diff --git a/components/agents/AgentPsdTemplateEditorDialog.tsx b/components/agents/AgentPsdTemplateEditorDialog.tsx
index ec40d7f9e..112577785 100644
--- a/components/agents/AgentPsdTemplateEditorDialog.tsx
+++ b/components/agents/AgentPsdTemplateEditorDialog.tsx
@@ -231,10 +231,10 @@ function getResolvedTextPreview(layer: AgentPsdTemplateTextLayerSlot, value: str
   return value || layer.placeholder || layer.layerName;
 }
 
-function getTextLayerContentStyle(
+function getTextLayerRenderFrame(
   layer: AgentPsdTemplateTextLayerSlot,
   value: string
-): CSSProperties {
+) {
   const resolvedLayout = resolveTextLayout({
     text: getResolvedTextPreview(layer, value),
     width: layer.width,
@@ -246,11 +246,35 @@ function getTextLayerContentStyle(
     paddingY: layer.paddingY,
     maxLines: layer.maxLines,
     autoFit: false,
+    preferNoWrap: true,
   });
+  const width = Math.max(layer.width, resolvedLayout.contentWidth);
+  const height = Math.max(layer.height, resolvedLayout.contentHeight);
+  const offsetX =
+    layer.textAlign === "right"
+      ? layer.width - width
+      : layer.textAlign === "center"
+        ? (layer.width - width) / 2
+        : 0;
 
   return {
-    width: "100%",
-    height: "100%",
+    ...resolvedLayout,
+    width,
+    height,
+    offsetX,
+    offsetY: 0,
+  };
+}
+
+function getTextLayerContentStyle(
+  layer: AgentPsdTemplateTextLayerSlot,
+  value: string
+): CSSProperties {
+  const resolvedLayout = getTextLayerRenderFrame(layer, value);
+
+  return {
+    width: resolvedLayout.width,
+    height: resolvedLayout.height,
     fontFamily: buildTextLayerFontFamily(layer),
     fontSize: resolvedLayout.fontSize,
     lineHeight: layer.lineHeight,
@@ -262,6 +286,9 @@ function getTextLayerContentStyle(
     paddingRight: layer.paddingX,
     paddingTop: layer.paddingY,
     paddingBottom: layer.paddingY,
+    whiteSpace: "pre",
+    wordBreak: "keep-all",
+    overflowWrap: "normal",
   };
 }
 
@@ -1108,14 +1135,24 @@ export function AgentPsdTemplateEditorDialog({
                           return null;
                         }
 
+                        const textFrame = getTextLayerRenderFrame(
+                          layer,
+                          value || layer.placeholder || layer.layerName
+                        );
+
                         return (
                           <div
                             key={layer.id}
-                            className="absolute overflow-hidden"
-                            style={layerBoxStyle}
+                            className="absolute overflow-visible"
+                            style={{
+                              left: layer.x + textFrame.offsetX,
+                              top: layer.y + textFrame.offsetY,
+                              width: textFrame.width,
+                              height: textFrame.height,
+                            }}
                           >
                             <div
-                              className="h-full w-full whitespace-pre-wrap break-words"
+                              className="whitespace-pre"
                               style={getTextLayerContentStyle(layer, value || layer.placeholder || layer.layerName)}
                             >
                               {value || layer.placeholder || layer.layerName}
@@ -1242,6 +1279,7 @@ export function AgentPsdTemplateEditorDialog({
                         const currentValue = effectiveTextAssignments[layer.id] || "";
                         const preserveSourceAppearance =
                           !!layer.sourceUrl && !hasEditedTextValue(layer, currentValue);
+                        const editedTextFrame = getTextLayerRenderFrame(layer, currentValue);
 
                         if (isSelected) {
                           return (
@@ -1263,18 +1301,33 @@ export function AgentPsdTemplateEditorDialog({
                                   className="pointer-events-none absolute inset-0 h-full w-full object-fill"
                                 />
                               ) : null}
-                              <textarea
-                                ref={inlineTextEditorRef}
-                                value={currentValue}
-                                onChange={(event) =>
-                                  setTextAssignments((current) => ({
-                                    ...current,
-                                    [layer.id]: event.target.value,
-                                  }))
+                              <div
+                                className="absolute"
+                                style={
+                                  preserveSourceAppearance
+                                    ? { inset: 0 }
+                                    : {
+                                        left: editedTextFrame.offsetX,
+                                        top: editedTextFrame.offsetY,
+                                        width: editedTextFrame.width,
+                                        height: editedTextFrame.height,
+                                      }
                                 }
-                                className="h-full w-full resize-none border-none bg-transparent outline-none"
-                                style={getInlineTextEditorStyle(layer, preserveSourceAppearance, currentValue)}
-                              />
+                              >
+                                <textarea
+                                  ref={inlineTextEditorRef}
+                                  wrap="off"
+                                  value={currentValue}
+                                  onChange={(event) =>
+                                    setTextAssignments((current) => ({
+                                      ...current,
+                                      [layer.id]: event.target.value,
+                                    }))
+                                  }
+                                  className="resize-none border-none bg-transparent outline-none"
+                                  style={getInlineTextEditorStyle(layer, preserveSourceAppearance, currentValue)}
+                                />
+                              </div>
                               <div className={getTextLayerNameBadgeClassName()}>
                                 {layer.layerName}
                               </div>
diff --git a/lib/agents/psd-template-renderer.ts b/lib/agents/psd-template-renderer.ts
index 0a7e60d14..2e11a5861 100644
--- a/lib/agents/psd-template-renderer.ts
+++ b/lib/agents/psd-template-renderer.ts
@@ -119,6 +119,30 @@ function sanitizeFileSegment(value: string, fallback: string) {
   return normalized || fallback;
 }
 
