diff --git a/apps/builder/app/canvas/instance-hovering.ts b/apps/builder/app/canvas/instance-hovering.ts
index d02e04521b..f05d8779bb 100644
--- a/apps/builder/app/canvas/instance-hovering.ts
+++ b/apps/builder/app/canvas/instance-hovering.ts
@@ -92,10 +92,10 @@ export const subscribeInstanceHovering = ({
   window.addEventListener(
     "mouseout",
     () => {
-      mouseOutTimeoutId = setTimeout(() => {
-        updateOnMouseMove = false;
-        hoveredElement = undefined;
+      updateOnMouseMove = false;
+      hoveredElement = undefined;
 
+      mouseOutTimeoutId = setTimeout(() => {
         $blockChildOutline.set(undefined);
         $hoveredInstanceSelector.set(undefined);
         $hoveredInstanceOutline.set(undefined);
diff --git a/apps/builder/app/canvas/instance-selected.ts b/apps/builder/app/canvas/instance-selected.ts
index e807665758..e5edf13984 100644
--- a/apps/builder/app/canvas/instance-selected.ts
+++ b/apps/builder/app/canvas/instance-selected.ts
@@ -20,6 +20,8 @@ import {
   getAllElementsBoundingBox,
   getVisibleElementsByInstanceSelector,
   getAllElementsByInstanceSelector,
+  scrollIntoView,
+  hasDoNotTrackMutationRecord,
 } from "~/shared/dom-utils";
 import { subscribeScrollState } from "~/canvas/shared/scroll-state";
 import { $selectedInstanceOutline } from "~/shared/nano-states";
@@ -127,26 +129,10 @@ const subscribeSelectedInstance = (
 
   const updateScroll = () => {
     const bbox = getAllElementsBoundingBox(visibleElements);
-
-    // Adds a small amount of space around the element after scrolling
-    const topScrollMargin = 16;
-
-    if (bbox.top < 0 || bbox.bottom > window.innerHeight) {
-      const moveToTopDelta = bbox.top - topScrollMargin;
-      const moveToBottomDelta =
-        bbox.bottom - window.innerHeight + topScrollMargin;
-
-      // scrollTo is used because scrollIntoView does not work with elements that have display:contents, etc.
-      // Here, we can be confident that if the outline can be calculated, we can scroll to it.
-      window.scrollTo({
-        top:
-          window.scrollY +
-          (Math.abs(moveToTopDelta) < Math.abs(moveToBottomDelta)
-            ? moveToTopDelta
-            : moveToBottomDelta),
-        behavior: "smooth",
-      });
+    if (visibleElements.length === 0) {
+      return;
     }
+    scrollIntoView(visibleElements[0], bbox);
   };
 
   const updateElements = () => {
@@ -285,6 +271,10 @@ const subscribeSelectedInstance = (
   const resizeObserver = new ResizeObserver(update);
 
