diff --git a/packages/@react-aria/overlays/src/calculatePosition.ts b/packages/@react-aria/overlays/src/calculatePosition.ts
index d40aa79f41a..e2c4a361dff 100644
--- a/packages/@react-aria/overlays/src/calculatePosition.ts
+++ b/packages/@react-aria/overlays/src/calculatePosition.ts
@@ -417,15 +417,21 @@ export function calculatePositionInternal(
 
   // All values are transformed so that 0 is at the top/left of the overlay depending on the orientation
   // Prefer the arrow being in the center of the trigger/overlay anchor element
-  let preferredArrowPosition = childOffset[crossAxis] + .5 * childOffset[crossSize] - position[crossAxis];
+  // childOffset[crossAxis] + .5 * childOffset[crossSize] = absolute position with respect to the trigger's coordinate system that would place the arrow in the center of the trigger
+  // position[crossAxis] - margins[AXIS[crossAxis]] = value use to transform the position to a value with respect to the overlay's coordinate system. A child element's (aka arrow) position absolute's "0"
+  // is positioned after the margin of its parent (aka overlay) so we need to subtract it to get the proper coordinate transform
+  let preferredArrowPosition = childOffset[crossAxis] + .5 * childOffset[crossSize] - position[crossAxis] - margins[AXIS[crossAxis]];
 
   // Min/Max position limits for the arrow with respect to the overlay
   const arrowMinPosition = arrowSize / 2 + arrowBoundaryOffset;
-  const arrowMaxPosition = overlaySize[crossSize] - (arrowSize / 2) - arrowBoundaryOffset;
+  // overlaySize[crossSize] - margins = true size of the overlay
+  const overlayMargin = AXIS[crossAxis] === 'left' ? margins.left + margins.right : margins.top + margins.bottom;
+  const arrowMaxPosition = overlaySize[crossSize] - overlayMargin - (arrowSize / 2) - arrowBoundaryOffset;
 
   // Min/Max position limits for the arrow with respect to the trigger/overlay anchor element
-  const arrowOverlappingChildMinEdge = childOffset[crossAxis] - position[crossAxis] + (arrowSize / 2);
-  const arrowOverlappingChildMaxEdge = childOffset[crossAxis] + childOffset[crossSize] - position[crossAxis] - (arrowSize / 2);
+  // Same margin accomodation done here as well as for the preferredArrowPosition
+  const arrowOverlappingChildMinEdge = childOffset[crossAxis] + (arrowSize / 2) - (position[crossAxis] + margins[AXIS[crossAxis]]);
+  const arrowOverlappingChildMaxEdge = childOffset[crossAxis] + childOffset[crossSize] - (arrowSize / 2) - (position[crossAxis] + margins[AXIS[crossAxis]]);
 
   // Clamp the arrow positioning so that it always is within the bounds of the anchor and the overlay
   const arrowPositionOverlappingChild = clamp(preferredArrowPosition, arrowOverlappingChildMinEdge, arrowOverlappingChildMaxEdge);
diff --git a/packages/@react-spectrum/s2/src/Tooltip.tsx b/packages/@react-spectrum/s2/src/Tooltip.tsx
index e5bf123ef5b..de01359933c 100644
--- a/packages/@react-spectrum/s2/src/Tooltip.tsx
+++ b/packages/@react-spectrum/s2/src/Tooltip.tsx
@@ -22,7 +22,7 @@ import {
 import {centerPadding, colorScheme, UnsafeStyles} from './style-utils' with {type: 'macro'};
 import {ColorScheme} from '@react-types/provider';
 import {ColorSchemeContext} from './Provider';
-import {createContext, forwardRef, MutableRefObject, ReactNode, useCallback, useContext} from 'react';
+import {createContext, forwardRef, MutableRefObject, ReactNode, useCallback, useContext, useState} from 'react';
 import {DOMRef} from '@react-types/shared';
 import {keyframes} from '../style/style-macro' with {type: 'macro'};
 import {style} from '../style/spectrum-theme' with {type: 'macro'};
@@ -154,6 +154,7 @@ function Tooltip(props: TooltipProps, ref: DOMRef<HTMLDivElement>) {
   } = useContext(InternalTooltipTriggerContext);
   let colorScheme = useContext(ColorSchemeContext);
   let {locale, direction} = useLocale();
+  let [borderRadius, setBorderRadius] = useState(0);
 
