diff --git a/examples/02-backend/01-file-uploading/src/App.tsx b/examples/02-backend/01-file-uploading/src/App.tsx
index c5805f0c40..52d774c468 100644
--- a/examples/02-backend/01-file-uploading/src/App.tsx
+++ b/examples/02-backend/01-file-uploading/src/App.tsx
@@ -3,19 +3,9 @@ import { useCreateBlockNote } from "@blocknote/react";
 import { BlockNoteView } from "@blocknote/mantine";
 import "@blocknote/mantine/style.css";
 
-// Uploads a file to tmpfiles.org and returns the URL to the uploaded file.
+// Creates a local blob URL for the file (for testing without an upload server).
 async function uploadFile(file: File) {
-  const body = new FormData();
-  body.append("file", file);
-
-  const ret = await fetch("https://tmpfiles.org/api/v1/upload", {
-    method: "POST",
-    body: body,
-  });
-  return (await ret.json()).data.url.replace(
-    "tmpfiles.org/",
-    "tmpfiles.org/dl/",
-  );
+  return URL.createObjectURL(file);
 }
 
 export default function App() {
diff --git a/packages/core/src/api/clipboard/fromClipboard/fileDropExtension.ts b/packages/core/src/api/clipboard/fromClipboard/fileDropExtension.ts
index f602ef4a2d..f11ab3fa8c 100644
--- a/packages/core/src/api/clipboard/fromClipboard/fileDropExtension.ts
+++ b/packages/core/src/api/clipboard/fromClipboard/fileDropExtension.ts
@@ -2,6 +2,7 @@ import { Extension } from "@tiptap/core";
 import { Plugin } from "prosemirror-state";
 
 import type { BlockNoteEditor } from "../../../editor/BlockNoteEditor.js";
+import { FilePanelExtension } from "../../../extensions/FilePanel/FilePanel.js";
 import {
   BlockSchema,
   InlineContentSchema,
@@ -41,6 +42,14 @@ export const createDropFileExtension = <
                 }
 
                 if (format === "Files") {
+                  // If the file panel is open, its React drop handler
+                  // manages the upload — don't insert a duplicate block.
+                  if (
+                    editor.getExtension(FilePanelExtension)?.store.state
+                  ) {
+                    return true;
+                  }
+
                   handleFileInsertion(event, editor);
                   return true;
                 }
diff --git a/packages/react/src/components/FilePanel/FilePanel.tsx b/packages/react/src/components/FilePanel/FilePanel.tsx
index 9365571025..0262844d3b 100644
--- a/packages/react/src/components/FilePanel/FilePanel.tsx
+++ b/packages/react/src/components/FilePanel/FilePanel.tsx
@@ -4,9 +4,10 @@ import {
   DefaultInlineContentSchema,
   DefaultStyleSchema,
   InlineContentSchema,
+  PartialBlock,
   StyleSchema,
 } from "@blocknote/core";
-import { useState } from "react";
+import { DragEvent, useCallback, useState } from "react";
 
 import {
   ComponentProps,
@@ -40,6 +41,43 @@ export const FilePanel = <
 
   const [loading, setLoading] = useState<boolean>(false);
 
+  const handleDragOver = useCallback((e: DragEvent) => {
+    e.preventDefault();
+  }, []);
+
+  const handleDrop = useCallback(
+    (e: DragEvent) => {
+      e.preventDefault();
+      e.stopPropagation();
+
+      const file = e.dataTransfer.files?.[0];
+      if (!file || !editor.uploadFile) {
+        return;
+      }
+
+      (async () => {
+        setLoading(true);
+        try {
+          let updateData = await editor.uploadFile!(file, props.blockId);
+          if (typeof updateData === "string") {
+            updateData = {
+              props: {
+                name: file.name,
+                url: updateData,
+              },
+            } as PartialBlock<B, I, S>;
+          }
+          editor.updateBlock(props.blockId, updateData);
+        } catch {
+          // Leave panel open so the user can retry.
+        } finally {
+          setLoading(false);
+        }
+      })();
+    },
+    [editor, props.blockId],
+  );
+
   const tabs: PanelProps["tabs"] = props.tabs ?? [
     ...(editor.uploadFile !== undefined
       ? [
@@ -62,13 +100,15 @@ export const FilePanel = <
   );
 
   return (
-    <Components.FilePanel.Root
-      className={"bn-panel"}
-      defaultOpenTab={openTab}
-      openTab={openTab}
-      setOpenTab={setOpenTab}
-      tabs={tabs}
-      loading={loading}
-    />
+    <div onDragOver={handleDragOver} onDrop={handleDrop}>
+      <Components.FilePanel.Root
+        className={"bn-panel bn-add-file-panel"}
+        defaultOpenTab={openTab}
+        openTab={openTab}
+        setOpenTab={setOpenTab}
+        tabs={tabs}
+        loading={loading}
+      />
+    </div>
   );
 };