diff --git a/src/vs/workbench/contrib/notebook/browser/notebookEditorWidget.ts b/src/vs/workbench/contrib/notebook/browser/notebookEditorWidget.ts
index 448409e6be0..e4132081efe 100644
--- a/src/vs/workbench/contrib/notebook/browser/notebookEditorWidget.ts
+++ b/src/vs/workbench/contrib/notebook/browser/notebookEditorWidget.ts
@@ -1582,23 +1582,26 @@ export class NotebookEditorWidget extends Disposable implements INotebookEditor
 			return;
 		}
 
-		const topInserToolbarHeight = this._notebookOptions.computeTopInserToolbarHeight(this.viewModel?.viewType);
-
 		this._dimension = new DOM.Dimension(dimension.width, dimension.height);
-		DOM.size(this._body, dimension.width, dimension.height - (this._notebookTopToolbar?.useGlobalToolbar ? /** Toolbar height */ 26 : 0));
-		if (this._list.getRenderHeight() < dimension.height - topInserToolbarHeight) {
+		const newBodyHeight = Math.max(dimension.height - (this._notebookTopToolbar?.useGlobalToolbar ? /** Toolbar height */ 26 : 0), 0);
+		DOM.size(this._body, dimension.width, newBodyHeight);
+
+		const topInserToolbarHeight = this._notebookOptions.computeTopInserToolbarHeight(this.viewModel?.viewType);
+		const newCellListHeight = Math.max(dimension.height - topInserToolbarHeight, 0);
+		if (this._list.getRenderHeight() < newCellListHeight) {
 			// the new dimension is larger than the list viewport, update its additional height first, otherwise the list view will move down a bit (as the `scrollBottom` will move down)
-			this._list.updateOptions({ additionalScrollHeight: this._allowScrollBeyondLastLine() ? Math.max(0, (dimension.height - topInserToolbarHeight - 50)) : topInserToolbarHeight });
-			this._list.layout(dimension.height - topInserToolbarHeight, dimension.width);
+			this._list.updateOptions({ additionalScrollHeight: this._allowScrollBeyondLastLine() ? Math.max(0, (newCellListHeight - 50)) : topInserToolbarHeight });
+			this._list.layout(newCellListHeight, dimension.width);
 		} else {
 			// the new dimension is smaller than the list viewport, if we update the additional height, the `scrollBottom` will move up, which moves the whole list view upwards a bit. So we run a layout first.
-			this._list.layout(dimension.height - topInserToolbarHeight, dimension.width);
-			this._list.updateOptions({ additionalScrollHeight: this._allowScrollBeyondLastLine() ? Math.max(0, (dimension.height - topInserToolbarHeight - 50)) : topInserToolbarHeight });
+			this._list.layout(newCellListHeight, dimension.width);
+			this._list.updateOptions({ additionalScrollHeight: this._allowScrollBeyondLastLine() ? Math.max(0, (newCellListHeight - 50)) : topInserToolbarHeight });
 		}
 
 		this._overlayContainer.style.visibility = 'visible';
 		this._overlayContainer.style.display = 'block';
 		this._overlayContainer.style.position = 'absolute';
+		this._overlayContainer.style.overflow = 'hidden';
 
 		const containerRect = this._overlayContainer.parentElement?.getBoundingClientRect();
 		this._overlayContainer.style.top = `${this._shadowElementViewInfo!.top - (containerRect?.top || 0)}px`;