diff --git a/apps/desktop/src/renderer/screens/main/components/Sidebar/components/ModeCarousel/components/AnimatedBackground/AnimatedBackground.tsx b/apps/desktop/src/renderer/screens/main/components/Sidebar/components/ModeCarousel/components/AnimatedBackground/AnimatedBackground.tsx
index 91852fe33b3..f878db6c4fc 100644
--- a/apps/desktop/src/renderer/screens/main/components/Sidebar/components/ModeCarousel/components/AnimatedBackground/AnimatedBackground.tsx
+++ b/apps/desktop/src/renderer/screens/main/components/Sidebar/components/ModeCarousel/components/AnimatedBackground/AnimatedBackground.tsx
@@ -24,7 +24,7 @@ export function AnimatedBackground({
 
 	return (
 		<motion.div
-			className="absolute h-9 rounded-lg bg-neutral-800/60"
+			className="absolute h-9 rounded bg-neutral-800/60"
 			style={{
 				width: buttonWidth,
 				x: translateX,
diff --git a/apps/desktop/src/renderer/screens/main/components/Sidebar/components/ModeCarousel/components/ModeNavigation/ModeNavigation.tsx b/apps/desktop/src/renderer/screens/main/components/Sidebar/components/ModeCarousel/components/ModeNavigation/ModeNavigation.tsx
index ba4ed8709e8..d251fb21861 100644
--- a/apps/desktop/src/renderer/screens/main/components/Sidebar/components/ModeCarousel/components/ModeNavigation/ModeNavigation.tsx
+++ b/apps/desktop/src/renderer/screens/main/components/Sidebar/components/ModeCarousel/components/ModeNavigation/ModeNavigation.tsx
@@ -1,8 +1,9 @@
 import { Button } from "@superset/ui/button";
+import { Tooltip, TooltipContent, TooltipTrigger } from "@superset/ui/tooltip";
 import type { MotionValue } from "framer-motion";
-import { AnimatedBackground } from "../AnimatedBackground";
-import { modeIcons } from "../../constants";
+import { modeIcons, modeLabels } from "../../constants";
 import type { SidebarMode } from "../../types";
+import { AnimatedBackground } from "../AnimatedBackground";
 
 interface ModeNavigationProps {
 	modes: SidebarMode[];
@@ -20,30 +21,37 @@ export function ModeNavigation({
 	return (
 		<div className="flex items-center justify-center gap-1 px-2 py-2 border-t border-neutral-800/50 bg-neutral-900/50 backdrop-blur-sm">
 			<div className="relative flex items-center gap-1">
-				<AnimatedBackground progress={scrollProgress} modeCount={modes.length} />
+				<AnimatedBackground
+					progress={scrollProgress}
+					modeCount={modes.length}
+				/>
 
 				{modes.map((mode) => {
 					const Icon = modeIcons[mode];
 					const isActive = mode === currentMode;
 
 					return (
-						<Button
-							key={mode}
-							variant="ghost"
-							size="sm"
-							onClick={() => onModeSelect(mode)}
-							className={`relative z-10 h-9 w-9 rounded-lg transition-colors duration-200 ${
-								isActive
-									? "text-neutral-100"
-									: "text-neutral-400 hover:text-neutral-300"
-							}`}
-						>
-							<Icon className="w-4 h-4" />
-						</Button>
+						<Tooltip key={mode}>
+							<TooltipTrigger asChild>
+								<Button
+									variant="ghost"
+									size="sm"
+									onClick={() => onModeSelect(mode)}
+									className={`relative z-10 h-9 w-9 rounded transition-colors duration-200 ${isActive
+										? "text-neutral-100"
+										: "text-neutral-400 hover:text-neutral-300"
+										}`}
+								>
+									<Icon className="w-4 h-4" />
+								</Button>
+							</TooltipTrigger>
+							<TooltipContent side="top">
+								<p className="text-xs">{modeLabels[mode]}</p>
+							</TooltipContent>
+						</Tooltip>
 					);
 				})}
 			</div>
 		</div>
 	);
 }
-
diff --git a/apps/desktop/src/renderer/screens/main/components/Sidebar/components/WorktreeList/WorktreeList.tsx b/apps/desktop/src/renderer/screens/main/components/Sidebar/components/WorktreeList/WorktreeList.tsx
index 708abae55ce..470cc04938e 100644
--- a/apps/desktop/src/renderer/screens/main/components/Sidebar/components/WorktreeList/WorktreeList.tsx
+++ b/apps/desktop/src/renderer/screens/main/components/Sidebar/components/WorktreeList/WorktreeList.tsx
@@ -1,6 +1,5 @@
-import { Button } from "@superset/ui/button";
-import { Tooltip, TooltipContent, TooltipTrigger } from "@superset/ui/tooltip";
-import { Monitor, Plus } from "lucide-react";
+import { ChevronDown, Monitor, Plus, SquareTerminal } from "lucide-react";
+import { useEffect, useRef, useState } from "react";
 import type { Workspace, Worktree } from "shared/types";
 import { WorkspacePortIndicator } from "../WorkspacePortIndicator";
 import { WorktreeItem } from "./components/WorktreeItem";
@@ -20,8 +19,8 @@ interface WorktreeListProps {
 
