diff --git a/indra/newview/llfloateroutbox.cpp b/indra/newview/llfloateroutbox.cpp
index 597602d5abb77a77a18ddc8c696f088d6953ffc5..297736f3bd86ff04463e316bf8af8a3ef038441f 100644
--- a/indra/newview/llfloateroutbox.cpp
+++ b/indra/newview/llfloateroutbox.cpp
@@ -111,6 +111,7 @@ LLFloaterOutbox::LLFloaterOutbox(const LLSD& key)
 	, mOutboxId(LLUUID::null)
 	, mOutboxInventoryPanel(NULL)
 	, mOutboxItemCount(0)
+	, mOutboxTopLevelDropZone(NULL)
 	, mWindowShade(NULL)
 {
 }
@@ -140,7 +141,9 @@ BOOL LLFloaterOutbox::postBuild()
 	
 	mImportButton = getChild<LLButton>("outbox_import_btn");
 	mImportButton->setCommitCallback(boost::bind(&LLFloaterOutbox::onImportButtonClicked, this));
-	
+
+	mOutboxTopLevelDropZone = getChild<LLPanel>("outbox_generic_drag_target");
+
 	LLFocusableElement::setFocusReceivedCallback(boost::bind(&LLFloaterOutbox::onFocusReceived, this));
 
 	return TRUE;
@@ -353,6 +356,11 @@ void LLFloaterOutbox::updateView()
 	}
 }
 
+bool isAccepted(EAcceptance accept)
+{
+	return (accept >= ACCEPT_YES_COPY_SINGLE);
+}
+
 BOOL LLFloaterOutbox::handleDragAndDrop(S32 x, S32 y, MASK mask, BOOL drop,
 										EDragAndDropType cargo_type,
 										void* cargo_data,
@@ -370,7 +378,7 @@ BOOL LLFloaterOutbox::handleDragAndDrop(S32 x, S32 y, MASK mask, BOOL drop,
 	BOOL handled = (handled_view != NULL);
 	
 	// Pass all drag and drop for this floater to the outbox inventory control
-	if (!handled || (*accept == ACCEPT_NO))
+	if (!handled || !isAccepted(*accept))
 	{
 		// Always assume we are going to move the drag and drop operation to the outbox root folder
 		bool move_to_root = true;
@@ -394,11 +402,33 @@ BOOL LLFloaterOutbox::handleDragAndDrop(S32 x, S32 y, MASK mask, BOOL drop,
 			
 			handled = root_folder->handleDragAndDropToThisFolder(mask, drop, cargo_type, cargo_data, accept, tooltip_msg);
 		}
+
+		if (mOutboxTopLevelDropZone)
+		{
+			mOutboxTopLevelDropZone->setBackgroundVisible(handled && !drop && isAccepted(*accept));
+		}
+	}
+	else
+	{
+		if (mOutboxTopLevelDropZone)
+		{
+			mOutboxTopLevelDropZone->setBackgroundVisible(FALSE);
+		}
 	}
 	
 	return handled;
 }
 
+void LLFloaterOutbox::onMouseLeave(S32 x, S32 y, MASK mask)
+{
+	if (mOutboxTopLevelDropZone)
+	{
+		mOutboxTopLevelDropZone->setBackgroundVisible(FALSE);
+	}
+
+	LLFloater::onMouseLeave(x, y, mask);
+}
+
 void LLFloaterOutbox::onImportButtonClicked()
 {
 	mOutboxInventoryPanel->clearSelection();
diff --git a/indra/newview/llfloateroutbox.h b/indra/newview/llfloateroutbox.h
index 58b7d6ec98a790b18516abc5525dc87a48a04657..796c533059f01fb4facd36701e9316985037fd70 100644
--- a/indra/newview/llfloateroutbox.h
+++ b/indra/newview/llfloateroutbox.h
@@ -66,6 +66,8 @@ class LLFloaterOutbox : public LLFloater
 	
 	void showNotification(const LLSD& notify);
 
+	void onMouseLeave(S32 x, S32 y, MASK mask);
+
 protected:
 	void fetchOutboxContents();
 
