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Understand from ArcGIS website that we can use feature dataset to group together related feature classes.

Is it possible to have another feature dataset in another feature dataset? Understand that there is a performance issue if we have too many things under one feature dataset, but at this point, it is very unlikely to have a lot of accessing the dataset once it is added.

The scenario that I tried to achieve:
1. Have a Report and archive feature dataset to group reports and archives.
2. In each of this feature dataset, it will be further grouped by different category.

For example:

Report Dataset
  Report Type A Dataset 
    Report October 2014 Feature Class
    Report November 2014 Feature Class
Archive Dataset
  Report Type A Dataset
    Report October 2013 Feature Class
    Report November 2013 Feature Class

If it is not possible, any other suggestion to achieve this? For example: Create a folder instead of Feature dataset. (Heard that there is a way to do this using ArcGIS command line tools?)

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up vote 3 down vote accepted

Although some people use feature datasets as "geodatabase folders" they are not intended for that purpose and quite poor at it. For example, feature datasets cannot contain tables, cannot contain feature classes with different coordinate systems, and only one level of "geodatabase sub-folder" is possible.

The GIS Dictionary definition of a geodatabase feature dataset is:

In a geodatabase, a collection of feature classes stored together so they can participate in topological relationships with one another. All the feature classes in a feature dataset must share the same spatial reference; that is, they must have the same coordinate system and their features must fall within a common geographic area. Feature classes with different geometry types may be stored in a feature dataset. In ArcGIS, feature classes that participate in a geometric network must be placed in a feature dataset.

A workaround to achieve what you are trying to do, which is to get a "super folder" for your feature datasets, is by using multiple geodatabases.

Report Geodatabase
  Report Type A Feature Dataset 
    Report October 2014 Feature Class
    Report November 2014 Feature Class

Archive Geodatabase
  Report Type A Feature Dataset
    Report October 2013 Feature Class
    Report November 2013 Feature Class
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No you cannot have a Feature Dataset within a Feature Dataset.

Feature Datasets do not hold data (they are not like a folder in a file system). They group data together when displayed in a geodatabase, but they don't hold the data themselves.

Feature Datasets should be used only for holding related data such as in Networks, Topology, or Geometric Networks.

If you have wanting to order how things are stored in your geodatabase I'd recommend using a logical naming convention rather than feature datasets.

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