diff --git a/packages/block-library/src/navigation/edit/index.js b/packages/block-library/src/navigation/edit/index.js
index ae7dd60bd0c5b..b1918ff201805 100644
--- a/packages/block-library/src/navigation/edit/index.js
+++ b/packages/block-library/src/navigation/edit/index.js
@@ -31,7 +31,8 @@ import { EntityProvider, store as coreStore } from '@wordpress/core-data';
 
 import { useDispatch, useSelect } from '@wordpress/data';
 import {
-	PanelBody,
+	__experimentalToolsPanel as ToolsPanel,
+	__experimentalToolsPanelItem as ToolsPanelItem,
 	ToggleControl,
 	__experimentalToggleGroupControl as ToggleGroupControl,
 	__experimentalToggleGroupControlOption as ToggleGroupControlOption,
@@ -72,6 +73,7 @@ import DeletedNavigationWarning from './deleted-navigation-warning';
 import AccessibleDescription from './accessible-description';
 import AccessibleMenuDescription from './accessible-menu-description';
 import { unlock } from '../../lock-unlock';
+import { useToolsPanelDropdownMenuProps } from '../../utils/hooks';
 
 function ColorTools( {
 	textColor,
@@ -583,11 +585,25 @@ function Navigation( {
 		`overlay-menu-preview`
 	);
 
+	const dropdownMenuProps = useToolsPanelDropdownMenuProps();
+
 	const stylingInspectorControls = (
 		<>
 			<InspectorControls>
 				{ hasSubmenuIndicatorSetting && (
-					<PanelBody title={ __( 'Display' ) }>
+					<ToolsPanel
+						label={ __( 'Display' ) }
+						resetAll={ () => {
+							setAttributes( {
+								showSubmenuIcon: true,
+								openSubmenusOnClick: false,
+								overlayMenu: 'mobile',
+								hasIcon: true,
+								icon: 'handle',
+							} );
+						} }
+						dropdownMenuProps={ dropdownMenuProps }
+					>
 						{ isResponsive && (
 							<>
 								<Button
@@ -615,76 +631,120 @@ function Navigation( {
 										</>
 									) }
 								</Button>
-								<div id={ overlayMenuPreviewId }>
-									{ overlayMenuPreview && (
+								{ overlayMenuPreview && (
+									<div
+										id={ overlayMenuPreviewId }
+										className="wp-block-navigation__overlay-menu-preview-controls"
+									>
 										<OverlayMenuPreview
 											setAttributes={ setAttributes }
 											hasIcon={ hasIcon }
 											icon={ icon }
 											hidden={ ! overlayMenuPreview }
 										/>
-									) }
-								</div>
+									</div>
+								) }
 							</>
 						) }
-						<ToggleGroupControl
-							__next40pxDefaultSize
-							__nextHasNoMarginBottom
+
+						<ToolsPanelItem
+							hasValue={ () => overlayMenu !== 'mobile' }
 							label={ __( 'Overlay Menu' ) }
-							aria-label={ __( 'Configure overlay menu' ) }
-							value={ overlayMenu }
-							help={ __(
-								'Collapses the navigation options in a menu icon opening an overlay.'
-							) }
-							onChange={ ( value ) =>
-								setAttributes( { overlayMenu: value } )
+							onDeselect={ () =>
+								setAttributes( { overlayMenu: 'mobile' } )
 							}
-							isBlock
+							isShownByDefault
 						>
-							<ToggleGroupControlOption
-								value="never"
-								label={ __( 'Off' ) }
-							/>
-							<ToggleGroupControlOption
-								value="mobile"
-								label={ __( 'Mobile' ) }
-							/>
-							<ToggleGroupControlOption
-								value="always"
