diff --git a/public/app/features/dashboard-scene/scene/DashboardLayoutOrchestrator.tsx b/public/app/features/dashboard-scene/scene/DashboardLayoutOrchestrator.tsx
index 87b4860ae20..9b348e81abc 100644
--- a/public/app/features/dashboard-scene/scene/DashboardLayoutOrchestrator.tsx
+++ b/public/app/features/dashboard-scene/scene/DashboardLayoutOrchestrator.tsx
@@ -128,18 +128,21 @@ export class DashboardLayoutOrchestrator extends SceneObjectBase<DashboardLayout
   private _stopDraggingSync(_evt: PointerEvent) {
     const gridItem = this.state.draggingGridItem?.resolve();
     const wasDetached = this._itemDetachedFromSource;
+    // Capture these before cleanup since setTimeout runs after cleanup
+    const sourceDropTarget = this._sourceDropTarget;
+    const lastDropTarget = this._lastDropTarget;
 
     // Handle cross-layout or cross-tab drop
-    if (this._sourceDropTarget !== this._lastDropTarget || wasDetached) {
+    if (sourceDropTarget !== lastDropTarget || wasDetached) {
       // Wrapped in setTimeout to ensure that any event handlers are called
       // Useful for allowing react-grid-layout to remove placeholders, etc.
       setTimeout(() => {
         if (gridItem) {
           // Only remove from source if not already detached during tab switch
           if (!wasDetached) {
-            this._sourceDropTarget?.draggedGridItemOutside?.(gridItem);
+            sourceDropTarget?.draggedGridItemOutside?.(gridItem);
           }
-          this._lastDropTarget?.draggedGridItemInside?.(gridItem);
+          lastDropTarget?.draggedGridItemInside?.(gridItem);
         } else {
           const warningMessage = 'No grid item to drag';
           console.warn(warningMessage);
@@ -153,6 +156,9 @@ export class DashboardLayoutOrchestrator extends SceneObjectBase<DashboardLayout
 
     this._clearTabActivationTimer();
     this._clearDragPreview();
+    this._lastDropTarget?.setIsDropTarget?.(false);
+    this._lastDropTarget = null;
+    this._sourceDropTarget = null;
     this._itemDetachedFromSource = false;
     this.setState({ draggingGridItem: undefined, sourceTabKey: undefined, hoverTabKey: undefined });
   }
@@ -244,6 +250,9 @@ export class DashboardLayoutOrchestrator extends SceneObjectBase<DashboardLayout
     document.body.removeEventListener('pointerup', this._onRowDragPointerUp);
     this._clearTabActivationTimer();
     this._clearDragPreview();
+    this._lastDropTarget?.setIsDropTarget?.(false);
+    this._lastDropTarget = null;
+    this._sourceDropTarget = null;
     this._itemDetachedFromSource = false;
     this._sourceRowsLayout = null;
     this._rowOffsetCaptured = false;
diff --git a/public/app/features/dashboard-scene/scene/layout-rows/RowsLayoutManager.tsx b/public/app/features/dashboard-scene/scene/layout-rows/RowsLayoutManager.tsx
index 48f11357e24..dca4f3e96cd 100644
--- a/public/app/features/dashboard-scene/scene/layout-rows/RowsLayoutManager.tsx
+++ b/public/app/features/dashboard-scene/scene/layout-rows/RowsLayoutManager.tsx
@@ -2,6 +2,7 @@ import { t } from '@grafana/i18n';
 import {
   sceneGraph,
   SceneGridItemLike,
+  SceneGridLayout,
   SceneGridRow,
   SceneObject,
   SceneObjectBase,
@@ -13,6 +14,7 @@ import { Spec as DashboardV2Spec } from '@grafana/schema/dist/esm/schema/dashboa
 import { dashboardEditActions, ObjectsReorderedOnCanvasEvent } from '../../edit-pane/shared';
 import { serializeRowsLayout } from '../../serialization/layoutSerializers/RowsLayoutSerializer';
 import { getDashboardSceneFor } from '../../utils/utils';
+import { AutoGridItem } from '../layout-auto-grid/AutoGridItem';
 import { AutoGridLayoutManager } from '../layout-auto-grid/AutoGridLayoutManager';
 import { DashboardGridItem } from '../layout-default/DashboardGridItem';
 import { DefaultGridLayoutManager } from '../layout-default/DefaultGridLayoutManager';
@@ -22,6 +24,7 @@ import { findAllGridTypes } from '../layouts-shared/findAllGridTypes';
 import { getRowFromClipboard } from '../layouts-shared/paste';
 import { showConvertMixedGridsModal, showUngroupConfirmation } from '../layouts-shared/ungroupConfirmation';
 import { generateUniqueTitle, ungroupLayout, GridLayoutType, mapIdToGridLayoutType } from '../layouts-shared/utils';
+import { DashboardDropTarget } from '../types/DashboardDropTarget';
 import { isDashboardLayoutGrid } from '../types/DashboardLayoutGrid';
 import { DashboardLayoutGroup, isDashboardLayoutGroup } from '../types/DashboardLayoutGroup';
 import { DashboardLayoutManager } from '../types/DashboardLayoutManager';
@@ -33,11 +36,16 @@ import { RowLayoutManagerRenderer } from './RowsLayoutManagerRenderer';
 
 interface RowsLayoutManagerState extends SceneObjectState {
   rows: RowItem[];
+  isDropTarget?: boolean;
 }
 
