diff --git a/Translations/Translations.pot b/Translations/Translations.pot
index f95afab035f8..d2dc4a488652 100644
--- a/Translations/Translations.pot
+++ b/Translations/Translations.pot
@@ -2780,10 +2780,36 @@ msgstr ""
 msgid "Spring towards the end"
 msgstr ""
 
-msgid "Silhouette"
+#. Used to turn images into a singular color
+msgid "Monochrome"
 msgstr ""
 
-msgid "Blacks out the image and makes all opaque pixels a dark color."
+#. A tooltip to tell users to hold the Shift key while clicking the remove button
+msgid "Hold Shift while pressing to instantly remove"
+msgstr ""
+
+#. Moves the reference image up in the list
+msgid "Move the selected reference image to the right"
+msgstr ""
+
+#. Moves the reference image down in the list
+msgid "Move the selected reference image to the left"
+msgstr ""
+
+#. Select a reference on the canvas
+msgid "Selects a reference image on the canvas"
+msgstr ""
+
+#. Moves the reference on the canvas
+msgid "Move the selected reference image"
+msgstr ""
+
+#. Rotates the reference on the canvas
+msgid "Rotate the selected reference image"
+msgstr ""
+
+#. Rotates the reference on the canvas
+msgid "Scale the selected reference image"
 msgstr ""
 
 #. Used in checkbuttons (like on/off switches) that enable/disable something.
diff --git a/assets/graphics/reference_images/move.png b/assets/graphics/reference_images/move.png
new file mode 100644
index 000000000000..94cb1b21370b
Binary files /dev/null and b/assets/graphics/reference_images/move.png differ
diff --git a/assets/graphics/reference_images/move.png.import b/assets/graphics/reference_images/move.png.import
new file mode 100644
index 000000000000..947b7c8b30fd
--- /dev/null
+++ b/assets/graphics/reference_images/move.png.import
@@ -0,0 +1,34 @@
+[remap]
+
+importer="texture"
+type="CompressedTexture2D"
+uid="uid://cedsyi8gf2n2i"
+path="res://.godot/imported/move.png-ed702c0a346cd77f0de30a0cba128fc7.ctex"
+metadata={
+"vram_texture": false
+}
+
+[deps]
+
+source_file="res://assets/graphics/reference_images/move.png"
+dest_files=["res://.godot/imported/move.png-ed702c0a346cd77f0de30a0cba128fc7.ctex"]
+
+[params]
+
+compress/mode=0
+compress/high_quality=false
+compress/lossy_quality=0.7
+compress/hdr_compression=1
+compress/normal_map=0
+compress/channel_pack=0
+mipmaps/generate=false
+mipmaps/limit=-1
+roughness/mode=0
+roughness/src_normal=""
+process/fix_alpha_border=true
+process/premult_alpha=false
+process/normal_map_invert_y=false
+process/hdr_as_srgb=false
+process/hdr_clamp_exposure=false
+process/size_limit=0
+detect_3d/compress_to=1
diff --git a/assets/graphics/reference_images/rotate.png b/assets/graphics/reference_images/rotate.png
new file mode 100644
index 000000000000..fa5bdb0165eb
Binary files /dev/null and b/assets/graphics/reference_images/rotate.png differ
diff --git a/assets/graphics/reference_images/rotate.png.import b/assets/graphics/reference_images/rotate.png.import
new file mode 100644
index 000000000000..7db7ba35f51c
--- /dev/null
+++ b/assets/graphics/reference_images/rotate.png.import
@@ -0,0 +1,34 @@
+[remap]
+
+importer="texture"
+type="CompressedTexture2D"
+uid="uid://dtd43nvphu3jj"
+path="res://.godot/imported/rotate.png-456db7ada5d7cd37fa30dc5557b226be.ctex"
+metadata={
+"vram_texture": false
+}
+
+[deps]
+
+source_file="res://assets/graphics/reference_images/rotate.png"
+dest_files=["res://.godot/imported/rotate.png-456db7ada5d7cd37fa30dc5557b226be.ctex"]
+
+[params]
+
+compress/mode=0
+compress/high_quality=false
+compress/lossy_quality=0.7
+compress/hdr_compression=1
+compress/normal_map=0
+compress/channel_pack=0
+mipmaps/generate=false
+mipmaps/limit=-1
+roughness/mode=0
+roughness/src_normal=""
+process/fix_alpha_border=true
+process/premult_alpha=false
+process/normal_map_invert_y=false
+process/hdr_as_srgb=false
+process/hdr_clamp_exposure=false
+process/size_limit=0
+detect_3d/compress_to=1
diff --git a/assets/graphics/reference_images/scale.png b/assets/graphics/reference_images/scale.png
new file mode 100644
index 000000000000..b89d675123e6
Binary files /dev/null and b/assets/graphics/reference_images/scale.png differ
diff --git a/assets/graphics/reference_images/scale.png.import b/assets/graphics/reference_images/scale.png.import
new file mode 100644
index 000000000000..704b5d2f0ca0
--- /dev/null
+++ b/assets/graphics/reference_images/scale.png.import
@@ -0,0 +1,34 @@
+[remap]
+
+importer="texture"
+type="CompressedTexture2D"
+uid="uid://nfabwr5mgdir"
+path="res://.godot/imported/scale.png-475926e4af79bb726ef59440df6e6f71.ctex"
+metadata={
+"vram_texture": false
+}
+
+[deps]
+
+source_file="res://assets/graphics/reference_images/scale.png"
+dest_files=["res://.godot/imported/scale.png-475926e4af79bb726ef59440df6e6f71.ctex"]
+
+[params]
+
+compress/mode=0
+compress/high_quality=false
+compress/lossy_quality=0.7
+compress/hdr_compression=1
+compress/normal_map=0
+compress/channel_pack=0
+mipmaps/generate=false
+mipmaps/limit=-1
+roughness/mode=0
+roughness/src_normal=""
+process/fix_alpha_border=true
+process/premult_alpha=false
+process/normal_map_invert_y=false
+process/hdr_as_srgb=false
+process/hdr_clamp_exposure=false
+process/size_limit=0
+detect_3d/compress_to=1
diff --git a/assets/graphics/reference_images/select.png b/assets/graphics/reference_images/select.png
new file mode 100644
index 000000000000..62f811be7795
Binary files /dev/null and b/assets/graphics/reference_images/select.png differ
diff --git a/assets/graphics/reference_images/select.png.import b/assets/graphics/reference_images/select.png.import
new file mode 100644
index 000000000000..732423eba859
--- /dev/null
+++ b/assets/graphics/reference_images/select.png.import
@@ -0,0 +1,34 @@
+[remap]
+
+importer="texture"
+type="CompressedTexture2D"
+uid="uid://d2m7enib3dplc"
+path="res://.godot/imported/select.png-7c7e96d5ba897a73341e1d0445a3c991.ctex"
+metadata={
+"vram_texture": false
+}
+
+[deps]
+
+source_file="res://assets/graphics/reference_images/select.png"
+dest_files=["res://.godot/imported/select.png-7c7e96d5ba897a73341e1d0445a3c991.ctex"]
+
+[params]
+
+compress/mode=0
+compress/high_quality=false
+compress/lossy_quality=0.7
+compress/hdr_compression=1
+compress/normal_map=0
+compress/channel_pack=0
+mipmaps/generate=false
+mipmaps/limit=-1
+roughness/mode=0
+roughness/src_normal=""
+process/fix_alpha_border=true
+process/premult_alpha=false
+process/normal_map_invert_y=false
+process/hdr_as_srgb=false
+process/hdr_clamp_exposure=false
+process/size_limit=0
+detect_3d/compress_to=1
diff --git a/project.godot b/project.godot
index c6af7c8c1b1e..0183b31f44ed 100644
--- a/project.godot
+++ b/project.godot
@@ -820,6 +820,26 @@ onion_skinning_settings={
 "deadzone": 0.5,
 "events": []
 }
+reference_rotate={
+"deadzone": 0.5,
+"events": [Object(InputEventKey,"resource_local_to_scene":false,"resource_name":"","device":-1,"window_id":0,"alt_pressed":false,"shift_pressed":false,"ctrl_pressed":false,"meta_pressed":false,"pressed":false,"keycode":0,"physical_keycode":4194326,"key_label":0,"unicode":0,"echo":false,"script":null)
+]
+}
+reference_scale={
+"deadzone": 0.5,
+"events": [Object(InputEventKey,"resource_local_to_scene":false,"resource_name":"","device":-1,"window_id":0,"alt_pressed":false,"shift_pressed":false,"ctrl_pressed":false,"meta_pressed":false,"pressed":false,"keycode":0,"physical_keycode":4194328,"key_label":0,"unicode":0,"echo":false,"script":null)
+]
+}
+reference_quick_menu={
+"deadzone": 0.5,
+"events": [Object(InputEventKey,"resource_local_to_scene":false,"resource_name":"","device":-1,"window_id":0,"alt_pressed":false,"shift_pressed":true,"ctrl_pressed":true,"meta_pressed":false,"pressed":false,"keycode":0,"physical_keycode":82,"key_label":0,"unicode":0,"echo":false,"script":null)
+]
+}
+cancel_reference_transform={
+"deadzone": 0.5,
+"events": [Object(InputEventKey,"resource_local_to_scene":false,"resource_name":"","device":-1,"window_id":0,"alt_pressed":false,"shift_pressed":false,"ctrl_pressed":false,"meta_pressed":false,"pressed":false,"keycode":0,"physical_keycode":4194305,"key_label":0,"unicode":0,"echo":false,"script":null)
+]
+}
 
 [internationalization]
 
diff --git a/src/Autoload/Global.gd b/src/Autoload/Global.gd
index eaac6d2f0e14..ec5c014e765c 100644
--- a/src/Autoload/Global.gd
+++ b/src/Autoload/Global.gd
@@ -466,6 +466,10 @@ var cel_button_scene: PackedScene = load("res://src/UI/Timeline/CelButton.tscn")
 
 ## The perspective editor. It has the [param PerspectiveEditor.gd] script attached.
 @onready var perspective_editor := control.find_child("Perspective Editor")
+
+## The reference panel. It has the [param ReferencesPanel.gd] script attached.
+@onready var reference_panel: ReferencesPanel = control.find_child("Reference Images")
+
 ## The top menu container. It has the [param TopMenuContainer.gd] script attached.
 @onready var top_menu_container: Panel = control.find_child("TopMenuContainer")
 ## The label indicating cursor position.
@@ -657,6 +661,10 @@ func _initialize_keychain() -> void:
 		Keychain.InputAction.new("", "Transformation tools", false),
 		"transform_copy_selection_content":
 		Keychain.InputAction.new("", "Transformation tools", false),
+		"reference_rotate": Keychain.InputAction.new("", "Reference images", false),
+		"reference_scale": Keychain.InputAction.new("", "Reference images", false),
+		"reference_quick_menu": Keychain.InputAction.new("", "Reference images", false),
+		"cancel_reference_transform": Keychain.InputAction.new("", "Reference images", false)
 	}
 
