diff --git a/source/blender/editors/transform/transform_convert_nla.c b/source/blender/editors/transform/transform_convert_nla.c
index c7ba989f37b..b2bbfabb120 100644
--- a/source/blender/editors/transform/transform_convert_nla.c
+++ b/source/blender/editors/transform/transform_convert_nla.c
@@ -54,6 +54,12 @@ typedef struct TransDataNla {
 
   /** index of track that strip is currently in. */
   int trackIndex;
+
+  // TODO go over this comment
+  /** NOTE: This index is relative to the initial first track at the start of transforming and
+   * thus can be negative when the tracks list grows downward. */
+  int signed_track_index;
+
   /** handle-index: 0 for dummy entry, -1 for start, 1 for end, 2 for both ends. */
   int handle;
 } TransDataNla;
@@ -138,6 +144,144 @@ static float transdata_get_time_shuffle_offset(ListBase *trans_datas)
   return -offset_left < offset_right ? offset_left : offset_right;
 }
 
+// TODO go over these comments
+/** Assumes all of given trans_datas are part of the same ID.
+ *
+ * \param r_total_offset: The minimal total signed offset that results in valid strip track-moves
+ * for all strips from \a trans_datas.
+ *
+ * \returns true if \a r_total_offset results in a valid offset, false if no solution exists in the
+ * desired direction.
+ */
+static bool transdata_get_track_shuffle_offset_side(ListBase *trans_datas,
+                                                    const bool shuffle_down,
+                                                    int *r_total_offset)
+{
+  *r_total_offset = 0;
+  if (BLI_listbase_is_empty(trans_datas)) {
+    return false;
+  }
+
+  ListBase *tracks = &BKE_animdata_from_id(
+                          ((TransDataNla *)((LinkData *)trans_datas->first)->data)->id)
+                          ->nla_tracks;
+
+  int offset;
+  do {
+    offset = 0;
+
+    LISTBASE_FOREACH (LinkData *, link, trans_datas) {
+      TransDataNla *trans_data = (TransDataNla *)link->data;
+
+      NlaTrack *dst_track = BLI_findlink(tracks, trans_data->trackIndex + *r_total_offset);
+
+      /* Cannot keep moving strip in given track direction. No solution. */
+      if (dst_track == NULL) {
+        return false;
+      }
+
+      /* Shuffle only if track is locked or library override. */
+      if (((dst_track->flag & NLATRACK_PROTECTED) == 0) &&
+          !BKE_nlatrack_is_nonlocal_in_liboverride(trans_data->id, dst_track))
+      {
+        continue;
+      }
+
+      offset = shuffle_down ? 1 : -1;
+      break;
+    }
+
+    *r_total_offset += offset;
+  } while (offset != 0);
+
+  return true;
+}
+
+// TODO go over these comments
+/** Assumes all of given trans_datas are part of the same ID.
+ *
+ * \param r_track_offset: The minimal total signed offset that results in valid strip track-moves
+ * for all strips from \a trans_datas.
+ *
+ * \returns true if \a r_track_offset results in a valid offset, false if no solution exists in
+ * either direction.
+ */
+static bool transdata_get_track_shuffle_offset(ListBase *trans_datas, int *r_track_offset)
+{
+  int offset_down = 0;
+  const bool down_valid = transdata_get_track_shuffle_offset_side(trans_datas, true, &offset_down);
+
+  int offset_up = 0;
+  const bool up_valid = transdata_get_track_shuffle_offset_side(trans_datas, false, &offset_up);
+
+  if (down_valid && up_valid) {
+    if (abs(offset_down) < offset_up) {
+      *r_track_offset = offset_down;
+    }
+    else {
+      *r_track_offset = offset_up;
+    }
+  }
+  else if (down_valid) {
+    *r_track_offset = offset_down;
+  }
+  else if (up_valid) {
+    *r_track_offset = offset_up;
+  }
+
+  return down_valid || up_valid;
+}
+
+/* -------------------------------------------------------------------- */
+/** \name Transform application to NLA strips
+ * \{ */
+
+/** \} */
+static void nlatrack_truncate_temporary_tracks(bAnimContext *ac)
+{
+  short filter = (ANIMFILTER_DATA_VISIBLE | ANIMFILTER_ANIMDATA);
+  ListBase anim_data = {NULL, NULL};
+  bAnimListElem *ale;
+  ANIM_animdata_filter(ac, &anim_data, filter, ac->data, ac->datatype);
+
+  for (ale = anim_data.first; ale; ale = ale->next) {
+    ListBase *nla_tracks = &ale->adt->nla_tracks;
+
+    /** Remove top tracks that weren't necessary. */
+    LISTBASE_FOREACH_BACKWARD_MUTABLE (NlaTrack *, track, nla_tracks) {
+      if (!(track->flag & NLATRACK_TEMPORARILY_ADDED)) {
+        break;
+      }
+      if (track->strips.first != NULL) {
+        break;
+      }
+      BKE_nlatrack_remove_and_free(nla_tracks, track, true);
+    }
+
+    /** Remove bottom tracks that weren't necessary. */
+    LISTBASE_FOREACH_MUTABLE (NlaTrack *, track, nla_tracks) {
+      /** Library override tracks are the first N tracks. They're never temporary and determine
+       * where we start removing temporaries.*/
+      if ((track->flag & NLATRACK_OVERRIDELIBRARY_LOCAL) == 0) {
+        continue;
+      }
+      if (!(track->flag & NLATRACK_TEMPORARILY_ADDED)) {
+        break;
+      }
+      if (track->strips.first != NULL) {
+        break;
+      }
+      BKE_nlatrack_remove_and_free(nla_tracks, track, true);
+    }
+
+    /** Clear temporary flag. */
+    LISTBASE_FOREACH_MUTABLE (NlaTrack *, track, nla_tracks) {
+      track->flag &= ~NLATRACK_TEMPORARILY_ADDED;
+    }
+  }
+
+  ANIM_animdata_freelist(&anim_data);
+}
 /* -------------------------------------------------------------------- */
 /** \name Transform application to NLA strips
  * \{ */
@@ -274,6 +418,59 @@ static void nlastrip_fix_overlapping(TransInfo *t, TransDataNla *tdn, NlaStrip *
   }
 }
 
