diff --git a/apps/sim/app/workspace/[workspaceId]/w/components/sidebar/hooks/use-drag-drop.test.tsx b/apps/sim/app/workspace/[workspaceId]/w/components/sidebar/hooks/use-drag-drop.test.tsx
new file mode 100644
index 00000000000..9a84d924f5f
--- /dev/null
+++ b/apps/sim/app/workspace/[workspaceId]/w/components/sidebar/hooks/use-drag-drop.test.tsx
@@ -0,0 +1,124 @@
+/**
+ * @vitest-environment jsdom
+ */
+import { act } from 'react'
+import { createRoot, type Root } from 'react-dom/client'
+import { afterEach, beforeEach, describe, expect, it, vi } from 'vitest'
+
+vi.mock('next/navigation', () => ({
+  useParams: () => ({ workspaceId: 'ws-1' }),
+}))
+
+vi.mock('@/hooks/queries/folders', () => ({
+  useReorderFolders: () => ({ mutateAsync: vi.fn() }),
+}))
+
+vi.mock('@/hooks/queries/workflows', () => ({
+  useReorderWorkflows: () => ({ mutateAsync: vi.fn() }),
+}))
+
+vi.mock('@/hooks/queries/utils/folder-cache', () => ({
+  getFolderMap: () => ({}),
+}))
+
+vi.mock('@/hooks/queries/utils/workflow-cache', () => ({
+  getWorkflows: () => [],
+}))
+
+vi.mock('@/lib/folders/tree', () => ({
+  getFolderPath: () => [],
+}))
+
+const { mockUseFolderStore } = vi.hoisted(() => {
+  const folderState = { setExpanded: () => {}, expandedFolders: new Set<string>() }
+  const store = Object.assign(
+    (selector: (state: typeof folderState) => unknown) => selector(folderState),
+    { getState: () => folderState }
+  )
+  return { mockUseFolderStore: store }
+})
+vi.mock('@/stores/folders/store', () => ({ useFolderStore: mockUseFolderStore }))
+
+import { useDragDrop } from '@/app/workspace/[workspaceId]/w/components/sidebar/hooks/use-drag-drop'
+
+type DragDropApi = ReturnType<typeof useDragDrop>
+
+let latest: DragDropApi
+
+function Harness() {
+  latest = useDragDrop()
+  return null
+}
+
+/** Minimal stand-in for the dragOver event `initDragOver` consumes. */
+function fakeDragOverEvent(): unknown {
+  const node = {}
+  return {
+    preventDefault: () => {},
+    stopPropagation: () => {},
+    clientY: 0,
+    // target !== currentTarget so the root drop zone skips indicator math (getBoundingClientRect)
+    target: node,
+    currentTarget: {},
+  }
+}
+
+let container: HTMLDivElement
+let root: Root
+
+describe('useDragDrop stranded-drag reset', () => {
+  beforeEach(() => {
+    // Prevent the auto-scroll rAF loop from spinning in jsdom.
+    vi.stubGlobal(
+      'requestAnimationFrame',
+      () => 0 as unknown as ReturnType<typeof requestAnimationFrame>
+    )
+    vi.stubGlobal('cancelAnimationFrame', () => {})
+    container = document.createElement('div')
+    document.body.appendChild(container)
+    root = createRoot(container)
+    act(() => {
+      root.render(<Harness />)
+    })
+    // The reset listeners only attach once a scroll container is registered.
+    act(() => {
+      latest.setScrollContainer(document.createElement('div'))
+    })
+  })
+
+  afterEach(() => {
+    act(() => {
+      root.unmount()
+    })
+    container.remove()
+    vi.unstubAllGlobals()
+    vi.clearAllMocks()
+  })
+
+  it('clears isDragging on a window dragend when no drop fired', () => {
+    // A drag entering the list flips isDragging on via initDragOver.
+    act(() => {
+      latest.createRootDropZone().onDragOver(fakeDragOverEvent() as never)
+    })
+    expect(latest.isDragging).toBe(true)
+
+    // The drag is cancelled/dropped outside the list: only `dragend` fires, no `drop`.
+    act(() => {
+      window.dispatchEvent(new Event('dragend'))
+    })
+    expect(latest.isDragging).toBe(false)
+  })
+
+  it('keeps isDragging active across dragOver updates until the drag ends', () => {
+    act(() => {
+      latest.createRootDropZone().onDragOver(fakeDragOverEvent() as never)
+    })
+    expect(latest.isDragging).toBe(true)
+
+    // A subsequent dragOver must not tear down the active drag.
+    act(() => {
+      latest.createRootDropZone().onDragOver(fakeDragOverEvent() as never)
+    })
+    expect(latest.isDragging).toBe(true)
+  })
+})
diff --git a/apps/sim/app/workspace/[workspaceId]/w/components/sidebar/hooks/use-drag-drop.ts b/apps/sim/app/workspace/[workspaceId]/w/components/sidebar/hooks/use-drag-drop.ts
index 1fb161c813d..3b97ca3caf5 100644
--- a/apps/sim/app/workspace/[workspaceId]/w/components/sidebar/hooks/use-drag-drop.ts
+++ b/apps/sim/app/workspace/[workspaceId]/w/components/sidebar/hooks/use-drag-drop.ts
@@ -649,11 +649,21 @@ export function useDragDrop(options: UseDragDropOptions = {}) {
       if (target && container.contains(target)) return
       handleDragEnd()
     }
+    /**
+     * `dragend` always fires on the drag source at the end of any drag operation, including
+     * Esc-cancels and drops on non-droppable targets. Without this reset, a non-sidebar drag
+     * that entered the list (flipping `isDragging` on via `initDragOver`) but ended without a
+     * `drop` inside the container would strand `isDragging` at `true` — leaving the absolutely
+     * positioned edge drop zones mounted over the first/last rows and stealing their grab band.
+     */
+    const onWindowDragEnd = () => handleDragEnd()
     container.addEventListener('dragleave', onLeave)
     window.addEventListener('drop', onWindowDrop, true)
+    window.addEventListener('dragend', onWindowDragEnd, true)
     return () => {
       container.removeEventListener('dragleave', onLeave)
       window.removeEventListener('drop', onWindowDrop, true)
+      window.removeEventListener('dragend', onWindowDragEnd, true)
     }
   }, [isDragging, handleDragEnd])