diff --git a/e2e-tests/003-collection-management-tests/001-cross-collection-drag-drop-request.spec.ts b/e2e-tests/003-collection-management-tests/001-cross-collection-drag-drop-request.spec.ts
new file mode 100644
index 000000000..8c1efaf59
--- /dev/null
+++ b/e2e-tests/003-collection-management-tests/001-cross-collection-drag-drop-request.spec.ts
@@ -0,0 +1,154 @@
+import { test, expect } from '../../playwright';
+
+test.describe('Cross-Collection Drag and Drop', () => {
+  test('Verify request drag and drop', async ({ pageWithUserData: page, createTmpDir }) => {
+    // Create first collection - click dropdown menu first
+    await page.locator('.dropdown-icon').click();
+    await page.locator('.dropdown-item').filter({ hasText: 'Create Collection' }).click();
+    await page.getByLabel('Name').fill('source-collection');
+    await page.getByLabel('Location').fill(await createTmpDir('source-collection'));
+    await page.getByRole('button', { name: 'Create', exact: true }).click();
+
+    await expect(page.locator('#sidebar-collection-name').filter({ hasText: 'source-collection' })).toBeVisible();
+    await page.locator('#sidebar-collection-name').filter({ hasText: 'source-collection' }).click();
+    await page.getByLabel('Safe Mode').check();
+    await page.getByRole('button', { name: 'Save' }).click();
+
+    // Create a request in the first collection
+    await page.locator('#create-new-tab').getByRole('img').click();
+    await page.getByPlaceholder('Request Name').fill('test-request');
+    await page.locator('#new-request-url .CodeMirror').click();
+    await page.locator('textarea').fill('https://httpbin.org/get');
+    await page.getByRole('button', { name: 'Create' }).click();
+
+    await expect(page.locator('.collection-item-name').filter({ hasText: 'test-request' })).toBeVisible();
+
+    // Create second collection - click dropdown menu first
+    await page.locator('.dropdown-icon').click();
+    await page.locator('.dropdown-item').filter({ hasText: 'Create Collection' }).click();
+    await page.getByLabel('Name').fill('target-collection');
+    await page.getByLabel('Location').fill(await createTmpDir('target-collection'));
+    await page.getByRole('button', { name: 'Create', exact: true }).click();
+
+    await expect(page.locator('#sidebar-collection-name').filter({ hasText: 'target-collection' })).toBeVisible();
+    await page.locator('#sidebar-collection-name').filter({ hasText: 'target-collection' }).click();
+    await page.getByLabel('Safe Mode').check();
+    await page.getByRole('button', { name: 'Save' }).click();
+
+    await expect(page.locator('#sidebar-collection-name').filter({ hasText: 'source-collection' })).toBeVisible();
+    await expect(page.locator('#sidebar-collection-name').filter({ hasText: 'target-collection' })).toBeVisible();
+
+    // Locate the request in source collection
+    const sourceRequest = page.locator('.collection-item-name').filter({ hasText: 'test-request' });
+    await expect(sourceRequest).toBeVisible();
+
+    // Locate the target collection area (the collection name element)
+    const targetCollection = page.locator('.collection-name').filter({ hasText: 'target-collection' });
+    await expect(targetCollection).toBeVisible();
+
+    // Perform drag and drop operation
+    await sourceRequest.dragTo(targetCollection);
+
+    // Verify the request has been moved to the target collection
+    // Click on target collection to expand it if needed
+    await page.locator('#sidebar-collection-name').filter({ hasText: 'target-collection' }).click();
+
+    // Check that the request now appears under target collection
+    const targetCollectionContainer = page
+      .locator('.collection-name')
+      .filter({ hasText: 'target-collection' })
+      .locator('..');
+    await expect(
+      targetCollectionContainer.locator('.collection-item-name').filter({ hasText: 'test-request' })
+    ).toBeVisible();
+
+    // Verify the request is no longer in the source collection
+    const sourceCollectionContainer = page
+      .locator('.collection-name')
+      .filter({ hasText: 'source-collection' })
+      .locator('..');
+    await expect(
+      sourceCollectionContainer.locator('.collection-item-name').filter({ hasText: 'test-request' })