+/**
+ * TODO make this functional abstration work
+ */
+static void nlatrack_auto_grow_tracklist(TransInfo *t,
+                                         TransDataNla *tdn,
+                                         ListBase *nla_tracks,
+                                         NlaTrack *dst_track,
+                                         int delta_new_tracks,
+                                         bool is_liboverride)
+{
+
+  /* Get event to check if ctrl is geld down. */
+  wmEvent *event = CTX_wm_window(t->context)->eventstate;
+
+  /* Only grow track list of ctrl key is held down. */
+  while (delta_new_tracks < 0) {
+    dst_track = dst_track->prev;
+    if ((event->modifier & KM_CTRL) &&
+        (dst_track == NULL || BKE_nlatrack_is_nonlocal_in_liboverride(tdn->id, dst_track)))
+    {
+      break;
+    }
+    delta_new_tracks++;
+  }
+
+  /** We assume all library tracks are grouped at the bottom of the nla stack. Thus, no need
+   * to check for them when moving tracks upward. */
+  while (delta_new_tracks > 0) {
+    dst_track = dst_track->next;
+    if ((event->modifier & KM_CTRL) && dst_track == NULL) {
+      break;
+    }
+    delta_new_tracks--;
+  }
+
+  /* Check if new tracks need to be added above or below existing tracks.*/
+  for (int i = 0; i < -delta_new_tracks; i++) {
+    NlaTrack *new_track = BKE_nlatrack_new();
+    new_track->flag |= NLATRACK_TEMPORARILY_ADDED;
+    BKE_nlatrack_insert_before(
+        nla_tracks, (NlaTrack *)nla_tracks->first, new_track, is_liboverride);
+    dst_track = new_track;
+  }
+
+  for (int i = 0; i < delta_new_tracks; i++) {
+    NlaTrack *new_track = BKE_nlatrack_new();
+    new_track->flag |= NLATRACK_TEMPORARILY_ADDED;
+
+    BKE_nlatrack_insert_after(nla_tracks, (NlaTrack *)nla_tracks->last, new_track, is_liboverride);
+    dst_track = new_track;
+  }
+}
+
 /** \} */
 
 /* -------------------------------------------------------------------- */
@@ -395,6 +592,7 @@ static void createTransNlaData(bContext *C, TransInfo *t)
             tdn->oldTrack = tdn->nlt = nlt;
             tdn->strip = strip;
             tdn->trackIndex = BLI_findindex(&adt->nla_tracks, nlt);
+            tdn->signed_track_index = tdn->trackIndex;
 
             yval = (float)(tdn->trackIndex * NLACHANNEL_STEP(snla));
 
@@ -576,56 +774,99 @@ static void recalcData_nla(TransInfo *t)
       continue;
     }
 
