diff --git a/packages/core/src/renderer/labels.ts b/packages/core/src/renderer/labels.ts
index b8cb9355e..7a460faea 100644
--- a/packages/core/src/renderer/labels.ts
+++ b/packages/core/src/renderer/labels.ts
@@ -73,26 +73,29 @@ function drawSectionTitle(
 
   const pillW = Math.min(textWidth + SECTION_TITLE_PADDING_X * 2, maxPillW)
   const pillH = SECTION_TITLE_HEIGHT
-  const pillX = screenX
-  const pillY = nested ? screenY + SECTION_TITLE_GAP : screenY - pillH - SECTION_TITLE_GAP
-
-  if (node.fills.length > 0 && node.fills[0].visible) {
-    const c = r.resolveFillColor(node.fills[0], 0, node, graph)
-    r.auxFill.setColor(r.ck.Color4f(c.r, c.g, c.b, node.fills[0].opacity))
-  } else {
-    r.auxFill.setColor(r.ck.Color4f(0.37, 0.37, 0.37, 1))
-  }
-  const pillRect = r.ck.LTRBRect(pillX, pillY, pillX + pillW, pillY + pillH)
-  canvas.drawRRect(r.ck.RRectXY(pillRect, SECTION_TITLE_RADIUS, SECTION_TITLE_RADIUS), r.auxFill)
+  const localPillX = 0
+  const localPillY = nested ? SECTION_TITLE_GAP : -pillH - SECTION_TITLE_GAP
 
   const pillColor =
     node.fills.length > 0 && node.fills[0].visible
       ? r.resolveFillColor(node.fills[0], 0, node, graph)
       : { r: 0.37, g: 0.37, b: 0.37, a: 1 }
+
+  canvas.save()
+  canvas.translate(screenX, screenY)
+  if (node.rotation !== 0) {
+    canvas.rotate(node.rotation, 0, 0)
+  }
+
+  r.auxFill.setColor(r.ck.Color4f(pillColor.r, pillColor.g, pillColor.b, pillColor.a))
+  const pillRect = r.ck.LTRBRect(localPillX, localPillY, localPillX + pillW, localPillY + pillH)
+  canvas.drawRRect(r.ck.RRectXY(pillRect, SECTION_TITLE_RADIUS, SECTION_TITLE_RADIUS), r.auxFill)
+
   const lum = 0.299 * pillColor.r + 0.587 * pillColor.g + 0.114 * pillColor.b
   r.auxFill.setColor(lum > 0.5 ? r.ck.BLACK : r.ck.WHITE)
-  const textY = pillY + pillH * 0.7
-  canvas.drawText(displayText, pillX + SECTION_TITLE_PADDING_X, textY, r.auxFill, font)
+  const textY = localPillY + pillH * 0.7
+  canvas.drawText(displayText, localPillX + SECTION_TITLE_PADDING_X, textY, r.auxFill, font)
+  canvas.restore()
 }
 
 export function drawComponentLabels(r: SkiaRenderer, canvas: Canvas, graph: SceneGraph): void {
diff --git a/packages/core/src/renderer/overlays.ts b/packages/core/src/renderer/overlays.ts
index 5cc580514..f9a580f6e 100644
--- a/packages/core/src/renderer/overlays.ts
+++ b/packages/core/src/renderer/overlays.ts
@@ -1,11 +1,5 @@
 import {
   HANDLE_HALF_SIZE,
-  LABEL_OFFSET_Y,
-  SIZE_PILL_PADDING_X,
-  SIZE_PILL_PADDING_Y,
-  SIZE_PILL_HEIGHT,
-  SIZE_PILL_RADIUS,
-  SIZE_PILL_TEXT_OFFSET_Y,
   MARQUEE_FILL_ALPHA,
   SELECTION_DASH_ALPHA,
   LAYOUT_INDICATOR_STROKE,
@@ -28,6 +22,21 @@ import type { Rect, Vector } from '../types'
 import type { SkiaRenderer, RenderOverlays } from './renderer'
 import type { Canvas } from 'canvaskit-wasm'
 