+function resolveTextOverlayFrame(params: {
+  layerWidth: number;
+  layerHeight: number;
+  contentWidth: number;
+  contentHeight: number;
+  textAlign: "left" | "center" | "right";
+}) {
+  const width = Math.max(params.layerWidth, params.contentWidth);
+  const height = Math.max(params.layerHeight, params.contentHeight);
+  const leftOffset =
+    params.textAlign === "right"
+      ? params.layerWidth - width
+      : params.textAlign === "center"
+        ? (params.layerWidth - width) / 2
+        : 0;
+
+  return {
+    width,
+    height,
+    leftOffset,
+    topOffset: 0,
+  };
+}
+
 function escapeXml(value: string) {
   return value
     .replace(/&/g, "&amp;")
@@ -234,6 +258,7 @@ async function createTextOverlayBuffer(params: {
     paddingY,
     maxLines,
     autoFit: false,
+    preferNoWrap: true,
   });
   const adjustedFontSize = resolvedLayout.fontSize;
   const lineHeightPx = resolvedLayout.lineHeightPx;
@@ -263,28 +288,27 @@ async function createTextOverlayBuffer(params: {
   const anchor = textAlign === "center" ? "middle" : textAlign === "right" ? "end" : "start";
   const x =
     textAlign === "center"
-      ? width / 2
+      ? resolvedLayout.contentWidth / 2
       : textAlign === "right"
-        ? width - paddingX
+        ? resolvedLayout.contentWidth - paddingX
         : paddingX;
 
   const tspans = lines
     .map((line, index) => {
-      const y = paddingY + fontSize + index * lineHeightPx;
       const baselineY = paddingY + adjustedFontSize + index * lineHeightPx;
       return `<tspan x="${x}" y="${baselineY}">${escapeXml(line)}</tspan>`;
     })
     .join("");
 
   const svg = `
-    <svg xmlns="http://www.w3.org/2000/svg" width="${width}" height="${height}" viewBox="0 0 ${width} ${height}">
+    <svg xmlns="http://www.w3.org/2000/svg" width="${resolvedLayout.contentWidth}" height="${resolvedLayout.contentHeight}" viewBox="0 0 ${resolvedLayout.contentWidth} ${resolvedLayout.contentHeight}">
       <defs>
         <style>
           ${fontFaceCss}
           .text { font-family: ${fontFamilyStack}; font-size: ${adjustedFontSize}px; font-weight: ${useExactFontFace ? "normal" : fontWeight}; fill: ${textColor}; letter-spacing: ${letterSpacing}px; }
         </style>
         <clipPath id="${clipId}">
-          <rect x="0" y="0" width="${width}" height="${height}" />
+          <rect x="0" y="0" width="${resolvedLayout.contentWidth}" height="${resolvedLayout.contentHeight}" />
         </clipPath>
       </defs>
       <g clip-path="url(#${clipId})">
@@ -547,13 +571,33 @@ export async function renderAgentPsdTemplate(params: {
       });
 
       if (!overlayBuffer) continue;
+      const overlayLayout = resolveTextLayout({
+        text,
+        width: layer.width,
+        height: layer.height,
+        fontSize: layer.fontSize,
+        lineHeight: layer.lineHeight,
+        letterSpacing: layer.letterSpacing,
+        paddingX: layer.paddingX,
+        paddingY: layer.paddingY,
+        maxLines: layer.maxLines,
+        autoFit: false,
+        preferNoWrap: true,
+      });
+      const overlayFrame = resolveTextOverlayFrame({
+        layerWidth: layer.width,
+        layerHeight: layer.height,
+        contentWidth: overlayLayout.contentWidth,
+        contentHeight: overlayLayout.contentHeight,
+        textAlign: layer.textAlign,
+      });
 
