diff --git a/Code/Framework/AzToolsFramework/AzToolsFramework/ViewportUi/ViewportUiDisplay.cpp b/Code/Framework/AzToolsFramework/AzToolsFramework/ViewportUi/ViewportUiDisplay.cpp
index bb2aeed4d6..81be2bba90 100644
--- a/Code/Framework/AzToolsFramework/AzToolsFramework/ViewportUi/ViewportUiDisplay.cpp
+++ b/Code/Framework/AzToolsFramework/AzToolsFramework/ViewportUi/ViewportUiDisplay.cpp
@@ -24,8 +24,6 @@
 
 namespace AzToolsFramework::ViewportUi::Internal
 {
-    // margin for the Viewport UI Overlay in pixels
-    const static int ViewportUiOverlayMargin = 5;
     const static int HighlightBorderSize = 5;
     const static int TopHighlightBorderSize = 25;
     const static char* HighlightBorderColor = "#44B2F8";
@@ -387,7 +385,6 @@ namespace AzToolsFramework::ViewportUi::Internal
         m_fullScreenLayout.setSpacing(0);
         m_fullScreenLayout.setContentsMargins(0, 0, 0, 0);
         m_fullScreenLayout.addLayout(&m_uiOverlayLayout, 0, 0, 1, 1);
-        m_uiOverlayLayout.setMargin(ViewportUiOverlayMargin);
 
         // format the label which will appear on top of the highlight border
         AZStd::string styleSheet = AZStd::string::format(
diff --git a/Code/Framework/AzToolsFramework/AzToolsFramework/ViewportUi/ViewportUiDisplayLayout.cpp b/Code/Framework/AzToolsFramework/AzToolsFramework/ViewportUi/ViewportUiDisplayLayout.cpp
index bab664d832..92fad8cc93 100644
--- a/Code/Framework/AzToolsFramework/AzToolsFramework/ViewportUi/ViewportUiDisplayLayout.cpp
+++ b/Code/Framework/AzToolsFramework/AzToolsFramework/ViewportUi/ViewportUiDisplayLayout.cpp
@@ -25,13 +25,15 @@ namespace AzToolsFramework::ViewportUi::Internal
         : QGridLayout(parent)
     {
         // set margins and spacing for internal contents
-        setContentsMargins(0, 0, 0, 0);
+        setContentsMargins(
+            ViewportUiOverlayMargin, ViewportUiOverlayMargin + ViewportUiOverlayTopMarginPadding, ViewportUiOverlayMargin,
+            ViewportUiOverlayMargin);
         setSpacing(ViewportUiDisplayLayoutSpacing);
 
         // create a 3x2 map of sub layouts which will stack widgets according to their mapped alignment
         m_internalLayouts = AZStd::unordered_map<Qt::Alignment, QBoxLayout*> {
             CreateSubLayout(new QVBoxLayout(), 0, 0, Qt::AlignTop | Qt::AlignLeft),
-            CreateSubLayout(new QHBoxLayout(), 1, 0, Qt::AlignBottom | Qt::AlignLeft),
+            CreateSubLayout(new QVBoxLayout(), 1, 0, Qt::AlignBottom | Qt::AlignLeft),
             CreateSubLayout(new QVBoxLayout(), 0, 1, Qt::AlignTop),
             CreateSubLayout(new QHBoxLayout(), 1, 1, Qt::AlignBottom),
             CreateSubLayout(new QVBoxLayout(), 0, 2, Qt::AlignTop | Qt::AlignRight),
@@ -50,9 +52,42 @@ namespace AzToolsFramework::ViewportUi::Internal
         if (auto layoutForAlignment = m_internalLayouts.find(alignment);
             layoutForAlignment != m_internalLayouts.end())
         {
-            // place the widget before the invisible spacer
-            // spacer must be last item in layout to not interfere with positioning
-            int index = layoutForAlignment->second->count() - 1;
+            // place the widget before or after the invisible spacer
+            // depending on the layout alignment
+            int index = 0;
+            switch (alignment)
+            {
+            case Qt::AlignTop | Qt::AlignLeft:
+            case Qt::AlignTop:
+                index = layoutForAlignment->second->count() - 1;
+                break;
+            case Qt::AlignBottom | Qt::AlignRight:
+            case Qt::AlignBottom:
+                index = layoutForAlignment->second->count();
+                break;
+            // TopRight and BottomLeft are special cases
+            // place the spacer differently according to whether it's a vertical or horizontal layout
+            case Qt::AlignTop | Qt::AlignRight:
+                if (QVBoxLayout* vLayout = qobject_cast<QVBoxLayout*>(layoutForAlignment->second))
+                {
+                    index = layoutForAlignment->second->count() - 1;
+                }
+                else if (QHBoxLayout* hLayout = qobject_cast<QHBoxLayout*>(layoutForAlignment->second))
+                {
+                    index = layoutForAlignment->second->count();
+                }
+                break;
+            case Qt::AlignBottom | Qt::AlignLeft:
+                if (QVBoxLayout* vLayout = qobject_cast<QVBoxLayout*>(layoutForAlignment->second))
+                {
+                    index = layoutForAlignment->second->count();
+                }
+                else if (QHBoxLayout* hLayout = qobject_cast<QHBoxLayout*>(layoutForAlignment->second))
+                {
+                    index = layoutForAlignment->second->count() - 1;
+                }
+                break;
+            }
             layoutForAlignment->second->insertWidget(index, widget);
         }
     }
diff --git a/Code/Framework/AzToolsFramework/AzToolsFramework/ViewportUi/ViewportUiDisplayLayout.h b/Code/Framework/AzToolsFramework/AzToolsFramework/ViewportUi/ViewportUiDisplayLayout.h
index 0beb0d5bd6..8d710264be 100644
--- a/Code/Framework/AzToolsFramework/AzToolsFramework/ViewportUi/ViewportUiDisplayLayout.h
+++ b/Code/Framework/AzToolsFramework/AzToolsFramework/ViewportUi/ViewportUiDisplayLayout.h
@@ -19,6 +19,11 @@
 
 namespace AzToolsFramework::ViewportUi::Internal
 {
+    // margin for the Viewport UI Overlay in pixels
+    constexpr int ViewportUiOverlayMargin = 5;
+    // padding to make space for ImGui
+    constexpr int ViewportUiOverlayTopMarginPadding = 20;
+
     //! QGridLayout implementation that uses a grid of QVBox/QHBoxLayouts internally to stack widgets.
     class ViewportUiDisplayLayout : public QGridLayout
     {