 	Keychain.groups = {
@@ -679,6 +687,7 @@ func _initialize_keychain() -> void:
 		"Shape tools": Keychain.InputGroup.new("Tool modifiers"),
 		"Selection tools": Keychain.InputGroup.new("Tool modifiers"),
 		"Transformation tools": Keychain.InputGroup.new("Tool modifiers"),
+		"Reference images": Keychain.InputGroup.new("Canvas")
 	}
 	Keychain.ignore_actions = ["left_mouse", "right_mouse", "middle_mouse", "shift", "ctrl"]
 
diff --git a/src/Autoload/OpenSave.gd b/src/Autoload/OpenSave.gd
index af34fa898b17..c13dc5225938 100644
--- a/src/Autoload/OpenSave.gd
+++ b/src/Autoload/OpenSave.gd
@@ -750,7 +750,7 @@ func import_reference_image_from_path(path: String) -> void:
 	var ri := ReferenceImage.new()
 	ri.project = project
 	ri.deserialize({"image_path": path})
-	Global.canvas.add_child(ri)
+	Global.canvas.reference_image_container.add_child(ri)
 	reference_image_imported.emit()
 
 
@@ -760,7 +760,7 @@ func import_reference_image_from_image(image: Image) -> void:
 	var ri := ReferenceImage.new()
 	ri.project = project
 	ri.create_from_image(image)
-	Global.canvas.add_child(ri)
+	Global.canvas.reference_image_container.add_child(ri)
 	reference_image_imported.emit()
 
 
diff --git a/src/Classes/Project.gd b/src/Classes/Project.gd
index f04642aa361d..648939cb14f4 100644
--- a/src/Classes/Project.gd
+++ b/src/Classes/Project.gd
@@ -45,6 +45,7 @@ var animation_tags: Array[AnimationTag] = []:
 var guides: Array[Guide] = []
 var brushes: Array[Image] = []
 var reference_images: Array[ReferenceImage] = []
+var reference_index: int = -1  # The currently selected index ReferenceImage
 var vanishing_points := []  ## Array of Vanishing Points
 var fps := 6.0
 
@@ -250,6 +251,21 @@ func change_project() -> void:
 	var edit_menu_popup: PopupMenu = Global.top_menu_container.edit_menu
 	edit_menu_popup.set_item_disabled(Global.EditMenu.NEW_BRUSH, !has_selection)
 
+	# We loop through all the reference image nodes and the ones that are not apart
+	# of the current project we remove from the tree
+	# They will still be in memory though
+	for ri: ReferenceImage in Global.canvas.reference_image_container.get_children():
+		if !reference_images.has(ri):
+			Global.canvas.reference_image_container.remove_child(ri)
+	# Now we loop through this projects reference images and add them back to the tree
+	var canvas_references := Global.canvas.reference_image_container.get_children()
+	for ri: ReferenceImage in reference_images:
+		if !canvas_references.has(ri) and !ri.is_inside_tree():
+			Global.canvas.reference_image_container.add_child(ri)
+
+	# Tell the reference images that the project changed
+	Global.reference_panel.project_changed()
+
 	var i := 0
 	for camera in Global.cameras:
 		camera.rotation = cameras_rotation[i]
@@ -870,3 +886,28 @@ func _update_layer_ui() -> void:
 		for f in frames.size():
 			cel_hbox.get_child(f).layer = l
 			cel_hbox.get_child(f).button_setup()
+
+
+## Change the current reference image
+func set_reference_image_index(new_index: int) -> void:
+	reference_index = clamp(-1, new_index, reference_images.size() - 1)
+	Global.canvas.reference_image_container.update_index(reference_index)
+
+
+## Returns the reference image based on reference_index
+func get_current_reference_image() -> ReferenceImage:
+	return get_reference_image(reference_index)
+
+
+## Returns the reference image based on the index or null if index < 0
+func get_reference_image(index: int) -> ReferenceImage:
+	if index < 0 or index > reference_images.size() - 1:
+		return null
+	return reference_images[index]
+
+
+## Reorders the position of the reference image in the tree / reference_images array
+func reorder_reference_image(from: int, to: int) -> void:
+	var ri: ReferenceImage = reference_images.pop_at(from)
+	reference_images.insert(to, ri)
+	Global.canvas.reference_image_container.move_child(ri, to)
diff --git a/src/Shaders/ReferenceImageShader.gdshader b/src/Shaders/ReferenceImageShader.gdshader
new file mode 100644
index 000000000000..d1dc16bf3f45
--- /dev/null
+++ b/src/Shaders/ReferenceImageShader.gdshader
@@ -0,0 +1,21 @@
+shader_type canvas_item;
+
+// This shader gets applied to every single reference image.
+
+
+uniform bool monochrome = false;
+// Used because modulate does not work when monochrome is true
+uniform vec4 monchrome_color : source_color;
+// Clamp the color by using the greyscale of the image to identify the brightness of each pixel
+uniform float clamping : hint_range(0.0, 1.0, 0.01) = 0.0;
+
+void fragment() {
+	// The original color
+	vec4 color = texture(TEXTURE, UV);
+	// Get the greyscale based on the brightest channel
+	float greyscale = max(max(color.r, color.g), color.b);
+	// Dont Use Alpha Channel past this statement!
+	if (greyscale < clamping) COLOR.a = 0.0;
+	// If we want the image to be onochrome we just set that pixels rgb color.
+	if (monochrome) COLOR.rgb = monchrome_color.rgb;
+}
diff --git a/src/Shaders/SilhouetteShader.gdshader b/src/Shaders/SilhouetteShader.gdshader
deleted file mode 100644
index a661cefa75b0..000000000000
--- a/src/Shaders/SilhouetteShader.gdshader
+++ /dev/null
@@ -1,14 +0,0 @@
-shader_type canvas_item;
-
-uniform vec4 silhouette_color;
-uniform bool show_silhouette;
-
-void fragment() {
-	vec4 color = texture(TEXTURE, UV);
-	if (show_silhouette && color.a > 0.0) {
-		color.rgb = silhouette_color.rgb;
-		COLOR.rgb = color.rgb;
-	} else {
-		COLOR = color;
-	}
-}
diff --git a/src/UI/Canvas/Canvas.gd b/src/UI/Canvas/Canvas.gd
index 3fc32b8023b8..2ec91a9e12e2 100644
--- a/src/UI/Canvas/Canvas.gd
+++ b/src/UI/Canvas/Canvas.gd
@@ -26,6 +26,7 @@ var layer_metadata_texture := ImageTexture.new()
 @onready var mouse_guide_container := $MouseGuideContainer as Node2D
 @onready var gizmos_3d := $Gizmos3D as Node2D
 @onready var measurements := $Measurements as Node2D
+@onready var reference_image_container := $ReferenceImages as Node2D
 
 
 func _ready() -> void:
diff --git a/src/UI/Canvas/Canvas.tscn b/src/UI/Canvas/Canvas.tscn
index 276703040635..48c7441ded6e 100644
--- a/src/UI/Canvas/Canvas.tscn
+++ b/src/UI/Canvas/Canvas.tscn
@@ -1,4 +1,4 @@
-[gd_scene load_steps=21 format=3 uid="uid://ba24iuv55m4l3"]
+[gd_scene load_steps=22 format=3 uid="uid://ba24iuv55m4l3"]
 
 [ext_resource type="Script" path="res://src/UI/Canvas/Canvas.gd" id="1"]
 [ext_resource type="Shader" path="res://src/Shaders/BlendLayers.gdshader" id="1_253dh"]
@@ -16,6 +16,7 @@
 [ext_resource type="Script" path="res://src/UI/Canvas/CropRect.gd" id="13"]
 [ext_resource type="Script" path="res://src/UI/Canvas/Gizmos3D.gd" id="14"]
 [ext_resource type="Script" path="res://src/UI/Canvas/Measurements.gd" id="16_nxilb"]
+[ext_resource type="Script" path="res://src/UI/Canvas/ReferenceImages.gd" id="17_qfjb4"]
 
 [sub_resource type="ShaderMaterial" id="ShaderMaterial_6b0ox"]
 shader = ExtResource("1_253dh")
@@ -93,3 +94,6 @@ script = ExtResource("14")
 
