diff --git a/packages/apollo-react/src/canvas/components/AddNodePanel/AddNodeManager.tsx b/packages/apollo-react/src/canvas/components/AddNodePanel/AddNodeManager.tsx
index 2a7443802..a8844305f 100644
--- a/packages/apollo-react/src/canvas/components/AddNodePanel/AddNodeManager.tsx
+++ b/packages/apollo-react/src/canvas/components/AddNodePanel/AddNodeManager.tsx
@@ -267,6 +267,9 @@ export const AddNodeManager: React.FC<AddNodeManagerProps> = ({
       nodeId={PREVIEW_NODE_ID}
       placement="right-start"
       offset={FLOATING_CANVAS_PANEL_OFFSET}
+      // The default AddNodePanel (Toolbox) manages its own virtualized scroll,
+      // so the chrome's outer scroll is disabled to avoid a redundant scrollbar.
+      scrollableContent={!!CustomPanel}
     >
       {CustomPanel ? (
         <CustomPanel onNodeSelect={(item) => handleNodeSelect(item)} onClose={handleClose} />
diff --git a/packages/apollo-react/src/canvas/components/FloatingCanvasPanel/FloatingCanvasPanel.tsx b/packages/apollo-react/src/canvas/components/FloatingCanvasPanel/FloatingCanvasPanel.tsx
index ab9047fc9..d31f0893d 100644
--- a/packages/apollo-react/src/canvas/components/FloatingCanvasPanel/FloatingCanvasPanel.tsx
+++ b/packages/apollo-react/src/canvas/components/FloatingCanvasPanel/FloatingCanvasPanel.tsx
@@ -1,7 +1,7 @@
 import type { Placement } from '@floating-ui/react';
 import { ViewportPortal } from '@uipath/apollo-react/canvas/xyflow/react';
 import { cn } from '@uipath/apollo-wind';
-import type { ReactNode } from 'react';
+import type { CSSProperties, ReactNode } from 'react';
 import { useMemo } from 'react';
 import { createPortal } from 'react-dom';
 import { CanvasPortal } from './CanvasPortal';
@@ -11,6 +11,23 @@ import { type AnchorRect, useFloatingPosition } from './useFloatingPosition';
 const PANEL_BASE_CLASS =
   'text-(--canvas-foreground) bg-(--canvas-background-raised) border border-(--canvas-border-de-emp) text-sm flex flex-col transition-opacity duration-200 ease-in-out';
 
+/**
+ * Design ceiling for the floating panel height (px). Mirrors the `max-h-[600px]`
+ * utility in {@link PANEL_FLOATING_CLASS}; keep the two in sync. The viewport
+ * cap from the `size` middleware is clamped to this so the panel never exceeds
+ * the intended ceiling on tall viewports.
+ */
+const PANEL_FLOATING_MAX_HEIGHT = 600;
+
+/**
+ * Floor for the viewport-aware height cap (px). When the anchor sits hard
+ * against a viewport edge on a short screen, the `size` middleware can report
+ * an `availableHeight` of just a few px (or 0). Without a floor the panel
+ * would collapse to an unusable sliver with no reachable close affordance;
+ * the floor keeps it usable and lets `shift` reposition it into view instead.
+ */
+const PANEL_FLOATING_MIN_HEIGHT = 100;
+
 const PANEL_FLOATING_CLASS =
   'rounded-lg shadow-[0_4px_16px_rgba(0,0,0,0.12)] w-auto min-w-[280px] max-w-none h-auto max-h-[600px]';
 
@@ -55,6 +72,13 @@ export type FloatingCanvasPanelProps = {
   children?: ReactNode;
   onClose?: () => void;
   scrollKey?: string;
+  /**
+   * When `false`, the panel chrome's content area uses `overflow: hidden`
+   * instead of `overflow-y: auto`. Set this when `children` already manage
+   * their own scrolling (e.g. a virtualized list inside `Toolbox`) so the
+   * chrome doesn't add a redundant outer scrollbar. Defaults to `true`.
+   */
+  scrollableContent?: boolean;
 
