diff --git a/Source/Editor/Windows/Assets/PrefabWindow.Hierarchy.cs b/Source/Editor/Windows/Assets/PrefabWindow.Hierarchy.cs
index 25c063372..1236e22b5 100644
--- a/Source/Editor/Windows/Assets/PrefabWindow.Hierarchy.cs
+++ b/Source/Editor/Windows/Assets/PrefabWindow.Hierarchy.cs
@@ -2,9 +2,12 @@
 
 using System;
 using System.Collections.Generic;
+using FlaxEditor.Content;
 using FlaxEditor.GUI.ContextMenu;
+using FlaxEditor.GUI.Drag;
 using FlaxEditor.GUI.Tree;
 using FlaxEditor.SceneGraph;
+using FlaxEditor.Scripting;
 using FlaxEngine;
 using FlaxEngine.GUI;
 
@@ -56,6 +59,129 @@ namespace FlaxEditor.Windows.Assets
             }
         }
 
+        private class SceneTreePanel : Panel
+        {
+            private PrefabWindow _window;
+            private DragAssets _dragAssets;
+            private DragActorType _dragActorType;
+            private DragHandlers _dragHandlers;
+
+            public SceneTreePanel(PrefabWindow window)
+            : base(ScrollBars.Vertical)
+            {
+                _window = window;
+                Offsets = Margin.Zero;
+                AnchorPreset = AnchorPresets.StretchAll;
+            }
+            
+            private bool ValidateDragAsset(AssetItem assetItem)
+            {
+                return assetItem.OnEditorDrag(this);
+            }
+
+            private static bool ValidateDragActorType(ScriptType actorType)
+            {
+                return true;
+            }
+
+            /// <inheritdoc />
+            public override DragDropEffect OnDragEnter(ref Vector2 location, DragData data)
+            {
+                var result = base.OnDragEnter(ref location, data);
+                if (result == DragDropEffect.None)
+                {
+                    if (_dragHandlers == null)
+                        _dragHandlers = new DragHandlers();
+                    if (_dragAssets == null)
+                    {
+                        _dragAssets = new DragAssets(ValidateDragAsset);
+                        _dragHandlers.Add(_dragAssets);
+                    }
+                    if (_dragAssets.OnDragEnter(data))
+                        return _dragAssets.Effect;
+                    if (_dragActorType == null)
+                    {
+                        _dragActorType = new DragActorType(ValidateDragActorType);
+                        _dragHandlers.Add(_dragActorType);
+                    }
+                    if (_dragActorType.OnDragEnter(data))
+                        return _dragActorType.Effect;
+                }
+                return result;
+            }
+
+            /// <inheritdoc />
+            public override DragDropEffect OnDragMove(ref Vector2 location, DragData data)
+            {
+                var result = base.OnDragMove(ref location, data);
+                if (result == DragDropEffect.None)
+                {
+                    result = _dragHandlers.Effect;
+                }
+                return result;
+            }
+
+            /// <inheritdoc />
+            public override void OnDragLeave()
+            {
+                base.OnDragLeave();
+
+                _dragHandlers?.OnDragLeave();
+            }
+
+            /// <inheritdoc />
+            public override DragDropEffect OnDragDrop(ref Vector2 location, DragData data)
+            {
+                var result = base.OnDragDrop(ref location, data);
+                if (result == DragDropEffect.None)
+                {
+                    // Drag assets
+                    if (_dragAssets != null && _dragAssets.HasValidDrag)
+                    {
+                        for (int i = 0; i < _dragAssets.Objects.Count; i++)
+                        {
+                            var item = _dragAssets.Objects[i];
+                            var actor = item.OnEditorDrop(this);
+                            actor.Name = item.ShortName;
+                            _window.Spawn(actor);
+                        }
+                        result = DragDropEffect.Move;
+                    }
+                    // Drag actor type
+                    else if (_dragActorType != null && _dragActorType.HasValidDrag)
+                    {
+                        for (int i = 0; i < _dragActorType.Objects.Count; i++)
+                        {
+                            var item = _dragActorType.Objects[i];
+                            var actor = item.CreateInstance() as Actor;
+                            if (actor == null)
+                            {
+                                Editor.LogWarning("Failed to spawn actor of type " + item.TypeName);
+                                continue;
+                            }
+                            actor.Name = item.Name;
+                            _window.Spawn(actor);
+                        }
+                        result = DragDropEffect.Move;
+                    }
+
+                    _dragHandlers.OnDragDrop(null);
+                }
+                return result;
+            }
+
+            public override void OnDestroy()
+            {
+                _window = null;
+                _dragAssets = null;
+                _dragActorType = null;
+                _dragHandlers?.Clear();
+                _dragHandlers = null;
+
+                base.OnDestroy();
+            }
+        }
+
         /// <summary>
         /// Occurs when prefab hierarchy panel wants to show the context menu. Allows to add custom options. Applies to all prefab windows.
         /// </summary>
diff --git a/Source/Editor/Windows/Assets/PrefabWindow.cs b/Source/Editor/Windows/Assets/PrefabWindow.cs
index 9c484d9d4..474f73372 100644
--- a/Source/Editor/Windows/Assets/PrefabWindow.cs
+++ b/Source/Editor/Windows/Assets/PrefabWindow.cs
@@ -94,13 +94,17 @@ namespace FlaxEditor.Windows.Assets
             _undo.ActionDone += OnUndoEvent;
 
             // Split Panel 1
-            _split1 = new SplitPanel(Orientation.Horizontal, ScrollBars.Both, ScrollBars.None)
+            _split1 = new SplitPanel(Orientation.Horizontal, ScrollBars.None, ScrollBars.None)
             {
                 AnchorPreset = AnchorPresets.StretchAll,
                 Offsets = new Margin(0, 0, _toolstrip.Bottom, 0),
                 SplitterValue = 0.2f,
                 Parent = this
             };
+            var sceneTreePanel = new SceneTreePanel(this)
+            {
+                Parent = _split1.Panel1,
+            };
 
             // Split Panel 2
             _split2 = new SplitPanel(Orientation.Horizontal, ScrollBars.None, ScrollBars.Vertical)
@@ -117,7 +121,7 @@ namespace FlaxEditor.Windows.Assets
                 AnchorPreset = AnchorPresets.HorizontalStretchTop,
                 IsScrollable = true,
                 Offsets = new Margin(0, 0, 0, 18 + 6),
-                Parent = _split1.Panel1,
+                Parent = sceneTreePanel,
             };
             _searchBox = new TextBox
             {
@@ -138,7 +142,7 @@ namespace FlaxEditor.Windows.Assets
             _tree.AddChild(Graph.Root.TreeNode);
             _tree.SelectedChanged += OnTreeSelectedChanged;
             _tree.RightClick += OnTreeRightClick;
-            _tree.Parent = _split1.Panel1;
+            _tree.Parent = sceneTreePanel;
 
             // Prefab viewport
             _viewport = new PrefabWindowViewport(this)
@@ -447,7 +451,7 @@ namespace FlaxEditor.Windows.Assets
         {
             _split1.SplitterValue = 0.2f;
             _split2.SplitterValue = 0.6f;
-            LiveReload = true;
+            LiveReload = false;
         }
 
         /// <inheritdoc />