 [node name="Measurements" type="Node2D" parent="."]
 script = ExtResource("16_nxilb")
+
+[node name="ReferenceImages" type="Node2D" parent="."]
+script = ExtResource("17_qfjb4")
diff --git a/src/UI/Canvas/ReferenceImages.gd b/src/UI/Canvas/ReferenceImages.gd
new file mode 100644
index 000000000000..727b2e1f8a3b
--- /dev/null
+++ b/src/UI/Canvas/ReferenceImages.gd
@@ -0,0 +1,334 @@
+extends Node2D
+
+## This node contains [ReferenceImage] nodes
+
+signal reference_image_changed(index: int)
+
+enum Mode { SELECT, MOVE, ROTATE, SCALE }
+
+var mode: Mode = Mode.SELECT
+
+var index: int:
+	get:
+		return Global.current_project.reference_index
+var drag_start_pos: Vector2
+var dragging := false
+var lmb_held := false  ## Holds whether the LBB is being held (use dragging for actual checks)
+
+# Original Transform
+var og_pos: Vector2
+var og_scale: Vector2
+var og_rotation: float
+
+var undo_data: Dictionary
+
+var reference_menu := PopupMenu.new()
+
+
+func _ready() -> void:
+	Global.camera.zoom_changed.connect(_update_on_zoom)
+	Global.control.get_node("Dialogs").add_child(reference_menu)
+
+	# Makes sure that the dark overlay disappears when the popup is hidden
+	reference_menu.visibility_changed.connect(func(): Global.dialog_open(reference_menu.visible))
+	# Emitted when a item is selected from the menu
+	reference_menu.id_pressed.connect(_reference_menu_id_pressed)
+
+
+## Updates the index and configures the "gizmo"
+func update_index(new_index: int) -> void:
+	index = new_index
+	reference_image_changed.emit(new_index)
+	queue_redraw()
+
+
+func _input(event: InputEvent) -> void:
+	var local_mouse_pos := get_local_mouse_position()
+
+	# Check if that event was for the quick menu (opened by the shortcut)
+	if event.is_action_pressed("reference_quick_menu"):
+		var list: Array[ReferenceImage] = Global.current_project.reference_images
+		populate_reference_menu(list, true)
+		reference_menu.position = Global.control.get_global_mouse_position()
+		reference_menu.popup()
+
+	var ri: ReferenceImage = Global.current_project.get_current_reference_image()
+
+	if !ri:
+		Global.can_draw = true
+		return
+
+	# Check if want to cancelthe reference transform
+	if event.is_action_pressed("cancel_reference_transform") and dragging:
+		ri.position = og_pos
+		ri.scale = og_scale
+		ri.rotation = og_rotation
+		dragging = false
+		Global.can_draw = true
+		commit_undo("Cancel Transform Content", undo_data)
+		return
+
+	if event is InputEventMouseButton:
+		if event.button_index == MOUSE_BUTTON_LEFT:
+			if event.is_pressed():
+				dragging = false
+				lmb_held = true
+				undo_data = get_undo_data()
+				Global.can_draw = false
+				drag_start_pos = get_local_mouse_position()
+				# Set the original positions
+				og_pos = ri.position
+				og_scale = ri.scale
+				og_rotation = ri.rotation
+
+			if !event.is_pressed():
+				Global.can_draw = true
+
+				if dragging:
+					commit_undo("Transform Content", undo_data)
+				else:
+					# Overlapping reference images
+					var overlapping: Array[ReferenceImage] = []
+
+					for idx: int in Global.current_project.reference_images.size():
+						var r = Global.current_project.reference_images[idx]
+						# The bounding polygon
+						var p := get_reference_polygon(idx)
+						if Geometry2D.is_point_in_polygon(local_mouse_pos, p):
+							overlapping.append(r)
+
+					# Some special cases
+					# 1. There is only one Reference Image
+					if overlapping.size() == 1:
+						var idx := overlapping[0].get_index()
+						Global.current_project.set_reference_image_index(idx)
+					# 2. There are more than 1 Reference Images
+					elif overlapping.size() > 1:
+						populate_reference_menu(overlapping, true)
+						reference_menu.position = Global.control.get_global_mouse_position()
+						reference_menu.popup()
+					# 3. There are no Reference Images
+					else:
+						Global.current_project.set_reference_image_index(-1)
+
+				undo_data.clear()
+				dragging = false
+				lmb_held = false
+
+	if event is InputEventMouseMotion:
+		# We check if the LMB is pressed and if we're not dragging then we force the
+		# draggin state.
+		# We dont use timers because it makes more sense to wait for the users mouse to move
+		# and that's what defines dragging. It would be smart to add a "deadzone" to determine
+		# if the mouse had moved enough.
+		if lmb_held and !dragging:
+			dragging = true
+
+		if dragging:
+			var text := ""
+
+			if mode == Mode.SELECT:
+				# Scale
+				if Input.is_action_pressed("reference_scale"):
+					scale_reference_image(local_mouse_pos, ri)
+					text = str(
+						"Moving: ", (og_scale * 100).floor(), " -> ", (ri.scale * 100).floor()
+					)
+				# Rotate
+				elif Input.is_action_pressed("reference_rotate"):
+					rotate_reference_image(local_mouse_pos, ri)
+					text = str(
+						"Rotating: ",
+						floorf(rad_to_deg(og_rotation)),
+						"° -> ",
+						floorf(rad_to_deg(ri.rotation)),
+						"°"
+					)
+				else:
+					move_reference_image(local_mouse_pos, ri)
+					text = str("Moving to: ", og_pos.floor(), " -> ", ri.position.floor())
+			elif mode == Mode.MOVE:
+				move_reference_image(local_mouse_pos, ri)
+				text = str("Moving to: ", og_pos.floor(), " -> ", ri.position.floor())
+			elif mode == Mode.ROTATE:
+				rotate_reference_image(local_mouse_pos, ri)
+				text = str(
+					"Rotating: ",
+					floorf(rad_to_deg(og_rotation)),
+					"° -> ",
+					floorf(rad_to_deg(ri.rotation)),
+					"°"
+				)
+			elif mode == Mode.SCALE:
+				scale_reference_image(local_mouse_pos, ri)
+				text = str("Moving: ", (og_scale * 100).floor(), " -> ", (ri.scale * 100).floor())
+
+			Global.cursor_position_label.text = text
+
+		queue_redraw()
+
+
+## Uniformly scales the [ReferenceImage] using this nodes "local_mouse_position".
+func scale_reference_image(mouse_pos: Vector2, img: ReferenceImage) -> void:
+	var s = (
+		Vector2.ONE
+		* minf(
+			float(mouse_pos.x - drag_start_pos.x),
+			float(mouse_pos.y - drag_start_pos.y),
+		)
+	)
+
+	img.scale = (og_scale + (s / 100.0))
+
+
+## Rotate the [ReferenceImage] using this nodes "local_mouse_position".
+func rotate_reference_image(mouse_pos: Vector2, img: ReferenceImage) -> void:
+	var starting_angle = og_rotation - og_pos.angle_to_point(drag_start_pos)
+	var new_angle = img.position.angle_to_point(mouse_pos)
+	var angle = starting_angle + new_angle
+	angle = deg_to_rad(floorf(rad_to_deg(wrapf(angle, -PI, PI))))
+	img.rotation = angle
+
+
+## Move the [ReferenceImage] using this nodes "local_mouse_position".
+func move_reference_image(mouse_pos: Vector2, img: ReferenceImage) -> void:
+	img.position = (mouse_pos - (drag_start_pos - og_pos)).floor()
+
+
+## Makes a polygon that matches the transformed [ReferenceImage]
+func get_reference_polygon(i: int) -> PackedVector2Array:
+	if i < 0:
+		return []
+
+	var ri: ReferenceImage = Global.current_project.reference_images[i]
+	var rect := ri.get_rect()
+	var poly = get_transformed_rect_polygon(rect, ri.transform)
+	return poly
+
+
+## Returns a [PackedVector2Array] based on the corners of the [Rect2].
+## This function also transforms the polygon.
+func get_transformed_rect_polygon(rect: Rect2, t: Transform2D) -> PackedVector2Array:
+	# First we scale the Rect2
+	rect.position *= t.get_scale()
+	rect.size *= t.get_scale()
+
+	# We create a polygon based on the Rect2
+	var p: PackedVector2Array = [
+		rect.position,
+		Vector2(rect.end.x, rect.position.y),
+		rect.end,
+		Vector2(rect.position.x, rect.end.y)
+	]
+
+	# Finally rotate and move the polygon
+	var final: PackedVector2Array = []
+	for v: Vector2 in p:
+		var vert := v.rotated(t.get_rotation()) + t.get_origin()
+		final.append(vert)
+
+	return final
+
+
+func populate_reference_menu(items: Array[ReferenceImage], default := false):
+	reference_menu.clear()
+	# Default / Reset
+	if default:
+		reference_menu.add_item("None", 0)
+		reference_menu.add_separator()
+
+	for ri: ReferenceImage in items:
+		var idx: int = ri.get_index() + 1
+		var label: String = "(%o) %s" % [idx, ri.image_path]
+		# We trim the length of the title
+		label = label.left(22) + "..."
+		reference_menu.add_item(label, idx)
+
+
+# When a id is pressed in the reference menu
+func _reference_menu_id_pressed(id: int) -> void:
+	Global.can_draw = true
+	Global.current_project.set_reference_image_index(id - 1)
+	reference_menu.hide()
+
+
+func remove_reference_image(idx: int) -> void:
+	var ri: ReferenceImage = Global.current_project.get_reference_image(idx)
+	Global.current_project.reference_images.remove_at(idx)
+	ri.queue_free()
+	Global.current_project.set_reference_image_index(-1)
+	Global.current_project.change_project()
+	Global.control.ui.find_child("Reference Images")._on_references_changed()
+
+
+func _update_on_zoom() -> void:
+	queue_redraw()
+
+
+func get_undo_data() -> Dictionary:
+	var ri: ReferenceImage = Global.current_project.get_current_reference_image()
+
+	if !ri:
+		return {}
+
+	var data := {}
+	data["position"] = ri.position
+	data["scale"] = ri.scale
+	data["rotation"] = ri.rotation
+	data["overlay_color"] = ri.overlay_color
+	data["filter"] = ri.filter
+	data["monochrome"] = ri.monochrome
+	data["color_clamping"] = ri.color_clamping
+	return data
+
+
+func commit_undo(action: String, undo_data_tmp: Dictionary) -> void:
+	if !undo_data_tmp:
+		print("No undo data found for ReferenceImages.gd!")
+		return
+
+	var ri: ReferenceImage = Global.current_project.get_current_reference_image()
+	if !ri:
+		print("No Reference Image ReferenceImages.gd!")
+		return
+
+	var redo_data: Dictionary = get_undo_data()
+	var project := Global.current_project
+
+	project.undos += 1
+	project.undo_redo.create_action(action)
+
+	for key in undo_data_tmp.keys():
+		if redo_data.has(key):
+			project.undo_redo.add_do_property(ri, key, redo_data.get(key))
+			project.undo_redo.add_undo_property(ri, key, undo_data_tmp.get(key))
+
+	project.undo_redo.add_do_method(Global.general_redo.bind(project))
+	project.undo_redo.add_do_method(ri.change_properties)
+	project.undo_redo.add_undo_method(Global.general_undo.bind(project))
+	project.undo_redo.add_undo_method(ri.change_properties)
+
+	project.undo_redo.commit_action()
+	undo_data.clear()
+
+
+func _draw() -> void:
+	if index < 0:
+		return
+	var line_width := 2.0 / Global.camera.zoom.x
+	# If we are dragging show where the Reference was coming from
+	if dragging:
+		var i: ReferenceImage = Global.current_project.get_current_reference_image()
+		var prev_transform = Transform2D(og_rotation, og_scale, 0.0, og_pos)
+		var prev_poly := get_transformed_rect_polygon(i.get_rect(), prev_transform)
+		prev_poly.append(prev_poly[0])
+		draw_polyline(prev_poly, Color(1, 0.29, 0.29), line_width)
+
+	# First we highlight the Reference Images under the mouse with yellow
+	for ri: ReferenceImage in Global.current_project.reference_images:
+		var p := get_transformed_rect_polygon(ri.get_rect(), ri.transform)
+		p.append(p[0])
+		if ri.get_index() == index:
+			draw_polyline(p, Color(0.50, 0.99, 0.29), line_width)
+		elif Geometry2D.is_point_in_polygon(get_local_mouse_position(), p) and !dragging:
+			draw_polyline(p, Color(0.98, 0.80, 0.29), line_width)
diff --git a/src/UI/ReferenceImages/ReferenceEdit.gd b/src/UI/ReferenceImages/ReferenceEdit.gd
new file mode 100644
index 000000000000..d48bcba2edbe
--- /dev/null
+++ b/src/UI/ReferenceImages/ReferenceEdit.gd
@@ -0,0 +1,272 @@
+extends VBoxContainer
+
+var undo_data: Dictionary
+
+var _prev_index: int = -1
+var _ignore_spinbox_changes: bool = false
+
+@onready var confirm_remove_dialog := $ConfirmRemoveDialog as ConfirmationDialog
+@onready var timer := $Timer as Timer
+@onready var references_container := Global.canvas.reference_image_container as Node2D
+
+
+func _ready() -> void:
+	references_container.reference_image_changed.connect(_on_reference_image_changed)
+
+
+func _update_properties():
+	var ri: ReferenceImage = Global.current_project.get_current_reference_image()
+	if !ri:
+		return
+	# This is because otherwise a little dance will occur.
+	# This also breaks non-uniform scales (not supported UI-wise, but...)
+	_ignore_spinbox_changes = true
+
+	# Image Path
+	if OS.get_name() == "Web":
+		$ImageOptions/ImagePath.disabled = true
+	else:
+		$ImageOptions/ImagePath.disabled = false
+
+	if ri.image_path.is_empty():
+		$ImageOptions/ImagePath.text = "(No Path)"
+		$ImageOptions/ImagePath.tooltip_text = "(No Path)"
+	else:
+		$ImageOptions/ImagePath.text = ri.image_path
+		$ImageOptions/ImagePath.tooltip_text = ri.image_path
+
+	if !ri.texture:
+		$ImageOptions/WarningLabel.visible = true
+		$ImageOptions/ImagePath.visible = false
+	else:
+		$ImageOptions/WarningLabel.visible = false
+		$ImageOptions/ImagePath.visible = true
+	# Transform
+	$Options/Position/X.value = ri.position.x
+	$Options/Position/Y.value = ri.position.y
+	$Options/Position/X.max_value = ri.project.size.x
+	$Options/Position/Y.max_value = ri.project.size.y
+	$Options/Scale.value = ri.scale.x * 100
+	$Options/Rotation.value = ri.rotation_degrees
+	# Color
+	$Options/Filter.button_pressed = ri.filter
+	$Options/Monochrome.button_pressed = ri.monochrome
+	$Options/Overlay.color = Color(ri.overlay_color, 1.0)
+	$Options/Opacity.value = ri.overlay_color.a * 100
+	$Options/ColorClamping.value = ri.color_clamping * 100
+	_ignore_spinbox_changes = false
+
+	# Fore update the "gizmo" drawing
+	references_container.queue_redraw()
+
+
+func _reset_properties() -> void:
+	# This is because otherwise a little dance will occur.
+	# This also breaks non-uniform scales (not supported UI-wise, but...)
+	_ignore_spinbox_changes = true
+	$ImageOptions/ImagePath.text = "None"
+	$ImageOptions/ImagePath.tooltip_text = "None"
+	$ImageOptions/ImagePath.disabled = true
+	$ImageOptions/WarningLabel.visible = false
+	$ImageOptions/ImagePath.visible = true
+	# Transform
+	$Options/Position/X.value = 0.0
+	$Options/Position/Y.value = 0.0
+	$Options/Position/X.max_value = 0.0
+	$Options/Position/Y.max_value = 0.0
+	$Options/Scale.value = 0.0
+	$Options/Rotation.value = 0.0
+	# Color
+	$Options/Filter.button_pressed = false
+	$Options/Monochrome.button_pressed = false
+	$Options/Overlay.color = Color.WHITE
+	$Options/Opacity.value = 0.0
+	$Options/ColorClamping.value = 0.0
+	_ignore_spinbox_changes = false
+	# Fore update the "gizmo" drawing
+	references_container.queue_redraw()
+
+
+func _on_image_path_pressed() -> void:
+	var ri: ReferenceImage = Global.current_project.get_current_reference_image()
+	if !ri:
+		return
+	if ri.image_path.is_empty():
+		print("No path for this image")
+		return
+	OS.shell_open(ri.image_path.get_base_dir())
+
+
+func _on_Monochrome_toggled(pressed: bool) -> void:
+	if _ignore_spinbox_changes:
+		return
+	var ri: ReferenceImage = Global.current_project.get_current_reference_image()
+	if !ri:
+		return
+	if timer.is_stopped():
+		undo_data = references_container.get_undo_data()
+	timer.start()
+	ri.monochrome = pressed
+
+
+func _on_Filter_toggled(pressed: bool) -> void:
+	if _ignore_spinbox_changes:
+		return
+	var ri: ReferenceImage = Global.current_project.get_current_reference_image()
+	if !ri:
+		return
+	if timer.is_stopped():
+		undo_data = references_container.get_undo_data()
+	timer.start()
+	ri.filter = pressed
+
+
+func _on_Reset_pressed():
+	var ri: ReferenceImage = Global.current_project.get_current_reference_image()
+	if !ri:
+		return
+	var undo_data_tmp = references_container.get_undo_data()
+	ri.position_reset()
+	references_container.commit_undo("Reset Reference Image Position", undo_data_tmp)
+
+
+func _on_Remove_pressed():
+	var ri: ReferenceImage = Global.current_project.get_current_reference_image()
+	if !ri:
+		return
+	var index: int = Global.current_project.reference_index
+	if index > -1:
+		# If shift is pressed we just remove it without a dialog
+		if Input.is_action_pressed("shift"):
+			references_container.remove_reference_image(index)
+		else:
+			confirm_remove_dialog.position = Global.control.get_global_mouse_position()
+			confirm_remove_dialog.popup()
+			Global.dialog_open(true)
+
+
+func _on_X_value_changed(value: float):
+	if _ignore_spinbox_changes:
+		return
+	var ri: ReferenceImage = Global.current_project.get_current_reference_image()
+	if !ri:
+		return
+	if timer.is_stopped():
+		undo_data = references_container.get_undo_data()
+	timer.start()
+	ri.position.x = value
+
+
+func _on_Y_value_changed(value: float):
+	if _ignore_spinbox_changes:
+		return
+	var ri: ReferenceImage = Global.current_project.get_current_reference_image()
+	if !ri:
+		return
+	if timer.is_stopped():
+		undo_data = references_container.get_undo_data()
+	timer.start()
+	ri.position.y = value
+
+
+func _on_Scale_value_changed(value: float):
+	if _ignore_spinbox_changes:
+		return
+	var ri: ReferenceImage = Global.current_project.get_current_reference_image()
+	if !ri:
+		return
+	if timer.is_stopped():
+		undo_data = references_container.get_undo_data()
+	timer.start()
+	ri.scale.x = value / 100
+	ri.scale.y = value / 100
+
+
+func _on_Rotation_value_changed(value: float):
+	if _ignore_spinbox_changes:
+		return
+	var ri: ReferenceImage = Global.current_project.get_current_reference_image()
+	if !ri:
+		return
+	if timer.is_stopped():
+		undo_data = references_container.get_undo_data()
+	timer.start()
+	ri.rotation_degrees = value
+
+
+func _on_Overlay_color_changed(color: Color):
+	if _ignore_spinbox_changes:
+		return
+	var ri: ReferenceImage = Global.current_project.get_current_reference_image()
+	if !ri:
+		return
+	if timer.is_stopped():
+		undo_data = references_container.get_undo_data()
+	timer.start()
+	ri.overlay_color = Color(color, ri.overlay_color.a)
+
+
+func _on_Opacity_value_changed(value: float):
+	if _ignore_spinbox_changes:
+		return
+	var ri: ReferenceImage = Global.current_project.get_current_reference_image()
+	if !ri:
+		return
+	if timer.is_stopped():
+		undo_data = references_container.get_undo_data()
+	timer.start()
+	ri.overlay_color.a = value / 100
+
+
+func _on_ColorClamping_value_changed(value: float):
+	if _ignore_spinbox_changes:
+		return
+	var ri: ReferenceImage = Global.current_project.get_current_reference_image()
+	if !ri:
+		return
+	if timer.is_stopped():
+		undo_data = references_container.get_undo_data()
+	timer.start()
+	ri.color_clamping = value / 100
+
+
+func _on_timer_timeout() -> void:
+	references_container.commit_undo("Reference Image Changed", undo_data)
+
+
+func _on_confirm_remove_dialog_confirmed() -> void:
+	var index: int = Global.current_project.reference_index
+	if index > -1:
+		references_container.remove_reference_image(index)
+		Global.dialog_open(false)
+
+
+func _on_confirm_remove_dialog_canceled() -> void:
+	Global.dialog_open(false)
+
+
+func _on_reference_image_porperties_changed() -> void:
+	_update_properties()
+
+
+func _on_reference_image_changed(index: int) -> void:
+	# This is a check to make sure that the index is not more than the amount of references
+	if _prev_index > Global.current_project.reference_images.size() - 1:
+		return
+	# Disconnect the previously selected one
+	if _prev_index > -1:
+		var prev_ri: ReferenceImage = Global.current_project.get_reference_image(_prev_index)
+		if prev_ri.properties_changed.is_connected(_on_reference_image_porperties_changed):
+			prev_ri.properties_changed.disconnect(_on_reference_image_porperties_changed)
+	# Connect the new Reference image (if it is one)
+	if index > -1:
+		Global.current_project.reference_images[index].properties_changed.connect(
+			_on_reference_image_porperties_changed
+		)
+
+	_prev_index = index
+
+	if index < 0:
+		_reset_properties()
+	else:
+		_update_properties()
diff --git a/src/UI/ReferenceImages/ReferenceImage.gd b/src/UI/ReferenceImages/ReferenceImage.gd
index 60eec8fcd0c5..3600acedf40a 100644
--- a/src/UI/ReferenceImages/ReferenceImage.gd
+++ b/src/UI/ReferenceImages/ReferenceImage.gd
@@ -6,15 +6,38 @@ signal properties_changed
 
