diff --git a/src/internal/components/selectable-item/styles.scss b/src/internal/components/selectable-item/styles.scss
index 0bbac402c9..e926f23e9a 100644
--- a/src/internal/components/selectable-item/styles.scss
+++ b/src/internal/components/selectable-item/styles.scss
@@ -6,6 +6,43 @@
 @use '../../styles' as styles;
 @use '../../styles/tokens' as awsui;
 
+// When using virtual scrolling, use box-shadows to mimic changing border width
+// and set the actual border to a fixed width to prevent jumping behaviour when
+// hovering selectable items
+$virtual-border-offset: calc(#{awsui.$border-item-width} - #{awsui.$border-divider-list-width});
+$virtual-border-offset-double: calc(2 * #{awsui.$border-item-width} - #{awsui.$border-divider-list-width});
+
+@mixin virtual-border-padding {
+  border-width: awsui.$border-divider-list-width;
+  padding-block: 0;
+  padding-inline: 0;
+  > .selectable-item-content {
+    padding-block: calc(#{styles.$option-padding-vertical} + #{$virtual-border-offset});
+    padding-inline: calc(#{styles.$control-padding-horizontal} + #{$virtual-border-offset});
+  }
+}
+
+@mixin virtual-highlighted-shadow {
+  box-shadow: inset 0 0 0 $virtual-border-offset awsui.$color-border-dropdown-item-hover;
+  &.is-keyboard {
+    box-shadow: inset 0 0 0 $virtual-border-offset awsui.$color-border-dropdown-item-focused;
+  }
+}
+
+@mixin virtual-selected-shadow {
+  box-shadow: inset 0 0 0 $virtual-border-offset awsui.$color-border-dropdown-item-selected;
+  &.highlighted {
+    box-shadow:
+      inset 0 0 0 $virtual-border-offset awsui.$color-border-dropdown-item-selected,
+      inset 0 0 0 $virtual-border-offset-double awsui.$color-border-dropdown-item-hover;
+    &.is-keyboard {
+      box-shadow:
+        inset 0 0 0 $virtual-border-offset awsui.$color-border-dropdown-item-selected,
+        inset 0 0 0 $virtual-border-offset-double awsui.$color-border-dropdown-item-focused;
+    }
+  }
+}
+
 // Outer borders of adjacent cells overlap and we want selected option border
 // to take precedence over the other ones, hence negative margins and z-indices
 .selectable-item {
@@ -199,6 +236,25 @@
     // Stay on top of the other options when they are scrolled up
     z-index: 4;
 
+    // Apply fixed border width to sticky items when there are virtual siblings (virtual scroll is enabled)
+    &:has(~ .virtual) {
+      &.highlighted:not(.selected) {
+        @include virtual-border-padding;
+        margin-block-end: calc(
+          #{awsui.$border-item-width} - #{awsui.$border-divider-list-width} - #{$virtual-border-offset}
+        );
+        @include virtual-highlighted-shadow;
+      }
+
+      &.selected {
+        @include virtual-border-padding;
+        margin-block-end: calc(
+          #{awsui.$border-item-width} - #{awsui.$border-divider-list-width} - #{$virtual-border-offset}
+        );
+        @include virtual-selected-shadow;
+      }
+    }
+
     &:not(.highlighted):not(.selected) {
       // Prevent covering the list border despite the higher z-index
       border-inline-start-width: awsui.$border-item-width;
@@ -253,6 +309,65 @@
     &:first-of-type:not(.selected, .highlighted) {
       border-block-start-color: awsui.$color-border-dropdown-item-top;
     }
+
+    &.parent:not(.interactiveGroups) {
+      border-block-start-width: awsui.$border-divider-list-width;
+      border-block-start-color: awsui.$color-border-dropdown-group;
+      padding-block: 0;
+      padding-inline: 0;
+      > .selectable-item-content {
+        padding-block: awsui.$space-xs;
+        padding-inline: awsui.$space-xs;
+      }
+    }
+
+    &.parent.interactiveGroups:not(.highlighted):not(.selected) {
+      border-block-start-color: awsui.$color-border-dropdown-group;
+    }
+
+    &.highlighted:not(.selected) {
+      @include virtual-border-padding;
+      @include virtual-highlighted-shadow;
+    }
+
+    &.selected {
+      @include virtual-border-padding;
+      @include virtual-selected-shadow;
+    }
+
+    &.selected.child > .selectable-item-content {
+      padding-inline-start: calc(#{awsui.$space-xxl} + #{$virtual-border-offset});
+    }
+
+    &.selected.pad-bottom > .selectable-item-content {
+      padding-block-end: calc(#{styles.$option-padding-vertical} + #{awsui.$space-xxxs} + #{$virtual-border-offset});
+    }
+
+    &.highlighted:not(.selected).child > .selectable-item-content {
+      padding-inline-start: calc(#{awsui.$space-xxl} + #{$virtual-border-offset});
+    }
+
+    &.highlighted:not(.selected).pad-bottom > .selectable-item-content {
+      padding-block-end: calc(#{styles.$option-padding-vertical} + #{awsui.$space-xxxs} + #{$virtual-border-offset});
+    }
+
+    &.parent.interactiveGroups.selected > .selectable-item-content,
+    &.parent.interactiveGroups.highlighted:not(.selected) > .selectable-item-content {
+      padding-block: calc(#{styles.$group-option-padding-vertical} + #{$virtual-border-offset});
+      padding-inline: calc(#{styles.$control-padding-horizontal} + #{$virtual-border-offset});
+    }
+
+    &.sticky {
+      &.highlighted:not(.selected) {
+        @include virtual-border-padding;
+        @include virtual-highlighted-shadow;
+      }
+
+      &.selected {
+        @include virtual-border-padding;
+        @include virtual-selected-shadow;
+      }
+    }
   }
 }
 