+function getNodeTransformChain(graph: SceneGraph, node: SceneNode): SceneNode[] {
+  const chain: SceneNode[] = []
+  let current = node
+
+  for (;;) {
+    chain.unshift(current)
+    if (!current.parentId) break
+    const parent = graph.getNode(current.parentId)
+    if (!parent || parent.id === graph.rootId || parent.type === 'CANVAS') break
+    current = parent
+  }
+
+  return chain
+}
+
 export function drawHoverHighlight(
   r: SkiaRenderer,
   canvas: Canvas,
@@ -38,22 +47,23 @@ export function drawHoverHighlight(
   const node = graph.getNode(hoveredNodeId)
   if (!node) return
 
-  const abs = graph.getAbsolutePosition(node.id)
-  const sx = abs.x * r.zoom + r.panX
-  const sy = abs.y * r.zoom + r.panY
-
   r.auxStroke.setStrokeWidth(1 / r.zoom)
   r.auxStroke.setColor(r.isComponentType(node.type) ? r.compColor() : r.selColor())
   r.auxStroke.setPathEffect(null)
 
+  const chain = getNodeTransformChain(graph, node)
+
   canvas.save()
-  canvas.translate(sx, sy)
-  if (node.rotation !== 0) {
-    const cx = (node.width / 2) * r.zoom
-    const cy = (node.height / 2) * r.zoom
-    canvas.rotate(node.rotation, cx, cy)
-  }
+  canvas.translate(r.panX, r.panY)
   canvas.scale(r.zoom, r.zoom)
+
+  for (const item of chain) {
+    canvas.translate(item.x, item.y)
+    if (item.rotation !== 0) {
+      canvas.rotate(item.rotation, item.width / 2, item.height / 2)
+    }
+  }
+
   r.strokeNodeShape(canvas, node, r.auxStroke)
   canvas.restore()
 }
@@ -115,7 +125,7 @@ export function drawSelection(
     const rotation =
       overlays.rotationPreview?.nodeId === id ? overlays.rotationPreview.angle : node.rotation
     r.drawNodeSelection(canvas, node, rotation, graph)
-    r.drawSelectionLabels(canvas, graph, selectedIds)
+    r.drawSelectionLabels(canvas, graph, selectedIds, overlays)
 
     r.selectionPaint.setColor(r.selColor())
     return
@@ -144,7 +154,7 @@ export function drawSelection(
   if (nodes.length === 0) return
   r.drawGroupBounds(canvas, nodes, graph)
 
-  r.drawSelectionLabels(canvas, graph, selectedIds)
+  r.drawSelectionLabels(canvas, graph, selectedIds, overlays)
 }
 
 function withNodeBounds(
@@ -194,82 +204,6 @@ export function drawNodeSelection(
   })
 }
 
-export function drawSelectionLabels(
-  r: SkiaRenderer,
-  canvas: Canvas,
-  graph: SceneGraph,
-  selectedIds: Set<string>
-): void {
-  if (!r.labelFont || !r.sizeFont) return
-
-  let minX = Infinity
-  let minY = Infinity
-  let maxX = -Infinity
-  let maxY = -Infinity
-  const nodes: SceneNode[] = []
-
-  for (const id of selectedIds) {
-    const node = graph.getNode(id)
-    if (!node) continue
-    nodes.push(node)
-    const abs = graph.getAbsolutePosition(id)
-    minX = Math.min(minX, abs.x)
-    minY = Math.min(minY, abs.y)
-    maxX = Math.max(maxX, abs.x + node.width)
-    maxY = Math.max(maxY, abs.y + node.height)
-  }
-
-  if (nodes.length === 0) return
-
-  const sx1 = minX * r.zoom + r.panX
-  const sy1 = minY * r.zoom + r.panY
-  const sx2 = maxX * r.zoom + r.panX
-  const sy2 = maxY * r.zoom + r.panY
-  const smx = (sx1 + sx2) / 2
-
-  if (nodes.length === 1) {
-    const node = nodes[0]
-    const parentNode = node.parentId ? graph.getNode(node.parentId) : null
-    const isTopLevel = !parentNode || parentNode.type === 'CANVAS' || parentNode.type === 'SECTION'
-    if (node.type === 'FRAME' && isTopLevel) {
-      r.auxFill.setColor(r.selColor())
-      canvas.drawText(node.name, sx1, sy1 - LABEL_OFFSET_Y, r.auxFill, r.labelFont)
-    }
-  }
-
-  const w = Math.round(maxX - minX)
-  const h = Math.round(maxY - minY)
-  const sizeText = `${w} × ${h}`
-  const glyphIds = r.sizeFont.getGlyphIDs(sizeText)
-  const widths = r.sizeFont.getGlyphWidths(glyphIds)
-  let textWidth = 0
-  for (const w of widths) textWidth += w
-  const pillW = textWidth + SIZE_PILL_PADDING_X * 2
-  const pillH = SIZE_PILL_HEIGHT
-  const pillX = smx - pillW / 2
-  const pillY = sy2 + SIZE_PILL_PADDING_Y
-
-  const allComponents = nodes.length > 0 && nodes.every((n) => r.isComponentType(n.type))
-  const pillColor = allComponents ? r.compColor() : r.selColor()
-
-  r.auxFill.setColor(pillColor)
-  const rrect = r.ck.RRectXY(
-    r.ck.LTRBRect(pillX, pillY, pillX + pillW, pillY + pillH),
-    SIZE_PILL_RADIUS,
-    SIZE_PILL_RADIUS
-  )
-  canvas.drawRRect(rrect, r.auxFill)
-
-  r.auxFill.setColor(r.ck.WHITE)
-  canvas.drawText(
-    sizeText,
-    pillX + SIZE_PILL_PADDING_X,
-    pillY + SIZE_PILL_TEXT_OFFSET_Y,
-    r.auxFill,
-    r.sizeFont
-  )
-}
-
 export function drawParentFrameOutlines(
   r: SkiaRenderer,
   canvas: Canvas,
@@ -377,6 +311,8 @@ export function getRotatedCorners(r: SkiaRenderer, n: SceneNode, abs: Vector): V
   return rotatedCorners(cx, cy, hw, hh, n.rotation)
 }
 