       const didAppend = await appendBufferOverlay({
         input: overlayBuffer,
-        left: layer.x,
-        top: layer.y,
-        width: layer.width,
-        height: layer.height,
+        left: layer.x + overlayFrame.leftOffset,
+        top: layer.y + overlayFrame.topOffset,
+        width: overlayFrame.width,
+        height: overlayFrame.height,
       });
       if (!didAppend) continue;
     }
diff --git a/lib/agents/psd-text-layout.ts b/lib/agents/psd-text-layout.ts
index 81204a308..1f180ac46 100644
--- a/lib/agents/psd-text-layout.ts
+++ b/lib/agents/psd-text-layout.ts
@@ -28,6 +28,17 @@ export function estimateGlyphWidth(char: string, fontSize: number, letterSpacing
   return fontSize * 0.58 + letterSpacing;
 }
 
+export function measureTextLineWidth(
+  text: string,
+  fontSize: number,
+  letterSpacing: number
+) {
+  return Array.from(String(text || "")).reduce(
+    (width, char) => width + estimateGlyphWidth(char, fontSize, letterSpacing),
+    0
+  );
+}
+
 export function wrapTextByWidth(params: {
   text: string;
   maxWidth: number;
@@ -92,6 +103,7 @@ export function resolveTextLayout(params: {
   paddingY: number;
   maxLines: number;
   autoFit?: boolean;
+  preferNoWrap?: boolean;
 }) {
   const {
     text,
@@ -104,6 +116,7 @@ export function resolveTextLayout(params: {
     paddingY,
     maxLines,
     autoFit = true,
+    preferNoWrap = false,
   } = params;
 
   const normalizedText = String(text || "").replace(/\r\n/g, "\n").replace(/\r/g, "\n");
@@ -115,21 +128,33 @@ export function resolveTextLayout(params: {
   let fittedFontSize = Math.max(10, Number(fontSize || 10));
   let bestLines: string[] = [];
   let bestLineHeightPx = Math.max(fittedFontSize, fittedFontSize * resolvedLineHeight);
+  let bestMaxLineWidth = 0;
 
   if (!autoFit) {
-    bestLines = wrapTextByWidth({
-      text: normalizedText,
-      maxWidth: availableWidth,
-      fontSize: fittedFontSize,
-      letterSpacing,
-      maxLines: resolvedMaxLines,
-    }).slice(0, resolvedMaxLines);
+    bestLines = preferNoWrap
+      ? normalizedText.split("\n")
+      : wrapTextByWidth({
+          text: normalizedText,
+          maxWidth: availableWidth,
+          fontSize: fittedFontSize,
+          letterSpacing,
+          maxLines: resolvedMaxLines,
+        }).slice(0, resolvedMaxLines);
+    bestMaxLineWidth = Math.max(
+      0,
+      ...bestLines.map((line) => measureTextLineWidth(line, fittedFontSize, letterSpacing))
+    );
     bestLineHeightPx = Math.max(fittedFontSize, fittedFontSize * resolvedLineHeight);
 
     return {
       fontSize: Number(fittedFontSize.toFixed(2)),
       lineHeightPx: Number(bestLineHeightPx.toFixed(2)),
       lines: bestLines,
+      maxLineWidth: Number(bestMaxLineWidth.toFixed(2)),
+      contentWidth: Number(Math.max(width, bestMaxLineWidth + paddingX * 2).toFixed(2)),
+      contentHeight: Number(
+        Math.max(height, Math.max(1, bestLines.length) * bestLineHeightPx + paddingY * 2).toFixed(2)
+      ),
     };
   }
 
@@ -150,9 +175,14 @@ export function resolveTextLayout(params: {
     const hasOverflow = fullLines.length > effectiveMaxLines;
     const lines = fullLines.slice(0, effectiveMaxLines);
     const totalHeight = Math.max(1, lines.length) * lineHeightPx;
+    const maxLineWidth = Math.max(
+      0,
+      ...lines.map((line) => measureTextLineWidth(line, fittedFontSize, letterSpacing))
+    );
 
     bestLines = lines;
     bestLineHeightPx = lineHeightPx;
+    bestMaxLineWidth = maxLineWidth;
 
     if (!hasOverflow && totalHeight <= availableHeight + 0.5) {
       break;
@@ -169,6 +199,11 @@ export function resolveTextLayout(params: {
     fontSize: Number(fittedFontSize.toFixed(2)),
     lineHeightPx: Number(bestLineHeightPx.toFixed(2)),
     lines: bestLines,
+    maxLineWidth: Number(bestMaxLineWidth.toFixed(2)),
+    contentWidth: Number(Math.max(width, bestMaxLineWidth + paddingX * 2).toFixed(2)),
+    contentHeight: Number(
+      Math.max(height, Math.max(1, bestLines.length) * bestLineHeightPx + paddingY * 2).toFixed(2)
+    ),
   };
 }