 var project := Global.current_project
 
-var shader := preload("res://src/Shaders/SilhouetteShader.gdshader")
+var shader := preload("res://src/Shaders/ReferenceImageShader.gdshader")
 
 var image_path := ""
-var filter := false
-var silhouette := false
+var filter := false:
+	set(value):
+		filter = value
+		if value:
+			texture_filter = CanvasItem.TEXTURE_FILTER_LINEAR
+		else:
+			texture_filter = CanvasItem.TEXTURE_FILTER_NEAREST
+var monochrome := false:
+	set(value):
+		monochrome = value
+		if material:
+			get_material().set_shader_parameter("monochrome", value)
+var overlay_color := Color.WHITE:
+	set(value):
+		overlay_color = value
+		modulate = value
+		if material:
+			get_material().set_shader_parameter("monchrome_color", value)
+var color_clamping := 0.0:
+	set(value):
+		color_clamping = value
+		if material:
+			get_material().set_shader_parameter("clamping", value)
 
 
 func _ready() -> void:
 	project.reference_images.append(self)
+	# Make this show behind parent because we want to use _draw() to draw over it
+	show_behind_parent = true
 
 
 func change_properties() -> void:
@@ -24,6 +47,7 @@ func change_properties() -> void:
 ## Resets the position and scale of the reference image.
 func position_reset() -> void:
 	position = project.size / 2.0
+	rotation_degrees = 0.0
 	if texture != null:
 		scale = (
 			Vector2.ONE
@@ -43,12 +67,14 @@ func serialize() -> Dictionary:
 		"y": position.y,
 		"scale_x": scale.x,
 		"scale_y": scale.y,
-		"modulate_r": modulate.r,
-		"modulate_g": modulate.g,
-		"modulate_b": modulate.b,
-		"modulate_a": modulate.a,
+		"rotation_degrees": rotation_degrees,
+		"overlay_color_r": overlay_color.r,
+		"overlay_color_g": overlay_color.g,
+		"overlay_color_b": overlay_color.b,
+		"overlay_color_a": overlay_color.a,
 		"filter": filter,
-		"silhouette": silhouette,
+		"monochrome": monochrome,
+		"color_clamping": color_clamping,
 		"image_path": image_path
 	}
 