+    ).not.toBeVisible();
+  });
+
+  test('Expected to show error toast message, when duplicate request found in drop location', async ({
+    pageWithUserData: page,
+    createTmpDir
+  }) => {
+    // Create first collection (source-collection)
+    await page.locator('.dropdown-icon').click();
+    await page.locator('.dropdown-item').filter({ hasText: 'Create Collection' }).click();
+    await page.getByLabel('Name').fill('source-collection');
+    await page.getByLabel('Location').fill(await createTmpDir('source-collection'));
+    await page.getByRole('button', { name: 'Create', exact: true }).click();
+
+    // Open collection
+    await expect(page.locator('#sidebar-collection-name').filter({ hasText: 'source-collection' })).toBeVisible();
+    await page.locator('#sidebar-collection-name').filter({ hasText: 'source-collection' }).click();
+    await page.getByLabel('Safe Mode').check();
+    await page.getByRole('button', { name: 'Save' }).click();
+
+    // Create a request in the first collection (request-1)
+    await page.locator('#create-new-tab').getByRole('img').click();
+    await page.getByPlaceholder('Request Name').fill('request-1');
+    await page.locator('#new-request-url .CodeMirror').click();
+    await page.locator('textarea').fill('https://httpbin.org/get');
+    await page.getByRole('button', { name: 'Create' }).click();
+
+    // check if request-1 is created and visible in sidebar
+    await expect(page.locator('.collection-item-name').filter({ hasText: 'request-1' })).toBeVisible();
+
+    // Create second collection (target-collection)
+    await page.locator('.dropdown-icon').click();
+    await page.locator('.dropdown-item').filter({ hasText: 'Create Collection' }).click();
+    await page.getByLabel('Name').fill('target-collection');
+    await page.getByLabel('Location').fill(await createTmpDir('target-collection'));
+    await page.getByRole('button', { name: 'Create', exact: true }).click();
+
+    // Open collection
+    await expect(page.locator('#sidebar-collection-name').filter({ hasText: 'target-collection' })).toBeVisible();
+    await page.locator('#sidebar-collection-name').filter({ hasText: 'target-collection' }).click();
+    await page.getByLabel('Safe Mode').check();
+    await page.getByRole('button', { name: 'Save' }).click();
+
+    // Create a request in the target collection with the same name (request-1)
+    await page.locator('#create-new-tab').getByRole('img').click();
+    await page.getByPlaceholder('Request Name').fill('request-1');
+    await page.locator('#new-request-url .CodeMirror').click();
+    await page.locator('textarea').fill('https://httpbin.org/post');
+    await page.getByRole('button', { name: 'Create' }).click();
+
+    // Go back to source collection to drag the request
+    await page.locator('#sidebar-collection-name').filter({ hasText: 'source-collection' }).click();
+    const sourceRequest = page.locator('.collection-item-name').filter({ hasText: 'request-1' }).first();
+    await expect(sourceRequest).toBeVisible();
+
+    // Locate the target collection area
+    const targetCollection = page.locator('.collection-name').filter({ hasText: 'target-collection' });
+    await expect(targetCollection).toBeVisible();
+
+    // Perform drag and drop operation to target-collection
+    await sourceRequest.dragTo(targetCollection);
+
+    // check for error toast notification
+    await expect(page.getByText(/Error: Cannot copy.*already exists/i)).toBeVisible();
+
+    // source and target collection request should remain unchanged
+    const targetCollectionContainer = page
+      .locator('.collection-name')
+      .filter({ hasText: 'target-collection' })
+      .locator('..');
+    await expect(
+      targetCollectionContainer.locator('.collection-item-name').filter({ hasText: 'request-1' })
+    ).toBeVisible();
+
+    const sourceCollectionContainer = page
+      .locator('.collection-name')
+      .filter({ hasText: 'source-collection' })
+      .locator('..');
+    await expect(
+      sourceCollectionContainer.locator('.collection-item-name').filter({ hasText: 'request-1' })
+    ).toBeVisible();
+  });
+});