   // Mouse events for hover persistence
   onMouseEnter?: () => void;
@@ -77,23 +101,39 @@ export function FloatingCanvasPanel({
   children,
   onClose,
   scrollKey,
+  scrollableContent = true,
   onMouseEnter,
   onMouseLeave,
 }: FloatingCanvasPanelProps) {
-  const { computedAnchor, floatingStyles, refs, mergedReferenceRef } = useFloatingPosition({
-    open,
-    nodeId,
-    anchorRect,
-    placement,
-    offset,
-    fallbackPlacement,
-  });
+  const { computedAnchor, floatingStyles, availableHeight, refs, mergedReferenceRef } =
+    useFloatingPosition({
+      open,
+      nodeId,
+      anchorRect,
+      placement,
+      offset,
+      fallbackPlacement,
+    });
 
   const panelClassName = useMemo(
     () => cn(PANEL_BASE_CLASS, isPinned ? PANEL_PINNED_CLASS : PANEL_FLOATING_CLASS),
     [isPinned]
   );
 
+  // Viewport-aware ceiling derived from the `size` middleware. The inline
+  // `maxHeight` overrides the `max-h-[600px]` class, so it's clamped to the
+  // design ceiling to keep the panel from exceeding 600px on tall viewports.
+  const sizingStyle = useMemo<CSSProperties>(() => {
+    if (isPinned || availableHeight == null) return {};
+    const maxHeight = Math.min(PANEL_FLOATING_MAX_HEIGHT, availableHeight);
+    const occupiedHeight = Math.max(PANEL_FLOATING_MIN_HEIGHT, maxHeight);
+    return {
+      maxHeight: `${maxHeight}px`,
+      minHeight: `${PANEL_FLOATING_MIN_HEIGHT}px`,
+      ['--floating-available-height' as string]: `${occupiedHeight}px`,
+    };
+  }, [isPinned, availableHeight]);
+
   if (!open || !computedAnchor) return null;
 
   if (useFixedPosition && anchorRect) {
@@ -150,6 +190,7 @@ export function FloatingCanvasPanel({
         style={{
           position: 'fixed',
           ...screenPosition,
+          ...sizingStyle,
           zIndex: 1100,
           pointerEvents: 'auto',
         }}
@@ -160,6 +201,7 @@ export function FloatingCanvasPanel({
           headerActions={headerActions}
           onClose={onClose}
           scrollKey={scrollKey}
+          scrollableContent={scrollableContent}
         >
           {children}
         </PanelChrome>
@@ -181,6 +223,7 @@ export function FloatingCanvasPanel({
       onPointerLeave={onMouseLeave}
       style={{
         ...(isPinned ? {} : floatingStyles),
+        ...sizingStyle,
         position: isPinned ? 'fixed' : 'absolute',
         right: isPinned ? 0 : undefined,
         top: isPinned ? 0 : undefined,
@@ -194,6 +237,7 @@ export function FloatingCanvasPanel({
         headerActions={headerActions}
         onClose={onClose}
         scrollKey={scrollKey}
+        scrollableContent={scrollableContent}
       >
         {children}
       </PanelChrome>
diff --git a/packages/apollo-react/src/canvas/components/FloatingCanvasPanel/PanelChrome.test.tsx b/packages/apollo-react/src/canvas/components/FloatingCanvasPanel/PanelChrome.test.tsx
new file mode 100644
index 000000000..f3839c36f
--- /dev/null
+++ b/packages/apollo-react/src/canvas/components/FloatingCanvasPanel/PanelChrome.test.tsx
@@ -0,0 +1,27 @@
+import { describe, expect, it } from 'vitest';
+import { render, screen } from '../../utils/testing';
+import { PanelChrome } from './PanelChrome';
+
+describe('PanelChrome', () => {
+  it('uses an auto-scrolling content area by default', () => {
+    render(
+      <PanelChrome>
+        <div data-testid="content">body</div>
+      </PanelChrome>
+    );
+
+    const content = screen.getByTestId('content').parentElement;
+    expect(content).toHaveStyle({ overflowY: 'auto' });
+  });
+
+  it('disables content scrolling when scrollableContent is false', () => {
+    render(
+      <PanelChrome scrollableContent={false}>
+        <div data-testid="content">body</div>
+      </PanelChrome>
+    );
+
+    const content = screen.getByTestId('content').parentElement;
+    expect(content).toHaveStyle({ overflowY: 'hidden' });
+  });
+});
diff --git a/packages/apollo-react/src/canvas/components/FloatingCanvasPanel/PanelChrome.tsx b/packages/apollo-react/src/canvas/components/FloatingCanvasPanel/PanelChrome.tsx
index e17fcd866..5f8f7858d 100644
--- a/packages/apollo-react/src/canvas/components/FloatingCanvasPanel/PanelChrome.tsx
+++ b/packages/apollo-react/src/canvas/components/FloatingCanvasPanel/PanelChrome.tsx
@@ -14,9 +14,10 @@ const PanelHeader = styled.div`
   flex-shrink: 0;
 `;
 
