diff --git a/apps/web/src/components/editor/media-panel.tsx b/apps/web/src/components/editor/media-panel.tsx
index 1e5aa46..565a4e7 100644
--- a/apps/web/src/components/editor/media-panel.tsx
+++ b/apps/web/src/components/editor/media-panel.tsx
@@ -2,14 +2,20 @@
 
 import { Button } from "../ui/button";
 import { AspectRatio } from "../ui/aspect-ratio";
+import { DragOverlay } from "../ui/drag-overlay";
 import { useMediaStore } from "@/stores/media-store";
-import { Plus, Image, Video, Music, Upload } from "lucide-react";
-import { useState, useRef } from "react";
+import { Plus, Image, Video, Music } from "lucide-react";
+import { useDragDrop } from "@/hooks/use-drag-drop";
 
 export function MediaPanel() {
   const { mediaItems, addMediaItem } = useMediaStore();
-  const [isDragOver, setIsDragOver] = useState(false);
-  const dragCounterRef = useRef(0);
+
+  const { isDragOver, dragProps } = useDragDrop({
+    onDrop: (files) => {
+      // TODO: Handle file drop functionality
+      console.log("Files dropped on media panel:", files);
+    },
+  });
 
   const handleAddSampleMedia = () => {
     // Just for testing - add a sample media item
@@ -30,55 +36,14 @@ export function MediaPanel() {
     }
   };
 
-  const handleDragEnter = (e: React.DragEvent) => {
-    e.preventDefault();
-    dragCounterRef.current += 1;
-    if (!isDragOver) {
-      setIsDragOver(true);
-    }
-  };
-
-  const handleDragOver = (e: React.DragEvent) => {
-    e.preventDefault();
-  };
-
-  const handleDragLeave = (e: React.DragEvent) => {
-    e.preventDefault();
-    dragCounterRef.current -= 1;
-    if (dragCounterRef.current === 0) {
-      setIsDragOver(false);
-    }
-  };
-
-  const handleDrop = (e: React.DragEvent) => {
-    e.preventDefault();
-    setIsDragOver(false);
-    dragCounterRef.current = 0;
-    // TODO: Handle file drop functionality
-  };
-
   return (
     <div
       className={`h-full overflow-y-auto transition-colors duration-200 relative ${
         isDragOver ? "bg-accent/30 border-accent" : ""
       }`}
-      onDragEnter={handleDragEnter}
-      onDragOver={handleDragOver}
-      onDragLeave={handleDragLeave}
-      onDrop={handleDrop}
+      {...dragProps}
     >
-      {/* Drag Overlay */}
-      {isDragOver && (
-        <div className="absolute inset-0 bg-accent/20 backdrop-blur-lg border-2 border-dashed border-accent rounded-lg flex items-center justify-center z-10 pointer-events-none">
-          <div className="text-center">
-            <Upload className="h-8 w-8 text-accent mx-auto mb-2" />
-            <p className="text-sm font-medium text-accent">Drop files here</p>
-            <p className="text-xs text-muted-foreground">
-              Images, videos, and audio files
-            </p>
-          </div>
-        </div>
-      )}
+      <DragOverlay isVisible={isDragOver} />
 
       <div className="space-y-4 p-2 h-full">
         {/* Media Grid */}
diff --git a/apps/web/src/components/editor/timeline.tsx b/apps/web/src/components/editor/timeline.tsx
index da44022..dd31276 100644
--- a/apps/web/src/components/editor/timeline.tsx
+++ b/apps/web/src/components/editor/timeline.tsx
@@ -17,13 +17,33 @@ import {
   TooltipTrigger,
   TooltipProvider,
 } from "../ui/tooltip";
+import { DragOverlay } from "../ui/drag-overlay";
 import { useTimelineStore, type TimelineTrack } from "@/stores/timeline-store";
+import { useDragDrop } from "@/hooks/use-drag-drop";
 
 export function Timeline() {
   const { tracks, addTrack } = useTimelineStore();
 
+  const { isDragOver, dragProps } = useDragDrop({
+    onDrop: (files) => {
+      // TODO: Handle file drop functionality for timeline
+      console.log("Files dropped on timeline:", files);
+    },
+  });
+
   return (
-    <div className="h-full flex flex-col">
+    <div
+      className={`h-full flex flex-col transition-colors duration-200 relative ${
+        isDragOver ? "bg-accent/30 border-accent" : ""
+      }`}
+      {...dragProps}
+    >
+      <DragOverlay
+        isVisible={isDragOver}
+        title="Drop files here"
+        description="Add media to timeline tracks"
+      />
+
       {/* Toolbar */}
       <div className="border-b flex items-center px-2 py-1 gap-1">
         <TooltipProvider delayDuration={500}>
diff --git a/apps/web/src/components/ui/drag-overlay.tsx b/apps/web/src/components/ui/drag-overlay.tsx
new file mode 100644
index 0000000..ba6fe08
--- /dev/null
+++ b/apps/web/src/components/ui/drag-overlay.tsx
@@ -0,0 +1,25 @@
+import { Upload } from "lucide-react";
+
+interface DragOverlayProps {
+  isVisible: boolean;
+  title?: string;
+  description?: string;
+}
+
+export function DragOverlay({
+  isVisible,
+  title = "Drop files here",
+  description = "Images, videos, and audio files",
+}: DragOverlayProps) {
+  if (!isVisible) return null;
+
+  return (
+    <div className="absolute inset-0 bg-accent/20 backdrop-blur-lg border-2 border-dashed border-accent flex items-center justify-center z-10 pointer-events-none">
+      <div className="text-center">
+        <Upload className="h-8 w-8 text-accent mx-auto mb-2" />
+        <p className="text-sm font-medium text-accent">{title}</p>
+        <p className="text-xs text-muted-foreground">{description}</p>
+      </div>
+    </div>
+  );
+}
diff --git a/apps/web/src/hooks/use-drag-drop.ts b/apps/web/src/hooks/use-drag-drop.ts
new file mode 100644
index 0000000..6b0c5a9
--- /dev/null
+++ b/apps/web/src/hooks/use-drag-drop.ts
@@ -0,0 +1,52 @@
+import { useState, useRef } from "react";
+
+interface UseDragDropOptions {
+  onDrop?: (files: FileList) => void;
+}
+
+export function useDragDrop(options: UseDragDropOptions = {}) {
+  const [isDragOver, setIsDragOver] = useState(false);
+  const dragCounterRef = useRef(0);
+
+  const handleDragEnter = (e: React.DragEvent) => {
+    e.preventDefault();
+    dragCounterRef.current += 1;
+    if (!isDragOver) {
+      setIsDragOver(true);
+    }
+  };
+
+  const handleDragOver = (e: React.DragEvent) => {
+    e.preventDefault();
+  };
+
+  const handleDragLeave = (e: React.DragEvent) => {
+    e.preventDefault();
+    dragCounterRef.current -= 1;
+    if (dragCounterRef.current === 0) {
+      setIsDragOver(false);
+    }
+  };
+
+  const handleDrop = (e: React.DragEvent) => {
+    e.preventDefault();
+    setIsDragOver(false);
+    dragCounterRef.current = 0;
+
+    if (options.onDrop && e.dataTransfer.files) {
+      options.onDrop(e.dataTransfer.files);
+    }
+  };
+
+  const dragProps = {
+    onDragEnter: handleDragEnter,
+    onDragOver: handleDragOver,
+    onDragLeave: handleDragLeave,
+    onDrop: handleDrop,
+  };
+
+  return {
+    isDragOver,
+    dragProps,
+  };
+}