-export class RowsLayoutManager extends SceneObjectBase<RowsLayoutManagerState> implements DashboardLayoutGroup {
+export class RowsLayoutManager
+  extends SceneObjectBase<RowsLayoutManagerState>
+  implements DashboardLayoutGroup, DashboardDropTarget
+{
   public static Component = RowLayoutManagerRenderer;
   public readonly isDashboardLayoutManager = true;
+  public readonly isDashboardDropTarget = true as const;
 
   public static readonly descriptor: LayoutRegistryItem = {
     get name() {
@@ -62,6 +70,38 @@ export class RowsLayoutManager extends SceneObjectBase<RowsLayoutManagerState> i
     this.state.rows[0]?.getLayout().addPanel(vizPanel);
   }
 
+  public setIsDropTarget(isDropTarget: boolean): void {
+    this.setState({ isDropTarget });
+  }
+
+  public draggedGridItemInside(gridItem: SceneGridItemLike): void {
+    // Create a new row with a DefaultGridLayoutManager and add the grid item to it
+    const newLayout = new DefaultGridLayoutManager({
+      grid: new SceneGridLayout({ children: [], isDraggable: true, isResizable: true }),
+    });
+    const newRow = new RowItem({
+      title: t('dashboard.rows-layout.new-row-title', 'New row'),
+      layout: newLayout,
+      collapse: false,
+    });
+
+    // Convert AutoGridItem to DashboardGridItem if needed
+    if (gridItem instanceof AutoGridItem) {
+      const vizPanel = gridItem.state.body;
+      const newGridItem = new DashboardGridItem({
+        body: vizPanel.clone(),
+        width: 12,
+        height: 8,
+      });
+      newLayout.addGridItem(newGridItem);
+    } else if (gridItem instanceof DashboardGridItem) {
+      newLayout.addGridItem(gridItem);
+    }
+
+    // Add the row to this layout
+    this.setState({ rows: [...this.state.rows, newRow], isDropTarget: false });
+  }
+
   public getVizPanels(): VizPanel[] {
     const panels: VizPanel[] = [];
 
diff --git a/public/app/features/dashboard-scene/scene/layout-rows/RowsLayoutManagerRenderer.tsx b/public/app/features/dashboard-scene/scene/layout-rows/RowsLayoutManagerRenderer.tsx
index 612c76701e4..f416a08844a 100644
--- a/public/app/features/dashboard-scene/scene/layout-rows/RowsLayoutManagerRenderer.tsx
+++ b/public/app/features/dashboard-scene/scene/layout-rows/RowsLayoutManagerRenderer.tsx
@@ -25,6 +25,9 @@ export function RowLayoutManagerRenderer({ model }: SceneComponentProps<RowsLayo
   const soloPanelContext = useSoloPanelContext();
   const orchestrator = getLayoutOrchestratorFor(model);
 
+  // Only act as a drop target when empty (no rows)
+  const showAsDropTarget = rows.length === 0;
+
   const handleBeforeCapture = useCallback(
     (before: BeforeCapture) => {
       const row = rows.find((r) => r.state.key === before.draggableId);
@@ -75,7 +78,12 @@ export function RowLayoutManagerRenderer({ model }: SceneComponentProps<RowsLayo
     >
       <Droppable droppableId={key!} direction="vertical">
         {(dropProvided) => (
-          <div className={styles.wrapper} ref={dropProvided.innerRef} {...dropProvided.droppableProps}>
+          <div
+            className={styles.wrapper}
+            ref={dropProvided.innerRef}
+            {...dropProvided.droppableProps}
+            {...(showAsDropTarget ? { 'data-dashboard-drop-target-key': key } : {})}
+          >
             {rows.map((row) => (
               <RowWrapper row={row} manager={model} key={row.state.key!} />
             ))}
diff --git a/public/app/features/dashboard-scene/scene/layout-tabs/TabItem.tsx b/public/app/features/dashboard-scene/scene/layout-tabs/TabItem.tsx
index 0b7ccf910ee..c24ef88cc4f 100644
--- a/public/app/features/dashboard-scene/scene/layout-tabs/TabItem.tsx
+++ b/public/app/features/dashboard-scene/scene/layout-tabs/TabItem.tsx
@@ -264,8 +264,10 @@ export class TabItem
         rowsLayout = new RowsLayoutManager({ rows: [row] });
       } else {
         // Convert existing layout and add the dropped row
+        // Use direct state update instead of addNewRow because the rowsLayout
+        // isn't connected to the scene yet, so dashboardEditActions won't work
         rowsLayout = RowsLayoutManager.createFromLayout(currentLayout);
-        rowsLayout.addNewRow(row);
+        rowsLayout.setState({ rows: [...rowsLayout.state.rows, row] });
       }
 
       // Clear the parent reference from the old layout