diff --git a/e2e-tests/003-collection-management-tests/002-cross-collection-drag-drop-folder.spec.ts b/e2e-tests/003-collection-management-tests/002-cross-collection-drag-drop-folder.spec.ts
new file mode 100644
index 000000000..d02bf91dc
--- /dev/null
+++ b/e2e-tests/003-collection-management-tests/002-cross-collection-drag-drop-folder.spec.ts
@@ -0,0 +1,235 @@
+import { test, expect } from '../../playwright';
+
+test.describe('Cross-Collection Drag and Drop for folder', () => {
+  test('Verify cross-collection folder drag and drop', async ({ pageWithUserData: page, createTmpDir }) => {
+    // Create first collection - click dropdown menu first
+    await page.locator('.dropdown-icon').click();
+    await page.locator('.dropdown-item').filter({ hasText: 'Create Collection' }).click();
+    await page.getByLabel('Name').fill('source-collection');
+    await page.getByLabel('Location').fill(await createTmpDir('source-collection'));
+    await page.getByRole('button', { name: 'Create', exact: true }).click();
+
+    // Wait for collection to appear and click on it
+    await expect(page.locator('#sidebar-collection-name').filter({ hasText: 'source-collection' })).toBeVisible();
+    await page.locator('#sidebar-collection-name').filter({ hasText: 'source-collection' }).click();
+    await page.getByLabel('Safe Mode').check();
+    await page.getByRole('button', { name: 'Save' }).click();
+
+    // Create a folder in the first collection
+    // Look for the collection menu button (usually three dots or similar)
+    await page.locator('.collection-actions').hover();
+    await page.locator('.collection-actions .icon').click();
+    await page.locator('.dropdown-item').filter({ hasText: 'New Folder' }).click();
+
+    // Fill folder name in the modal
+    await expect(page.locator('#collection-name')).toBeVisible();
+    await page.locator('#collection-name').fill('test-folder');
+    await page.getByRole('button', { name: 'Create' }).click();
+
+    // Wait for the folder to be created and appear in the sidebar
+    await page.waitForTimeout(2000);
+    await expect(page.locator('.collection-item-name').filter({ hasText: 'test-folder' })).toBeVisible();
+
+    // Add a request to the folder to make it more realistic
+    await page.locator('.collection-item-name').filter({ hasText: 'test-folder' }).click({ button: 'right' });
+    await page.locator('.dropdown-item').filter({ hasText: 'New Request' }).click();
+    await page.getByPlaceholder('Request Name').fill('test-request-in-folder');
+    await page.locator('#new-request-url .CodeMirror').click();
+    await page.locator('textarea').fill('https://httpbin.org/get');
+    await page.getByRole('button', { name: 'Create' }).click();
+
+    // Wait for the request to be created
+    await page.waitForTimeout(1000);
+
+    // Expand the folder to see the request inside
+    await page.locator('.collection-item-name').filter({ hasText: 'test-folder' }).click();
+    await page.waitForTimeout(500);
+    await expect(page.locator('.collection-item-name').filter({ hasText: 'test-request-in-folder' })).toBeVisible();
+
+    // Create second collection - click dropdown menu first
+    await page.locator('.dropdown-icon').click();
+    await page.locator('.dropdown-item').filter({ hasText: 'Create Collection' }).click();
+    await page.getByLabel('Name').fill('target-collection');
+    await page.getByLabel('Location').fill(await createTmpDir('target-collection'));
+    await page.getByRole('button', { name: 'Create', exact: true }).click();
+
+    // Wait for second collection to appear and click on it
+    await expect(page.locator('#sidebar-collection-name').filter({ hasText: 'target-collection' })).toBeVisible();
+    await page.locator('#sidebar-collection-name').filter({ hasText: 'target-collection' }).click();
+    await page.getByLabel('Safe Mode').check();
+    await page.getByRole('button', { name: 'Save' }).click();
+
+    // Wait for both collections to be visible in sidebar
+    await expect(page.locator('#sidebar-collection-name').filter({ hasText: 'source-collection' })).toBeVisible();
+    await expect(page.locator('#sidebar-collection-name').filter({ hasText: 'target-collection' })).toBeVisible();
+
+    // Locate the folder in source collection
+    const sourceFolder = page.locator('.collection-item-name').filter({ hasText: 'test-folder' });