-								label={ __( 'Always' ) }
-							/>
-						</ToggleGroupControl>
+							<ToggleGroupControl
+								__next40pxDefaultSize
+								__nextHasNoMarginBottom
+								label={ __( 'Overlay Menu' ) }
+								aria-label={ __( 'Configure overlay menu' ) }
+								value={ overlayMenu }
+								help={ __(
+									'Collapses the navigation options in a menu icon opening an overlay.'
+								) }
+								onChange={ ( value ) =>
+									setAttributes( { overlayMenu: value } )
+								}
+								isBlock
+							>
+								<ToggleGroupControlOption
+									value="never"
+									label={ __( 'Off' ) }
+								/>
+								<ToggleGroupControlOption
+									value="mobile"
+									label={ __( 'Mobile' ) }
+								/>
+								<ToggleGroupControlOption
+									value="always"
+									label={ __( 'Always' ) }
+								/>
+							</ToggleGroupControl>
+						</ToolsPanelItem>
+
 						{ hasSubmenus && (
 							<>
-								<h3>{ __( 'Submenus' ) }</h3>
-								<ToggleControl
-									__nextHasNoMarginBottom
-									checked={ openSubmenusOnClick }
-									onChange={ ( value ) => {
-										setAttributes( {
-											openSubmenusOnClick: value,
-											...( value && {
-												showSubmenuIcon: true,
-											} ), // Make sure arrows are shown when we toggle this on.
-										} );
-									} }
+								<h3 className="wp-block-navigation__submenu-header">
+									{ __( 'Submenus' ) }
+								</h3>
+								<ToolsPanelItem
+									hasValue={ () => openSubmenusOnClick }
 									label={ __( 'Open on click' ) }
-								/>
-
-								<ToggleControl
-									__nextHasNoMarginBottom
-									checked={ showSubmenuIcon }
-									onChange={ ( value ) => {
+									onDeselect={ () =>
 										setAttributes( {
-											showSubmenuIcon: value,
-										} );
-									} }
-									disabled={ attributes.openSubmenusOnClick }
+											openSubmenusOnClick: false,
+											showSubmenuIcon: true,
+										} )
+									}
+									isShownByDefault
+								>
+									<ToggleControl
+										__nextHasNoMarginBottom
+										checked={ openSubmenusOnClick }
+										onChange={ ( value ) => {
+											setAttributes( {
+												openSubmenusOnClick: value,
+												...( value && {
+													showSubmenuIcon: true,
+												} ), // Make sure arrows are shown when we toggle this on.
+											} );
+										} }
+										label={ __( 'Open on click' ) }
+									/>
+								</ToolsPanelItem>
+
+								<ToolsPanelItem
+									hasValue={ () => ! showSubmenuIcon }
 									label={ __( 'Show arrow' ) }
-								/>
+									onDeselect={ () =>
+										setAttributes( {
+											showSubmenuIcon: true,
+										} )
+									}
+									isDisabled={
+										attributes.openSubmenusOnClick
+									}
+									isShownByDefault
+								>
+									<ToggleControl
+										__nextHasNoMarginBottom
+										checked={ showSubmenuIcon }
+										onChange={ ( value ) => {
+											setAttributes( {
+												showSubmenuIcon: value,
+											} );
+										} }
+										disabled={
+											attributes.openSubmenusOnClick
+										}
+										label={ __( 'Show arrow' ) }
+									/>
+								</ToolsPanelItem>
 
