I had the exact same workflow and the exact same issue. I found a video entitled "The Composable Architecture (TCA) - New Project Setup in SwiftUI using XCode 16 and Swift Testing" by Thicket Studios on Youtube to be the solution I needed. The steps were basically: File -> New Project -> App -> Next -> Product Name: Foo -> Next -> Select location for Foo top level folder -> Create File -> New Package -> Library -> Next -> Select Testing -> Next -> Save As "Foo" in location "Foo", Select Add to Project or Workspace "Foo", add to group "Foo" (the one with the App Icon) -> Create The first time I ran this, I had to restart Xcode but doing a walkthrough just now, it seemed fine without the restart.