@@ -57,7 +83,7 @@ func serialize() -> Dictionary:
 ## Be aware that new ReferenceImages are created via deserialization.
 ## This is because deserialization sets up some nice defaults.
 func deserialize(d: Dictionary) -> void:
-	modulate = Color(1, 1, 1, 0.5)
+	overlay_color = Color(1, 1, 1, 0.5)
 	if d.has("image_path"):
 		# Note that reference images are referred to by path.
 		# These images may be rather big.
@@ -69,9 +95,6 @@ func deserialize(d: Dictionary) -> void:
 		# Apply the silhouette shader
 		var mat := ShaderMaterial.new()
 		mat.shader = shader
-		# TODO: Lsbt - Add a option in prefrences to customize the color
-		# This color is almost black because it is less harsh
-		mat.set_shader_parameter("silhouette_color", Color(0.069, 0.069326, 0.074219))
 		set_material(mat)
 
 	# Now that the image may have been established...
@@ -82,20 +105,24 @@ func deserialize(d: Dictionary) -> void:
 		position.y = d["y"]
 	if d.has("scale_x"):
 		scale.x = d["scale_x"]
+	if d.has("rotation_degrees"):
+		rotation_degrees = d["rotation_degrees"]
 	if d.has("scale_y"):
 		scale.y = d["scale_y"]
-	if d.has("modulate_r"):
-		modulate.r = d["modulate_r"]
-	if d.has("modulate_g"):
-		modulate.g = d["modulate_g"]
-	if d.has("modulate_b"):
-		modulate.b = d["modulate_b"]
-	if d.has("modulate_a"):
-		modulate.a = d["modulate_a"]
+	if d.has("overlay_color_r"):
+		overlay_color.r = d["overlay_color_r"]
+	if d.has("overlay_color_g"):
+		overlay_color.g = d["overlay_color_g"]
+	if d.has("overlay_color_b"):
+		overlay_color.b = d["overlay_color_b"]
+	if d.has("overlay_color_a"):
+		overlay_color.a = d["overlay_color_a"]
 	if d.has("filter"):
 		filter = d["filter"]
-	if d.has("silhouette"):
-		get_material().set_shader_parameter("show_silhouette", d["silhouette"])
+	if d.has("monochrome"):
+		monochrome = d["monochrome"]
+	if d.has("color_clamping"):
+		color_clamping = d["color_clamping"]
 	change_properties()
 
 
diff --git a/src/UI/ReferenceImages/ReferenceImageButton.gd b/src/UI/ReferenceImages/ReferenceImageButton.gd
index f162d99b3d1f..79f4984da442 100644
--- a/src/UI/ReferenceImages/ReferenceImageButton.gd
+++ b/src/UI/ReferenceImages/ReferenceImageButton.gd
@@ -1,98 +1,67 @@
-extends Container
-## UI to handle reference image editing.
+extends Button
 
-var element: ReferenceImage
-var _ignore_spinbox_changes := false
 
+func _get_drag_data(_at_position: Vector2) -> Variant:
+	var index := get_index() - 1
+	# If the index < 0 then that means this button is the "reset button"
+	if index < 0:
+		return null
 
-func _ready():
-	if OS.get_name() == "Web":
-		$Interior/PathHeader/Path.visible = false
-		$Interior/PathHeader/PathHTML.text = element.image_path
-	else:
-		$Interior/PathHeader/PathHTML.visible = false
-		$Interior/PathHeader/Path.text = element.image_path
-
-	if !element.texture:
-		$Interior/PreviewAndOptions/PreviewPanel/Warning.text = "Image not found!"
-	else:
-		$Interior/PreviewAndOptions/PreviewPanel/Preview.texture = element.texture
-	element.properties_changed.connect(_update_properties)
-	_update_properties()
-
+	set_drag_preview(self.duplicate())
 
-func _update_properties():
-	# This is because otherwise a little dance will occur.
-	# This also breaks non-uniform scales (not supported UI-wise, but...)
-	_ignore_spinbox_changes = true
-	$Interior/PreviewAndOptions/Options/Scale.value = element.scale.x * 100
-	$Interior/PreviewAndOptions/Options/Position/X.value = element.position.x
-	$Interior/PreviewAndOptions/Options/Position/Y.value = element.position.y
-	$Interior/PreviewAndOptions/Options/Position/X.max_value = element.project.size.x
-	$Interior/PreviewAndOptions/Options/Position/Y.max_value = element.project.size.y
-	$Interior/PreviewAndOptions/Options/Opacity.value = element.modulate.a * 100
-	$Interior/OtherOptions/ApplyFilter.button_pressed = element.filter
-	_ignore_spinbox_changes = false
+	var data := ["ReferenceImage", index]
 
+	return data
 
-func _on_Reset_pressed():
-	element.position_reset()
-	element.change_properties()
 
+func _can_drop_data(_at_position: Vector2, data: Variant) -> bool:
+	if typeof(data) != TYPE_ARRAY:
+		Global.reference_panel.drag_highlight.visible = false
+		return false
+	if data[0] != "ReferenceImage":
+		Global.reference_panel.drag_highlight.visible = false
+		return false
 
-func _on_Remove_pressed():
-	var index = Global.current_project.reference_images.find(element)
-	if index != -1:
-		queue_free()
-		element.queue_free()
-		Global.current_project.reference_images.remove_at(index)
-		OpenSave.reference_image_imported.emit()
+	var index := get_index() - 1
+	var from_index: int = data[1]
+	# If the index < 0 then that means this button is the "reset button"
+	# Or we are trying to drop on the same button
+	if index < 0 or index == from_index:
+		Global.reference_panel.drag_highlight.visible = false
+		return false
 
+	var side: int = -1
+	if get_local_mouse_position().x > size.x / 2:
+		side = 1
 
-func _on_Scale_value_changed(value: float):
-	if _ignore_spinbox_changes:
-		return
-	element.scale.x = value / 100
-	element.scale.y = value / 100
-	element.change_properties()
+	var region := Rect2(global_position + Vector2(3, 0), Vector2(6, size.y))
 
+	# Get the side
+	if side == 1:
+		region.position.x = (size.x + global_position.x) - 3
 
-func _on_X_value_changed(value: float):
-	if _ignore_spinbox_changes:
-		return
-	element.position.x = value
-	element.change_properties()
+	Global.reference_panel.drag_highlight.visible = true
+	Global.reference_panel.drag_highlight.position = region.position
+	Global.reference_panel.drag_highlight.size = region.size
 
+	return true
 
-func _on_Y_value_changed(value: float):
-	if _ignore_spinbox_changes:
-		return
-	element.position.y = value
-	element.change_properties()
 
+func _drop_data(_at_position: Vector2, data: Variant) -> void:
+	var from_index: int = data[1]
+	var to_index := get_index()
 
-func _on_Opacity_value_changed(value: float):
-	if _ignore_spinbox_changes:
-		return
-	element.modulate.a = value / 100
-	element.change_properties()
-
-
-func _on_Path_pressed() -> void:
-	OS.shell_open($Interior/PathHeader/Path.text.get_base_dir())
-
+	if get_local_mouse_position().x > size.x / 2:
+		if from_index > to_index:
+			to_index += 1
+			print("Help mee")
+	else:
+		if from_index < to_index:
+			to_index -= 1
 
-func _on_Silhouette_toggled(button_pressed: bool) -> void:
-	element.silhouette = button_pressed
-	element.get_material().set_shader_parameter("show_silhouette", button_pressed)
-	element.change_properties()
+	Global.reference_panel.reorder_reference_image(from_index, to_index - 1, false)
 
+	#Global.current_project.reorder_reference_image(from_index, to_index - 1)
+	#Global.reference_panel._on_references_changed()
 
