java.awt.event.KeyEvent;
@@ -163,8 +164,9 @@ public void windowClosing(final WindowEvent event) {
     }
 
     private void detectPackageName(final @NotNull PsiDirectory initialBaseDir) {
-        final PsiDirectory parentDir = initialBaseDir.getParent();
-        if (parentDir != null && parentDir.toString().endsWith(Package.packagesRoot)) {
+        final VirtualFile initialBaseDirVf = initialBaseDir.getVirtualFile();
+
+        if (MagentoBasePathUtil.isCustomVendorDirValid(initialBaseDirVf.getPath())) {
             packageName.setVisible(false);
             packageNameLabel.setVisible(false);
             this.detectedPackageName = initialBaseDir.getName();
diff --git a/src/com/magento/idea/magento2plugin/magento/packages/Package.java b/src/com/magento/idea/magento2plugin/magento/packages/Package.java
index dcd91eeec..3bf3d2bd2 100644
--- a/src/com/magento/idea/magento2plugin/magento/packages/Package.java
+++ b/src/com/magento/idea/magento2plugin/magento/packages/Package.java
@@ -6,6 +6,7 @@
 package com.magento.idea.magento2plugin.magento.packages;
 
 public class Package { //NOPMD
+    public static final String V_FILE_SEPARATOR = "/";
     public static String packagesRoot = "app/code";
     public static String libWebRoot = "lib/web";
     public static String frameworkRootComposer = "vendor/magento/framework";
diff --git a/src/com/magento/idea/magento2plugin/util/magento/MagentoBasePathUtil.java b/src/com/magento/idea/magento2plugin/util/magento/MagentoBasePathUtil.java
index 8cd83bf60..b3efd164c 100644
--- a/src/com/magento/idea/magento2plugin/util/magento/MagentoBasePathUtil.java
+++ b/src/com/magento/idea/magento2plugin/util/magento/MagentoBasePathUtil.java
@@ -9,8 +9,10 @@
 import com.intellij.openapi.vfs.LocalFileSystem;
 import com.intellij.openapi.vfs.VfsUtil;
 import com.intellij.openapi.vfs.VirtualFile;
-import com.magento.idea.magento2plugin.magento.packages.File;
 import com.magento.idea.magento2plugin.magento.packages.Package;
+import java.io.File;
+import java.util.Arrays;
+import org.jetbrains.annotations.NotNull;
 
 public final class MagentoBasePathUtil {
 
@@ -38,4 +40,54 @@ public static boolean isMagentoFolderValid(final String path) {
         }
         return false;
     }
+
+    /**
+     * Check if specified path belongs to the correct vendor name.
+     *
+     * @param path String
+     *
+     * @return boolean
+     */
+    public static boolean isCustomVendorDirValid(final @NotNull String path) {
+        final String[] pathParts = path.split(Package.V_FILE_SEPARATOR);
+
+        if (pathParts.length < 3) { //NOPMD
+            return false;
+        }
+
+        final String[] sourceCandidateParts = Arrays.copyOfRange(
+                pathParts,
+                pathParts.length - 3,
+                pathParts.length - 1
+        );
+
+        return Package.packagesRoot.equals(
+                String.join(Package.V_FILE_SEPARATOR, sourceCandidateParts)
+        );
+    }
+
+    /**
+     * Check if specified path belongs to the correct packages folder.
+     *
+     * @param path String
+     *
+     * @return boolean
+     */
+    public static boolean isCustomCodeSourceDirValid(final @NotNull String path) {
+        final String[] pathParts = path.split(Package.V_FILE_SEPARATOR);
+
+        if (pathParts.length < 2) { //NOPMD
+            return false;
+        }
+
+        final String[] sourceCandidateParts = Arrays.copyOfRange(
+                pathParts,
+                pathParts.length - 2,
+                pathParts.length
+        );
+
+        return Package.packagesRoot.equals(
+                String.join(Package.V_FILE_SEPARATOR, sourceCandidateParts)
+        );
+    }
 }