diff --git a/blocks/editable/index.js b/blocks/editable/index.js
index 9c0ac6afc12d4..a02964b7a7fc4 100644
--- a/blocks/editable/index.js
+++ b/blocks/editable/index.js
@@ -2,7 +2,7 @@
  * External dependencies
  */
 import classnames from 'classnames';
-import { last, isEqual, capitalize, omitBy, forEach, merge } from 'lodash';
+import { last, isEqual, capitalize, omitBy, forEach, merge, identity } from 'lodash';
 import { nodeListToReact } from 'dom-react';
 import { Fill } from 'react-slot-fill';
 import 'element-closest';
@@ -67,6 +67,7 @@ export default class Editable extends wp.element.Component {
 		super( ...arguments );
 
 		this.onInit = this.onInit.bind( this );
+		this.getSettings = this.getSettings.bind( this );
 		this.onSetup = this.onSetup.bind( this );
 		this.onChange = this.onChange.bind( this );
 		this.onNewBlock = this.onNewBlock.bind( this );
@@ -84,6 +85,13 @@ export default class Editable extends wp.element.Component {
 		};
 	}
 
+	getSettings( settings ) {
+		return ( this.props.getSettings || identity )( {
+			...settings,
+			forced_root_block: this.props.inline ? false : 'p',
+		} );
+	}
+
 	onSetup( editor ) {
 		this.editor = editor;
 		editor.on( 'init', this.onInit );
@@ -93,6 +101,10 @@ export default class Editable extends wp.element.Component {
 		editor.on( 'nodechange', this.onNodeChange );
 		editor.on( 'keydown', this.onKeyDown );
 		editor.on( 'selectionChange', this.onSelectionChange );
+
+		if ( this.props.onSetup ) {
+			this.props.onSetup( editor );
+		}
 	}
 
 	onInit() {
@@ -394,7 +406,6 @@ export default class Editable extends wp.element.Component {
 			className,
 			showAlignments = false,
 			inlineToolbar = false,
-			inline,
 			formattingControls,
 			placeholder,
 		} = this.props;
@@ -438,12 +449,10 @@ export default class Editable extends wp.element.Component {
 
 				<TinyMCE
 					tagName={ tagName }
+					getSettings={ this.getSettings }
 					onSetup={ this.onSetup }
 					style={ style }
 					defaultValue={ value }
-					settings={ {
-						forced_root_block: inline ? false : 'p',
-					} }
 					isEmpty={ this.state.empty }
 					placeholder={ placeholder }
 					key={ key } />
diff --git a/blocks/editable/tinymce.js b/blocks/editable/tinymce.js
index 72f8fad07390f..e12b769474319 100644
--- a/blocks/editable/tinymce.js
+++ b/blocks/editable/tinymce.js
@@ -34,24 +34,27 @@ export default class TinyMCE extends wp.element.Component {
 	}
 
 	initialize() {
-		const { settings, focus } = this.props;
+		const { focus } = this.props;
 
-		tinymce.init( {
-			target: this.editorNode,
+		const settings = this.props.getSettings( {
 			theme: false,
 			inline: true,
 			toolbar: false,
 			browser_spellcheck: true,
 			entity_encoding: 'raw',
 			convert_urls: false,
-			setup: ( editor ) => {
-				this.editor = editor;
-				this.props.onSetup( editor );
-			},
 			formats: {
 				strikethrough: { inline: 'del' },
 			},
+		} );
+
+		tinymce.init( {
 			...settings,
+			target: this.editorNode,
+			setup: ( editor ) => {
+				this.editor = editor;
+				this.props.onSetup( editor );
+			},
 		} );
 
 		if ( focus ) {
diff --git a/blocks/library/list/index.js b/blocks/library/list/index.js
index b3ffbf97a3e6f..46b0acf18d812 100644
--- a/blocks/library/list/index.js
+++ b/blocks/library/list/index.js
@@ -2,6 +2,7 @@
  * WordPress dependencies
  */
 import { switchChildrenNodeName } from 'element';
+import { find } from 'lodash';
 
 /**
  * Internal dependencies
@@ -12,6 +13,40 @@ import Editable from '../../editable';
 
 const { children, prop } = hpq;
 