-const PanelContent = styled.div`
+const PanelContent = styled.div<{ scrollable?: boolean }>`
   flex: 1;
-  overflow-y: auto;
+  min-height: 0;
+  overflow-y: ${(props) => (props.scrollable === false ? 'hidden' : 'auto')};
   overflow-x: hidden;
 
   &::-webkit-scrollbar {
@@ -45,6 +46,7 @@ export interface PanelChromeProps {
   children?: ReactNode;
   onClose?: () => void;
   scrollKey?: string;
+  scrollableContent?: boolean;
 }
 
 export function PanelChrome({
@@ -54,6 +56,7 @@ export function PanelChrome({
   children,
   onClose,
   scrollKey,
+  scrollableContent = true,
 }: PanelChromeProps) {
   const contentRef = useRef<HTMLDivElement>(null);
 
@@ -88,7 +91,9 @@ export function PanelChrome({
           )}
         </PanelHeader>
       )}
-      <PanelContent ref={contentRef}>{children}</PanelContent>
+      <PanelContent ref={contentRef} scrollable={scrollableContent}>
+        {children}
+      </PanelContent>
     </>
   );
 }
diff --git a/packages/apollo-react/src/canvas/components/FloatingCanvasPanel/useFloatingPosition.ts b/packages/apollo-react/src/canvas/components/FloatingCanvasPanel/useFloatingPosition.ts
index 0aa079938..1635daa22 100644
--- a/packages/apollo-react/src/canvas/components/FloatingCanvasPanel/useFloatingPosition.ts
+++ b/packages/apollo-react/src/canvas/components/FloatingCanvasPanel/useFloatingPosition.ts
@@ -3,14 +3,23 @@ import {
   flip,
   offset,
   type Placement,
+  shift,
+  size,
   useFloating,
   useMergeRefs,
 } from '@floating-ui/react';
 import { useInternalNode } from '@uipath/apollo-react/canvas/xyflow/react';
-import { type CSSProperties, type RefCallback, useEffect, useMemo, useRef } from 'react';
+import { type CSSProperties, type RefCallback, useEffect, useMemo, useRef, useState } from 'react';
 
 export type AnchorRect = { x: number; y: number; width: number; height: number };
 
+/**
+ * Viewport padding (px) reserved around the floating element when computing
+ * `availableHeight` / `shift` boundaries. Keeps the panel from butting against
+ * the viewport edge at low resolutions.
+ */
+const VIEWPORT_PADDING = 8;
+
 export interface UseFloatingPositionOptions {
   open?: boolean;
   nodeId?: string;
@@ -23,6 +32,7 @@ export interface UseFloatingPositionOptions {
 export interface UseFloatingPositionReturn {
   computedAnchor: AnchorRect | null;
   floatingStyles: CSSProperties;
+  availableHeight: number | null;
   refs: {
     setReference: RefCallback<Element>;
     setFloating: RefCallback<HTMLElement>;
@@ -40,6 +50,7 @@ export function useFloatingPosition({
 }: UseFloatingPositionOptions): UseFloatingPositionReturn {
   const referenceRef = useRef<HTMLDivElement>(null);
   const internalNode = useInternalNode(nodeId || '');
+  const [availableHeight, setAvailableHeight] = useState<number | null>(null);
 
   const computedAnchor = useMemo<AnchorRect | null>(() => {
     if (anchorRect) {
@@ -59,12 +70,31 @@ export function useFloatingPosition({
   const { refs, floatingStyles, update } = useFloating({
     placement,
     open: !!open && !!computedAnchor,
-    middleware: [offset(offsetValue), flip({ fallbackAxisSideDirection: fallbackPlacement })],
+    middleware: [
+      offset(offsetValue),
+      flip({ fallbackAxisSideDirection: fallbackPlacement }),
+      shift({ padding: VIEWPORT_PADDING }),
+      size({
+        padding: VIEWPORT_PADDING,
+        apply({ availableHeight: ah }) {
+          const next = Math.max(0, Math.floor(ah));
+          setAvailableHeight((prev) => (prev === next ? prev : next));
+        },
+      }),
+    ],
     whileElementsMounted: autoUpdate,
   });
 
   const mergedReferenceRef = useMergeRefs([refs.setReference, referenceRef]);
 