-func _on_ApplyFilter_toggled(button_pressed: bool) -> void:
-	element.filter = button_pressed
-	if element.texture:
-		if element.filter:
-			element.texture_filter = CanvasItem.TEXTURE_FILTER_LINEAR
-		else:
-			element.texture_filter = CanvasItem.TEXTURE_FILTER_NEAREST
-	element.change_properties()
+	#Global.reference_panel.drag_highlight.visible = false
diff --git a/src/UI/ReferenceImages/ReferenceImageButton.tscn b/src/UI/ReferenceImages/ReferenceImageButton.tscn
index 9ffa9d2f8bb8..be95b65851e1 100644
--- a/src/UI/ReferenceImages/ReferenceImageButton.tscn
+++ b/src/UI/ReferenceImages/ReferenceImageButton.tscn
@@ -1,128 +1,21 @@
-[gd_scene load_steps=3 format=3 uid="uid://5quwfcfl5o1e"]
-
-[ext_resource type="PackedScene" uid="uid://yjhp0ssng2mp" path="res://src/UI/Nodes/ValueSlider.tscn" id="1"]
-[ext_resource type="Script" path="res://src/UI/ReferenceImages/ReferenceImageButton.gd" id="2"]
-
-[node name="ReferenceImageButton" type="PanelContainer"]
-anchors_preset = 15
-anchor_right = 1.0
-anchor_bottom = 1.0
-offset_right = -969.0
-offset_bottom = -581.0
-size_flags_horizontal = 3
-script = ExtResource("2")
-
-[node name="Interior" type="VBoxContainer" parent="."]
-layout_mode = 2
-
-[node name="PathHeader" type="HBoxContainer" parent="Interior"]
-layout_mode = 2
-theme_override_constants/separation = 0
-
-[node name="Path" type="LinkButton" parent="Interior/PathHeader"]
-modulate = Color(0.552941, 1, 0.298039, 1)
-layout_mode = 2
-size_flags_horizontal = 3
-underline = 1
-
-[node name="PathHTML" type="Label" parent="Interior/PathHeader"]
-self_modulate = Color(0.552941, 1, 0.298039, 1)
-layout_mode = 2
-size_flags_horizontal = 3
-
-[node name="HSeparator" type="HSeparator" parent="Interior/PathHeader"]
-layout_mode = 2
-size_flags_horizontal = 3
-
-[node name="PreviewAndOptions" type="HBoxContainer" parent="Interior"]
-layout_mode = 2
-
-[node name="Options" type="GridContainer" parent="Interior/PreviewAndOptions"]
-layout_mode = 2
-size_flags_horizontal = 3
-columns = 2
-
-[node name="PosLabel" type="Label" parent="Interior/PreviewAndOptions/Options"]
-layout_mode = 2
-text = "Position:"
-
-[node name="Position" type="HBoxContainer" parent="Interior/PreviewAndOptions/Options"]
-layout_mode = 2
-size_flags_horizontal = 3
-
-[node name="X" parent="Interior/PreviewAndOptions/Options/Position" instance=ExtResource("1")]
-layout_mode = 2
-allow_greater = true
-allow_lesser = true
-
-[node name="Y" parent="Interior/PreviewAndOptions/Options/Position" instance=ExtResource("1")]
-layout_mode = 2
-allow_greater = true
-allow_lesser = true
-
-[node name="ScaleLabel" type="Label" parent="Interior/PreviewAndOptions/Options"]
-layout_mode = 2
-text = "Scale:"
-
-[node name="Scale" parent="Interior/PreviewAndOptions/Options" instance=ExtResource("1")]
-layout_mode = 2
-allow_greater = true
-allow_lesser = true
-
-[node name="OpacityLabel" type="Label" parent="Interior/PreviewAndOptions/Options"]
-layout_mode = 2
-text = "Opacity:"
-
-[node name="Opacity" parent="Interior/PreviewAndOptions/Options" instance=ExtResource("1")]
-layout_mode = 2
-
-[node name="PreviewPanel" type="Panel" parent="Interior/PreviewAndOptions"]
-custom_minimum_size = Vector2(80, 80)
-layout_mode = 2
-
-[node name="Warning" type="Label" parent="Interior/PreviewAndOptions/PreviewPanel"]
-layout_mode = 0
-anchor_right = 1.0
-anchor_bottom = 1.0
-
-[node name="Preview" type="TextureRect" parent="Interior/PreviewAndOptions/PreviewPanel"]
-layout_mode = 0
-anchor_right = 1.0
-anchor_bottom = 1.0
-offset_left = 2.0
-offset_top = 2.0
-offset_right = -2.0
-offset_bottom = -2.0
-expand_mode = 1
-
-[node name="OtherOptions" type="HBoxContainer" parent="Interior"]
-layout_mode = 2
-alignment = 2
-
-[node name="ApplyFilter" type="CheckBox" parent="Interior/OtherOptions"]
-layout_mode = 2
-tooltip_text = "Uses a magnifying filter, to enable smooth zooming in of the texture."
-text = "Apply Filter"
-
-[node name="Silhouette" type="CheckBox" parent="Interior/OtherOptions"]
-layout_mode = 2
-text = "Silhouette"
-
-[node name="Reset" type="Button" parent="Interior/OtherOptions"]
-layout_mode = 2
-text = "Reset"
-
-[node name="Remove" type="Button" parent="Interior/OtherOptions"]
-layout_mode = 2
-theme_override_colors/font_color = Color(1, 0.266667, 0.266667, 1)
-text = "Remove"
-
-[connection signal="pressed" from="Interior/PathHeader/Path" to="." method="_on_Path_pressed"]
-[connection signal="value_changed" from="Interior/PreviewAndOptions/Options/Position/X" to="." method="_on_X_value_changed"]
-[connection signal="value_changed" from="Interior/PreviewAndOptions/Options/Position/Y" to="." method="_on_Y_value_changed"]
-[connection signal="value_changed" from="Interior/PreviewAndOptions/Options/Scale" to="." method="_on_Scale_value_changed"]
-[connection signal="value_changed" from="Interior/PreviewAndOptions/Options/Opacity" to="." method="_on_Opacity_value_changed"]
-[connection signal="toggled" from="Interior/OtherOptions/ApplyFilter" to="." method="_on_ApplyFilter_toggled"]
-[connection signal="toggled" from="Interior/OtherOptions/Silhouette" to="." method="_on_Silhouette_toggled"]
-[connection signal="pressed" from="Interior/OtherOptions/Reset" to="." method="_on_Reset_pressed"]
-[connection signal="pressed" from="Interior/OtherOptions/Remove" to="." method="_on_Remove_pressed"]
+[gd_scene load_steps=4 format=3 uid="uid://by3300fom3plf"]
+
+[ext_resource type="Script" path="res://src/UI/ReferenceImages/ReferenceImageButton.gd" id="1_nf0dd"]
+
+[sub_resource type="StyleBoxFlat" id="StyleBoxFlat_53xjd"]
+draw_center = false
+border_width_left = 2
+border_width_top = 2
+border_width_right = 2
+border_width_bottom = 2
+
+[sub_resource type="StyleBoxEmpty" id="StyleBoxEmpty_tuwm6"]
+
+[node name="ReferenceImageButton" type="Button"]
+custom_minimum_size = Vector2(64, 64)
+theme_override_styles/pressed = SubResource("StyleBoxFlat_53xjd")
+theme_override_styles/focus = SubResource("StyleBoxEmpty_tuwm6")
+toggle_mode = true
+icon_alignment = 1
+expand_icon = true
+script = ExtResource("1_nf0dd")
diff --git a/src/UI/ReferenceImages/ReferencesPanel.gd b/src/UI/ReferenceImages/ReferencesPanel.gd
index 775074c0f4f8..27a55b44c354 100644
--- a/src/UI/ReferenceImages/ReferencesPanel.gd
+++ b/src/UI/ReferenceImages/ReferencesPanel.gd
@@ -1,27 +1,157 @@
 class_name ReferencesPanel
-extends VBoxContainer
+extends PanelContainer
 ## Panel for reference image management
 
-var reference_image_button_tscn := preload("res://src/UI/ReferenceImages/ReferenceImageButton.tscn")
-@onready var list = $"Scroll/List"
+const ReferenceImageButton = preload("res://src/UI/ReferenceImages/ReferenceImageButton.tscn")
+
+var list_btn_group := ButtonGroup.new()
+var transform_button_group: ButtonGroup
+var _ignore_ui_updates := false
+
+@onready var list := %List as HBoxContainer
+@onready var drag_highlight := $Overlay/DragHighlight as ColorRect
+@onready var remove_btn := $ScrollContainer/Container/ReferenceEdit/ImageOptions/Remove as Button
+@onready var transform_tools_btns := $ScrollContainer/Container/Tools/TransformTools
 
 
 func _ready() -> void:
-	Global.project_changed.connect(_update_reference_images)
-	OpenSave.reference_image_imported.connect(_update_reference_images)
+	transform_button_group = transform_tools_btns.get_child(0).button_group
+	transform_button_group.pressed.connect(_on_transform_tool_button_group_pressed)
+	list_btn_group.pressed.connect(_on_reference_image_button_pressed)
+	Global.canvas.reference_image_container.reference_image_changed.connect(
+		_on_reference_image_changed
+	)
+	OpenSave.reference_image_imported.connect(_on_references_changed)
+	# We call this function to update the buttons
+	_on_references_changed()
+	_update_ui()
+
+
+func _notification(what: int) -> void:
+	if what == NOTIFICATION_DRAG_END:
+		drag_highlight.hide()
+
+
+func _on_transform_tool_button_group_pressed(button: Button) -> void:
+	Global.canvas.reference_image_container.mode = button.get_index()
+
+
+func _on_move_image_left_pressed() -> void:
+	var index: int = Global.current_project.reference_index
+	reorder_reference_image(index, index - 1)
+
+
+func _on_move_image_right_pressed() -> void:
+	var index: int = Global.current_project.reference_index
+	reorder_reference_image(index, index + 1)
+
+
+## This method allows you to reoreder reference image with undo redo support
+## Please use this and not the method with the same name in project.gd
+func reorder_reference_image(from: int, to: int, update_reference_index := true) -> void:
+	var project := Global.current_project
+	project.undo_redo.create_action("Reorder Reference Image")
+	project.undo_redo.add_do_method(project.reorder_reference_image.bind(from, to))
+	project.undo_redo.add_do_method(Global.reference_panel._on_references_changed)
+	if update_reference_index:
+		project.undo_redo.add_do_method(project.set_reference_image_index.bind(to))
+	else:
+		project.undo_redo.add_undo_method(
+			project.set_reference_image_index.bind(project.reference_index)
+		)
+	project.undo_redo.add_do_method(_update_ui)
+
+	project.undo_redo.add_undo_method(project.reorder_reference_image.bind(to, from))
+	project.undo_redo.add_undo_method(Global.reference_panel._on_references_changed)
+	if update_reference_index:
+		project.undo_redo.add_undo_method(project.set_reference_image_index.bind(from))
+	else:
+		project.undo_redo.add_undo_method(
+			project.set_reference_image_index.bind(project.reference_index)
+		)
+
+	project.undo_redo.add_undo_method(_update_ui)
+
+	project.undo_redo.commit_action()
+
 
+func _update_ui() -> void:
+	var index: int = Global.current_project.reference_index
+
+	# Enable the buttons as a default
+	%MoveImageRightBtn.disabled = false
+	%MoveImageLeftBtn.disabled = false
+
+	if index == -1:
+		%MoveImageLeftBtn.disabled = true
+		%MoveImageRightBtn.disabled = true
+	if index == 0:
+		%MoveImageLeftBtn.disabled = true
+	if index == Global.current_project.reference_images.size() - 1:
+		%MoveImageRightBtn.disabled = true
+
+	if %MoveImageLeftBtn.disabled:
+		%MoveImageLeftBtn.mouse_default_cursor_shape = CURSOR_FORBIDDEN
+	else:
+		%MoveImageLeftBtn.mouse_default_cursor_shape = CURSOR_POINTING_HAND
+
+	if %MoveImageRightBtn.disabled:
+		%MoveImageRightBtn.mouse_default_cursor_shape = CURSOR_FORBIDDEN
+	else:
+		%MoveImageRightBtn.mouse_default_cursor_shape = CURSOR_POINTING_HAND
+
+	# Update the remove button
+	remove_btn.disabled = index == -1
+	if remove_btn.disabled:
+		remove_btn.mouse_default_cursor_shape = CURSOR_FORBIDDEN
+	else:
+		remove_btn.mouse_default_cursor_shape = CURSOR_POINTING_HAND
+
+
+func _on_reference_image_button_pressed(button: Button) -> void:
+	# We subtract 1 because we already have a default button to "select no reference image
+	Global.current_project.set_reference_image_index(button.get_index() - 1)
+
+
+# In case the signal is emitted for another node and not from a pressed button
+func _on_reference_image_changed(index: int) -> void:
+	_update_ui()
+	# Update the buttons to show which one is pressed
+	if list_btn_group.get_buttons().size() > 0:
+		# First we loop through the buttons to "unpress them all"
+		for b: Button in list_btn_group.get_buttons():
+			b.set_pressed_no_signal(false)
+		# Then we get the wanted button and we press it
+		list_btn_group.get_buttons()[index + 1].set_pressed_no_signal(true)
+
+
+func project_changed() -> void:
+	var project_reference_index := Global.current_project.reference_index
+	_on_references_changed()
+	_update_ui()
+	Global.current_project.set_reference_image_index(project_reference_index)
+
+
+func _on_references_changed():
+	# When we change the project we set the default
+	Global.current_project.set_reference_image_index(-1)
 
-func _update_reference_images():
 	for c in list.get_children():
+		if c is Button:
+			c.button_group = null
 		c.queue_free()
-	# Just do this here because I'm not sure where it's done.
-	# By all means, change this!
-	for ref in Global.canvas.get_children():
-		if ref is ReferenceImage:
-			ref.visible = false
+
+	# The default button
+	var default = ReferenceImageButton.instantiate()
+	default.button_group = list_btn_group
+	default.text = "none"
+	default.button_pressed = true
+	list.add_child(default)
+
 	# And update.
 	for ref in Global.current_project.reference_images:
-		ref.visible = true
-		var l = reference_image_button_tscn.instantiate()
-		l.element = ref
+		var l: Button = ReferenceImageButton.instantiate()
+		l.button_group = list_btn_group
+		if ref.texture:
+			l.icon = ref.texture
 		list.add_child(l)
diff --git a/src/UI/ReferenceImages/ReferencesPanel.tscn b/src/UI/ReferenceImages/ReferencesPanel.tscn
index 05ccca9bc281..b735ee78c2f0 100644
--- a/src/UI/ReferenceImages/ReferencesPanel.tscn
+++ b/src/UI/ReferenceImages/ReferencesPanel.tscn
@@ -1,40 +1,399 @@
-[gd_scene load_steps=2 format=3 uid="uid://b75xk2ix8xxml"]
+[gd_scene load_steps=13 format=3 uid="uid://cxhs8qy5ilufv"]
 
