diff --git a/packages/canon/src/components/Toolbar/Toolbar.styles.css b/packages/canon/src/components/Toolbar/Toolbar.styles.css
index 0c432b971c..edcb3b4b8d 100644
--- a/packages/canon/src/components/Toolbar/Toolbar.styles.css
+++ b/packages/canon/src/components/Toolbar/Toolbar.styles.css
@@ -14,12 +14,33 @@
  * limitations under the License.
  */
 
+.canon-ToolbarRoot {
+  display: flex;
+  flex-direction: column;
+  gap: var(--canon-space-2);
+}
+
+.canon-Toolbar {
+  display: flex;
+  flex-direction: row;
+  align-items: center;
+  background-color: var(--canon-bg-surface-1);
+  padding-inline: var(--canon-space-3);
+  border-radius: var(--canon-radius-2);
+  border: 1px solid var(--canon-border);
+  color: var(--canon-fg-primary);
+  height: 52px;
+}
+
 .canon-ToolbarTabs {
   display: flex;
   flex-direction: row;
   align-items: center;
   background-color: var(--canon-bg-surface-1);
   position: relative;
+  padding-inline: var(--canon-space-1);
+  border-radius: var(--canon-radius-2);
+  border: 1px solid var(--canon-border);
 
   /* Initialize CSS variables */
   --active-tab-left: 0px;
@@ -35,6 +56,8 @@
   --hovered-tab-bottom: 0px;
   --hovered-tab-width: 0px;
   --hovered-tab-height: 0px;
+  --hovered-tab-opacity: 0;
+  --hovered-transition-duration: 0s;
 }
 
 .canon-ToolbarTabList {
@@ -52,17 +75,18 @@
   cursor: pointer;
   position: relative;
   z-index: 2;
+  padding-inline: var(--canon-space-2);
 }
 
 /* Active tab indicator */
 .canon-ToolbarActiveIndicator {
   content: '';
   position: absolute;
-  left: var(--active-tab-left);
-  top: var(--active-tab-top);
-  width: var(--active-tab-width);
-  height: var(--active-tab-height);
-  background-color: green;
+  left: calc(var(--active-tab-left) + var(--canon-space-2));
+  bottom: -1px;
+  width: calc(var(--active-tab-width) - var(--canon-space-4));
+  height: 1px;
+  background-color: var(--canon-fg-primary);
   border-radius: 4px;
   transition: all 0.25s ease-out;
   opacity: 1;
@@ -73,10 +97,14 @@
   content: '';
   position: absolute;
   left: var(--hovered-tab-left);
-  top: var(--hovered-tab-top);
+  top: calc(var(--hovered-tab-top) + 4px);
   width: var(--hovered-tab-width);
-  height: var(--hovered-tab-height);
-  background-color: red;
+  height: calc(var(--hovered-tab-height) - 8px);
+  background-color: var(--canon-gray-2);
   border-radius: 4px;
-  transition: all 0.2s ease-out;
+  opacity: var(--hovered-tab-opacity);
+  transition: left var(--hovered-transition-duration) ease-out,
+    top var(--hovered-transition-duration) ease-out,
+    width var(--hovered-transition-duration) ease-out,
+    height var(--hovered-transition-duration) ease-out, opacity 0.15s ease-out;
 }
diff --git a/packages/canon/src/components/Toolbar/Toolbar.tsx b/packages/canon/src/components/Toolbar/Toolbar.tsx
index d6f5b4d7f3..65ee408399 100644
--- a/packages/canon/src/components/Toolbar/Toolbar.tsx
+++ b/packages/canon/src/components/Toolbar/Toolbar.tsx
@@ -28,9 +28,12 @@ import {
   useEffect,
   useState,
   useCallback,
-  MutableRefObject,
 } from 'react';
-import { ToolbarProps, ToolbarTab } from './types';
+import type {
+  ToolbarProps,
+  ToolbarIndicatorsProps,
+  ToolbarTabProps,
+} from './types';
 
 export const Toolbar = (props: ToolbarProps) => {
   const { tabs } = props;
@@ -38,6 +41,7 @@ export const Toolbar = (props: ToolbarProps) => {
   const tabsRef = useRef<HTMLDivElement>(null);
   const tabRefs = useRef<Map<string, HTMLDivElement>>(new Map());
   const [hoveredKey, setHoveredKey] = useState<string | null>(null);
+  const prevHoveredKey = useRef<string | null>(null);
 
   const setTabRef = (key: string, element: HTMLDivElement | null) => {
     if (element) {
@@ -48,8 +52,8 @@ export const Toolbar = (props: ToolbarProps) => {
   };
 
   return (
-    <>
-      <div>Toolbar</div>
+    <div className={classNames.root}>
+      <div className={classNames.toolbar}>Toolbar</div>
       {tabs && (
         <Tabs className={classNames.tabs} ref={tabsRef}>
           <TabList className={classNames.tabList}>
@@ -64,26 +68,20 @@ export const Toolbar = (props: ToolbarProps) => {
               );
             })}
           </TabList>
-          <Indicator
+          <Indicators
             tabRefs={tabRefs}
             tabsRef={tabsRef}
             hoveredKey={hoveredKey}
+            prevHoveredKey={prevHoveredKey}
           />
         </Tabs>
       )}
-    </>
+    </div>
   );
 };
 
