This post explains how to setup a new repository from a sub-directory of an existing git repository.

Steps

Clone the repository that contains the sub-directory:

git clone https://github.com/USERNAME/REPOSITORY-NAME

Change the current working directory to your cloned repository:

cd REPOSITORY-NAME

run git filter-branch, To filter out the subfolder from the rest of the files in the repository

git filter-branch --prune-empty --subdirectory-filter FOLDER-NAME BRANCH-NAME

FOLDER-NAME: The folder within your project that you'd like to create a separate repository from.
BRANCH-NAME: The default branch for your current project, for example, main or gh-pages

Create a new repository on GitHub and set up a new remote URL for your new repository

git remote set-url origin https://github.com/USERNAME/NEW-REPOSITORY-NAME.git

Push your changes to the new repository on GitHub.

git push -u origin BRANCH-NAME

Rollback/Undo

When you use git filter-branch, a backup file is created in refs/original/refs/heads/master

If you used the command in branch master. You can check if you have the backup in .git/refs directory. With this in mind, you can use this backup to recover your files with:

git reset --hard refs/original/refs/heads/master

then delete the folder, commit and push the changes.

References

https://docs.github.com/en/get-started/using-git/splitting-a-subfolder-out-into-a-new-repository
https://stackoverflow.com/a/26888022
https://stackoverflow.com/a/14544544

Enjoy Git!