@@ -103,6 +105,7 @@ class LLFloaterOutbox : public LLFloater
 	LLUUID				mOutboxId;
 	LLInventoryPanel *	mOutboxInventoryPanel;
 	U32					mOutboxItemCount;
+	LLPanel *			mOutboxTopLevelDropZone;
 	
 	LLWindowShade *	mWindowShade;
 };
diff --git a/indra/newview/skins/default/xui/en/floater_merchant_outbox.xml b/indra/newview/skins/default/xui/en/floater_merchant_outbox.xml
index c0f26413cb3122f5e5a4a4346bb14838d51d2e71..498a9b6ce09352630f1fee27c60c86df434ae57c 100644
--- a/indra/newview/skins/default/xui/en/floater_merchant_outbox.xml
+++ b/indra/newview/skins/default/xui/en/floater_merchant_outbox.xml
@@ -1,24 +1,24 @@
 <?xml version="1.0" encoding="UTF-8" standalone="yes"?>
 <floater
- open_positioning="cascading"
- can_close="true"
- can_resize="true"
- height="440"
- help_topic="floater_merchant_outbox"
- min_width="300"
- min_height="200"
- name="floater_merchant_outbox"
- save_rect="true"
- save_visibility="false"
- reuse_instance="true"
- title="MERCHANT OUTBOX"
- width="333" >
- <string name="OutboxFolderCount0"></string>
- <string name="OutboxFolderCount1">1 folder</string>
- <string name="OutboxFolderCountN">[NUM] folders</string>
- <string name="OutboxImporting">Sending folders...</string>
- <string name="OutboxInitializing">Initializing...</string>
- <panel
+    open_positioning="cascading"
+    can_close="true"
+    can_resize="true"
+    height="440"
+    help_topic="floater_merchant_outbox"
+    min_width="300"
+    min_height="200"
+    name="floater_merchant_outbox"
+    save_rect="true"
+    save_visibility="false"
+    reuse_instance="true"
+    title="MERCHANT OUTBOX"
+    width="333">
+  <string name="OutboxFolderCount0"></string>
+  <string name="OutboxFolderCount1">1 folder</string>
+  <string name="OutboxFolderCountN">[NUM] folders</string>
+  <string name="OutboxImporting">Sending folders...</string>
+  <string name="OutboxInitializing">Initializing...</string>
+  <panel
       follows="all"
       layout="topleft"
       left="0"
@@ -26,104 +26,127 @@
       label=""
       height="440"
       width="333">
-     <panel
+    <panel
         follows="all"
         left="10"
-        bottom="400"
+        bottom="370"
         width="313"
         top="0"
-        bg_opaque_color="InventoryBackgroundColor"
-        >
-		<panel
-			name="outbox_inventory_placeholder_panel"
-			follows="all"
-			layout="topleft"
-			top="0"
-			left="0"
-			width="308"
-			height="400"
-			bg_opaque_color="InventoryBackgroundColor"
-			>
-			<text
-				name="outbox_inventory_placeholder_title"
-				type="string"
-				follows="top|left|right"
-				layout="topleft"
-				top="10"
-				left="0"
-				width="308"
-				height="25"
-				wrap="true"
-				halign="center"
-				font="SansSerifBold">
-				Loading...
-			</text>
-			<text
-				name="outbox_inventory_placeholder_text"
-				type="string"
-				follows="top|left|right"
-				layout="topleft"
-				top="35"
-				left="0"
-				width="308"
-				height="130"
-				wrap="true"
-				halign="left" />
-		</panel>
+        bg_opaque_color="InventoryBackgroundColor">
+      <panel
+          name="outbox_inventory_placeholder_panel"
+          follows="all"
+          layout="topleft"
+          top="0"
+          left="0"
+          width="308"
+          height="370"
+          bg_opaque_color="InventoryBackgroundColor">
+        <text
+            name="outbox_inventory_placeholder_title"
+            type="string"
+            follows="top|left|right"
+            layout="topleft"
+            top="10"
+            left="0"
+            width="308"
+            height="25"
+            wrap="true"
+            halign="center"
+            font="SansSerifBold">
+          Loading...
+        </text>
+        <text
+            name="outbox_inventory_placeholder_text"
+            type="string"
+            follows="top|left|right"
+            layout="topleft"
