diff --git a/scripts/setup/inline_email_css.py b/scripts/setup/inline_email_css.py
index f0c26db00c..25ba26f619 100755
--- a/scripts/setup/inline_email_css.py
+++ b/scripts/setup/inline_email_css.py
@@ -29,12 +29,12 @@ def configure_cssutils() -> None:
 configure_cssutils()
 
 def inline_template(template_source_name: str) -> None:
-    os.makedirs(COMPILED_EMAIL_TEMPLATES_PATH, exist_ok=True)
-
     template_name = template_source_name.split('.source.html')[0]
-    compiled_template_path = os.path.join(COMPILED_EMAIL_TEMPLATES_PATH,
-                                          template_name + ".html")
     template_path = os.path.join(EMAIL_TEMPLATES_PATH, template_source_name)
+    compiled_template_path = os.path.join(os.path.dirname(template_path), "compiled",
+                                          os.path.basename(template_name) + ".html")
+
+    os.makedirs(os.path.dirname(compiled_template_path), exist_ok=True)
 
     with open(template_path) as template_source_file:
         template_str = template_source_file.read()
diff --git a/templates/zerver/emails/.gitignore b/templates/zerver/emails/.gitignore
index e3ca6473f7..429b77e996 100644
--- a/templates/zerver/emails/.gitignore
+++ b/templates/zerver/emails/.gitignore
@@ -1 +1,2 @@
 compiled
+custom
diff --git a/zerver/lib/send_email.py b/zerver/lib/send_email.py
index 97c75b139a..43f6653e81 100644
--- a/zerver/lib/send_email.py
+++ b/zerver/lib/send_email.py
@@ -265,12 +265,13 @@ def send_custom_email(users: List[UserProfile], options: Dict[str, Any]) -> None
         parsed_email_template = Parser(policy=default).parsestr(text)
         email_template_hash = hashlib.sha256(text.encode('utf-8')).hexdigest()[0:32]
 
-    email_filename = "custom_email_%s.source.html" % (email_template_hash,)
-    email_id = "zerver/emails/custom_email_%s" % (email_template_hash,)
+    email_filename = "custom/custom_email_%s.source.html" % (email_template_hash,)
+    email_id = "zerver/emails/custom/custom_email_%s" % (email_template_hash,)
     markdown_email_base_template_path = "templates/zerver/emails/custom_email_base.pre.html"
     html_source_template_path = "templates/%s.source.html" % (email_id,)
     plain_text_template_path = "templates/%s.txt" % (email_id,)
     subject_path = "templates/%s.subject.txt" % (email_id,)
+    os.makedirs(os.path.dirname(html_source_template_path), exist_ok=True)
 
     # First, we render the markdown input file just like our
     # user-facing docs with render_markdown_path.