 [ext_resource type="Script" path="res://src/UI/ReferenceImages/ReferencesPanel.gd" id="1"]
+[ext_resource type="Script" path="res://src/UI/Nodes/ValueSlider.gd" id="2_1qu4x"]
+[ext_resource type="Texture2D" uid="uid://d1oxrkwndy5fi" path="res://assets/graphics/timeline/move_arrow.png" id="2_uqbp6"]
+[ext_resource type="PackedScene" uid="uid://yjhp0ssng2mp" path="res://src/UI/Nodes/ValueSlider.tscn" id="3_1w6gu"]
+[ext_resource type="Script" path="res://src/UI/ReferenceImages/ReferenceEdit.gd" id="3_skjtb"]
+[ext_resource type="Texture2D" uid="uid://d2m7enib3dplc" path="res://assets/graphics/reference_images/select.png" id="3_us8st"]
+[ext_resource type="Texture2D" uid="uid://cedsyi8gf2n2i" path="res://assets/graphics/reference_images/move.png" id="4_8mlcg"]
+[ext_resource type="Texture2D" uid="uid://dtd43nvphu3jj" path="res://assets/graphics/reference_images/rotate.png" id="5_ifey7"]
+[ext_resource type="Texture2D" uid="uid://nfabwr5mgdir" path="res://assets/graphics/reference_images/scale.png" id="6_7v0q5"]
 
-[node name="Reference Images" type="VBoxContainer"]
+[sub_resource type="InputEventAction" id="InputEventAction_unp5j"]
+action = &"move_frame_right"
+
+[sub_resource type="Shortcut" id="Shortcut_uucm4"]
+events = [SubResource("InputEventAction_unp5j")]
+
+[sub_resource type="ButtonGroup" id="ButtonGroup_adw61"]
+
+[node name="Reference Images" type="PanelContainer"]
+custom_minimum_size = Vector2(300, 0)
 anchors_preset = 15
 anchor_right = 1.0
 anchor_bottom = 1.0
+grow_horizontal = 2
+grow_vertical = 2
 script = ExtResource("1")
 
-[node name="Header" type="HBoxContainer" parent="."]
+[node name="ScrollContainer" type="ScrollContainer" parent="."]
 layout_mode = 2
-theme_override_constants/separation = 0
 
-[node name="HSeparator2" type="HSeparator" parent="Header"]
+[node name="Container" type="VBoxContainer" parent="ScrollContainer"]
 layout_mode = 2
 size_flags_horizontal = 3
+size_flags_vertical = 3
 
-[node name="Label" type="Label" parent="Header"]
+[node name="Header" type="HBoxContainer" parent="ScrollContainer/Container"]
+layout_mode = 2
+theme_override_constants/separation = 0
+
+[node name="Label" type="Label" parent="ScrollContainer/Container/Header"]
 layout_mode = 2
 theme_type_variation = &"HeaderSmall"
-text = "Reference Images"
+text = "My Reference Images"
+
+[node name="Tip" type="Label" parent="ScrollContainer/Container"]
+custom_minimum_size = Vector2(10, 0)
+layout_mode = 2
+text = "When opening an image, it may be imported as a reference."
+autowrap_mode = 2
+
+[node name="Tools" type="HBoxContainer" parent="ScrollContainer/Container"]
+layout_mode = 2
 
-[node name="HSeparator" type="HSeparator" parent="Header"]
+[node name="MoveImageLeftBtn" type="Button" parent="ScrollContainer/Container/Tools" groups=["UIButtons"]]
+unique_name_in_owner = true
+custom_minimum_size = Vector2(31, 31)
+layout_mode = 2
+size_flags_horizontal = 0
+tooltip_text = "Move the selected reference image to the left"
+focus_mode = 0
+mouse_default_cursor_shape = 2
+shortcut = SubResource("Shortcut_uucm4")
+
+[node name="TextureRect" type="TextureRect" parent="ScrollContainer/Container/Tools/MoveImageLeftBtn"]
+layout_mode = 0
+anchor_left = 0.5
+anchor_top = 0.5
+anchor_right = 0.5
+anchor_bottom = 0.5
+offset_left = -7.5
+offset_top = -5.5
+offset_right = 7.5
+offset_bottom = 5.5
+texture = ExtResource("2_uqbp6")
+flip_h = true
+
+[node name="MoveImageRightBtn" type="Button" parent="ScrollContainer/Container/Tools" groups=["UIButtons"]]
+unique_name_in_owner = true
+custom_minimum_size = Vector2(31, 31)
+layout_mode = 2
+size_flags_horizontal = 0
+tooltip_text = "Move the selected reference image to the right"
+focus_mode = 0
+mouse_default_cursor_shape = 2
+shortcut = SubResource("Shortcut_uucm4")
+
+[node name="TextureRect" type="TextureRect" parent="ScrollContainer/Container/Tools/MoveImageRightBtn"]
+layout_mode = 0
+anchor_left = 0.5
+anchor_top = 0.5
+anchor_right = 0.5
+anchor_bottom = 0.5
+offset_left = -7.5
+offset_top = -5.5
+offset_right = 7.5
+offset_bottom = 5.5
+texture = ExtResource("2_uqbp6")
+
+[node name="Spacer" type="Control" parent="ScrollContainer/Container/Tools"]
 layout_mode = 2
 size_flags_horizontal = 3
 
-[node name="Label" type="Label" parent="."]
+[node name="TransformTools" type="HBoxContainer" parent="ScrollContainer/Container/Tools"]
 layout_mode = 2
-text = "When opening an image, it may be imported as a reference."
 
-[node name="Scroll" type="ScrollContainer" parent="."]
+[node name="Select" type="Button" parent="ScrollContainer/Container/Tools/TransformTools" groups=["UIButtons"]]
+custom_minimum_size = Vector2(31, 31)
+layout_mode = 2
+size_flags_horizontal = 0
+tooltip_text = "Selects a reference image on the canvas"
+focus_mode = 0
+mouse_default_cursor_shape = 2
+toggle_mode = true
+button_pressed = true
+button_group = SubResource("ButtonGroup_adw61")
+shortcut = SubResource("Shortcut_uucm4")
+
+[node name="TextureRect" type="TextureRect" parent="ScrollContainer/Container/Tools/TransformTools/Select"]
+layout_mode = 1
+anchors_preset = 8
+anchor_left = 0.5
+anchor_top = 0.5
+anchor_right = 0.5
+anchor_bottom = 0.5
+offset_left = -12.0
+offset_top = -12.0
+offset_right = 12.0
+offset_bottom = 12.0
+grow_horizontal = 2
+grow_vertical = 2
+texture = ExtResource("3_us8st")
+
+[node name="Move" type="Button" parent="ScrollContainer/Container/Tools/TransformTools" groups=["UIButtons"]]
+custom_minimum_size = Vector2(31, 31)
+layout_mode = 2
+size_flags_horizontal = 0
+tooltip_text = "Move the selected reference image"
+focus_mode = 0
+mouse_default_cursor_shape = 2
+toggle_mode = true
+button_group = SubResource("ButtonGroup_adw61")
+shortcut = SubResource("Shortcut_uucm4")
+
+[node name="TextureRect" type="TextureRect" parent="ScrollContainer/Container/Tools/TransformTools/Move"]
+layout_mode = 1
+anchors_preset = 8
+anchor_left = 0.5
+anchor_top = 0.5
+anchor_right = 0.5
+anchor_bottom = 0.5
+offset_left = -12.0
+offset_top = -12.0
+offset_right = 12.0
+offset_bottom = 12.0
+grow_horizontal = 2
+grow_vertical = 2
+texture = ExtResource("4_8mlcg")
+
+[node name="Rotate" type="Button" parent="ScrollContainer/Container/Tools/TransformTools" groups=["UIButtons"]]
+custom_minimum_size = Vector2(31, 31)
+layout_mode = 2
+size_flags_horizontal = 0
+tooltip_text = "Rotate the selected image"
+focus_mode = 0
+mouse_default_cursor_shape = 2
+toggle_mode = true
+button_group = SubResource("ButtonGroup_adw61")
+shortcut = SubResource("Shortcut_uucm4")
+
+[node name="TextureRect" type="TextureRect" parent="ScrollContainer/Container/Tools/TransformTools/Rotate"]
+layout_mode = 1
+anchors_preset = 8
+anchor_left = 0.5
+anchor_top = 0.5
+anchor_right = 0.5
+anchor_bottom = 0.5
+offset_left = -12.0
+offset_top = -12.0
+offset_right = 12.0
+offset_bottom = 12.0
+grow_horizontal = 2
+grow_vertical = 2
+texture = ExtResource("5_ifey7")
+
+[node name="Scale" type="Button" parent="ScrollContainer/Container/Tools/TransformTools" groups=["UIButtons"]]
+custom_minimum_size = Vector2(31, 31)
+layout_mode = 2
+size_flags_horizontal = 0
+tooltip_text = "Scale the selected reference image"
+focus_mode = 0
+mouse_default_cursor_shape = 2
+toggle_mode = true
+button_group = SubResource("ButtonGroup_adw61")
+shortcut = SubResource("Shortcut_uucm4")
+
+[node name="TextureRect" type="TextureRect" parent="ScrollContainer/Container/Tools/TransformTools/Scale"]
+layout_mode = 1
+anchors_preset = 8
+anchor_left = 0.5
+anchor_top = 0.5
+anchor_right = 0.5
+anchor_bottom = 0.5
+offset_left = -12.0
+offset_top = -12.0
+offset_right = 12.0
+offset_bottom = 12.0
+grow_horizontal = 2
+grow_vertical = 2
+texture = ExtResource("6_7v0q5")
+
+[node name="ReferenceImages" type="ScrollContainer" parent="ScrollContainer/Container"]
+layout_mode = 2
+horizontal_scroll_mode = 2
+vertical_scroll_mode = 0
+
+[node name="List" type="HBoxContainer" parent="ScrollContainer/Container/ReferenceImages"]
+unique_name_in_owner = true
+custom_minimum_size = Vector2(0, 64)
+layout_mode = 2
+
+[node name="ReferenceEdit" type="VBoxContainer" parent="ScrollContainer/Container"]
+layout_mode = 2
+script = ExtResource("3_skjtb")
+
+[node name="ImageOptions" type="HBoxContainer" parent="ScrollContainer/Container/ReferenceEdit"]
+layout_mode = 2
+
+[node name="WarningLabel" type="Label" parent="ScrollContainer/Container/ReferenceEdit/ImageOptions"]
 layout_mode = 2
 size_flags_horizontal = 3
-size_flags_vertical = 3
+theme_override_colors/font_color = Color(0.972549, 1, 0.545098, 1)
+text = "Image not found!"
+text_overrun_behavior = 3
 