+    await expect(sourceFolder).toBeVisible();
+
+    // Locate the target collection area (the collection name element)
+    const targetCollection = page.locator('.collection-name').filter({ hasText: 'target-collection' });
+    await expect(targetCollection).toBeVisible();
+
+    // Perform drag and drop operation
+    await sourceFolder.dragTo(targetCollection);
+
+    // Wait for the operation to complete
+    await page.waitForTimeout(3000);
+
+    // Verify the folder has been moved to the target collection
+    // Click on target collection to expand it if needed
+    await page.locator('#sidebar-collection-name').filter({ hasText: 'target-collection' }).click();
+    await page.waitForTimeout(1000);
+
+    // Check that the folder now appears under target collection
+    const targetCollectionContainer = page
+      .locator('.collection-name')
+      .filter({ hasText: 'target-collection' })
+      .locator('..');
+    await expect(
+      targetCollectionContainer.locator('.collection-item-name').filter({ hasText: 'test-folder' })
+    ).toBeVisible();
+
+    // Expand the moved folder to verify the request inside is also moved
+    await targetCollectionContainer.locator('.collection-item-name').filter({ hasText: 'test-folder' }).click();
+    await page.waitForTimeout(500);
+    await expect(
+      targetCollectionContainer.locator('.collection-item-name').filter({ hasText: 'test-request-in-folder' })
+    ).toBeVisible();
+
+    // Verify the folder is no longer in the source collection
+    const sourceCollectionContainer = page
+      .locator('.collection-name')
+      .filter({ hasText: 'source-collection' })
+      .locator('..');
+    await expect(
+      sourceCollectionContainer.locator('.collection-item-name').filter({ hasText: 'test-folder' })
+    ).not.toBeVisible();
+
+    // Verify the request is also no longer in the source collection
+    await expect(
+      sourceCollectionContainer.locator('.collection-item-name').filter({ hasText: 'test-request-in-folder' })
+    ).not.toBeVisible();
+  });
+
+  test('Verify cross-collection folder drag and drop, a duplicate folder exist. expected to throw error toast', async ({
+    pageWithUserData: page,
+    createTmpDir
+  }) => {
+    // Create first collection (source) - use unique names for this test
+    await page.locator('.dropdown-icon').click();
+    await page.locator('.dropdown-item').filter({ hasText: 'Create Collection' }).click();
+    await page.getByLabel('Name').fill('source-collection');
+    await page.getByLabel('Location').fill(await createTmpDir('source-collection'));
+    await page.getByRole('button', { name: 'Create', exact: true }).click();
+
+    // Wait for collection to appear and click on it
+    await expect(page.locator('#sidebar-collection-name').filter({ hasText: 'source-collection' })).toBeVisible();
+    await page.locator('#sidebar-collection-name').filter({ hasText: 'source-collection' }).click();
+    await page.getByLabel('Safe Mode').check();
+    await page.getByRole('button', { name: 'Save' }).click();
+
+    // Create a folder in the first collection
+    await page
+      .locator('.collection-name')
+      .filter({ hasText: 'source-collection' })
+      .locator('..')
+      .locator('.collection-actions')
+      .hover();
+    await page
+      .locator('.collection-name')
+      .filter({ hasText: 'source-collection' })
+      .locator('..')
+      .locator('.collection-actions .icon')
+      .click();
+    await page.locator('.dropdown-item').filter({ hasText: 'New Folder' }).click();
+    await expect(page.locator('#collection-name')).toBeVisible();
+    await page.locator('#collection-name').fill('folder-1');
+    await page.getByRole('button', { name: 'Create' }).click();
+
+    await expect(page.locator('.collection-item-name').filter({ hasText: 'folder-1' })).toBeVisible();
+
+    // Add a request to the folder to make it more realistic
+    await page.locator('.collection-item-name').filter({ hasText: 'folder-1' }).click({ button: 'right' });
+    await page.locator('.dropdown-item').filter({ hasText: 'New Request' }).click();
+    await page.getByPlaceholder('Request Name').fill('http-request');
+    await page.locator('#new-request-url .CodeMirror').click();
