diff --git a/packages/block-editor/src/components/block-popover/index.js b/packages/block-editor/src/components/block-popover/index.js
index 5382949684abd..0c994d51c3f77 100644
--- a/packages/block-editor/src/components/block-popover/index.js
+++ b/packages/block-editor/src/components/block-popover/index.js
@@ -7,6 +7,7 @@ import classnames from 'classnames';
  * WordPress dependencies
  */
 import { useMergeRefs } from '@wordpress/compose';
+import { getScrollContainer } from '@wordpress/dom';
 import { Popover } from '@wordpress/components';
 import {
 	forwardRef,
@@ -75,6 +76,31 @@ function BlockPopover(
 		};
 	}, [ selectedElement ] );
 
+	const scrollContainer = useMemo( () => {
+		if ( ! __unstableContentRef?.current ) {
+			return;
+		}
+		return getScrollContainer( __unstableContentRef?.current );
+	}, [ __unstableContentRef?.current ] );
+
+	useLayoutEffect( () => {
+		if ( ! scrollContainer ) {
+			return;
+		}
+
+		scrollContainer?.addEventListener?.(
+			'scroll',
+			forceRecomputePopoverDimensions
+		);
+
+		return () => {
+			scrollContainer?.removeEventHandler?.(
+				'scroll',
+				forceRecomputePopoverDimensions
+			);
+		};
+	}, [ scrollContainer ] );
+
 	const style = useMemo( () => {
 		if (
 			// popoverDimensionsRecomputeCounter is by definition always equal or greater
diff --git a/packages/block-editor/src/components/block-tools/use-block-toolbar-popover-props.js b/packages/block-editor/src/components/block-tools/use-block-toolbar-popover-props.js
index d218b1104139c..4703e05985529 100644
--- a/packages/block-editor/src/components/block-tools/use-block-toolbar-popover-props.js
+++ b/packages/block-editor/src/components/block-tools/use-block-toolbar-popover-props.js
@@ -3,7 +3,13 @@
  */
 import { useRefEffect } from '@wordpress/compose';
 import { useSelect } from '@wordpress/data';
-import { useCallback, useLayoutEffect, useState } from '@wordpress/element';
+import { getScrollContainer } from '@wordpress/dom';
+import {
+	useCallback,
+	useLayoutEffect,
+	useMemo,
+	useState,
+} from '@wordpress/element';
 
 /**
  * Internal dependencies
@@ -40,24 +46,40 @@ const RESTRICTED_HEIGHT_PROPS = {
  *
  * @param {Element} contentElement       The DOM element that represents the editor content or canvas.
  * @param {Element} selectedBlockElement The outer DOM element of the first selected block.
+ * @param {Element} scrollContainer      The scrollable container for the contentElement.
  * @param {number}  toolbarHeight        The height of the toolbar in pixels.
  *
  * @return {Object} The popover props used to determine the position of the toolbar.
  */
-function getProps( contentElement, selectedBlockElement, toolbarHeight ) {
+function getProps(
+	contentElement,
+	selectedBlockElement,
+	scrollContainer,
+	toolbarHeight
+) {
 	if ( ! contentElement || ! selectedBlockElement ) {
 		return DEFAULT_PROPS;
 	}
 
+	// Get how far the content area has been scrolled.
+	const scrollTop = scrollContainer?.scrollTop || 0;
+
 	const blockRect = selectedBlockElement.getBoundingClientRect();
 	const contentRect = contentElement.getBoundingClientRect();
 
+	// Get the vertical position of top of the visible content area.
+	const topOfContentElementInViewport = scrollTop + contentRect.top;
+
 	// The document element's clientHeight represents the viewport height.
 	const viewportHeight =
 		contentElement.ownerDocument.documentElement.clientHeight;
 
-	const hasSpaceForToolbarAbove =
-		blockRect.top - contentRect.top > toolbarHeight;
+	// The restricted height area is calculated as the sum of the
+	// vertical position of the visible content area, plus the height
+	// of the block toolbar.
+	const restrictedTopArea = topOfContentElementInViewport + toolbarHeight;
+	const hasSpaceForToolbarAbove = blockRect.top > restrictedTopArea;
+
 	const isBlockTallerThanViewport =
 		blockRect.height > viewportHeight - toolbarHeight;
 
@@ -83,8 +105,19 @@ export default function useBlockToolbarPopoverProps( {
 } ) {
 	const selectedBlockElement = useBlockElement( clientId );
 	const [ toolbarHeight, setToolbarHeight ] = useState( 0 );
+	const scrollContainer = useMemo( () => {
+		if ( ! contentElement ) {
+			return;
+		}
+		return getScrollContainer( contentElement );
+	}, [ contentElement ] );
 	const [ props, setProps ] = useState( () =>
-		getProps( contentElement, selectedBlockElement, toolbarHeight )
+		getProps(
+			contentElement,
+			selectedBlockElement,
+			scrollContainer,
+			toolbarHeight
+		)
 	);
 	const blockIndex = useSelect(
 		( select ) => select( blockEditorStore ).getBlockIndex( clientId ),
@@ -98,7 +131,12 @@ export default function useBlockToolbarPopoverProps( {
 	const updateProps = useCallback(
 		() =>
 			setProps(
-				getProps( contentElement, selectedBlockElement, toolbarHeight )
+				getProps(
+					contentElement,
+					selectedBlockElement,
+					scrollContainer,
+					toolbarHeight
+				)
 			),
 		[ contentElement, selectedBlockElement, toolbarHeight ]
 	);