   const mutationHandler: MutationCallback = (mutationRecords) => {
+    if (hasDoNotTrackMutationRecord(mutationRecords)) {
+      return;
+    }
+
     if (hasCollapsedMutationRecord(mutationRecords)) {
       return;
     }
diff --git a/apps/builder/app/shared/dom-utils.stories.tsx b/apps/builder/app/shared/dom-utils.stories.tsx
new file mode 100644
index 0000000000..c8d60abd52
--- /dev/null
+++ b/apps/builder/app/shared/dom-utils.stories.tsx
@@ -0,0 +1,63 @@
+import { scrollIntoView } from "./dom-utils";
+
+export default {
+  title: "DomUtile/ScrollIntoView",
+};
+
+const handleClick = (selector: string) => {
+  const elements = document.querySelectorAll(selector);
+
+  const element = elements[0];
+  if (element === undefined) {
+    return;
+  }
+
+  if (false === element instanceof HTMLElement) {
+    return;
+  }
+
+  scrollIntoView(element, element.getBoundingClientRect());
+};
+
+const ToolbarStory = () => {
+  return (
+    <div>
+      <button onClick={() => handleClick(".element")}>
+        Test Scroll Into Scrollable
+      </button>
+      <button onClick={() => handleClick(".viewport")}>
+        Test Scroll Into Viewport
+      </button>
+      <h1
+        style={{
+          marginTop: "1000px",
+        }}
+      >
+        Viewport Matrix Fiztures
+      </h1>
+      <div
+        style={{
+          marginTop: "20px",
+          width: "200px",
+          height: "200px",
+          overflow: "auto",
+        }}
+      >
+        <h1 style={{ marginTop: "2400px" }} className="element">
+          Inside scrollable
+        </h1>
+        <div style={{ height: "1000px" }}></div>
+      </div>
+      <h2 className="viewport">Inside viewport</h2>
+      <div style={{ height: "1000px" }}></div>
+      <button onClick={() => handleClick(".element")}>
+        Test Scroll Into Scrollable
+      </button>
+      <button onClick={() => handleClick(".viewport")}>
+        Test Scroll Into Viewport
+      </button>
+    </div>
+  );
+};
+
+export { ToolbarStory as Toolbar };
diff --git a/apps/builder/app/shared/dom-utils.ts b/apps/builder/app/shared/dom-utils.ts
index 8af9301ddd..9c474c294a 100644
--- a/apps/builder/app/shared/dom-utils.ts
+++ b/apps/builder/app/shared/dom-utils.ts
@@ -216,3 +216,177 @@ export const getAllElementsBoundingBox = (
     width: right - left,
   });
 };
+
+const doNotTrackMutationAttribute = "data-ws-do-not-track-mutation";
+
+export const hasDoNotTrackMutationAttribute = (element: Element) => {
+  return element.hasAttribute(doNotTrackMutationAttribute);
+};
+
+export const hasDoNotTrackMutationRecord = (
+  mutationRecords: MutationRecord[]
+) => {
+  return mutationRecords.some((record) =>
+    record.type === "childList"
+      ? [...record.addedNodes.values()].some(
+          (node) =>
+            node instanceof Element &&
+            node.hasAttribute(doNotTrackMutationAttribute)
+        )
+      : false
+  );
+};
+
+/**
+ * Get a DOMMatrix mapping the container's local coords to viewport coords.
+ * This uses one test DIV (width=100, height=100) placed at (0,0) in container space.
+ */
+const getLocalToViewportMatrix = (container: Element): DOMMatrix => {
+  const rectSize = 100;
+
+  const testDiv = document.createElement("div");
+  Object.assign(testDiv.style, {
+    position: "absolute",
+    left: "0px",
+    top: "0px",
+    width: `${rectSize}px`,
+    height: `${rectSize}px`,
+    pointerEvents: "none",
+    background: "transparent",
+    visibility: "hidden",
+  });
+  container.appendChild(testDiv);
+  testDiv.setAttribute(doNotTrackMutationAttribute, "true");
+
+  const { left, top, width, height } = testDiv.getBoundingClientRect();
+  container.removeChild(testDiv);
+
+  const x1 = left;
+  const y1 = top;
+  const x2 = left + width;
+  const y2 = top;
+  const x3 = left;
+  const y3 = top + height;
+
+  const a = (x2 - x1) / rectSize;
+  const b = (y2 - y1) / rectSize;
+  const c = (x3 - x1) / rectSize;
+  const d = (y3 - y1) / rectSize;
+  const e = x1;
+  const f = y1;
+
+  return new DOMMatrix([a, b, c, d, e, f]);
+};
+
+const getViewportToLocalMatrix = (container: Element): DOMMatrix => {
+  return getLocalToViewportMatrix(container).inverse();
+};
+
+const transformDOMRect = (rect: DOMRect, matrix: DOMMatrix) => {
+  const topLeft = new DOMPoint(rect.x, rect.y).matrixTransform(matrix);
+  const topRight = new DOMPoint(rect.x + rect.width, rect.y).matrixTransform(
+    matrix
+  );
+  const bottomLeft = new DOMPoint(rect.x, rect.y + rect.height).matrixTransform(
+    matrix
+  );
+  const bottomRight = new DOMPoint(
+    rect.x + rect.width,
+    rect.y + rect.height
+  ).matrixTransform(matrix);
+
+  const xs = [topLeft.x, topRight.x, bottomLeft.x, bottomRight.x];
+  const ys = [topLeft.y, topRight.y, bottomLeft.y, bottomRight.y];
+  const minX = Math.min(...xs);
+  const maxX = Math.max(...xs);
+  const minY = Math.min(...ys);
+  const maxY = Math.max(...ys);
+
+  return new DOMRect(minX, minY, maxX - minX, maxY - minY);
+};
+
+/**
+ * `overflow: hidden` can be scrolled
+ */
+const isScrollable = (
+  node: HTMLElement,
+  checkForOverflow: boolean
+): boolean => {
+  if (!node) {
+    return false;
+  }
+  const style = window.getComputedStyle(node);
+
+  let isScrollable = /(auto|scroll|hidden)/.test(
+    style.overflow + style.overflowX + style.overflowY
+  );
+
+  if (isScrollable && checkForOverflow) {
+    isScrollable =
+      node.scrollHeight !== node.clientHeight ||
+      node.scrollWidth !== node.clientWidth;
+  }
+
+  return isScrollable;
+};
+
+const getScrollParent = (
+  node: HTMLElement,
+  checkForOverflow: boolean
+): HTMLElement | null => {
+  for (
+    let scrollableNode = node.parentElement;
+    scrollableNode !== null;
+    scrollableNode = scrollableNode.parentElement
+  ) {
+    if (isScrollable(scrollableNode, checkForOverflow)) {
+      return scrollableNode;
+    }
+  }
+
+  return document.documentElement;
+};
+
+/**
+ * We scroll using rectangle and anchor calculations because `scrollIntoView` does not work
+ * reliably for certain elements, such as those with `display: contents`.
+ * For these elements, we display a selected or hovered outline on the canvas using the
+ * bounding rectangles of their children or the selection range.
+ * Here, we ensure scrolling works for these elements as well.
+ */
+export const scrollIntoView = (anchor: HTMLElement, rect: DOMRect) => {
+  const scrollParent = getScrollParent(anchor, true);
+
+  if (false === scrollParent instanceof HTMLElement) {
+    return;
+  }
+
+  requestAnimationFrame(() => {
+    const savedPosition = (scrollParent as HTMLElement).style.position;
+    (scrollParent as HTMLElement).style.position = "relative";
+
+    const matrix = getViewportToLocalMatrix(scrollParent);
+
+    const transformedRect = transformDOMRect(rect, matrix);
+
+    const scrollDiv = document.createElement("div");
+
+    Object.assign(scrollDiv.style, {
+      position: "absolute",
+      left: `${transformedRect.left}px`,
+      top: `${transformedRect.top}px`,
+      width: `${transformedRect.width}px`,
+      height: `${transformedRect.height}px`,
+      pointerEvents: "none",
+      background: "transparent",
+      scrollMargin: "20px",
+    });
+    scrollParent.appendChild(scrollDiv);
+
+    scrollDiv.scrollIntoView({ behavior: "smooth", block: "nearest" });
+
+    scrollParent.removeChild(scrollDiv);
+
+    (scrollParent as HTMLElement).style.position = savedPosition;
+  });
+};