+    await page.locator('textarea').fill('https://httpbin.org/get');
+    await page.getByRole('button', { name: 'Create' }).click();
+    // Expand the folder to see the request inside
+    await page.locator('.collection-item-name').filter({ hasText: 'folder-1' }).click();
+    await expect(page.locator('.collection-item-name').filter({ hasText: 'http-request' })).toBeVisible();
+
+    // Create second collection (target)
+    await page.locator('.dropdown-icon').click();
+    await page.locator('.dropdown-item').filter({ hasText: 'Create Collection' }).click();
+    await page.getByLabel('Name').fill('target-collection');
+    await page.getByLabel('Location').fill(await createTmpDir('target-collection'));
+    await page.getByRole('button', { name: 'Create', exact: true }).click();
+
+    // Wait for second collection to appear and click on it
+    await expect(page.locator('#sidebar-collection-name').filter({ hasText: 'target-collection' })).toBeVisible();
+    await page.locator('#sidebar-collection-name').filter({ hasText: 'target-collection' }).click();
+    await page.getByLabel('Safe Mode').check();
+    await page.getByRole('button', { name: 'Save' }).click();
+
+    // Create a folder with the same name in the target collection
+    await page
+      .locator('.collection-name')
+      .filter({ hasText: 'target-collection' })
+      .locator('..')
+      .locator('.collection-actions')
+      .hover();
+    await page
+      .locator('.collection-name')
+      .filter({ hasText: 'target-collection' })
+      .locator('..')
+      .locator('.collection-actions .icon')
+      .click();
+    await page.locator('.dropdown-item').filter({ hasText: 'New Folder' }).click();
+    await expect(page.locator('#collection-name')).toBeVisible();
+    await page.locator('#collection-name').fill('folder-1');
+    await page.getByRole('button', { name: 'Create' }).click();
+
+    // Go back to source collection to drag the folder
+    await page.locator('#sidebar-collection-name').filter({ hasText: 'source-collection' }).click();
+
+    // Verify we have the folder to drag in the source collection
+    const sourceFolder = page.locator('.collection-item-name').filter({ hasText: 'folder-1' }).first();
+    await expect(sourceFolder).toBeVisible();
+
+    // Locate the target collection area
+    const targetCollection = page.locator('.collection-name').filter({ hasText: 'target-collection' });
+    await expect(targetCollection).toBeVisible();
+
+    // Perform drag and drop operation
+    await sourceFolder.dragTo(targetCollection);
+
+    // check for error toast notification
+    await expect(page.getByText(/Error: Cannot copy.*already exists/i)).toBeVisible();
+
+    // source and target collection request should remain unchanged
+    const sourceCollectionContainer = page
+      .locator('.collection-name')
+      .filter({ hasText: 'source-collection' })
+      .locator('..');
+    await expect(
+      sourceCollectionContainer.locator('.collection-item-name').filter({ hasText: 'folder-1' })
+    ).toBeVisible();
+    await expect(
+      sourceCollectionContainer.locator('.collection-item-name').filter({ hasText: 'http-request' })
+    ).toBeVisible();
+
+    const targetCollectionContainer = page
+      .locator('.collection-name')
+      .filter({ hasText: 'target-collection' })
+      .locator('..');
+    await expect(
+      targetCollectionContainer.locator('.collection-item-name').filter({ hasText: 'folder-1' })
+    ).toBeVisible();
+    await expect(
+      targetCollectionContainer.locator('.collection-item-name').filter({ hasText: 'http-request' })
+    ).not.toBeVisible();
+  });
+});
diff --git a/packages/bruno-app/src/components/Sidebar/Collections/Collection/CollectionItem/index.js b/packages/bruno-app/src/components/Sidebar/Collections/Collection/CollectionItem/index.js
index e7a3a21ea..1b09cb7e3 100644
--- a/packages/bruno-app/src/components/Sidebar/Collections/Collection/CollectionItem/index.js
+++ b/packages/bruno-app/src/components/Sidebar/Collections/Collection/CollectionItem/index.js
@@ -60,8 +60,8 @@ const CollectionItem = ({ item, collectionUid, collectionPathname, searchText })
   const [dropType, setDropType] = useState(null); // 'adjacent' or 'inside'
 
