diff --git a/src/panels/StructurePanel.tsx b/src/panels/StructurePanel.tsx
index 4b3fa0ed..2d4007d2 100644
--- a/src/panels/StructurePanel.tsx
+++ b/src/panels/StructurePanel.tsx
@@ -433,7 +433,13 @@ function NavigatorBody({
 }) {
   const nodes = props.pageState.model.nodes;
   return (
-    <div className="panel-body" ref={state.bodyRef} onDragLeave={() => state.setDropTarget(null)}>
+    <div className="panel-body" ref={state.bodyRef}
+      onDragOver={() => state.setDropTarget(null)}
+      onDragLeave={(event) => {
+        if (!(event.relatedTarget instanceof Node) || !event.currentTarget.contains(event.relatedTarget)) {
+          state.setDropTarget(null);
+        }
+      }}>
       <FrontmatterRow props={props} />
       <NodeList nodes={nodes} parentId={null} depth={0} {...treeContext} />
       {nodes.length === 0 && <EmptyDropTarget props={props} state={state} />}
@@ -482,6 +488,7 @@ function EmptyDropTarget({
       onDragOver={(event) => {
         if (isDndPayload(event)) {
           event.preventDefault();
+          event.stopPropagation();
           state.setDropTarget({ kind: 'gap', ...location });
         }
       }}
diff --git a/src/panels/StructureTree.tsx b/src/panels/StructureTree.tsx
index ecd7876e..5dbda7be 100644
--- a/src/panels/StructureTree.tsx
+++ b/src/panels/StructureTree.tsx
@@ -63,7 +63,15 @@ interface NodeListProps extends StructureTreeContext {
 
 const ANNOTATABLE = new Set(['element', 'component']);
 
+// Decode once so native drag feedback does not obscure the drop target.
+let blankDragImage: HTMLImageElement | undefined;
 export function NodeList({ nodes, parentId, depth, ...context }: NodeListProps) {
+  useEffect(() => {
+    if (!blankDragImage) {
+      blankDragImage = document.createElement('img');
+      blankDragImage.src = 'data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7';
+    }
+  }, []);
   const { noteFor, folded } = foldedNotes(nodes);
   return (
     <>
@@ -299,6 +307,8 @@ function treeRowHandlers(props: TreeRowProps) {
       event.stopPropagation();
       event.dataTransfer.setData('avb/node', node.id);
       event.dataTransfer.effectAllowed = 'move';
+      if (blankDragImage) { event.dataTransfer.setDragImage(blankDragImage, 0, 0); }
+      props.onSelect(node.id);
       const tag = 'name' in node ? node.name : undefined;
       setDrag({
         kind: 'node',
@@ -307,7 +317,7 @@ function treeRowHandlers(props: TreeRowProps) {
         ...(tag === undefined ? {} : { tag }),
       });
     },
-    onDragEnd: clearDrag,
+    onDragEnd: () => { clearDrag(); props.setDropTarget(null); },
     onDragOver: (event: React.DragEvent<HTMLDivElement>): void => {
       if (props.canHostChildren && acceptsDrag(node) && props.isDndPayload(event)) {
         event.preventDefault();
diff --git a/src/styles.css b/src/styles.css
index 02fa6301..61b033a1 100644
--- a/src/styles.css
+++ b/src/styles.css
@@ -2380,14 +2380,18 @@ body > .embed-editor_provenance {
    gaps of every ancestor level are adjacent in the DOM — collapse all but
    the first so they don't stack into a large blank strip (each stays a
    distinct drop target for its own nesting level). */
-.nav-gap { height: 7px; }
+.nav-gap { position: relative; height: 7px; }
 .nav-gap + .nav-gap { height: 2px; }
 
 .drop-indicator {
+  /* The marker must not move the gap or become a new drag target. */
+  position: absolute;
+  inset: 50% 0 auto;
+  transform: translateY(-50%);
+  pointer-events: none;
   height: 2px;
   border-radius: 1px;
   background: var(--accent);
-  margin: 2px 0;
   box-shadow: 0 0 6px rgba(0, 153, 255, 0.6);
 }
 .drop-zone-empty {
diff --git a/test/navigator.js b/test/navigator.js
index 3fb89c7e..0eeebdbf 100644
--- a/test/navigator.js
+++ b/test/navigator.js
@@ -269,6 +269,45 @@ const WORDS = el('words', 'p', [{ id: 'w-text', kind: 'expr', value: '{heading}'
     );
   }
 
+  // Moving between descendants must not erase the destination between two
+  // dragover events. Leaving the panel, hovering blank space, and cancelling
+  // a drag must still remove it.
+  {
+    const source = rowFor('hero-command');
+    const gap = rowFor('if-ternary').previousElementSibling;
+    const data = new Map();
+    const dataTransfer = {
+      types: ['avb/node'],
+      setData: (type, value) => data.set(type, value),
+      getData: (type) => data.get(type) || '',
+      setDragImage: () => {},
+    };
+    const fire = (element, type, relatedTarget = null) => act(async () => {
+      element.dispatchEvent(Object.assign(
+        new dom.window.MouseEvent(type, { bubbles: true, cancelable: true, relatedTarget }),
+        { dataTransfer }
+      ));
+    });
+    await fire(source, 'dragstart');
+    check('dragging selects the source row', selected.at(-1) === 'hero-command');
+    check('dragging keeps the source in its original place', rowFor('hero-command') === source);
+    await fire(gap, 'dragover');
+    check('a gap shows the insertion marker', !!gap.querySelector('.drop-indicator'));
+    await fire(gap, 'dragleave', gap.querySelector('.drop-indicator'));
+    check('entering the marker does not erase it', !!gap.querySelector('.drop-indicator'));
+    await fire(rowFor('if-and'), 'dragover');
+    await fire(gap, 'dragleave', rowFor('if-and').querySelector('.label'));
+    check('entering a row preserves the new child destination', rowFor('if-and').style.borderColor !== '');
+    await fire(rowFor('if-and'), 'dragleave', document.body);
+    check('leaving the panel clears the child destination', rowFor('if-and').style.borderColor === '');
+    await fire(gap, 'dragover');
+    await fire(container.querySelector('.panel-body'), 'dragover');
+    check('blank space clears the previous marker', !container.querySelector('.drop-indicator'));
+    await fire(gap, 'dragover');
+    await fire(source, 'dragend');
+    check('cancelling clears the insertion marker', !container.querySelector('.drop-indicator'));
+  }
+
   // --- arrow keys -------------------------------------------------------------
   // They walk the tree that is drawn: a row nobody can see is not somewhere the
   // selection can land.