diff --git a/packages/vue/src/shared/input/auto-layout.ts b/packages/vue/src/shared/input/auto-layout.ts
index 77abf9fda..554a8c32b 100644
--- a/packages/vue/src/shared/input/auto-layout.ts
+++ b/packages/vue/src/shared/input/auto-layout.ts
@@ -64,12 +64,17 @@ export function computeIndicatorPosition(
   return (prevAbs.y + prev.height + nextAbs.y) / 2
 }
 
-export function filteredToRealIndex(parentId: string, insertIndex: number, editor: Editor): number {
+export function filteredToRealIndex(
+  parentId: string,
+  insertIndex: number,
+  editor: Editor,
+  movingIds = editor.state.selectedIds
+): number {
   const allChildren = editor.graph.getChildren(parentId)
   let realIndex = 0
   let filteredCount = 0
   for (const child of allChildren) {
-    if (editor.state.selectedIds.has(child.id)) continue
+    if (movingIds.has(child.id)) continue
     if (child.layoutPositioning === 'ABSOLUTE') {
       realIndex++
       continue
@@ -85,11 +90,12 @@ export function computeAutoLayoutIndicatorForFrame(
   parent: SceneNode,
   cx: number,
   cy: number,
-  editor: Editor
+  editor: Editor,
+  movingIds = editor.state.selectedIds
 ) {
   const children = editor.graph
     .getChildren(parent.id)
-    .filter((c) => c.layoutPositioning !== 'ABSOLUTE' && !editor.state.selectedIds.has(c.id))
+    .filter((c) => c.layoutPositioning !== 'ABSOLUTE' && !movingIds.has(c.id))
 
   const parentAbs = editor.graph.getAbsolutePosition(parent.id)
   const isRow = parent.layoutMode === 'HORIZONTAL'
@@ -107,6 +113,17 @@ export function computeAutoLayoutIndicatorForFrame(
     }
   }
 
+  const realIndex = filteredToRealIndex(parent.id, insertIndex, editor, movingIds)
+  if (movingIds.size === 1) {
+    const movingId = [...movingIds][0]
+    const movingNode = editor.graph.getNode(movingId)
+    const currentIndex = parent.childIds.indexOf(movingId)
+    if (movingNode?.parentId === parent.id && realIndex === currentIndex) {
+      editor.setLayoutInsertIndicator(null)
+      return
+    }
+  }
+
   const indicatorPos = computeIndicatorPosition(
     children,
     insertIndex,
@@ -122,7 +139,7 @@ export function computeAutoLayoutIndicatorForFrame(
 
   editor.setLayoutInsertIndicator({
     parentId: parent.id,
-    index: filteredToRealIndex(parent.id, insertIndex, editor),
+    index: realIndex,
     x: isRow ? indicatorPos : crossStart,
     y: isRow ? crossStart : indicatorPos,
     length: crossLength,
@@ -134,5 +151,5 @@ export function computeAutoLayoutIndicator(d: DragMove, cx: number, cy: number,
   if (!d.autoLayoutParentId) return
   const parent = editor.graph.getNode(d.autoLayoutParentId)
   if (!parent || parent.layoutMode === 'NONE') return
-  computeAutoLayoutIndicatorForFrame(parent, cx, cy, editor)
+  computeAutoLayoutIndicatorForFrame(parent, cx, cy, editor, new Set(d.originals.keys()))
 }
diff --git a/tests/e2e/editor/auto-layout-drag.spec.ts b/tests/e2e/editor/auto-layout-drag.spec.ts
index ce8e3a2dd..5d07f14cd 100644
--- a/tests/e2e/editor/auto-layout-drag.spec.ts
+++ b/tests/e2e/editor/auto-layout-drag.spec.ts
@@ -82,3 +82,82 @@ test('dragging selected nested instance content reorders its auto-layout item',
   expect(childIds).toEqual([ids.second, ids.first])
   canvas.assertNoErrors()
 })
+
+test('auto-layout drag does not show an insert indicator before order changes', async ({ page }) => {
+  await page.goto('/')
+  const canvas = new CanvasHelper(page)
+  await canvas.waitForInit()
+  canvas.errors.length = 0
+  await canvas.clearCanvas()
+
+  const ids = await page.evaluate(() => {
+    const store = window.openPencil?.getStore?.()
+    if (!store) throw new Error('OpenPencil store not initialized')
+
+    const pageId = store.state.currentPageId
+    const frame = store.graph.createNode('FRAME', pageId, {
+      name: 'Auto Row',
+      x: 100,
+      y: 100,
+      width: 360,
+      height: 80,
+      layoutMode: 'HORIZONTAL',
+      itemSpacing: 20,
+      paddingTop: 10,
+      paddingRight: 10,
+      paddingBottom: 10,
+      paddingLeft: 10
+    })
+    const first = store.graph.createNode('INSTANCE', frame.id, {
+      name: 'First item',
+      x: 110,
+      y: 110,
+      width: 120,
+      height: 60
+    })
+    const second = store.graph.createNode('INSTANCE', frame.id, {
+      name: 'Second item',
+      x: 250,
+      y: 110,
+      width: 120,
+      height: 60
+    })
+    const secondText = store.graph.createNode('TEXT', second.id, {
+      name: 'Second label',
+      text: 'Second',
+      x: 8,
+      y: 8,
+      width: 80,
+      height: 24
+    })
+
+    store.select([secondText.id])
+    store.requestRender()
+    return { frame: frame.id, first: first.id, second: second.id }
+  })
+  await canvas.waitForRender()
+
+  const box = await canvas.canvas.boundingBox()
+  if (!box) throw new Error('Canvas has no bounding box')
+  await page.mouse.move(box.x + 370, box.y + 228)
+  await page.mouse.down()
+  await page.mouse.move(box.x + 365, box.y + 228, { steps: 3 })
+  await canvas.waitForRender()
+
+  const indicator = await page.evaluate(() => {
+    const store = window.openPencil?.getStore?.()
+    if (!store) throw new Error('OpenPencil store not initialized')
+    return store.state.layoutInsertIndicator
+  })
+  await page.mouse.up()
+
+  expect(indicator).toBeNull()
+
+  const childIds = await page.evaluate((frameId) => {
+    const store = window.openPencil?.getStore?.()
+    if (!store) throw new Error('OpenPencil store not initialized')
+    return store.graph.getNode(frameId)?.childIds ?? []
+  }, ids.frame)
+  expect(childIds).toEqual([ids.first, ids.second])
+  canvas.assertNoErrors()
+})