diff --git a/UI/BagFrame.xml b/UI/BagFrame.xml
index faa1716..fe5f411 100644
--- a/UI/BagFrame.xml
+++ b/UI/BagFrame.xml
@@ -638,7 +638,8 @@
 
 
             <!-- Container for item buttons -->
-            <Frame name="$parent_ItemContainer" enableMouse="true">
+            <!-- Set enableMouse to false so it does not intercept drag/drop meant for child item buttons -->
+            <Frame name="$parent_ItemContainer" enableMouse="false">
                 <Size>
                     <AbsDimension x="400" y="480"/>
                 </Size>
@@ -654,15 +655,8 @@
                     </TileSize>
                     <Color r="0" g="0" b="0" a="0.5"/>
                 </Backdrop>
-                <Scripts>
-                    <OnMouseDown>
-                        -- Clear search focus when clicking in item area
-                        local searchBox = getglobal("Guda_BagFrame_SearchBar_SearchBox")
-                        if searchBox then
-                            searchBox:ClearFocus()
-                        end
-                    </OnMouseDown>
-                </Scripts>
+                <!-- Note: with enableMouse=false, OnMouseDown/OnReceiveDrag here would not fire; 
+                     child item buttons will handle mouse events directly. -->
             </Frame>
         </Frames>
 
diff --git a/UI/ItemButton.lua b/UI/ItemButton.lua
index 50b84d6..a9dc3fd 100644
--- a/UI/ItemButton.lua
+++ b/UI/ItemButton.lua
@@ -108,6 +108,20 @@ function Guda_ItemButton_OnLoad(self)
         iconFrame:Hide()
         self.questIcon = iconFrame
     end
+
+    -- Ensure the item button sits above its container backdrop and is mouse-enabled
+    local parent = self:GetParent()
+    if parent and parent.GetFrameLevel then
+        -- Place button above parent backdrop/mouse layer to reliably receive drops
+        local parentLevel = parent:GetFrameLevel()
+        if parentLevel and self:GetFrameLevel() <= parentLevel + 1 then
+            self:SetFrameLevel(parentLevel + 2)
+        end
+    end
+
+    if self.EnableMouse then
+        self:EnableMouse(true)
+    end
 end
 
 -- Set item data
@@ -484,6 +498,11 @@ function Guda_ItemButton_OnDragStart(self, button)
 
     -- Only allow left button drag
     if button == "LeftButton" and self.hasItem then
+        -- Ensure the global click catcher doesn't intercept the drag/drop
+        local cc = getglobal and getglobal("Guda_ClickCatcher")
+        if cc and cc.Hide and cc:IsShown() then
+            cc:Hide()
+        end
         PickupContainerItem(self.bagID, self.slotID)
     end
 end
@@ -499,6 +518,33 @@ function Guda_ItemButton_OnReceiveDrag(self)
     PickupContainerItem(self.bagID, self.slotID)
 end
 
+-- Handle mouse-up to emulate Blizzard drop behavior on 1.12 where OnReceiveDrag may not always fire
+function Guda_ItemButton_OnMouseUp(self, button)
+    -- Only handle left-button drops
+    if button ~= "LeftButton" then return end
+
+    -- Don't allow interaction with other characters' items or in read-only mode
+    if self.otherChar or self.isReadOnly then
+        return
+    end
+
+    -- If the cursor is holding an item, drop/swap into this slot
+    if CursorHasItem and CursorHasItem() then
+        PickupContainerItem(self.bagID, self.slotID)
+        return
+    end
+
+    -- Otherwise, normal click behavior is handled by OnClick
+end
+
+-- OnDragStop handler (optional cleanup)
+function Guda_ItemButton_OnDragStop(self)
+    -- Reset cursor to default to avoid lingering special cursors
+    if ResetCursor then
+        ResetCursor()
+    end
+end
+
 -- Stack split callback (called by StackSplitFrame)
 local function ItemButton_SplitStack(self, split)
     if self.bagID and self.slotID then
diff --git a/UI/ItemButton.xml b/UI/ItemButton.xml
index dccdb67..0086eb1 100644
--- a/UI/ItemButton.xml
+++ b/UI/ItemButton.xml
@@ -47,9 +47,15 @@
             <OnClick>
                 Guda_ItemButton_OnClick(this, arg1)
             </OnClick>
+            <OnMouseUp>
+                Guda_ItemButton_OnMouseUp(this, arg1)
+            </OnMouseUp>
             <OnDragStart>
                 Guda_ItemButton_OnDragStart(this, arg1)
             </OnDragStart>
+            <OnDragStop>
+                Guda_ItemButton_OnDragStop(this)
+            </OnDragStop>
             <OnReceiveDrag>
                 Guda_ItemButton_OnReceiveDrag(this)
             </OnReceiveDrag>