-    delta_y1 = ((int)tdn->h1[1] / NLACHANNEL_STEP(snla) - tdn->trackIndex);
-    delta_y2 = ((int)tdn->h2[1] / NLACHANNEL_STEP(snla) - tdn->trackIndex);
+    delta_y1 = ((int)tdn->h1[1] / NLACHANNEL_STEP(snla) - tdn->signed_track_index);
+    delta_y2 = ((int)tdn->h2[1] / NLACHANNEL_STEP(snla) - tdn->signed_track_index);
 
+    /* Move strip into track in the requested direction. */
     if (delta_y1 || delta_y2) {
-      NlaTrack *track;
       int delta = (delta_y2) ? delta_y2 : delta_y1;
-      int n;
 
-      /* Move in the requested direction,
-       * checking at each layer if there's space for strip to pass through,
-       * stopping on the last track available or that we're able to fit in.
+      AnimData *anim_data = BKE_animdata_from_id(tdn->id);
+      ListBase *nla_tracks = &anim_data->nla_tracks;
+
+      NlaTrack *old_track = tdn->nlt;
+      NlaTrack *dst_track = NULL;
+
+      /* Calculate the total new tracks needed
+       *
+       * Determine dst_track, which will end up being NULL, the last library override
+       * track, or a normal local track. The first two cases lead to delta_new_tracks!=0.
+       * The last case leads to delta_new_tracks==0.
        */
-      if (delta > 0) {
-        for (track = tdn->nlt->next, n = 0; (track) && (n < delta); track = track->next, n++) {
-          /* check if space in this track for the strip */
-          if (BKE_nlatrack_has_space(track, strip->start, strip->end) &&
-              !BKE_nlatrack_is_nonlocal_in_liboverride(tdn->id, track))
-          {
-            /* move strip to this track */
-            BKE_nlatrack_remove_strip(tdn->nlt, strip);
-            BKE_nlatrack_add_strip(track, strip, is_liboverride);
 
-            tdn->nlt = track;
-            tdn->trackIndex++;
-          }
-          else { /* can't move any further */
-            break;
-          }
+      int delta_new_tracks = delta;
+
+      /* it's possible to drag a strip fast enough to make delta > |1|. We only want to process
+       * 1 track shift at a time.
+       */
+      CLAMP(delta_new_tracks, -1, 1);
+      dst_track = old_track;
+
+      /* Get event to check if ctrl is geld down. */
+      wmEvent *event = CTX_wm_window(t->context)->eventstate;
+
+      // nlatrack_auto_grow_tracklist(
+      //     t, tdn, nla_tracks, dst_track, delta_new_tracks, is_liboverride);
+
+      /* Auto-grow track list on ctrl + transform. */
+      while (delta_new_tracks < 0) {
+        dst_track = dst_track->prev;
+        if ((event->modifier & KM_CTRL) &&
+            (dst_track == NULL || BKE_nlatrack_is_nonlocal_in_liboverride(tdn->id, dst_track)))
+        {
+          break;
         }
+        delta_new_tracks++;
       }
-      else {
-        /* make delta 'positive' before using it, since we now know to go backwards */
-        delta = -delta;
 
-        for (track = tdn->nlt->prev, n = 0; (track) && (n < delta); track = track->prev, n++) {
-          /* check if space in this track for the strip */
-          if (BKE_nlatrack_has_space(track, strip->start, strip->end) &&
-              !BKE_nlatrack_is_nonlocal_in_liboverride(tdn->id, track))
-          {
-            /* move strip to this track */
-            BKE_nlatrack_remove_strip(tdn->nlt, strip);
-            BKE_nlatrack_add_strip(track, strip, is_liboverride);
-
-            tdn->nlt = track;
-            tdn->trackIndex--;
-          }
-          else { /* can't move any further */
-            break;
-          }
+      /** We assume all library tracks are grouped at the bottom of the nla stack. Thus, no
+      need
+       * to check for them when moving tracks upward. */
+      while (delta_new_tracks > 0) {
+        dst_track = dst_track->next;
+        if ((event->modifier & KM_CTRL) && dst_track == NULL) {
+          break;
         }
+        delta_new_tracks--;
+      }
+
+      for (int i = 0; i < -delta_new_tracks; i++) {
+        NlaTrack *new_track = BKE_nlatrack_new();
+        new_track->flag |= NLATRACK_TEMPORARILY_ADDED;
+        BKE_nlatrack_insert_before(
+            nla_tracks, (NlaTrack *)nla_tracks->first, new_track, is_liboverride);
+        dst_track = new_track;
+      }
+
+      for (int i = 0; i < delta_new_tracks; i++) {
+        NlaTrack *new_track = BKE_nlatrack_new();
+        new_track->flag |= NLATRACK_TEMPORARILY_ADDED;
+
+        BKE_nlatrack_insert_after(
+            nla_tracks, (NlaTrack *)nla_tracks->last, new_track, is_liboverride);
+        dst_track = new_track;
+      }
+
+      /* If the destination track is null, then we need to go to the last track. */
+      if (dst_track == NULL) {
+        dst_track = old_track;
+      }
+
+      /* Move strip from old_track to dst_track. */
+      if (dst_track != old_track) {
+        BKE_nlatrack_remove_strip(old_track, strip);
+        BKE_nlastrips_add_strip_unsafe(&dst_track->strips, strip);
+
+        tdn->nlt = dst_track;
+        tdn->signed_track_index += delta;
+        tdn->trackIndex = BLI_findindex(nla_tracks, dst_track);
+      }
+
+      /* Ensure we set the target track as active. */
+      BKE_nlatrack_set_active(nla_tracks, dst_track);
+
+      if (tdn->nlt->flag & NLATRACK_PROTECTED) {
+        strip->flag |= NLASTRIP_FLAG_INVALID_LOCATION;
       }
     }
 