+export { drawSelectionLabels } from './selection-labels'
+
 export function drawHandle(r: SkiaRenderer, canvas: Canvas, x: number, y: number): void {
   r.auxFill.setColor(r.ck.WHITE)
   const rect = r.ck.LTRBRect(
diff --git a/packages/core/src/renderer/renderer.ts b/packages/core/src/renderer/renderer.ts
index 8780b044d..6d2d7410a 100644
--- a/packages/core/src/renderer/renderer.ts
+++ b/packages/core/src/renderer/renderer.ts
@@ -1,3 +1,8 @@
+import {
+  resolveNodeFillColor,
+  resolveNodeStrokeColor,
+  type ResolvedRenderColor
+} from '../color-management'
 /* eslint-disable max-lines -- SkiaRenderer class; text, pen-overlay, fills, scene already extracted */
 import {
   SELECTION_COLOR,
@@ -30,7 +35,6 @@ import {
 } from '../constants'
 import { computeAbsoluteBounds } from '../geometry'
 import { RenderProfiler } from '../profiler'
-import { resolveNodeFillColor, resolveNodeStrokeColor, type ResolvedRenderColor } from '../color-management'
 import { drawAiOverlays as drawAiOverlaysFn } from './ai-overlays'
 import {
   getCachedDropShadow as getCachedDropShadowFn,
@@ -570,25 +574,28 @@ export class SkiaRenderer {
           const widths = font.getGlyphWidths(glyphIds)
           let textW = 0
           for (const w of widths) textW += w
+
           const pillW =
             Math.min(textW + SECTION_TITLE_PADDING_X * 2, child.width * this.zoom) / this.zoom
           const pillH = SECTION_TITLE_HEIGHT / this.zoom
           const gap = SECTION_TITLE_GAP / this.zoom
+          const localX = canvasX - ax
+          const localY = canvasY - ay
 
-          const pillX = ax
-          let pillY: number
-          if (insideSection) {
-            pillY = ay + gap
-          } else {
-            pillY = ay - pillH - gap
+          let hitX = localX
+          let hitY = localY
+          if (child.rotation !== 0) {
+            const rad = (-child.rotation * Math.PI) / 180
+            const cos = Math.cos(rad)
+            const sin = Math.sin(rad)
+            hitX = localX * cos - localY * sin
+            hitY = localX * sin + localY * cos
           }
 
-          if (
-            canvasX >= pillX &&
-            canvasX <= pillX + pillW &&
-            canvasY >= pillY &&
-            canvasY <= pillY + pillH
-          ) {
+          const pillX = 0
+          const pillY = insideSection ? gap : -pillH - gap
+
+          if (hitX >= pillX && hitX <= pillX + pillW && hitY >= pillY && hitY <= pillY + pillH) {
             result = child
             return
           }
@@ -687,16 +694,23 @@ export class SkiaRenderer {
 
     const labelW = textW / this.zoom
     const labelH = LABEL_FONT_SIZE / this.zoom
-    const gap = LABEL_OFFSET_Y / this.zoom
-    const labelX = abs.x
-    const labelY = abs.y - gap - labelH
+    const localX = canvasX - abs.x
+    const localY = canvasY - abs.y
 