-[node name="List" type="VBoxContainer" parent="Scroll"]
+[node name="ImagePath" type="Button" parent="ScrollContainer/Container/ReferenceEdit/ImageOptions"]
+visible = false
 layout_mode = 2
 size_flags_horizontal = 3
-size_flags_vertical = 3
+size_flags_vertical = 4
+text = "Image Path"
+alignment = 0
+text_overrun_behavior = 3
+
+[node name="Remove" type="Button" parent="ScrollContainer/Container/ReferenceEdit/ImageOptions"]
+layout_mode = 2
+tooltip_text = "Hold Shift while pressing to instantly remove."
+theme_override_colors/font_color = Color(1, 0.490196, 0.419608, 1)
+text = "Remove"
+
+[node name="Options" type="GridContainer" parent="ScrollContainer/Container/ReferenceEdit"]
+layout_mode = 2
+size_flags_horizontal = 3
+columns = 2
+
+[node name="TransformLabel" type="Label" parent="ScrollContainer/Container/ReferenceEdit/Options"]
+layout_mode = 2
+text = "Transform"
+
+[node name="Reset" type="Button" parent="ScrollContainer/Container/ReferenceEdit/Options"]
+layout_mode = 2
+text = "Reset Transform"
+
+[node name="PosLabel" type="Label" parent="ScrollContainer/Container/ReferenceEdit/Options"]
+custom_minimum_size = Vector2(115, 0)
+layout_mode = 2
+text = "Position"
+
+[node name="Position" type="HBoxContainer" parent="ScrollContainer/Container/ReferenceEdit/Options"]
+layout_mode = 2
+size_flags_horizontal = 3
+
+[node name="X" parent="ScrollContainer/Container/ReferenceEdit/Options/Position" instance=ExtResource("3_1w6gu")]
+layout_mode = 2
+allow_greater = true
+allow_lesser = true
+
+[node name="Y" parent="ScrollContainer/Container/ReferenceEdit/Options/Position" instance=ExtResource("3_1w6gu")]
+layout_mode = 2
+allow_greater = true
+allow_lesser = true
+
+[node name="ScaleLabel" type="Label" parent="ScrollContainer/Container/ReferenceEdit/Options"]
+custom_minimum_size = Vector2(115, 0)
+layout_mode = 2
+text = "Scale"
+
+[node name="Scale" parent="ScrollContainer/Container/ReferenceEdit/Options" instance=ExtResource("3_1w6gu")]
+layout_mode = 2
+allow_greater = true
+allow_lesser = true
+
+[node name="RotationLabel" type="Label" parent="ScrollContainer/Container/ReferenceEdit/Options"]
+custom_minimum_size = Vector2(115, 0)
+layout_mode = 2
+text = "Rotation"
+
+[node name="Rotation" parent="ScrollContainer/Container/ReferenceEdit/Options" instance=ExtResource("3_1w6gu")]
+layout_mode = 2
+min_value = -180.0
+max_value = 180.0
+
+[node name="ColorLabel" type="Label" parent="ScrollContainer/Container/ReferenceEdit/Options"]
+layout_mode = 2
+text = "Color Options"
+
+[node name="Spacer2" type="Control" parent="ScrollContainer/Container/ReferenceEdit/Options"]
+layout_mode = 2
+
+[node name="FilterLabel" type="Label" parent="ScrollContainer/Container/ReferenceEdit/Options"]
+custom_minimum_size = Vector2(115, 0)
+layout_mode = 2
+text = "Filter"
+
+[node name="Filter" type="CheckButton" parent="ScrollContainer/Container/ReferenceEdit/Options"]
+layout_mode = 2
+size_flags_horizontal = 3
+text = "Enabled"
+
+[node name="MonochromeLabel" type="Label" parent="ScrollContainer/Container/ReferenceEdit/Options"]
+custom_minimum_size = Vector2(115, 0)
+layout_mode = 2
+text = "Monochrome"
+
+[node name="Monochrome" type="CheckButton" parent="ScrollContainer/Container/ReferenceEdit/Options"]
+layout_mode = 2
+size_flags_horizontal = 3
+text = "Enabled"
+
+[node name="OverlayLabel" type="Label" parent="ScrollContainer/Container/ReferenceEdit/Options"]
+custom_minimum_size = Vector2(115, 0)
+layout_mode = 2
+text = "Overlay"
+
+[node name="Overlay" type="ColorPickerButton" parent="ScrollContainer/Container/ReferenceEdit/Options"]
+custom_minimum_size = Vector2(48, 28)
+layout_mode = 2
+size_flags_horizontal = 3
+size_flags_stretch_ratio = 0.25
+edit_alpha = false
+
+[node name="OpacityLabel" type="Label" parent="ScrollContainer/Container/ReferenceEdit/Options"]
+custom_minimum_size = Vector2(115, 0)
+layout_mode = 2
+text = "Opacity"
+
+[node name="Opacity" parent="ScrollContainer/Container/ReferenceEdit/Options" instance=ExtResource("3_1w6gu")]
+layout_mode = 2
+
+[node name="ColorClampingLabel" type="Label" parent="ScrollContainer/Container/ReferenceEdit/Options"]
+custom_minimum_size = Vector2(115, 0)
+layout_mode = 2
+text = "Color Clamping"
+
+[node name="ColorClamping" type="TextureProgressBar" parent="ScrollContainer/Container/ReferenceEdit/Options"]
+custom_minimum_size = Vector2(0, 24)
+layout_mode = 2
+size_flags_horizontal = 3
+focus_mode = 2
+theme_type_variation = &"ValueSlider"
+nine_patch_stretch = true
+stretch_margin_left = 3
+stretch_margin_top = 3
+stretch_margin_right = 3
+stretch_margin_bottom = 3
+script = ExtResource("2_1qu4x")
+
+[node name="Timer" type="Timer" parent="ScrollContainer/Container/ReferenceEdit"]
+wait_time = 0.2
+one_shot = true
+
+[node name="ConfirmRemoveDialog" type="ConfirmationDialog" parent="ScrollContainer/Container/ReferenceEdit"]
+position = Vector2i(0, 36)
+size = Vector2i(454, 106)
+dialog_text = "Are you sure you want to remove this reference image? It will not be deleted from your file system."
+dialog_autowrap = true
+
+[node name="Overlay" type="CanvasLayer" parent="."]
+
+[node name="DragHighlight" type="ColorRect" parent="Overlay"]
+color = Color(0, 0.741176, 1, 0.501961)
+
+[connection signal="pressed" from="ScrollContainer/Container/Tools/MoveImageLeftBtn" to="." method="_on_move_image_left_pressed"]
+[connection signal="pressed" from="ScrollContainer/Container/Tools/MoveImageRightBtn" to="." method="_on_move_image_right_pressed"]
+[connection signal="pressed" from="ScrollContainer/Container/ReferenceEdit/ImageOptions/Remove" to="ScrollContainer/Container/ReferenceEdit" method="_on_Remove_pressed"]
+[connection signal="pressed" from="ScrollContainer/Container/ReferenceEdit/Options/Reset" to="ScrollContainer/Container/ReferenceEdit" method="_on_Reset_pressed"]
+[connection signal="value_changed" from="ScrollContainer/Container/ReferenceEdit/Options/Position/X" to="ScrollContainer/Container/ReferenceEdit" method="_on_X_value_changed"]
+[connection signal="value_changed" from="ScrollContainer/Container/ReferenceEdit/Options/Position/Y" to="ScrollContainer/Container/ReferenceEdit" method="_on_Y_value_changed"]
+[connection signal="value_changed" from="ScrollContainer/Container/ReferenceEdit/Options/Scale" to="ScrollContainer/Container/ReferenceEdit" method="_on_Scale_value_changed"]
+[connection signal="value_changed" from="ScrollContainer/Container/ReferenceEdit/Options/Rotation" to="ScrollContainer/Container/ReferenceEdit" method="_on_Rotation_value_changed"]
+[connection signal="toggled" from="ScrollContainer/Container/ReferenceEdit/Options/Filter" to="ScrollContainer/Container/ReferenceEdit" method="_on_Filter_toggled"]
+[connection signal="toggled" from="ScrollContainer/Container/ReferenceEdit/Options/Monochrome" to="ScrollContainer/Container/ReferenceEdit" method="_on_Monochrome_toggled"]
+[connection signal="color_changed" from="ScrollContainer/Container/ReferenceEdit/Options/Overlay" to="ScrollContainer/Container/ReferenceEdit" method="_on_Overlay_color_changed"]
+[connection signal="value_changed" from="ScrollContainer/Container/ReferenceEdit/Options/Opacity" to="ScrollContainer/Container/ReferenceEdit" method="_on_Opacity_value_changed"]
+[connection signal="value_changed" from="ScrollContainer/Container/ReferenceEdit/Options/ColorClamping" to="ScrollContainer/Container/ReferenceEdit" method="_on_ColorClamping_value_changed"]
+[connection signal="timeout" from="ScrollContainer/Container/ReferenceEdit/Timer" to="ScrollContainer/Container/ReferenceEdit" method="_on_timer_timeout"]
+[connection signal="canceled" from="ScrollContainer/Container/ReferenceEdit/ConfirmRemoveDialog" to="ScrollContainer/Container/ReferenceEdit" method="_on_confirm_remove_dialog_canceled"]
+[connection signal="confirmed" from="ScrollContainer/Container/ReferenceEdit/ConfirmRemoveDialog" to="ScrollContainer/Container/ReferenceEdit" method="_on_confirm_remove_dialog_confirmed"]
diff --git a/src/UI/UI.tscn b/src/UI/UI.tscn
index 1801f7eae554..cc29f95bb815 100644
--- a/src/UI/UI.tscn
+++ b/src/UI/UI.tscn
@@ -10,7 +10,7 @@
 [ext_resource type="Shader" path="res://src/Shaders/Greyscale.gdshader" id="8"]
 [ext_resource type="Shader" path="res://src/Shaders/TransparentChecker.gdshader" id="9"]
 [ext_resource type="PackedScene" uid="uid://wo0hqxkst808" path="res://src/UI/GlobalToolOptions/GlobalToolOptions.tscn" id="10"]
-[ext_resource type="PackedScene" uid="uid://b75xk2ix8xxml" path="res://src/UI/ReferenceImages/ReferencesPanel.tscn" id="11"]
+[ext_resource type="PackedScene" uid="uid://cxhs8qy5ilufv" path="res://src/UI/ReferenceImages/ReferencesPanel.tscn" id="11"]
 [ext_resource type="PackedScene" uid="uid://cap1bhavhi33g" path="res://src/UI/PerspectiveEditor/PerspectiveEditor.tscn" id="12"]
 [ext_resource type="PackedScene" uid="uid://dl6ook010q86o" path="res://src/UI/Recorder/Recorder.tscn" id="13"]
 [ext_resource type="Script" path="res://addons/dockable_container/layout.gd" id="14"]