diff --git a/d2layouts/d2dagrelayout/layout.go b/d2layouts/d2dagrelayout/layout.go
index 1272105fe..8233dce79 100644
--- a/d2layouts/d2dagrelayout/layout.go
+++ b/d2layouts/d2dagrelayout/layout.go
@@ -345,8 +345,10 @@ func Layout(ctx context.Context, g *d2graph.Graph, opts *ConfigurableOpts) (err
 			continue
 		}
 
+		subtract := go2.Min(rootAttrs.ranksep/2, *obj.LabelHeight+label.PADDING)
+
 		// This was artifically added to make dagre consider label height
-		obj.Height -= (float64(*obj.LabelHeight) + label.PADDING)
+		obj.Height -= float64(subtract)
 
 		movedEdges := make(map[*d2graph.Edge]struct{})
 		for _, e := range g.Edges {
@@ -371,7 +373,7 @@ func Layout(ctx context.Context, g *d2graph.Graph, opts *ConfigurableOpts) (err
 				currDst = currDst.Parent
 			}
 			if isSrcDesc && isDstDesc {
-				stepSize := float64(*obj.LabelHeight) + label.PADDING
+				stepSize := float64(subtract)
 				if e.Src != obj || e.Dst != obj {
 					stepSize /= 2.
 				}
@@ -388,7 +390,7 @@ func Layout(ctx context.Context, g *d2graph.Graph, opts *ConfigurableOpts) (err
 			curr := q[0]
 			q = q[1:]
 
-			stepSize := float64(*obj.LabelHeight) + label.PADDING
+			stepSize := float64(subtract)
 			if curr != obj {
 				stepSize /= 2.
 			}
diff --git a/e2etests/testdata/stable/font_sizes_containers_large/dagre/board.exp.json b/e2etests/testdata/stable/font_sizes_containers_large/dagre/board.exp.json
index 1d131a92a..c1b6f4cd0 100644
--- a/e2etests/testdata/stable/font_sizes_containers_large/dagre/board.exp.json
+++ b/e2etests/testdata/stable/font_sizes_containers_large/dagre/board.exp.json
@@ -7,10 +7,10 @@
       "type": "rectangle",
       "pos": {
         "x": 0,
-        "y": 130
+        "y": 65
       },
       "width": 404,
-      "height": 446,
+      "height": 511,
       "opacity": 1,
       "strokeDash": 0,
       "strokeWidth": 2,
@@ -48,10 +48,10 @@
       "type": "rectangle",
       "pos": {
         "x": 40,
-        "y": 216
+        "y": 162
       },
       "width": 324,
-      "height": 360,
+      "height": 381,
       "opacity": 1,
       "strokeDash": 0,
       "strokeWidth": 2,
@@ -89,7 +89,7 @@
       "type": "rectangle",
       "pos": {
         "x": 80,
-        "y": 284
+        "y": 241
       },
       "width": 244,
       "height": 270,
@@ -130,7 +130,7 @@
       "type": "rectangle",
       "pos": {
         "x": 120,
-        "y": 352
+        "y": 309
       },
       "width": 164,
       "height": 160,
@@ -171,7 +171,7 @@
       "type": "rectangle",
       "pos": {
         "x": 170,
-        "y": 404
+        "y": 361
       },
       "width": 64,
       "height": 56,
diff --git a/e2etests/testdata/stable/font_sizes_containers_large/dagre/sketch.exp.svg b/e2etests/testdata/stable/font_sizes_containers_large/dagre/sketch.exp.svg
index 5d4f49655..533dd9d80 100644
--- a/e2etests/testdata/stable/font_sizes_containers_large/dagre/sketch.exp.svg
+++ b/e2etests/testdata/stable/font_sizes_containers_large/dagre/sketch.exp.svg
@@ -3,7 +3,7 @@
 id="d2-svg"
 style="background: white;"
 xmlns="http://www.w3.org/2000/svg" xmlns:xlink="http://www.w3.org/1999/xlink"
-width="652" height="778" viewBox="-124 -100 652 778"><style type="text/css">
+width="652" height="843" viewBox="-124 -165 652 843"><style type="text/css">
 <![CDATA[
 .shape {
   shape-rendering: geometricPrecision;
@@ -39,8 +39,8 @@ width="652" height="778" viewBox="-124 -100 652 778"><style type="text/css">
     svgEl.setAttribute("height", height * ratio - 16);
   }
 });
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-<rect x="-100" y="-100" width="652" height="778" fill="white"></rect>
+]]></script><g id="ninety nine"><g class="shape" ><rect x="0" y="65" width="404" height="511" style="fill:#E3E9FD;stroke:#0D32B2;stroke-width:2;" /></g><text class="text" x="202.000000" y="34.000000" style="text-anchor:middle;font-size:99px;fill:#0A0F25">ninety nine</text></g><g id="ninety nine.sixty four"><g class="shape" ><rect x="40" y="162" width="324" height="381" style="fill:#EDF0FD;stroke:#0D32B2;stroke-width:2;" /></g><text class="text" x="202.000000" y="140.000000" style="text-anchor:middle;font-size:64px;fill:#0A0F25">sixty four</text></g><g id="ninety nine.sixty four.thirty two"><g class="shape" ><rect x="80" y="241" width="244" height="270" style="fill:#F7F8FE;stroke:#0D32B2;stroke-width:2;" /></g><text class="text" x="202.000000" y="227.000000" style="text-anchor:middle;font-size:32px;fill:#0A0F25">thirty two</text></g><g id="ninety nine.sixty four.thirty two.sixteen"><g class="shape" ><rect x="120" y="309" width="164" height="160" style="fill:#FFFFFF;stroke:#0D32B2;stroke-width:2;" /></g><text class="text" x="202.000000" y="299.000000" style="text-anchor:middle;font-size:16px;fill:#0A0F25">sixteen</text></g><g id="ninety nine.sixty four.thirty two.sixteen.eight"><g class="shape" ><rect x="170" y="361" width="64" height="56" style="fill:#FFFFFF;stroke:#0D32B2;stroke-width:2;" /></g><text class="text-bold" x="202.000000" y="391.500000" style="text-anchor:middle;font-size:8px;fill:#0A0F25">eight</text></g><mask id="674103652" maskUnits="userSpaceOnUse" x="-100" y="-100" width="652" height="843">
+<rect x="-100" y="-100" width="652" height="843" fill="white"></rect>
 
 </mask><style type="text/css"><![CDATA[
 .text {