-    if (
-      canvasX >= labelX &&
-      canvasX <= labelX + labelW &&
-      canvasY >= labelY &&
-      canvasY <= labelY + labelH
-    ) {
+    let hitX = localX
+    let hitY = localY
+    if (node.rotation !== 0) {
+      const rad = (-node.rotation * Math.PI) / 180
+      const cos = Math.cos(rad)
+      const sin = Math.sin(rad)
+      hitX = localX * cos - localY * sin
+      hitY = localX * sin + localY * cos
+    }
+
+    const labelX = 0
+    const labelY = -LABEL_OFFSET_Y / this.zoom - labelH
+
+    if (hitX >= labelX && hitX <= labelX + labelW && hitY >= labelY && hitY <= labelY + labelH) {
       return node
     }
 
@@ -1095,8 +1109,13 @@ export class SkiaRenderer {
     drawNodeSelectionFn(this, canvas, node, rotation, graph)
   }
 
-  drawSelectionLabels(canvas: Canvas, graph: SceneGraph, selectedIds: Set<string>): void {
-    drawSelectionLabelsFn(this, canvas, graph, selectedIds)
+  drawSelectionLabels(
+    canvas: Canvas,
+    graph: SceneGraph,
+    selectedIds: Set<string>,
+    overlays?: RenderOverlays
+  ): void {
+    drawSelectionLabelsFn(this, canvas, graph, selectedIds, overlays)
   }
 
