diff --git a/src/components/dropdown/dropdown.scss b/src/components/dropdown/dropdown.scss
index 8d8ac159a..264935889 100644
--- a/src/components/dropdown/dropdown.scss
+++ b/src/components/dropdown/dropdown.scss
@@ -12,9 +12,12 @@
   display: block;
 }
 
-.dropdown__panel {
+.dropdown__panel-positioner {
   position: absolute;
   z-index: var(--sl-z-index-dropdown);
+}
+
+.dropdown__panel {
   max-height: 50vh;
   font-family: var(--sl-font-sans);
   font-size: var(--sl-font-size-medium);
@@ -27,9 +30,27 @@
   opacity: 0;
   overflow: auto;
   overscroll-behavior: none;
-  transition: var(--sl-transition-fast) opacity;
-
-  &.popover-visible {
-    opacity: 1;
-  }
+  transform: scale(0.9);
+  transition: var(--sl-transition-fast) opacity, var(--sl-transition-fast) transform;
+}
+
+[data-popper-placement^='top'] .dropdown__panel {
+  transform-origin: bottom;
+}
+
+[data-popper-placement^='bottom'] .dropdown__panel {
+  transform-origin: top;
+}
+
+[data-popper-placement^='left'] .dropdown__panel {
+  transform-origin: right;
+}
+
+[data-popper-placement^='right'] .dropdown__panel {
+  transform-origin: left;
+}
+
+.popover-visible .dropdown__panel {
+  opacity: 1;
+  transform: scale(1);
 }
diff --git a/src/components/dropdown/dropdown.tsx b/src/components/dropdown/dropdown.tsx
index 90016a25d..7fa11e9e7 100644
--- a/src/components/dropdown/dropdown.tsx
+++ b/src/components/dropdown/dropdown.tsx
@@ -25,6 +25,7 @@ export class Dropdown {
   componentId = `dropdown-${++id}`;
   isShowing = false;
   panel: HTMLElement;
+  panelPositioner: HTMLElement;
   popover: Popover;
   trigger: HTMLElement;
 
@@ -113,11 +114,12 @@ export class Dropdown {
   }
 
   componentDidLoad() {
-    this.popover = new Popover(this.trigger, this.panel, {
+    this.popover = new Popover(this.trigger, this.panelPositioner, {
       strategy: this.hoist ? 'fixed' : 'absolute',
       placement: this.placement,
       distance: this.distance,
       skidding: this.skidding,
+      transitionElement: this.panel,
       onAfterHide: () => this.slAfterHide.emit(),
       onAfterShow: () => this.slAfterShow.emit(),
       onTransitionEnd: () => {
@@ -307,16 +309,19 @@ export class Dropdown {
           <slot name="trigger" />
         </span>
 
-        <div
-          ref={el => (this.panel = el)}
-          part="panel"
-          class="dropdown__panel"
-          role="menu"
-          aria-hidden={!this.open}
-          aria-labelledby={this.componentId}
-          hidden
-        >
-          <slot />
+        {/* Position the panel with a wrapper, since the popover uses `translate`. This lets us expose the panel so the
+        user can style it without interfering with the position. */}
+        <div ref={el => (this.panelPositioner = el)} class="dropdown__panel-positioner">
+          <div
+            ref={el => (this.panel = el)}
+            part="panel"
+            class="dropdown__panel"
+            role="menu"
+            aria-hidden={!this.open}
+            aria-labelledby={this.componentId}
+          >
+            <slot />
+          </div>
         </div>
       </div>
     );