+function execCommand( command ) {
+	return ( { editor } ) => {
+		if ( editor ) {
+			editor.execCommand( command );
+		}
+	};
+}
+
+function listIsActive( listType ) {
+	return ( { nodeName = 'OL', internalListType } ) => {
+		return listType === ( internalListType ? internalListType : nodeName );
+	};
+}
+
+function listSetType( listType, editorCommand ) {
+	return ( { internalListType, editor }, setAttributes ) => {
+		if ( internalListType ) {
+			// only change list types, don't toggle off internal lists
+			if ( internalListType !== listType ) {
+				if ( editor ) {
+					editor.execCommand( editorCommand );
+				}
+			}
+		} else {
+			setAttributes( { nodeName: listType } );
+		}
+	};
+}
+
+function findInternalListType( { parents } ) {
+	const list = find( parents, ( node ) => node.nodeName === 'UL' || node.nodeName === 'OL' );
+	return list ? list.nodeName : null;
+}
+
 registerBlock( 'core/list', {
 	title: wp.i18n.__( 'List' ),
 	icon: 'editor-ul',
@@ -26,18 +61,24 @@ registerBlock( 'core/list', {
 		{
 			icon: 'editor-ul',
 			title: wp.i18n.__( 'Convert to unordered' ),
-			isActive: ( { nodeName = 'OL' } ) => nodeName === 'UL',
-			onClick( attributes, setAttributes ) {
-				setAttributes( { nodeName: 'UL' } );
-			},
+			isActive: listIsActive( 'UL' ),
+			onClick: listSetType( 'UL', 'InsertUnorderedList' ),
 		},
 		{
 			icon: 'editor-ol',
 			title: wp.i18n.__( 'Convert to ordered' ),
-			isActive: ( { nodeName = 'OL' } ) => nodeName === 'OL',
-			onClick( attributes, setAttributes ) {
-				setAttributes( { nodeName: 'OL' } );
-			},
+			isActive: listIsActive( 'OL' ),
+			onClick: listSetType( 'OL', 'InsertOrderedList' ),
+		},
+		{
+			icon: 'editor-outdent',
+			title: wp.i18n.__( 'Outdent list item' ),
+			onClick: execCommand( 'Outdent' ),
+		},
+		{
+			icon: 'editor-indent',
+			title: wp.i18n.__( 'Indent list item' ),
+			onClick: execCommand( 'Indent' ),
 		},
 	],
 
@@ -72,6 +113,17 @@ registerBlock( 'core/list', {
 		return (
 			<Editable
 				tagName={ nodeName.toLowerCase() }
+				getSettings={ ( settings ) => ( {
+					...settings,
+					plugins: ( settings.plugins || [] ).concat( 'lists' ),
+					lists_indent_on_tab: false,
+				} ) }
+				onSetup={ ( editor ) => {
+					editor.on( 'nodeChange', ( nodeInfo ) => {
+						setAttributes( { internalListType: findInternalListType( nodeInfo ) } );
+					} );
+					setAttributes( { editor } );
+				} }
 				onChange={ ( nextValues ) => {
 					setAttributes( { values: nextValues } );
 				} }
diff --git a/blocks/library/list/style.scss b/blocks/library/list/style.scss
index 4626951e7d302..4448ee1c55d8f 100644
--- a/blocks/library/list/style.scss
+++ b/blocks/library/list/style.scss
@@ -1,3 +1,6 @@
-.blocks-list .blocks-editable__tinymce {
+.blocks-list .blocks-editable__tinymce,
+.blocks-list .blocks-editable__tinymce ul,
+.blocks-list .blocks-editable__tinymce ol {
 	padding-left: 2.5em;
+	margin-left: 0;
 }
diff --git a/editor/modes/visual-editor/block.js b/editor/modes/visual-editor/block.js
index f612e32760921..31b9f020327bb 100644
--- a/editor/modes/visual-editor/block.js
+++ b/editor/modes/visual-editor/block.js
@@ -205,7 +205,7 @@ class VisualEditorBlock extends wp.element.Component {
 								controls={ settings.controls.map( ( control ) => ( {
 									...control,
 									onClick: () => control.onClick( block.attributes, this.setAttributes ),
-									isActive: control.isActive( block.attributes ),
+									isActive: control.isActive ? control.isActive( block.attributes ) : false,
 								} ) ) } />
 						) }
 						<Slot name="Formatting.Toolbar" />