   drawParentFrameOutlines(canvas: Canvas, graph: SceneGraph, selectedIds: Set<string>): void {
diff --git a/packages/core/src/renderer/selection-labels.ts b/packages/core/src/renderer/selection-labels.ts
new file mode 100644
index 000000000..bf98f87dc
--- /dev/null
+++ b/packages/core/src/renderer/selection-labels.ts
@@ -0,0 +1,211 @@
+import {
+  LABEL_OFFSET_Y,
+  SIZE_PILL_PADDING_X,
+  SIZE_PILL_PADDING_Y,
+  SIZE_PILL_HEIGHT,
+  SIZE_PILL_RADIUS,
+  SIZE_PILL_TEXT_OFFSET_Y
+} from '../constants'
+import { degToRad, rotatePoint, rotatedCorners } from '../geometry'
+
+import type { SceneNode, SceneGraph } from '../scene-graph'
+import type { SkiaRenderer, RenderOverlays } from './renderer'
+import type { Canvas } from 'canvaskit-wasm'
+
+function getOverlayRotation(node: SceneNode, overlays?: RenderOverlays): number {
+  return overlays?.rotationPreview?.nodeId === node.id
+    ? overlays.rotationPreview.angle
+    : node.rotation
+}
+
+function accumulateSelectionBounds(
+  graph: SceneGraph,
+  selectedIds: Set<string>,
+  overlays?: RenderOverlays
+): { nodes: SceneNode[]; minX: number; minY: number; maxX: number; maxY: number } {
+  let minX = Infinity
+  let minY = Infinity
+  let maxX = -Infinity
+  let maxY = -Infinity
+  const nodes: SceneNode[] = []
+
+  for (const id of selectedIds) {
+    const node = graph.getNode(id)
+    if (!node) continue
+    nodes.push(node)
+    const abs = graph.getAbsolutePosition(id)
+    const rotation = getOverlayRotation(node, overlays)
+    if (rotation !== 0) {
+      const corners = rotatedCorners(abs.x, abs.y, node.width, node.height, rotation)
+      for (const corner of corners) {
+        minX = Math.min(minX, corner.x)
+        minY = Math.min(minY, corner.y)
+        maxX = Math.max(maxX, corner.x)
+        maxY = Math.max(maxY, corner.y)
+      }
+      continue
+    }
+    minX = Math.min(minX, abs.x)
+    minY = Math.min(minY, abs.y)
+    maxX = Math.max(maxX, abs.x + node.width)
+    maxY = Math.max(maxY, abs.y + node.height)
+  }
+
+  return { nodes, minX, minY, maxX, maxY }
+}
+
+function drawSingleFrameTitle(
+  r: SkiaRenderer,
+  canvas: Canvas,
+  graph: SceneGraph,
+  node: SceneNode,
+  overlays: RenderOverlays,
+  labelFont: NonNullable<SkiaRenderer['labelFont']>
+): void {
+  const parentNode = node.parentId ? graph.getNode(node.parentId) : null
+  const isTopLevel = !parentNode || parentNode.type === 'CANVAS' || parentNode.type === 'SECTION'
+  if (node.type !== 'FRAME' || !isTopLevel) return
+
+  const abs = graph.getAbsolutePosition(node.id)
+  const rotation = getOverlayRotation(node, overlays)
+  const anchor =
+    rotation === 0
+      ? { x: abs.x, y: abs.y }
+      : rotatePoint(
+          abs.x,
+          abs.y,
+          abs.x + node.width / 2,
+          abs.y + node.height / 2,
+          degToRad(rotation)
+        )
+  const labelX = anchor.x * r.zoom + r.panX
+  const labelY = anchor.y * r.zoom + r.panY - LABEL_OFFSET_Y
+
+  r.auxFill.setColor(r.selColor())
+  canvas.save()
+  canvas.translate(labelX, labelY)
+  if (rotation !== 0) {
+    canvas.rotate(rotation, 0, LABEL_OFFSET_Y)
+  }
+  canvas.drawText(node.name, 0, 0, r.auxFill, labelFont)
+  canvas.restore()
+}
+
+function drawSingleSelectionSize(
+  r: SkiaRenderer,
+  canvas: Canvas,
+  graph: SceneGraph,
+  node: SceneNode,
+  overlays: RenderOverlays,
+  sizeFont: NonNullable<SkiaRenderer['sizeFont']>
+): void {
+  const sizeText = `${Math.round(node.width)} × ${Math.round(node.height)}`
+  const glyphIds = sizeFont.getGlyphIDs(sizeText)
+  const widths = sizeFont.getGlyphWidths(glyphIds)
+  let textWidth = 0
+  for (const width of widths) textWidth += width
+  const pillW = textWidth + SIZE_PILL_PADDING_X * 2
+  const pillH = SIZE_PILL_HEIGHT
+  const pillColor = r.isComponentType(node.type) ? r.compColor() : r.selColor()
+  const abs = graph.getAbsolutePosition(node.id)
+  const rotation = getOverlayRotation(node, overlays)
+  const cx = (abs.x + node.width / 2) * r.zoom + r.panX
+  const cy = (abs.y + node.height / 2) * r.zoom + r.panY