 								{ submenuAccessibilityNotice && (
-									<div>
+									<div className="wp-block-navigation__submenu-accessibility-notice">
 										<Notice
 											spokenMessage={ null }
 											status="warning"
@@ -696,7 +756,7 @@ function Navigation( {
 								) }
 							</>
 						) }
-					</PanelBody>
+					</ToolsPanel>
 				) }
 			</InspectorControls>
 			<InspectorControls group="color">
diff --git a/packages/block-library/src/navigation/edit/overlay-menu-preview.js b/packages/block-library/src/navigation/edit/overlay-menu-preview.js
index cdd4d6e3263c9..c73ba71c1afcb 100644
--- a/packages/block-library/src/navigation/edit/overlay-menu-preview.js
+++ b/packages/block-library/src/navigation/edit/overlay-menu-preview.js
@@ -5,6 +5,7 @@ import {
 	ToggleControl,
 	__experimentalToggleGroupControl as ToggleGroupControl,
 	__experimentalToggleGroupControlOption as ToggleGroupControlOption,
+	__experimentalToolsPanelItem as ToolsPanelItem,
 } from '@wordpress/components';
 import { __ } from '@wordpress/i18n';
 
@@ -16,36 +17,52 @@ import OverlayMenuIcon from './overlay-menu-icon';
 export default function OverlayMenuPreview( { setAttributes, hasIcon, icon } ) {
 	return (
 		<>
-			<ToggleControl
-				__nextHasNoMarginBottom
+			<ToolsPanelItem
 				label={ __( 'Show icon button' ) }
-				help={ __(
-					'Configure the visual appearance of the button that toggles the overlay menu.'
-				) }
-				onChange={ ( value ) => setAttributes( { hasIcon: value } ) }
-				checked={ hasIcon }
-			/>
+				isShownByDefault
+				hasValue={ () => ! hasIcon }
+				onDeselect={ () => setAttributes( { hasIcon: true } ) }
+			>
+				<ToggleControl
+					__nextHasNoMarginBottom
+					label={ __( 'Show icon button' ) }
+					help={ __(
+						'Configure the visual appearance of the button that toggles the overlay menu.'
+					) }
+					onChange={ ( value ) =>
+						setAttributes( { hasIcon: value } )
+					}
+					checked={ hasIcon }
+				/>
+			</ToolsPanelItem>
 
-			<ToggleGroupControl
-				__next40pxDefaultSize
-				__nextHasNoMarginBottom
-				className="wp-block-navigation__overlay-menu-icon-toggle-group"
+			<ToolsPanelItem
 				label={ __( 'Icon' ) }
-				value={ icon }
-				onChange={ ( value ) => setAttributes( { icon: value } ) }
-				isBlock
+				isShownByDefault
+				hasValue={ () => icon !== 'handle' }
+				onDeselect={ () => setAttributes( { icon: 'handle' } ) }
 			>
-				<ToggleGroupControlOption
-					value="handle"
-					aria-label={ __( 'handle' ) }
-					label={ <OverlayMenuIcon icon="handle" /> }
-				/>
-				<ToggleGroupControlOption
-					value="menu"
-					aria-label={ __( 'menu' ) }
-					label={ <OverlayMenuIcon icon="menu" /> }
-				/>
-			</ToggleGroupControl>
+				<ToggleGroupControl
+					__next40pxDefaultSize
+					__nextHasNoMarginBottom
+					className="wp-block-navigation__overlay-menu-icon-toggle-group"
+					label={ __( 'Icon' ) }
+					value={ icon }
+					onChange={ ( value ) => setAttributes( { icon: value } ) }
+					isBlock
+				>
+					<ToggleGroupControlOption
+						value="handle"
+						aria-label={ __( 'handle' ) }
+						label={ <OverlayMenuIcon icon="handle" /> }
+					/>
+					<ToggleGroupControlOption
+						value="menu"
+						aria-label={ __( 'menu' ) }
+						label={ <OverlayMenuIcon icon="menu" /> }
+					/>
+				</ToggleGroupControl>
+			</ToolsPanelItem>
 		</>
 	);
 }
diff --git a/packages/block-library/src/navigation/editor.scss b/packages/block-library/src/navigation/editor.scss
index 2f61a19be2b79..f547169101e95 100644
--- a/packages/block-library/src/navigation/editor.scss
+++ b/packages/block-library/src/navigation/editor.scss
@@ -569,7 +569,7 @@ body.editor-styles-wrapper .wp-block-navigation__responsive-container.is-menu-op
 	// Ref - https://github.com/WordPress/gutenberg/pull/65075#discussion_r1746282734
 	height: $grid-unit-40 * 2 !important;
 
-	margin-bottom: $grid-unit-15;
+	grid-column: span 2;
 
 	&.open {
 		box-shadow: inset 0 0 0 $border-width $gray-200;
@@ -637,7 +637,19 @@ body.editor-styles-wrapper .wp-block-navigation__responsive-container.is-menu-op
 	margin-left: 24px;
 }
 
-.wp-block-navigation__overlay-menu-icon-toggle-group {
-	// Counteract the margin added by the block inspector.
-	margin-bottom: $grid-unit-20;
+.editor-sidebar__panel .wp-block-navigation__submenu-header {
+	margin-top: 0;
+	margin-bottom: 0;
+}
+
+.wp-block-navigation__overlay-menu-preview-controls {
+	grid-column: span 2;
+
+	.components-tools-panel-item:first-child {
+		margin-bottom: 16px;
+	}
+}
+
+.wp-block-navigation__submenu-accessibility-notice {
+	grid-column: span 2;
 }