diff --git a/.changeset/slimy-jokes-press.md b/.changeset/slimy-jokes-press.md
new file mode 100644
index 00000000000..38b437c7c93
--- /dev/null
+++ b/.changeset/slimy-jokes-press.md
@@ -0,0 +1,5 @@
+---
+'@shopify/polaris': patch
+---
+
+Updated DropZone minimum size from 50px to 40px to fit within a small Thumbnail
diff --git a/polaris-react/src/components/DropZone/DropZone.module.scss b/polaris-react/src/components/DropZone/DropZone.module.scss
index 0eaa0f61a93..2571a30f073 100755
--- a/polaris-react/src/components/DropZone/DropZone.module.scss
+++ b/polaris-react/src/components/DropZone/DropZone.module.scss
@@ -3,7 +3,7 @@
 $dropzone-border-style: dashed;
 $dropzone-min-height-large: 120px;
 $dropzone-min-height-medium: 100px;
-$dropzone-min-height-small: 50px;
+$dropzone-min-height-small: 40px;
 
 $dropzone-stacking-order: (
   outline: 29,
@@ -111,6 +111,13 @@ $dropzone-stacking-order: (
   padding: 0;
   align-items: center;
   min-height: $dropzone-min-height-small;
+
+  /* This creates a square with a 1:1 aspect ratio */
+  &::before {
+    content: '';
+    /* stylelint-disable-next-line -- set padding top to full width of the element to maintain 1:1 aspect ratio */
+    padding-top: 100%;
+  }
 }
 
 .measuring {
diff --git a/polaris-react/src/components/DropZone/DropZone.stories.tsx b/polaris-react/src/components/DropZone/DropZone.stories.tsx
index 18aaf57b70c..3f732f4e3c7 100644
--- a/polaris-react/src/components/DropZone/DropZone.stories.tsx
+++ b/polaris-react/src/components/DropZone/DropZone.stories.tsx
@@ -376,37 +376,45 @@ export function SmallSized() {
   return (
     <BlockStack gap="400">
       <BlockStack gap="200">
-        <div>
-          <Text as="h2" variant="headingMd">
-            Small sized Drop zone
-          </Text>
-        </div>
-        <div style={{width: 50, height: 50}}>
+        <Text as="h2" variant="headingMd">
+          Small sized Drop zone (40px)
+        </Text>
+
+        <div style={{width: 40, height: 40}}>
           <DropZone>
             <DropZone.FileUpload />
           </DropZone>
         </div>
       </BlockStack>
       <BlockStack gap="200">
-        <div>
-          <Text as="h2" variant="headingMd">
-            Small sized Drop zone with error
-          </Text>
-          <Text as="p">Drag file in to see error state</Text>
+        <Text as="h2" variant="headingMd">
+          Small sized Drop zone without outline
+        </Text>
+
+        <div style={{width: 40, height: 40}}>
+          <DropZone outline={false}>
+            <DropZone.FileUpload />
+          </DropZone>
         </div>
-        <div style={{width: 50, height: 50}}>
+      </BlockStack>
+      <BlockStack gap="200">
+        <Text as="h2" variant="headingMd">
+          Small sized Drop zone with error
+        </Text>
+        <Text as="p">Drag file in to see error state</Text>
+
+        <div style={{width: 40, height: 40}}>
           <DropZone error>
             <DropZone.FileUpload />
           </DropZone>
         </div>
       </BlockStack>
       <BlockStack gap="200">
-        <div>
-          <Text as="h2" variant="headingMd">
-            Small sized Drop zone with disabled state
-          </Text>
-        </div>
-        <div style={{width: 50, height: 50}}>
+        <Text as="h2" variant="headingMd">
+          Small sized Drop zone with disabled state
+        </Text>
+
+        <div style={{width: 40, height: 40}}>
           <DropZone disabled>
             <DropZone.FileUpload />
           </DropZone>
diff --git a/polaris-react/src/components/DropZone/components/FileUpload/FileUpload.module.scss b/polaris-react/src/components/DropZone/components/FileUpload/FileUpload.module.scss
index 46c9f50e07a..80401aa279a 100755
--- a/polaris-react/src/components/DropZone/components/FileUpload/FileUpload.module.scss
+++ b/polaris-react/src/components/DropZone/components/FileUpload/FileUpload.module.scss
@@ -14,7 +14,7 @@
 }
 
 .small {
-  padding: var(--p-space-300);
+  padding: var(--p-space-200);
 }
 
 .FileUpload img {
diff --git a/polaris.shopify.com/pages/examples/drop-zone-small-sized.tsx b/polaris.shopify.com/pages/examples/drop-zone-small-sized.tsx
index bd3620e5204..37d4880af00 100644
--- a/polaris.shopify.com/pages/examples/drop-zone-small-sized.tsx
+++ b/polaris.shopify.com/pages/examples/drop-zone-small-sized.tsx
@@ -4,7 +4,7 @@ import {withPolarisExample} from '../../src/components/PolarisExampleWrapper';
 
 function DropZoneExample() {
   return (
-    <div style={{width: 50, height: 50}}>
+    <div style={{width: 40, height: 40}}>
       <DropZone>
         <DropZone.FileUpload />
       </DropZone>