+  const localY = (node.height * r.zoom) / 2 + SIZE_PILL_PADDING_Y
+
+  canvas.save()
+  canvas.translate(cx, cy)
+  if (rotation !== 0) {
+    canvas.rotate(rotation, 0, 0)
+  }
+
+  r.auxFill.setColor(pillColor)
+  const rrect = r.ck.RRectXY(
+    r.ck.LTRBRect(-pillW / 2, localY, pillW / 2, localY + pillH),
+    SIZE_PILL_RADIUS,
+    SIZE_PILL_RADIUS
+  )
+  canvas.drawRRect(rrect, r.auxFill)
+
+  r.auxFill.setColor(r.ck.WHITE)
+  canvas.drawText(
+    sizeText,
+    -pillW / 2 + SIZE_PILL_PADDING_X,
+    localY + SIZE_PILL_TEXT_OFFSET_Y,
+    r.auxFill,
+    sizeFont
+  )
+  canvas.restore()
+}
+
+function drawMultiSelectionSize(
+  r: SkiaRenderer,
+  canvas: Canvas,
+  nodes: SceneNode[],
+  minX: number,
+  minY: number,
+  maxX: number,
+  maxY: number,
+  sizeFont: NonNullable<SkiaRenderer['sizeFont']>
+): void {
+  const sizeText = `${Math.round(maxX - minX)} × ${Math.round(maxY - minY)}`
+  const glyphIds = sizeFont.getGlyphIDs(sizeText)
+  const widths = sizeFont.getGlyphWidths(glyphIds)
+  let textWidth = 0
+  for (const width of widths) textWidth += width
+  const pillW = textWidth + SIZE_PILL_PADDING_X * 2
+  const pillH = SIZE_PILL_HEIGHT
+  const sx1 = minX * r.zoom + r.panX
+  const sx2 = maxX * r.zoom + r.panX
+  const sy2 = maxY * r.zoom + r.panY
+  const smx = (sx1 + sx2) / 2
+  const pillX = smx - pillW / 2
+  const pillY = sy2 + SIZE_PILL_PADDING_Y
+  const allComponents = nodes.length > 0 && nodes.every((n) => r.isComponentType(n.type))
+  const pillColor = allComponents ? r.compColor() : r.selColor()
+
+  r.auxFill.setColor(pillColor)
+  const rrect = r.ck.RRectXY(
+    r.ck.LTRBRect(pillX, pillY, pillX + pillW, pillY + pillH),
+    SIZE_PILL_RADIUS,
+    SIZE_PILL_RADIUS
+  )
+  canvas.drawRRect(rrect, r.auxFill)
+
+  r.auxFill.setColor(r.ck.WHITE)
+  canvas.drawText(
+    sizeText,
+    pillX + SIZE_PILL_PADDING_X,
+    pillY + SIZE_PILL_TEXT_OFFSET_Y,
+    r.auxFill,
+    sizeFont
+  )
+}
+
+export function drawSelectionLabels(
+  r: SkiaRenderer,
+  canvas: Canvas,
+  graph: SceneGraph,
+  selectedIds: Set<string>,
+  overlays?: RenderOverlays
+): void {
+  const labelFont = r.labelFont
+  const sizeFont = r.sizeFont
+  if (!labelFont || !sizeFont) return
+
+  const activeOverlays = overlays ?? {}
+  const { nodes, minX, minY, maxX, maxY } = accumulateSelectionBounds(
+    graph,
+    selectedIds,
+    activeOverlays
+  )
+  if (nodes.length === 0) return
+
+  if (nodes.length === 1) {
+    drawSingleFrameTitle(r, canvas, graph, nodes[0], activeOverlays, labelFont)
+    drawSingleSelectionSize(r, canvas, graph, nodes[0], activeOverlays, sizeFont)
+    return
+  }
+
+  drawMultiSelectionSize(r, canvas, nodes, minX, minY, maxX, maxY, sizeFont)
+}
diff --git a/tests/e2e/canvas-manipulation.spec.ts b/tests/e2e/canvas-manipulation.spec.ts
index 86544f168..414ea81f3 100644
--- a/tests/e2e/canvas-manipulation.spec.ts
+++ b/tests/e2e/canvas-manipulation.spec.ts
@@ -181,3 +181,136 @@ test('hover highlight changes canvas rendering', async () => {
   expect(Buffer.compare(noHoverShot, hoverShot)).not.toBe(0)
   canvas.assertNoErrors()
 })
+
+async function setupFrameChild(rotation: number) {
+  await canvas.clearCanvas()
+
+  const setup = await page.evaluate((frameRotation) => {
+    const store = window.__OPEN_PENCIL_STORE__!
+    const frameId = store.createShape('FRAME', 180, 160, 240, 160)
+    if (!frameId) return null
+    store.updateNode(frameId, { rotation: frameRotation })
+    const rectId = store.createShape('RECTANGLE', 245, 205, 60, 40)
+    if (!rectId) return null
+    store.graph.reparentNode(rectId, frameId)
+    store.updateNode(rectId, { x: 65, y: 45 })
+    store.select([])
+    store.requestRender()
+    return { frameId, rectId }
+  }, rotation)
+
+  expect(setup).not.toBeNull()
+  await canvas.waitForRender()
+
+  const state = await page.evaluate(() => {
+    const store = window.__OPEN_PENCIL_STORE__!
+    const pageId = store.state.currentPageId
+    const pageNode = store.graph.getNode(pageId)
+    const frame = pageNode?.childIds
