diff --git a/CHANGELOG.md b/CHANGELOG.md
index 3b55c7984..180ee741b 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -5,6 +5,7 @@ We use [semantic versioning](http://semver.org/):
 - PATCH version when you make backwards compatible bug fixes.
 
 # Next version
+- [fix] _teamscale-gradle-plugin_, _teamscale-maven-plugin_: Testwise coverage reports no longer drop a class directory that contains an archive (JAR, WAR, EAR, ZIP) that contains a JAR.
 
 # 39.0.0
 - [breaking] _agent_: The deprecated Docker image `cqse/teamscale-jacoco-agent` is no longer published. Use `cqse/teamscale-java-profiler` instead, which has replaced it since version 36.5.0.
diff --git a/report-generator/src/main/kotlin/com/teamscale/report/testwise/jacoco/cache/AnalyzerCache.kt b/report-generator/src/main/kotlin/com/teamscale/report/testwise/jacoco/cache/AnalyzerCache.kt
index bb718aaff..4ea7496dd 100644
--- a/report-generator/src/main/kotlin/com/teamscale/report/testwise/jacoco/cache/AnalyzerCache.kt
+++ b/report-generator/src/main/kotlin/com/teamscale/report/testwise/jacoco/cache/AnalyzerCache.kt
@@ -9,10 +9,10 @@ import org.jacoco.core.internal.analysis.StringPool
 import org.jacoco.core.internal.data.CRC64
 import org.jacoco.core.internal.flow.ClassProbesAdapter
 import org.jacoco.core.internal.instr.InstrSupport
+import java.io.File
 import java.io.IOException
 import java.io.InputStream
 import java.nio.file.Files
-import java.nio.file.Paths
 
 /**
  * An [AnalyzerCache] instance processes a set of Java class/jar/war/... files and builds a cache for each of the classes.
@@ -55,10 +55,38 @@ class AnalyzerCache(
 