+            top="35"
+            left="0"
+            width="308"
+            height="130"
+            wrap="true"
+            halign="left" />
+      </panel>
     </panel>
-	<panel
+    <panel
         follows="bottom|left|right"
         left="10"
         bottom="435"
         width="313"
-        top="405"
-        bg_opaque_color="InventoryBackgroundColor"
-        >
-		<text
-			name="outbox_folder_count"
-			type="string"
-			follows="all"
-			layout="topleft"
-			top="10"
-			left="5"
-			width="150"
-			height="20"
-			wrap="true"
-			halign="left"
-			valign="bottom"
-			font="SansSerif" />
-		<button
-			 label="Send to Marketplace"
-			 tool_tip="Push to my Marketplace Storefront"
-			 is_toggle="false"
-			 name="outbox_import_btn"
-			 follows="bottom|right"
-			 tab_stop="false"
-			 halign="center"
-			 top="3"
-			 left="160"
-			 height="25"
-			 width="150"
-			 enabled="false" />
+        top="370">
+      <panel
+          name="outbox_generic_drag_target"
+          mouse_opaque="false"
+          follows="all"
+          top="5"
+          left="5"
+          width="303"
+          height="25"
+          background_visible="false"
+          bg_alpha_color="EmphasisColor_35"
+          border="true"
+          bevel_style="in"
+          visible="true">
+        <text
+            type="string"
+            follows="all"
+            layout="topleft"
+            top="6"
+            height="20"
+            left="5"
+            width="293"
+            halign="center"
+            font="SansSerifMedium"
+            font_shadow="hard"
+            valign="bottom">
+          Drag items here to create folders
+        </text>
+      </panel>
+      <text
+          name="outbox_folder_count"
+          type="string"
+          follows="all"
+          layout="topleft"
+          top="40"
+          left="5"
+          width="150"
+          height="20"
+          wrap="true"
+          halign="left"
+          valign="bottom"
+          font="SansSerif" />
+      <button
+          label="Send to Marketplace"
+          tool_tip="Push to my Marketplace Storefront"
+          is_toggle="false"
+          name="outbox_import_btn"
+          follows="bottom|right"
+          tab_stop="false"
+          halign="center"
+          top="37"
+          left="160"
+          height="25"
+          width="150"
+          enabled="false" />
     </panel>
-	<layout_stack name="import_progress_indicator" orientation="vertical" left="0" height="440" top="0" width="333" follows="all" visible="false">
-		<layout_panel />
-		<layout_panel height="45" auto_resize="false">
-			<layout_stack orientation="horizontal" left="0" height="45" top="0" width="333" follows="all">
-				<layout_panel width="0" />
-				<layout_panel width="45" auto_resize="false">
-					<loading_indicator
-						 height="45"
-						 layout="topleft"
-						 left="0"
-						 top="0"
-						 width="45"
-						 />
-				</layout_panel>
-				<layout_panel width="0" />
-			</layout_stack>
-		 </layout_panel>
-		 <layout_panel />
-	</layout_stack>
- </panel>
+    <layout_stack name="import_progress_indicator" orientation="vertical" left="0" height="440" top="0" width="333" follows="all" visible="false">
+      <layout_panel />
+      <layout_panel height="45" auto_resize="false">
+        <layout_stack orientation="horizontal" left="0" height="45" top="0" width="333" follows="all">
+          <layout_panel width="0" />
+          <layout_panel width="45" auto_resize="false">
+            <loading_indicator
+                height="45"
+                layout="topleft"
+                left="0"
+                top="0"
+                width="45" />
+          </layout_panel>
+          <layout_panel width="0" />
+        </layout_stack>
+      </layout_panel>
+      <layout_panel />
+    </layout_stack>
+  </panel>
 </floater>