+      .map((id: string) => store.graph.getNode(id))
+      .find((node: { type: string } | undefined) => node?.type === 'FRAME')
+    if (!frame) return null
+    const child = frame.childIds
+      .map((childId: string) => store.graph.getNode(childId))
+      .find((node: { type: string } | undefined) => node?.type === 'RECTANGLE')
+    if (!child) return null
+    const abs = store.graph.getAbsolutePosition(frame.id)
+    const cx = abs.x + frame.width / 2
+    const cy = abs.y + frame.height / 2
+    const childCx = abs.x + child.x + child.width / 2
+    const childCy = abs.y + child.y + child.height / 2
+    const rad = (frame.rotation * Math.PI) / 180
+    const dx = childCx - cx
+    const dy = childCy - cy
+    return {
+      childId: child.id,
+      hitX: cx + dx * Math.cos(rad) - dy * Math.sin(rad),
+      hitY: cy + dx * Math.sin(rad) + dy * Math.cos(rad),
+      missX: abs.x + 20,
+      missY: abs.y + 20,
+    }
+  })
+
+  expect(state).not.toBeNull()
+  return state!
+}
+
+test('frame children keep correct hover and click hit area without rotation', async () => {
+  const state = await setupFrameChild(0)
+
+  await canvas.hover(state.hitX, state.hitY)
+  const hoveredId = await page.evaluate(() => window.__OPEN_PENCIL_STORE__!.state.hoveredNodeId)
+  expect(hoveredId).toBe(state.childId)
+
+  await canvas.click(state.hitX, state.hitY)
+  await canvas.waitForRender()
+  const selected = await getSelectedNode(page)
+  expect(selected?.id).toBe(state.childId)
+
+  await canvas.hover(state.missX, state.missY)
+  const hoveredMiss = await page.evaluate(() => window.__OPEN_PENCIL_STORE__!.state.hoveredNodeId)
+  expect(hoveredMiss).not.toBe(state.childId)
+  canvas.assertNoErrors()
+})
+
+test('rotated frame children keep correct hover and click hit area', async () => {
+  const state = await setupFrameChild(35)
+
+  await canvas.hover(state.hitX, state.hitY)
+  const hoveredId = await page.evaluate(() => window.__OPEN_PENCIL_STORE__!.state.hoveredNodeId)
+  expect(hoveredId).toBe(state.childId)
+
+  await canvas.click(state.hitX, state.hitY)
+  await canvas.waitForRender()
+  const selected = await getSelectedNode(page)
+  expect(selected?.id).toBe(state.childId)
+
+  await canvas.hover(state.missX, state.missY)
+  const hoveredMiss = await page.evaluate(() => window.__OPEN_PENCIL_STORE__!.state.hoveredNodeId)
+  expect(hoveredMiss).not.toBe(state.childId)
+  canvas.assertNoErrors()
+})
+
+ test('rotation drag exposes live rotation preview state', async () => {
+  await canvas.clearCanvas()
+  await canvas.drawRect(200, 200, 100, 100)
+  await canvas.click(250, 250)
+  await canvas.waitForRender()
+
+  const viewport = await page.evaluate(() => {
+    const store = window.__OPEN_PENCIL_STORE__!
+    const id = [...store.state.selectedIds][0]
+    const n = store.graph.getNode(id)
+    if (!n) return null
+    const abs = store.graph.getAbsolutePosition(id)
+    const zoom = store.state.zoom
+    const panX = store.state.panX
+    const panY = store.state.panY
+    const cx = (abs.x + n.width / 2) * zoom + panX
+    const topMidY = abs.y * zoom + panY
+    return { cx, topMidY }
+  })
+  expect(viewport).not.toBeNull()
+
+  const box = await page.locator('canvas').boundingBox()
+  if (!box) throw new Error('No canvas')
+
+  const rx = box.x + viewport!.cx
+  const ry = box.y + viewport!.topMidY - 24
+
+  await page.mouse.move(rx, ry)
+  await canvas.waitForRender()
+  await page.mouse.down()
+  await page.mouse.move(rx + 60, ry + 60, { steps: 15 })
+  await canvas.waitForRender()
+
+  const preview = await page.evaluate(() => window.__OPEN_PENCIL_STORE__!.state.rotationPreview)
+  expect(preview).not.toBeNull()
+
+  await page.mouse.up()
+  await canvas.waitForRender()
+
+  const clearedPreview = await page.evaluate(() => window.__OPEN_PENCIL_STORE__!.state.rotationPreview)
+  expect(clearedPreview).toBeNull()
+  canvas.assertNoErrors()
+})
diff --git a/tests/e2e/frame-overlays.spec.ts b/tests/e2e/frame-overlays.spec.ts
new file mode 100644
index 000000000..ce6f2c26e
--- /dev/null
