diff --git a/editor/plugins/collision_shape_2d_editor_plugin.cpp b/editor/plugins/collision_shape_2d_editor_plugin.cpp
index 232160d17c7..ec3805885e3 100644
--- a/editor/plugins/collision_shape_2d_editor_plugin.cpp
+++ b/editor/plugins/collision_shape_2d_editor_plugin.cpp
@@ -96,7 +96,7 @@ Variant CollisionShape2DEditor::get_handle_value(int idx) const {
 		case RECTANGLE_SHAPE: {
 			Ref<RectangleShape2D> rect = node->get_shape();
 
-			if (idx < 3) {
+			if (idx < 8) {
 				return rect->get_extents().abs();
 			}
 
@@ -175,16 +175,26 @@ void CollisionShape2DEditor::set_handle(int idx, Point2 &p_point) {
 		} break;
 
 		case RECTANGLE_SHAPE: {
-			if (idx < 3) {
+			if (idx < 8) {
 				Ref<RectangleShape2D> rect = node->get_shape();
+				Vector2 extents = (Point2)original;
 
-				Vector2 extents = rect->get_extents();
-				if (idx == 2) {
-					extents = p_point;
-				} else {
-					extents[idx] = p_point[idx];
+				if (RECT_HANDLES[idx].x != 0) {
+					extents.x = p_point.x * RECT_HANDLES[idx].x;
+				}
+				if (RECT_HANDLES[idx].y != 0) {
+					extents.y = p_point.y * RECT_HANDLES[idx].y;
+				}
+
+				if (Input::get_singleton()->is_key_pressed(KEY_ALT)) {
+					rect->set_extents(extents.abs());
+					node->set_global_position(original_transform.get_origin());
+				} else {
+					rect->set_extents(((Point2)original + (extents - (Point2)original) * 0.5).abs());
+					Point2 pos = original_transform.affine_inverse().xform(original_transform.get_origin());
+					pos += (extents - (Point2)original) * RECT_HANDLES[idx] * 0.5;
+					node->set_global_position(original_transform.xform(pos));
 				}
-				rect->set_extents(extents.abs());
 
 				canvas_item_editor->update_viewport();
 			}
@@ -279,8 +289,10 @@ void CollisionShape2DEditor::commit_handle(int idx, Variant &p_org) {
 			Ref<RectangleShape2D> rect = node->get_shape();
 
 			undo_redo->add_do_method(rect.ptr(), "set_extents", rect->get_extents());
+			undo_redo->add_do_method(node, "set_global_transform", node->get_global_transform());
 			undo_redo->add_do_method(canvas_item_editor, "update_viewport");
 			undo_redo->add_undo_method(rect.ptr(), "set_extents", p_org);
+			undo_redo->add_undo_method(node, "set_global_transform", original_transform);
 			undo_redo->add_undo_method(canvas_item_editor, "update_viewport");
 
 		} break;
@@ -341,6 +353,8 @@ bool CollisionShape2DEditor::forward_canvas_gui_input(const Ref<InputEvent> &p_e
 				}
 
 				original = get_handle_value(edit_handle);
+				original_transform = node->get_global_transform();
+				last_point = original;
 				pressed = true;
 
 				return true;
@@ -368,13 +382,26 @@ bool CollisionShape2DEditor::forward_canvas_gui_input(const Ref<InputEvent> &p_e
 		}
 
 		Vector2 cpoint = canvas_item_editor->snap_point(canvas_item_editor->get_canvas_transform().affine_inverse().xform(mm->get_position()));
-		cpoint = node->get_global_transform().affine_inverse().xform(cpoint);
+		cpoint = original_transform.affine_inverse().xform(cpoint);
+		last_point = cpoint;
 
 		set_handle(edit_handle, cpoint);
 
 		return true;
 	}
 
+	Ref<InputEventKey> k = p_event;
+
+	if (k.is_valid()) {
+		if (edit_handle == -1 || !pressed || k->is_echo()) {
+			return false;
+		}
+
+		if (shape_type == RECTANGLE_SHAPE && k->get_scancode() == KEY_ALT) {
+			set_handle(edit_handle, last_point); // Update handle when Alt key is toggled.
+		}
+	}
+
 	return false;
 }
 
@@ -491,16 +518,12 @@ void CollisionShape2DEditor::forward_canvas_draw_over_viewport(Control *p_overla
 		case RECTANGLE_SHAPE: {
 			Ref<RectangleShape2D> shape = node->get_shape();
 
-			handles.resize(3);
+			handles.resize(8);
 			Vector2 ext = shape->get_extents();
-			handles.write[0] = Point2(ext.x, 0);
-			handles.write[1] = Point2(0, -ext.y);
-			handles.write[2] = Point2(ext.x, -ext.y);
-
-			p_overlay->draw_texture(h, gt.xform(handles[0]) - size);
-			p_overlay->draw_texture(h, gt.xform(handles[1]) - size);
-			p_overlay->draw_texture(h, gt.xform(handles[2]) - size);
-
+			for (int i = 0; i < handles.size(); i++) {
+				handles.write[i] = RECT_HANDLES[i] * ext;
+				p_overlay->draw_texture(h, gt.xform(handles[i]) - size);
+			}
 		} break;
 
 		case SEGMENT_SHAPE: {
diff --git a/editor/plugins/collision_shape_2d_editor_plugin.h b/editor/plugins/collision_shape_2d_editor_plugin.h
index c22edbe1f32..15b0e5ac3d6 100644
--- a/editor/plugins/collision_shape_2d_editor_plugin.h
+++ b/editor/plugins/collision_shape_2d_editor_plugin.h
@@ -31,6 +31,8 @@
 #ifndef COLLISION_SHAPE_2D_EDITOR_PLUGIN_H
 #define COLLISION_SHAPE_2D_EDITOR_PLUGIN_H
 
+#include "core/os/input.h"
+#include "core/os/keyboard.h"
 #include "editor/editor_node.h"
 #include "editor/editor_plugin.h"
 
@@ -52,6 +54,17 @@ class CollisionShape2DEditor : public Control {
 		SEGMENT_SHAPE
 	};
 
+	const Point2 RECT_HANDLES[8] = {
+		Point2(1, 0),
+		Point2(1, 1),
+		Point2(0, 1),
+		Point2(-1, 1),
+		Point2(-1, 0),
+		Point2(-1, -1),
+		Point2(0, -1),
+		Point2(1, -1),
+	};
+
 	EditorNode *editor;
 	UndoRedo *undo_redo;
 	CanvasItemEditor *canvas_item_editor;
@@ -63,6 +76,8 @@ class CollisionShape2DEditor : public Control {
 	int edit_handle;
 	bool pressed;
 	Variant original;
+	Transform2D original_transform;
+	Point2 last_point;
 
 	Variant get_handle_value(int idx) const;
 	void set_handle(int idx, Point2 &p_point);