diff --git a/scene/gui/tree.cpp b/scene/gui/tree.cpp
index f816b3eb0ce..d9f4ca3cacb 100644
--- a/scene/gui/tree.cpp
+++ b/scene/gui/tree.cpp
@@ -1206,21 +1206,27 @@ int Tree::draw_item(const Point2i &p_pos, const Point2 &p_draw_ofs, const Size2
 				}
 			}
 
-			if (drop_mode_flags && drop_mode_over == p_item) {
+			if (drop_mode_flags && drop_mode_over) {
 				Rect2 r = cell_rect;
-				bool has_parent = p_item->get_children() != nullptr;
-
-				if (drop_mode_section == -1 || has_parent || drop_mode_section == 0) {
-					VisualServer::get_singleton()->canvas_item_add_rect(ci, Rect2(r.position.x, r.position.y, r.size.x, 1), cache.drop_position_color);
-				}
-
-				if (drop_mode_section == 0) {
-					VisualServer::get_singleton()->canvas_item_add_rect(ci, Rect2(r.position.x, r.position.y, 1, r.size.y), cache.drop_position_color);
-					VisualServer::get_singleton()->canvas_item_add_rect(ci, Rect2(r.position.x + r.size.x - 1, r.position.y, 1, r.size.y), cache.drop_position_color);
-				}
-
-				if ((drop_mode_section == 1 && !has_parent) || drop_mode_section == 0) {
-					VisualServer::get_singleton()->canvas_item_add_rect(ci, Rect2(r.position.x, r.position.y + r.size.y, r.size.x, 1), cache.drop_position_color);
+				if (drop_mode_over == p_item) {
+					if (drop_mode_section == 0 || drop_mode_section == -1) {
+						// Line above.
+						VisualServer::get_singleton()->canvas_item_add_rect(ci, Rect2(r.position.x, r.position.y, r.size.x, 1), cache.drop_position_color);
+					}
+					if (drop_mode_section == 0) {
+						// Side lines.
+						VisualServer::get_singleton()->canvas_item_add_rect(ci, Rect2(r.position.x, r.position.y, 1, r.size.y), cache.drop_position_color);
+						VisualServer::get_singleton()->canvas_item_add_rect(ci, Rect2(r.position.x + r.size.x - 1, r.position.y, 1, r.size.y), cache.drop_position_color);
+					}
+					if (drop_mode_section == 0 || (drop_mode_section == 1 && (!p_item->get_children() || p_item->is_collapsed()))) {
+						// Line below.
+						VisualServer::get_singleton()->canvas_item_add_rect(ci, Rect2(r.position.x, r.position.y + r.size.y, r.size.x, 1), cache.drop_position_color);
+					}
+				} else if (drop_mode_over == p_item->get_parent()) {
+					if (drop_mode_section == 1 && !p_item->get_prev() /* && !drop_mode_over->is_collapsed() */) { // The drop_mode_over shouldn't ever be collapsed in here, otherwise we would be drawing a child of a collapsed item.
+						// Line above.
+						VisualServer::get_singleton()->canvas_item_add_rect(ci, Rect2(r.position.x, r.position.y, r.size.x, 1), cache.drop_position_color);
+					}
 				}
 			}