   // TODO: should we pass through lang and dir props in RAC?
   let tooltipRef = useCallback((el: HTMLDivElement) => {
@@ -161,12 +162,17 @@ function Tooltip(props: TooltipProps, ref: DOMRef<HTMLDivElement>) {
     if (el) {
       el.lang = locale;
       el.dir = direction;
+      let spectrumBorderRadius = window.getComputedStyle(el).borderRadius;
+      if (spectrumBorderRadius !== '') {
+        setBorderRadius(parseInt(spectrumBorderRadius, 10));
+      }
     }
   }, [locale, direction, domRef]);
 
   return (
     <AriaTooltip
       {...props}
+      arrowBoundaryOffset={borderRadius}
       containerPadding={containerPadding}
       crossOffset={crossOffset}
       offset={offset}
diff --git a/packages/@react-spectrum/s2/stories/Tooltip.stories.tsx b/packages/@react-spectrum/s2/stories/Tooltip.stories.tsx
index 3151d2d0f51..18e880bde79 100644
--- a/packages/@react-spectrum/s2/stories/Tooltip.stories.tsx
+++ b/packages/@react-spectrum/s2/stories/Tooltip.stories.tsx
@@ -16,6 +16,7 @@ import Crop from '../s2wf-icons/S2_Icon_Crop_20_N.svg';
 import LassoSelect from '../s2wf-icons/S2_Icon_LassoSelect_20_N.svg';
 import type {Meta} from '@storybook/react';
 import {style} from '../style/spectrum-theme' with {type: 'macro'};
+import {userEvent, within} from '@storybook/testing-library';
 
 const meta: Meta<typeof CombinedTooltip> = {
   component: CombinedTooltip,
@@ -25,7 +26,8 @@ const meta: Meta<typeof CombinedTooltip> = {
   tags: ['autodocs'],
   argTypes: {
     onOpenChange: {table: {category: 'Events'}}
-  }
+  },
+  decorators: [(Story) => <div style={{height: '100px', width: '200px', display: 'flex', alignItems: 'end', justifyContent: 'center', paddingBottom: 10}}><Story /></div>]
 };
 
 export default meta;
@@ -78,6 +80,22 @@ export const Example = (args: any) => {
   );
 };
 
+Example.play = async ({canvasElement}) => {
+  await userEvent.tab();
+  let body = canvasElement.ownerDocument.body;
+  await within(body).findByRole('tooltip');
+};
+
+
+Example.story = {
+  argTypes: {
+    isOpen: {
+      control: 'select',
+      options: [true, false, undefined]
+    }
+  }
+};
+
 export const LongLabel = (args: any) => {
   let {
     trigger,
@@ -114,8 +132,38 @@ export const LongLabel = (args: any) => {
   );
 };
 
+LongLabel.story = {
+  argTypes: {
+    isOpen: {
+      control: 'select',
+      options: [true, false, undefined]
+    }
+  }
+};
+
+LongLabel.play = async ({canvasElement}) => {
+  await userEvent.tab();
+  let body = canvasElement.ownerDocument.body;
+  await within(body).findByRole('tooltip');
+};
+
 export const ColorScheme = (args: any) => (
   <Provider colorScheme="dark" background="base" styles={style({padding: 48})}>
     <Example {...args} />
   </Provider>
 );
+
+ColorScheme.story = {
+  argTypes: {
+    isOpen: {
+      control: 'select',
+      options: [true, false, undefined]
+    }
+  }
+};
+
+ColorScheme.play = async ({canvasElement}) => {
+  await userEvent.tab();
+  let body = canvasElement.ownerDocument.body;
+  await within(body).findByRole('tooltip');
+};