@@ -694,6 +935,45 @@ static void nlastrip_shuffle_transformed(TransDataContainer *tc, TransDataNla *f
   LISTBASE_FOREACH (IDGroupedTransData *, group, &grouped_trans_datas) {
     ListBase *trans_datas = &group->trans_datas;
 
+    /* Apply vertical shuffle. */
+    int minimum_track_offset = 0;
+    const bool track_offset_valid = transdata_get_track_shuffle_offset(trans_datas,
+                                                                       &minimum_track_offset);
+
+    /* Debug assert to ensure strips preserved their relative track offsets from eachother and
+     * none were compressed. Otherwise, no amount of vertical shuffling is a solution.
+     *
+     * This is considered a bug. */
+    BLI_assert(track_offset_valid);
+    if (minimum_track_offset != 0) {
+      ListBase *tracks = &BKE_animdata_from_id(group->id)->nla_tracks;
+
+      LISTBASE_FOREACH (LinkData *, link, trans_datas) {
+        TransDataNla *trans_data = (TransDataNla *)link->data;
+        NlaTrack *dst_track = BLI_findlink(tracks, trans_data->trackIndex + minimum_track_offset);
+
+        NlaStrip *strip = trans_data->strip;
+        if ((dst_track->flag & NLATRACK_PROTECTED) != 0) {
+
+          BKE_nlatrack_remove_strip(trans_data->nlt, strip);
+          // Should this be false? Should we short circuit the loop
+          BKE_nlatrack_add_strip(dst_track, strip, false);
+
+          trans_data->nlt = dst_track;
+        }
+        else {
+          NlaTrack *old_track = BLI_findlink(tracks, trans_data->oldTrack->index);
+
+          BKE_nlatrack_remove_strip(trans_data->nlt, strip);
+          // Should this be false? Should we short circuit the loop
+          // BKE_nlatrack_add_strip(old_track, strip, false);
+          BKE_nlastrips_add_strip_unsafe(&old_track->strips, strip);
+
+          trans_data->nlt = old_track;
+        }
+      }
+    }
+
     /* Apply horizontal shuffle. */
     const float minimum_time_offset = transdata_get_time_shuffle_offset(trans_datas);
     LISTBASE_FOREACH (LinkData *, link, trans_datas) {
@@ -769,6 +1049,9 @@ static void special_aftertrans_update__nla(bContext *C, TransInfo *t)
   /* free temp memory */
   ANIM_animdata_freelist(&anim_data);
 
+  /* Truncate temporarily added tracks. */
+  nlatrack_truncate_temporary_tracks(&ac);
+
   /* Perform after-transform validation. */
   ED_nla_postop_refresh(&ac);
 }
diff --git a/source/blender/makesdna/DNA_anim_types.h b/source/blender/makesdna/DNA_anim_types.h
index 77d30e5758c..4f848a73156 100644
--- a/source/blender/makesdna/DNA_anim_types.h
+++ b/source/blender/makesdna/DNA_anim_types.h
@@ -905,6 +905,11 @@ typedef enum eNlaTrack_Flag {
    * usually as result of tweaking being enabled (internal flag) */
   NLATRACK_DISABLED = (1 << 10),
 
+// TODO is this the best name?
+  /** Marks tracks automatically added for space while dragging strips vertically.
+   * Internal flag that's only set during transform operator. */
+  NLATRACK_TEMPORARILY_ADDED = (1 << 11),
+
   /** This NLA track is added to an override ID, which means it is fully editable.
    * Irrelevant in case the owner ID is not an override. */
   NLATRACK_OVERRIDELIBRARY_LOCAL = 1 << 16,