   const [{ isDragging }, drag, dragPreview] = useDrag({
-    type: `collection-item-${collectionUid}`,
-    item,
+    type: 'collection-item',
+    item: { ...item, sourceCollectionUid: collectionUid },
     collect: (monitor) => ({
       isDragging: monitor.isDragging()
     }),
@@ -92,10 +92,15 @@ const CollectionItem = ({ item, collectionUid, collectionPathname, searchText })
 
   const canItemBeDropped = ({ draggedItem, targetItem, dropType }) => {
     const { uid: targetItemUid, pathname: targetItemPathname } = targetItem;
-    const { uid: draggedItemUid, pathname: draggedItemPathname } = draggedItem;
+    const { uid: draggedItemUid, pathname: draggedItemPathname, sourceCollectionUid } = draggedItem;
 
     if (draggedItemUid === targetItemUid) return false;
 
+    // For cross-collection moves, we allow the drop
+    if (sourceCollectionUid !== collectionUid) {
+      return true;
+    }
+
     const newPathname = calculateDraggedItemNewPathname({ draggedItem, targetItem, dropType, collectionPathname });
     if (!newPathname) return false;
 
@@ -105,7 +110,7 @@ const CollectionItem = ({ item, collectionUid, collectionPathname, searchText })
   };
 
   const [{ isOver, canDrop }, drop] = useDrop({
-    accept: `collection-item-${collectionUid}`,
+    accept: 'collection-item',
     hover: (draggedItem, monitor) => {
       const { uid: targetItemUid } = item;
       const { uid: draggedItemUid } = draggedItem;
diff --git a/packages/bruno-app/src/components/Sidebar/Collections/Collection/StyledWrapper.js b/packages/bruno-app/src/components/Sidebar/Collections/Collection/StyledWrapper.js
index 8c1111c29..dc2e05251 100644
--- a/packages/bruno-app/src/components/Sidebar/Collections/Collection/StyledWrapper.js
+++ b/packages/bruno-app/src/components/Sidebar/Collections/Collection/StyledWrapper.js
@@ -7,6 +7,7 @@ const Wrapper = styled.div`
     user-select: none;
     padding-left: 8px;
     font-weight: 600;
+    border: ${(props) => props.theme.dragAndDrop.borderStyle} transparent;
 
     .rotate-90 {
       transform: rotateZ(90deg);
@@ -66,6 +67,7 @@ const Wrapper = styled.div`
     }
 
     &.drop-target {
+      border: ${(props) => props.theme.dragAndDrop.borderStyle} ${(props) => props.theme.dragAndDrop.border};
       background-color: ${(props) => props.theme.dragAndDrop.hoverBg};
       transition: ${(props) => props.theme.dragAndDrop.transition};
     }
@@ -95,15 +97,6 @@ const Wrapper = styled.div`
     }
   }
 
-  .collection-name.drop-target {
-    border: ${(props) => props.theme.dragAndDrop.borderStyle} ${(props) => props.theme.dragAndDrop.border};
-    border-radius: 4px;
-    background-color: ${(props) => props.theme.dragAndDrop.hoverBg};
-    margin: -2px;
-    transition: ${(props) => props.theme.dragAndDrop.transition};
-    box-shadow: 0 0 0 2px ${(props) => props.theme.dragAndDrop.hoverBg};
-  }
-
   #sidebar-collection-name {
     white-space: nowrap;
     text-overflow: ellipsis;
diff --git a/packages/bruno-app/src/components/Sidebar/Collections/Collection/index.js b/packages/bruno-app/src/components/Sidebar/Collections/Collection/index.js
index 67ffcb68b..3152bef8c 100644
--- a/packages/bruno-app/src/components/Sidebar/Collections/Collection/index.js
+++ b/packages/bruno-app/src/components/Sidebar/Collections/Collection/index.js
@@ -34,6 +34,7 @@ const Collection = ({ collection, searchText }) => {
   const [showCloneCollectionModalOpen, setShowCloneCollectionModalOpen] = useState(false);
   const [showShareCollectionModal, setShowShareCollectionModal] = useState(false);
   const [showRemoveCollectionModal, setShowRemoveCollectionModal] = useState(false);
+  const [dropType, setDropType] = useState(null);
   const dispatch = useDispatch();
   const isLoading = areItemsLoading(collection);
   const collectionRef = useRef(null);
@@ -42,7 +43,7 @@ const Collection = ({ collection, searchText }) => {
   