-const Tab = ({
-  tab,
-  setTabRef,
-  setHoveredKey,
-}: {
-  tab: ToolbarTab;
-  setTabRef: (key: string, element: HTMLDivElement | null) => void;
-  setHoveredKey: (key: string | null) => void;
-}) => {
+const Tab = (props: ToolbarTabProps) => {
+  const { tab, setTabRef, setHoveredKey } = props;
   const id = useId();
   const { classNames } = useStyles('Toolbar');
 
@@ -100,15 +98,8 @@ const Tab = ({
   );
 };
 
-const Indicator = ({
-  tabRefs,
-  tabsRef,
-  hoveredKey,
-}: {
-  tabRefs: MutableRefObject<Map<string, HTMLDivElement>>;
-  tabsRef: MutableRefObject<HTMLDivElement | null>;
-  hoveredKey: string | null;
-}) => {
+const Indicators = (props: ToolbarIndicatorsProps) => {
+  const { tabRefs, tabsRef, hoveredKey, prevHoveredKey } = props;
   const { classNames } = useStyles('Toolbar');
   const state = useContext(TabListStateContext);
 
@@ -120,7 +111,7 @@ const Indicator = ({
     // Set active tab variables
     if (state?.selectedKey) {
       const activeTab = tabRefs.current.get(state.selectedKey.toString());
-      console.log(activeTab);
+
       if (activeTab) {
         const activeRect = activeTab.getBoundingClientRect();
         const relativeLeft = activeRect.left - tabsRect.left;
@@ -185,15 +176,43 @@ const Indicator = ({
           '--hovered-tab-height',
           `${hoveredRect.height}px`,
         );
+        // Control transition timing based on whether this is a new hover session
+        const isNewHoverSession = prevHoveredKey.current === null;
+
+        if (isNewHoverSession) {
+          // Starting new hover session: no transitions for position
+          tabsRef.current.style.setProperty(
+            '--hovered-transition-duration',
+            '0s',
+          );
+          // Enable transitions on next frame for future tab switches
+          requestAnimationFrame(() => {
+            if (tabsRef.current) {
+              tabsRef.current.style.setProperty(
+                '--hovered-transition-duration',
+                '0.2s',
+              );
+            }
+          });
+        } else {
+          // Moving between tabs in same session: full transitions
+          tabsRef.current.style.setProperty(
+            '--hovered-transition-duration',
+            '0.2s',
+          );
+        }
+
+        // Update previous hover key for next time
+        prevHoveredKey.current = hoveredKey;
+
+        tabsRef.current.style.setProperty('--hovered-tab-opacity', '1');
       }
     } else {
-      // Clear hovered variables when no tab is hovered
-      tabsRef.current.style.setProperty('--hovered-tab-left', '0px');
-      tabsRef.current.style.setProperty('--hovered-tab-right', '0px');
-      tabsRef.current.style.setProperty('--hovered-tab-top', '0px');
-      tabsRef.current.style.setProperty('--hovered-tab-bottom', '0px');
-      tabsRef.current.style.setProperty('--hovered-tab-width', '0px');
-      tabsRef.current.style.setProperty('--hovered-tab-height', '0px');
+      // When not hovering, hide with opacity and reset for next hover session
+      tabsRef.current.style.setProperty('--hovered-tab-opacity', '0');
+
+      // Reset previous hover key so next hover is treated as new session
+      prevHoveredKey.current = null;
     }
   }, [state?.selectedKey, hoveredKey]);
 
diff --git a/packages/canon/src/components/Toolbar/types.ts b/packages/canon/src/components/Toolbar/types.ts
index 48f5d53c10..572a1beee7 100644
--- a/packages/canon/src/components/Toolbar/types.ts
+++ b/packages/canon/src/components/Toolbar/types.ts
@@ -14,6 +14,8 @@
  * limitations under the License.
  */
 
+import { MutableRefObject } from 'react';
+
 export interface ToolbarTab {
   label: string;
 }
@@ -21,3 +23,16 @@ export interface ToolbarTab {
 export interface ToolbarProps {
   tabs: ToolbarTab[];
 }
+
+export interface ToolbarTabProps {
+  tab: ToolbarTab;
+  setTabRef: (key: string, element: HTMLDivElement | null) => void;
+  setHoveredKey: (key: string | null) => void;
+}
+
+export interface ToolbarIndicatorsProps {
+  tabRefs: MutableRefObject<Map<string, HTMLDivElement>>;
+  tabsRef: MutableRefObject<HTMLDivElement | null>;
+  hoveredKey: string | null;
+  prevHoveredKey: MutableRefObject<string | null>;
+}
diff --git a/packages/canon/src/utils/componentDefinitions.ts b/packages/canon/src/utils/componentDefinitions.ts
index b23757313d..ee3e9775d2 100644
--- a/packages/canon/src/utils/componentDefinitions.ts
+++ b/packages/canon/src/utils/componentDefinitions.ts
@@ -237,6 +237,8 @@ export const componentDefinitions = {
   },
   Toolbar: {
     classNames: {
+      root: 'canon-ToolbarRoot',
+      toolbar: 'canon-Toolbar',
       tabs: 'canon-ToolbarTabs',
       tabList: 'canon-ToolbarTabList',
       tab: 'canon-ToolbarTab',