diff --git a/src/internal/hooks/use-virtual/index.ts b/src/internal/hooks/use-virtual/index.ts
index ffc3dee761..28fa4c16b7 100644
--- a/src/internal/hooks/use-virtual/index.ts
+++ b/src/internal/hooks/use-virtual/index.ts
@@ -16,6 +16,7 @@ interface UseVirtualProps<Item> {
   parentRef: React.RefObject<HTMLElement>;
   estimateSize: () => number;
   firstItemSticky?: boolean;
+  itemOverlap?: number;
 }
 
 interface RowVirtualizer {
@@ -41,6 +42,7 @@ export function useVirtual<Item extends object>({
   parentRef,
   estimateSize,
   firstItemSticky,
+  itemOverlap = 0,
 }: UseVirtualProps<Item>): RowVirtualizer {
   const rowVirtualizer = useVirtualDefault({
     size: items.length,
@@ -61,22 +63,45 @@ export function useVirtual<Item extends object>({
 
   const virtualItems = useMemo(
     () =>
-      rowVirtualizer.virtualItems.map(virtualItem => ({
-        ...virtualItem,
-        measureRef: (node: null | HTMLElement) => {
-          const mountedCount = measuresCache.current.get(items[virtualItem.index]) ?? 0;
-          if (mountedCount < MAX_ITEM_MOUNTS) {
-            virtualItem.measureRef(node);
-            measuresCache.current.set(items[virtualItem.index], mountedCount + 1);
-          }
-        },
-      })),
-    [items, rowVirtualizer.virtualItems]
+      rowVirtualizer.virtualItems.map((virtualItem, index) => {
+        let adjustedStart: number;
+        if (firstItemSticky && virtualItem.index !== 0) {
+          adjustedStart = virtualItem.start + 1 - index * itemOverlap;
+        } else {
+          adjustedStart = virtualItem.start - index * itemOverlap;
+        }
+
+        return {
+          ...virtualItem,
+          start: adjustedStart,
+          measureRef: (node: null | HTMLElement) => {
+            const mountedCount = measuresCache.current.get(items[virtualItem.index]) ?? 0;
+            if (mountedCount < MAX_ITEM_MOUNTS) {
+              virtualItem.measureRef(node);
+              measuresCache.current.set(items[virtualItem.index], mountedCount + 1);
+            }
+          },
+        };
+      }),
+    [items, rowVirtualizer.virtualItems, firstItemSticky, itemOverlap]
   );
 
+  // Adjust totalSize to account for applied itemOverlap. Since adjustedStart
+  // uses the render index (not virtualItem.index) for overlap calculation, we
+  // must use the maximum render index to determine the total overlap reduction.
+  // The last rendered item has render index (virtualItems.length - 1), so the
+  // total overlap applied is (virtualItems.length - 1) * itemOverlap.
+
+  const firstItemSize = virtualItems[0]?.size ?? 0;
+  const maxRenderIndex = virtualItems.length - 1;
+  const totalOverlapReduction = maxRenderIndex >= 0 ? maxRenderIndex * itemOverlap : 0;
+
+  let adjustedTotalSize = rowVirtualizer.totalSize - totalOverlapReduction;
+  adjustedTotalSize = firstItemSticky ? adjustedTotalSize - firstItemSize : adjustedTotalSize;
+
   return {
     virtualItems,
-    totalSize: rowVirtualizer.totalSize,
+    totalSize: adjustedTotalSize,
     scrollToIndex: rowVirtualizer.scrollToIndex,
   };
 }
diff --git a/src/select/parts/virtual-list.tsx b/src/select/parts/virtual-list.tsx
index 93b611ef9d..eb3458d131 100644
--- a/src/select/parts/virtual-list.tsx
+++ b/src/select/parts/virtual-list.tsx
@@ -54,6 +54,7 @@ const VirtualListOpen = forwardRef(
       // eslint-disable-next-line react-hooks/exhaustive-deps
       estimateSize: useCallback(() => fallbackItemHeight, [width?.inner, filteringValue]),
       firstItemSticky: firstOptionSticky,
+      itemOverlap: 1,
     });
 
     useImperativeHandle(
@@ -108,12 +109,7 @@ const VirtualListOpen = forwardRef(
     return (
       <OptionsList {...menuProps} stickyItemBlockSize={stickySize} ref={menuRef}>
         {finalOptions}
-        <div
-          aria-hidden="true"
-          key="total-size"
-          className={styles['layout-strut']}
-          style={{ height: totalSize - stickySize }}
-        />
+        <div aria-hidden="true" key="total-size" className={styles['layout-strut']} style={{ height: totalSize }} />
         {listBottom ? (
           <div role="option" className={styles['list-bottom']}>
             {listBottom}
diff --git a/src/select/utils/render-options.tsx b/src/select/utils/render-options.tsx
index 15aa8d31b2..98a95a822e 100644
--- a/src/select/utils/render-options.tsx
+++ b/src/select/utils/render-options.tsx
@@ -75,7 +75,7 @@ export const renderOptions = ({
         virtualIndex={virtualItem ? virtualItem.index : undefined}
         key={globalIndex}
         {...props}
-        virtualPosition={virtualItem && virtualItem.start}
+        virtualPosition={virtualItem?.start}
         ref={isSticky && stickyOptionRef ? stickyOptionRef : virtualItem && virtualItem.measureRef}
         padBottom={padBottom}
         screenReaderContent={screenReaderContent}