 	/**
 	 * Adds caching for jar files to the analyze jar functionality.
+	 *
+	 * The jar ID of a jar on disk is computed from the file, so the jar is only held in memory while the ID is
+	 * computed. The jar itself is then streamed from [input] while it is analyzed.
 	 */
 	@Throws(IOException::class)
 	override fun analyzeJar(input: InputStream, location: String): Int {
-		val jarId = CRC64.classId(Files.readAllBytes(Paths.get(location)))
+		val file = File(location)
+		// Checks the file system instead of looking for '@' in the location, because real paths may contain '@' as
+		// well (e.g. the Jenkins workspace `workspace@2`). Such jars must still be streamed instead of buffered.
+		if (!file.isFile) {
+			return analyzeJarInsideArchive(input, location)
+		}
+		return analyzeJarWithCache(CRC64.classId(Files.readAllBytes(file.toPath())), input, location)
+	}
+
+	/**
+	 * Analyzes a jar that is an entry of another archive (JAR, WAR, EAR, ZIP, ...). Such a jar has a location like
+	 * `app.war@WEB-INF/lib/inner.jar`, which is not a file on disk. Its bytes are only available from [input], so
+	 * they are buffered to compute the jar ID and to analyze the jar.
+	 */
+	@Throws(IOException::class)
+	private fun analyzeJarInsideArchive(input: InputStream, location: String): Int {
+		val bytes = try {
+			input.readBytes()
+		} catch (e: IOException) {
+			throw analyzerError(location, e)
+		}
+		return analyzeJarWithCache(CRC64.classId(bytes), bytes.inputStream(), location)
+	}
+
+	/** Analyzes the given jar unless a jar with the same [jarId] has been analyzed before.  */
+	private fun analyzeJarWithCache(jarId: Long, input: InputStream, location: String): Int {
 		val probesCountForJarId = probesCache.countForJarId(jarId)
 		if (probesCountForJarId != 0) {
 			return probesCountForJarId
diff --git a/report-generator/src/test/kotlin/com/teamscale/report/testwise/jacoco/cache/AnalyzerCacheTest.kt b/report-generator/src/test/kotlin/com/teamscale/report/testwise/jacoco/cache/AnalyzerCacheTest.kt
new file mode 100644
index 000000000..556794a6c
--- /dev/null
+++ b/report-generator/src/test/kotlin/com/teamscale/report/testwise/jacoco/cache/AnalyzerCacheTest.kt
@@ -0,0 +1,70 @@
+package com.teamscale.report.testwise.jacoco.cache
+
+import com.teamscale.report.EDuplicateClassFileBehavior
+import com.teamscale.report.util.ClasspathWildcardIncludeFilter
+import com.teamscale.report.util.ILogger
+import org.assertj.core.api.Assertions.assertThat
+import org.assertj.core.api.Assertions.assertThatThrownBy
+import org.jacoco.core.internal.data.CRC64
+import org.junit.jupiter.api.Test
+import org.junit.jupiter.api.io.TempDir
+import org.junit.jupiter.params.ParameterizedTest
+import org.junit.jupiter.params.provider.CsvSource
+import org.mockito.Mockito
+import java.io.ByteArrayOutputStream
+import java.io.File
+import java.io.IOException
+import java.util.zip.ZipEntry
+import java.util.zip.ZipOutputStream
+
+/** Tests for the [AnalyzerCache] class.  */
+class AnalyzerCacheTest {
+
+	@TempDir
+	private lateinit var tempDir: File
+
+	private val classBytes = javaClass.getResourceAsStream("AnalyzerCacheTest.class")!!.use { it.readBytes() }
+	private val innerJar = zip("com/teamscale/report/testwise/jacoco/cache/AnalyzerCacheTest.class" to classBytes)
+
+	private val logger = Mockito.mock<ILogger>()
+	private val probesCache = ProbesCache(logger, EDuplicateClassFileBehavior.IGNORE)
+	private val analyzer = AnalyzerCache(probesCache, ClasspathWildcardIncludeFilter(null, null), logger)
+
+	/**
+	 * An archive may contain JARs, e.g. a WAR contains its libraries and some JARs contain other JARs (e.g. SVNKit).
+	 * The analyzer addresses such a JAR as `app.war@WEB-INF/lib/inner.jar`, which is not a file on disk, so the cache
+	 * must not try to read it from there.
+	 */
+	@ParameterizedTest
+	@CsvSource("outer.jar, lib/inner.jar", "app.war, WEB-INF/lib/inner.jar")
+	fun analyzesClassesInJarsInsideArchives(archiveName: String, jarPath: String) {
+		tempDir.resolve(archiveName).writeBytes(zip(jarPath to innerJar))
+
+		assertThat(analyzer.analyzeAll(tempDir)).isEqualTo(1)
+		assertThat(probesCache.containsClassId(CRC64.classId(classBytes))).isTrue()
+	}
+
+	/** A nested JAR that cannot be read must be reported with its location, so that users can find it. */
+	@Test
+	fun reportsLocationOfUnreadableNestedJar() {
+		val outerJar = zip("lib/inner.jar" to innerJar)
+		// Cuts the outer JAR in the middle of the nested JAR's data
+		tempDir.resolve("outer.jar").writeBytes(outerJar.copyOf(outerJar.size / 2))
+
+		assertThatThrownBy { analyzer.analyzeAll(tempDir) }
+			.isInstanceOf(IOException::class.java)
+			.hasMessageContaining("outer.jar@lib/inner.jar")
+	}
+
+	private fun zip(vararg entries: Pair<String, ByteArray>): ByteArray {
+		val output = ByteArrayOutputStream()
+		ZipOutputStream(output).use { zip ->
+			entries.forEach { (name, content) ->
+				zip.putNextEntry(ZipEntry(name))
+				zip.write(content)
+				zip.closeEntry()
+			}
+		}
+		return output.toByteArray()
+	}
+}