diff --git a/browser/components/customizableui/CustomizableUI.jsm b/browser/components/customizableui/CustomizableUI.jsm
index b3f76d8acfbf..aa809760c503 100644
--- a/browser/components/customizableui/CustomizableUI.jsm
+++ b/browser/components/customizableui/CustomizableUI.jsm
@@ -5614,7 +5614,8 @@ class OverflowableToolbar {
 
   /**
    * Allows callers to query for the current parent of a toolbar item that may
-   * or may not be overflowed. That parent will either be #defaultList or #target.
+   * or may not be overflowed. That parent will either be #defaultList,
+   * #webExtList (if it's an extension button) or #target.
    *
    * Note: It is assumed that the caller has verified that aNode is placed
    * within the toolbar customizable area according to CustomizableUI.
@@ -5625,7 +5626,9 @@ class OverflowableToolbar {
    */
   getContainerFor(aNode) {
     if (aNode.getAttribute("overflowedItem") == "true") {
-      return this.#defaultList;
+      return CustomizableUI.isWebExtensionWidget(aNode.id)
+        ? this.#webExtList
+        : this.#defaultList;
     }
     return this.#target;
   }
@@ -6003,6 +6006,17 @@ class OverflowableToolbar {
     return this.#webExtList;
   }
 
+  /**
+   * Returns true if aNode is not null and is one of either this.#webExtList or
+   * this.#defaultList.
+   *
+   * @param {DOMElement} aNode The node to test.
+   * @returns {boolean}
+   */
+  #isOverflowList(aNode) {
+    return aNode && (aNode == this.#defaultList || aNode == this.#webExtList);
+  }
+
   /**
    * Private event handlers start here.
    */
@@ -6075,30 +6089,25 @@ class OverflowableToolbar {
     // moved or removed from an area via the CustomizableUI API while
     // overflowed. It reorganizes the internal state of this OverflowableToolbar
     // to handle that change.
-    if (
-      !this.#enabled ||
-      (aContainer != this.#target && aContainer != this.#defaultList)
-    ) {
+    if (!this.#enabled || !this.#isOverflowList(aContainer)) {
       return;
     }
     // When we (re)move an item, update all the items that come after it in the list
     // with the minsize *of the item before the to-be-removed node*. This way, we
     // ensure that we try to move items back as soon as that's possible.
-    if (aNode.parentNode == this.#defaultList) {
-      let updatedMinSize;
-      if (aNode.previousElementSibling) {
-        updatedMinSize = this.#overflowedInfo.get(
-          aNode.previousElementSibling.id
-        );
-      } else {
-        // Force (these) items to try to flow back into the bar:
-        updatedMinSize = 1;
-      }
-      let nextItem = aNode.nextElementSibling;
-      while (nextItem) {
-        this.#overflowedInfo.set(nextItem.id, updatedMinSize);
-        nextItem = nextItem.nextElementSibling;
-      }
+    let updatedMinSize;
+    if (aNode.previousElementSibling) {
+      updatedMinSize = this.#overflowedInfo.get(
+        aNode.previousElementSibling.id
+      );
+    } else {
+      // Force (these) items to try to flow back into the bar:
+      updatedMinSize = 1;
+    }
+    let nextItem = aNode.nextElementSibling;
+    while (nextItem) {
+      this.#overflowedInfo.set(nextItem.id, updatedMinSize);
+      nextItem = nextItem.nextElementSibling;
     }
   }
 
@@ -6109,12 +6118,12 @@ class OverflowableToolbar {
     // causes overflow or underflow of the toolbar.
     if (
       !this.#enabled ||
-      (aContainer != this.#target && aContainer != this.#defaultList)
+      (aContainer != this.#target && !this.#isOverflowList(aContainer))
     ) {
       return;
     }
 
-    let nowOverflowed = aNode.parentNode == this.#defaultList;
+    let nowOverflowed = this.#isOverflowList(aNode.parentNode);
     let wasOverflowed = this.#overflowedInfo.has(aNode.id);
 
     // If this wasn't overflowed before...
diff --git a/browser/components/extensions/test/browser/browser_unified_extensions_overflowable_toolbar.js b/browser/components/extensions/test/browser/browser_unified_extensions_overflowable_toolbar.js
index 662d25df9d61..f89553613b02 100644
--- a/browser/components/extensions/test/browser/browser_unified_extensions_overflowable_toolbar.js
+++ b/browser/components/extensions/test/browser/browser_unified_extensions_overflowable_toolbar.js
@@ -10,6 +10,10 @@
 
 loadTestSubscript("head_unified_extensions.js");
 
+const { ExtensionCommon } = ChromeUtils.import(
+  "resource://gre/modules/ExtensionCommon.jsm"
+);
+
 const NUM_EXTENSIONS = 5;
 const OVERFLOW_WINDOW_WIDTH_PX = 450;
 const DEFAULT_WIDGET_IDS = [
@@ -85,11 +89,13 @@ function getVisibleMenuItems(popup) {
  *     {Element} unifiedExtensionList: The DOM element that holds overflowed
  *       WebExtension browser_actions when Unified Extensions is enabled.
  *     {string[]} extensionIDs: The IDs of the test WebExtensions.
+ * @param {Function} afterUnderflowFn An optional async function that will be run
+ *   once the toolbar underflows, before the extensions are removed.
  *
  *   The function is expected to return a Promise that does not resolve
  *   with anything.
  */
-async function withWindowOverflowed(win, taskFn) {
+async function withWindowOverflowed(win, taskFn, afterUnderflowFn) {
   const doc = win.document;
   doc.documentElement.removeAttribute("persist");
   const navbar = doc.getElementById(CustomizableUI.AREA_NAVBAR);
@@ -277,7 +283,13 @@ async function withWindowOverflowed(win, taskFn) {
         .hasAttribute("overflowedItem");
     });
 
-    await Promise.all(extensions.map(extension => extension.unload()));
+    try {
+      if (afterUnderflowFn) {
+        await afterUnderflowFn();
+      }
+    } finally {
+      await Promise.all(extensions.map(extension => extension.unload()));
+    }
   }
 }
 
@@ -394,6 +406,7 @@ async function verifyExtensionWidget(win, widget, unifiedExtensionsEnabled) {
  */
 add_task(async function test_overflowable_toolbar() {
   let win = await promiseEnableUnifiedExtensions();
+  let movedNode;
 
   await withWindowOverflowed(
     win,
@@ -423,6 +436,33 @@ add_task(async function test_overflowable_toolbar() {
         );
         await verifyExtensionWidget(win, child, true);
       }
+
+      let extensionWidgetID = `${ExtensionCommon.makeWidgetId(
+        extensionIDs.at(-1)
+      )}-browser-action`;
+      movedNode = CustomizableUI.getWidget(extensionWidgetID).forWindow(win)
+        .node;
+      Assert.equal(movedNode.getAttribute("cui-areatype"), "toolbar");
+
+      CustomizableUI.addWidgetToArea(
+        extensionWidgetID,
+        CustomizableUI.AREA_ADDONS
+      );
+
+      Assert.equal(
+        movedNode.getAttribute("cui-areatype"),
+        "panel",
+        "The moved browser action button should have the right cui-areatype set."
+      );
+    },
+    async () => {
+      // Ensure that the moved node's parent is still the add-ons panel.
+      Assert.equal(
+        movedNode.parentElement.id,
+        CustomizableUI.AREA_ADDONS,
+        "The browser action should still be in the addons panel"
+      );
+      CustomizableUI.addWidgetToArea(movedNode.id, CustomizableUI.AREA_NAVBAR);
     }
   );