+  // Drop the cached viewport cap when the panel closes. Call sites typically
+  // keep the panel mounted and toggle `open`, so without this a reopen would
+  // render one frame with a stale `availableHeight` (e.g. from a since-changed
+  // viewport) before the `size` middleware recomputes.
+  useEffect(() => {
+    if (!open) setAvailableHeight(null);
+  }, [open]);
+
   // biome-ignore lint/correctness/useExhaustiveDependencies: Dependencies are correct
   useEffect(() => {
     if (open) update();
@@ -80,6 +110,7 @@ export function useFloatingPosition({
   return {
     computedAnchor,
     floatingStyles,
+    availableHeight,
     refs,
     mergedReferenceRef,
   };
diff --git a/packages/apollo-react/src/canvas/components/Toolbox/Toolbox.styles.ts b/packages/apollo-react/src/canvas/components/Toolbox/Toolbox.styles.ts
index 27023346f..db8224e74 100644
--- a/packages/apollo-react/src/canvas/components/Toolbox/Toolbox.styles.ts
+++ b/packages/apollo-react/src/canvas/components/Toolbox/Toolbox.styles.ts
@@ -33,7 +33,7 @@ export const AnimatedContainer = styled.div`
   display: flex;
   flex-direction: column;
   overflow: hidden;
-  min-height: 200px;
+  min-height: 50px;
 `;
 
 export const AnimatedContent = styled.div<{ entering?: boolean; direction?: 'forward' | 'back' }>`
@@ -41,7 +41,7 @@ export const AnimatedContent = styled.div<{ entering?: boolean; direction?: 'for
   display: flex;
   flex-direction: column;
   animation: ${(props) => (props.entering ? `slideIn-${props.direction}` : 'none')} 0.15s ease-out;
-  min-height: 200px;
+  min-height: 50px;
 
   @keyframes slideIn-forward {
     from {
diff --git a/packages/apollo-react/src/canvas/components/Toolbox/Toolbox.tsx b/packages/apollo-react/src/canvas/components/Toolbox/Toolbox.tsx
index e854a743a..3a3a68287 100644
--- a/packages/apollo-react/src/canvas/components/Toolbox/Toolbox.tsx
+++ b/packages/apollo-react/src/canvas/components/Toolbox/Toolbox.tsx
@@ -630,14 +630,34 @@ export function Toolbox<T>({
     handleBackTransition,
   ]);
 
+  // When rendered inside a `FloatingCanvasPanel`, the panel's `size` middleware
+  // exposes `--floating-available-height` so the Toolbox can cap its own
+  // height to whatever fits the viewport.
+  const responsiveStyle = useMemo<React.CSSProperties>(
+    () =>
+      fullHeight
+        ? { boxSizing: 'border-box', overflow: 'hidden' }
+        : {
+            boxSizing: 'border-box',
+            overflow: 'hidden',
+            maxHeight: `min(${TOOLBOX_HEIGHT}px, var(--floating-available-height, ${TOOLBOX_HEIGHT}px))`,
+          },
+    [fullHeight]
+  );
+
   return (
-    <div ref={containerRef} data-testid="toolbox-container">
+    <div
+      ref={containerRef}
+      data-testid="toolbox-container"
+      style={{ maxHeight: '100%', overflow: 'hidden' }}
+    >
       <Column
         px={TOOLBOX_PADDING_X}
         py={TOOLBOX_PADDING_Y}
         gap={TOOLBOX_GAP}
         w={fullWidth ? '100%' : TOOLBOX_WIDTH}
         h={fullHeight ? '100%' : TOOLBOX_HEIGHT}
+        style={responsiveStyle}
       >
         {quickActions && quickActions.length > 0 && <QuickActionsRow actions={quickActions} />}
         <Header