+++ b/tests/e2e/frame-overlays.spec.ts
@@ -0,0 +1,118 @@
+import { test, expect, type Page } from '@playwright/test'
+
+import { CanvasHelper } from '../helpers/canvas'
+
+let page: Page
+let canvas: CanvasHelper
+
+test.describe.configure({ mode: 'serial' })
+
+test.beforeAll(async ({ browser }) => {
+  page = await browser.newPage()
+  await page.goto('/?test&no-chrome')
+  canvas = new CanvasHelper(page)
+  await canvas.waitForInit()
+})
+
+test.afterAll(async () => {
+  await page.close()
+})
+
+test.beforeEach(async () => {
+  await canvas.clearCanvas()
+})
+
+async function expectCanvas(name: string) {
+  canvas.assertNoErrors()
+  const buffer = await canvas.canvas.screenshot()
+  expect(buffer).toMatchSnapshot(`${name}.png`)
+}
+
+async function createOverlayDemo(rotation: number) {
+  await page.evaluate((frameRotation) => {
+    const store = window.__OPEN_PENCIL_STORE__!
+    const pageId = store.state.currentPageId
+
+    const frame = store.graph.createNode('FRAME', pageId, {
+      name: 'Typography',
+      x: 140,
+      y: 140,
+      width: 300,
+      height: 120,
+      rotation: frameRotation,
+      cornerRadius: 16,
+      fills: [{ type: 'SOLID', color: { r: 1, g: 1, b: 1, a: 1 }, visible: true, opacity: 1 }],
+      strokes: []
+    })
+
+    store.graph.createNode('TEXT', frame.id, {
+      name: 'Heading',
+      text: 'Heading',
+      x: 24,
+      y: 20,
+      width: 120,
+      height: 32,
+      fontSize: 22,
+      fontWeight: 700,
+      textAutoResize: 'WIDTH_AND_HEIGHT'
+    })
+
+    store.graph.createNode('TEXT', frame.id, {
+      name: 'Body',
+      text: 'The quick brown fox jumps.',
+      x: 24,
+      y: 62,
+      width: 220,
+      height: 24,
+      fontSize: 14,
+      textAutoResize: 'WIDTH_AND_HEIGHT'
+    })
+
+    const hoverTarget = store.graph.createNode('RECTANGLE', frame.id, {
+      name: 'Hover Target',
+      x: 210,
+      y: 28,
+      width: 56,
+      height: 40,
+      cornerRadius: 10,
+      fills: [
+        {
+          type: 'SOLID',
+          color: { r: 0.42, g: 0.78, b: 0.58, a: 1 },
+          visible: true,
+          opacity: 1
+        }
+      ]
+    })
+
+    store.select([frame.id])
+    store.state.hoveredNodeId = hoverTarget.id
+    store.requestRender()
+  }, rotation)
+
+  await canvas.waitForRender()
+}
+
+test('rotated frame selection labels render with hovered child', async () => {
+  await createOverlayDemo(18)
+  await expectCanvas('rotated-frame-selection-labels')
+})
+
+test('rotation preview updates frame labels before mouse up', async () => {
+  await createOverlayDemo(0)
+
+  await page.evaluate(() => {
+    const store = window.__OPEN_PENCIL_STORE__!
+    const frameId = [...store.state.selectedIds][0]
+    store.state.rotationPreview = { nodeId: frameId, angle: 28 }
+    store.requestRepaint()
+  })
+
+  await canvas.waitForRender()
+  await expectCanvas('rotated-frame-selection-labels-preview')
+})
+
+test('hover highlight stays aligned for child inside rotated frame', async () => {
+  await createOverlayDemo(28)
+  await expectCanvas('rotated-frame-child-hover-highlight')
+})
diff --git a/tests/e2e/frame-overlays.spec.ts-snapshots/rotated-frame-child-hover-highlight-openpencil-darwin.png b/tests/e2e/frame-overlays.spec.ts-snapshots/rotated-frame-child-hover-highlight-openpencil-darwin.png
new file mode 100644
index 000000000..4d91cf6c4
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diff --git a/tests/e2e/frame-overlays.spec.ts-snapshots/rotated-frame-selection-labels-openpencil-darwin.png b/tests/e2e/frame-overlays.spec.ts-snapshots/rotated-frame-selection-labels-openpencil-darwin.png
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index 000000000..95d391c72
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diff --git a/tests/e2e/frame-overlays.spec.ts-snapshots/rotated-frame-selection-labels-preview-openpencil-darwin.png b/tests/e2e/frame-overlays.spec.ts-snapshots/rotated-frame-selection-labels-preview-openpencil-darwin.png
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