   const menuDropdownTippyRef = useRef();
   const onMenuDropdownCreate = (ref) => (menuDropdownTippyRef.current = ref);
-  const MenuIcon = forwardRef((props, ref) => {
+  const MenuIcon = forwardRef((_props, ref) => {
     return (
       <div ref={ref} className="pr-2">
         <IconDots size={22} />
@@ -101,7 +102,7 @@ const Collection = ({ collection, searchText }) => {
     }
   };
 
-  const handleDoubleClick = (event) => {
+  const handleDoubleClick = (_event) => {
     dispatch(makeTabPermanent({ uid: collection.uid }))
   };
 
@@ -118,7 +119,7 @@ const Collection = ({ collection, searchText }) => {
     e.preventDefault();
   };
 
-  const handleRightClick = (event) => {
+  const handleRightClick = (_event) => {
     const _menuDropdown = menuDropdownTippyRef.current;
     if (_menuDropdown) {
       let menuDropdownBehavior = 'show';
@@ -140,7 +141,7 @@ const Collection = ({ collection, searchText }) => {
   };
 
   const isCollectionItem = (itemType) => {
-    return itemType.startsWith('collection-item');
+    return itemType === 'collection-item';
   };
 
   const [{ isDragging }, drag, dragPreview] = useDrag({
@@ -155,7 +156,17 @@ const Collection = ({ collection, searchText }) => {
   });
   
   const [{ isOver }, drop] = useDrop({
-    accept: ["collection", `collection-item-${collection.uid}`],
+    accept: ["collection", "collection-item"],
+    hover: (_draggedItem, monitor) => {
+      const itemType = monitor.getItemType();
+      if (isCollectionItem(itemType)) {
+        // For collection items, always show full highlight (inside drop)
+        setDropType('inside');
+      } else {
+        // For collections, show line indicator (adjacent drop)
+        setDropType('adjacent');
+      }
+    },
     drop: (draggedItem, monitor) => {
       const itemType = monitor.getItemType();
       if (isCollectionItem(itemType)) {
@@ -163,6 +174,7 @@ const Collection = ({ collection, searchText }) => {
       } else {
         dispatch(moveCollectionAndPersist({draggedItem, targetItem: collection}));
       }
+      setDropType(null);
     },
     canDrop: (draggedItem) => {
       return draggedItem.uid !== collection.uid;
@@ -183,7 +195,8 @@ const Collection = ({ collection, searchText }) => {
   }
 
   const collectionRowClassName = classnames('flex py-1 collection-name items-center', {
-      'item-hovered': isOver,
+      'item-hovered': isOver && dropType === 'adjacent', // For collection-to-collection moves (show line)
+      'drop-target': isOver && dropType === 'inside', // For collection-item drops (highlight full area)
       'collection-focused-in-tab': isCollectionFocused
     });
 
@@ -241,7 +254,7 @@ const Collection = ({ collection, searchText }) => {
           <Dropdown onCreate={onMenuDropdownCreate} icon={<MenuIcon />} placement="bottom-start">
             <div
               className="dropdown-item"
-              onClick={(e) => {
+              onClick={(_e) => {
                 menuDropdownTippyRef.current.hide();
                 setShowNewRequestModal(true);
               }}
@@ -250,7 +263,7 @@ const Collection = ({ collection, searchText }) => {
             </div>
             <div
               className="dropdown-item"
-              onClick={(e) => {
+              onClick={(_e) => {
                 menuDropdownTippyRef.current.hide();
                 setShowNewFolderModal(true);
               }}
@@ -259,7 +272,7 @@ const Collection = ({ collection, searchText }) => {
             </div>
             <div
               className="dropdown-item"
-              onClick={(e) => {
+              onClick={(_e) => {
                 menuDropdownTippyRef.current.hide();
                 setShowCloneCollectionModalOpen(true);
               }}
@@ -268,7 +281,7 @@ const Collection = ({ collection, searchText }) => {
             </div>
             <div
               className="dropdown-item"
-              onClick={(e) => {
+              onClick={(_e) => {
                 menuDropdownTippyRef.current.hide();
                 ensureCollectionIsMounted();
                 handleRun();
@@ -278,7 +291,7 @@ const Collection = ({ collection, searchText }) => {
             </div>
             <div
               className="dropdown-item"
-              onClick={(e) => {
+              onClick={(_e) => {
                 menuDropdownTippyRef.current.hide();
                 setShowRenameCollectionModal(true);
               }}
@@ -287,7 +300,7 @@ const Collection = ({ collection, searchText }) => {
             </div>
             <div
               className="dropdown-item"
-              onClick={(e) => {
+              onClick={(_e) => {
                 menuDropdownTippyRef.current.hide();
                 ensureCollectionIsMounted();
                 setShowShareCollectionModal(true);
@@ -297,7 +310,7 @@ const Collection = ({ collection, searchText }) => {
             </div>
             <div
               className="dropdown-item"
-              onClick={(e) => {
+              onClick={(_e) => {
                 menuDropdownTippyRef.current.hide();
                 setShowRemoveCollectionModal(true);
               }}
@@ -306,7 +319,7 @@ const Collection = ({ collection, searchText }) => {
             </div>
             <div
               className="dropdown-item"
-              onClick={(e) => {
+              onClick={(_e) => {
                 menuDropdownTippyRef.current.hide();
                 viewCollectionSettings();
               }}
diff --git a/packages/bruno-app/src/providers/ReduxStore/slices/collections/actions.js b/packages/bruno-app/src/providers/ReduxStore/slices/collections/actions.js
index 2787016c4..c341cf4f5 100644
--- a/packages/bruno-app/src/providers/ReduxStore/slices/collections/actions.js
+++ b/packages/bruno-app/src/providers/ReduxStore/slices/collections/actions.js
@@ -726,11 +726,16 @@ export const handleCollectionItemDrop =
   (dispatch, getState) => {
     const state = getState();
     const collection = findCollectionByUid(state.collections.collections, collectionUid);
+    // if its withincollection set the source to current collection,
+    // if its cross collection set the source to the source collection
+    const sourceCollectionUid = draggedItem.sourceCollectionUid
+    const isCrossCollectionMove = sourceCollectionUid && collectionUid !== sourceCollectionUid;
+    const sourceCollection = isCrossCollectionMove ? findCollectionByUid(state.collections.collections, sourceCollectionUid) : collection;
     const { uid: draggedItemUid, pathname: draggedItemPathname } = draggedItem;
     const { uid: targetItemUid, pathname: targetItemPathname } = targetItem;
     const targetItemDirectory = findParentItemInCollection(collection, targetItemUid) || collection;
     const targetItemDirectoryItems = cloneDeep(targetItemDirectory.items);
-    const draggedItemDirectory = findParentItemInCollection(collection, draggedItemUid) || collection;
+    const draggedItemDirectory = findParentItemInCollection(sourceCollection, draggedItemUid) || sourceCollection;
     const draggedItemDirectoryItems = cloneDeep(draggedItemDirectory.items);
 
     const handleMoveToNewLocation = async ({
diff --git a/packages/bruno-electron/src/ipc/collection.js b/packages/bruno-electron/src/ipc/collection.js
index 30cf11111..f26ec6a2c 100644
--- a/packages/bruno-electron/src/ipc/collection.js
+++ b/packages/bruno-electron/src/ipc/collection.js
@@ -699,7 +699,7 @@ const registerRendererEventHandlers = (mainWindow, watcher, lastOpenedCollection
       // Recursive function to parse the folder and create files/folders
       const parseCollectionItems = (items = [], currentPath) => {
         items.forEach(async (item) => {
-          if (['http-request', 'graphql-request'].includes(item.type)) {
+          if (['http-request', 'graphql-request', 'grpc-request'].includes(item.type)) {
             const content = await stringifyRequestViaWorker(item);            
             const filePath = path.join(currentPath, item.filename);
             safeWriteFileSync(filePath, content);