 export function WorktreeList({
 	currentWorkspace,
-	expandedWorktrees,
-	onToggleWorktree,
+	expandedWorktrees: _expandedWorktrees,
+	onToggleWorktree: _onToggleWorktree,
 	onTabSelect,
 	onReload,
 	onUpdateWorktree,
@@ -30,6 +29,44 @@ export function WorktreeList({
 	selectedWorktreeId,
 	showWorkspaceHeader = false,
 }: WorktreeListProps) {
+	// Hooks must be called before any early returns
+	const [isDropdownOpen, setIsDropdownOpen] = useState(false);
+	const [defaultTabType, setDefaultTabType] = useState<"terminal" | "preview">(
+		() => {
+			// Load from localStorage or default to "terminal"
+			const saved = localStorage.getItem("newTabDefaultType");
+			return (saved === "preview" ? "preview" : "terminal") as
+				| "terminal"
+				| "preview";
+		},
+	);
+	const dropdownRef = useRef<HTMLDivElement>(null);
+	const buttonRef = useRef<HTMLButtonElement>(null);
+	const chevronRef = useRef<HTMLButtonElement>(null);
+
+	// Close dropdown when clicking outside
+	useEffect(() => {
+		const handleClickOutside = (event: MouseEvent) => {
+			if (
+				dropdownRef.current &&
+				buttonRef.current &&
+				chevronRef.current &&
+				!dropdownRef.current.contains(event.target as Node) &&
+				!buttonRef.current.contains(event.target as Node) &&
+				!chevronRef.current.contains(event.target as Node)
+			) {
+				setIsDropdownOpen(false);
+			}
+		};
+
+		if (isDropdownOpen) {
+			document.addEventListener("mousedown", handleClickOutside);
+			return () => {
+				document.removeEventListener("mousedown", handleClickOutside);
+			};
+		}
+	}, [isDropdownOpen]);
+
 	if (!currentWorkspace) {
 		return (
 			<div className="text-sm text-gray-500 px-3 py-2">No workspace open</div>
@@ -48,11 +85,14 @@ export function WorktreeList({
 	const hasPortForwarding =
 		currentWorkspace.ports && currentWorkspace.ports.length > 0;
 
-	// Get main branch from workspace config, fallback to 'main'
-	const mainBranch = currentWorkspace.branch || "main";
-
-	const handleAddTerminal = async () => {
+	const handleAddTerminal = async (updateDefault = false) => {
 		if (!currentWorkspace || !selectedWorktreeId) return;
+		setIsDropdownOpen(false);
+
+		if (updateDefault) {
+			setDefaultTabType("terminal");
+			localStorage.setItem("newTabDefaultType", "terminal");
+		}
 
 		try {
 			const result = await window.ipcRenderer.invoke("tab-create", {
@@ -74,8 +114,14 @@ export function WorktreeList({
 		}
 	};
 
-	const handleAddPreview = async () => {
+	const handleAddPreview = async (updateDefault = false) => {
 		if (!currentWorkspace || !selectedWorktreeId) return;
+		setIsDropdownOpen(false);
+
+		if (updateDefault) {
+			setDefaultTabType("preview");
+			localStorage.setItem("newTabDefaultType", "preview");
+		}
 
 		try {
 			const worktree = currentWorkspace.worktrees.find(
@@ -104,6 +150,19 @@ export function WorktreeList({
 		}
 	};
 
+	const handleCreateDefault = () => {
+		if (defaultTabType === "terminal") {
+			handleAddTerminal();
+		} else {
+			handleAddPreview();
+		}
+	};
+
+	const handleChevronClick = (e: React.MouseEvent) => {
+		e.stopPropagation();
+		setIsDropdownOpen(!isDropdownOpen);
+	};
+
 	return (
 		<>
 			{/* Workspace Header - more minimal */}
@@ -113,43 +172,6 @@ export function WorktreeList({
 				</div>
 			)}
 
-			{/* Action Buttons - more subtle, inline */}
-			{selectedWorktreeId && (
-				<div className="px-3 pb-1.5 flex items-center justify-center gap-1.5">
-					<Tooltip>
-						<TooltipTrigger asChild>
-							<Button
-								variant="ghost"
-								size="icon-sm"
-								onClick={handleAddTerminal}
-								className="h-6 w-6 hover:bg-neutral-800/60 text-neutral-400 hover:text-neutral-200"
-							>
-								<Plus size={14} />
-							</Button>
-						</TooltipTrigger>
-						<TooltipContent side="bottom">
-							<p className="text-xs">New Terminal</p>
-						</TooltipContent>
-					</Tooltip>
-
-					<Tooltip>
-						<TooltipTrigger asChild>
-							<Button
-								variant="ghost"
-								size="icon-sm"
-								onClick={handleAddPreview}
-								className="h-6 w-6 hover:bg-neutral-800/60 text-neutral-400 hover:text-neutral-200"
-							>
-								<Monitor size={14} />
-							</Button>
-						</TooltipTrigger>
-						<TooltipContent side="bottom">
-							<p className="text-xs">New Preview</p>
-						</TooltipContent>
-					</Tooltip>
-				</div>
-			)}
-
 			{currentWorkspace.worktrees.map((worktree) => (
 				<WorktreeItem
 					key={worktree.id}
@@ -166,6 +188,72 @@ export function WorktreeList({
 					onCloneWorktree={() => onCloneWorktree(worktree.id, worktree.branch)}
 				/>
 			))}
+
+			{/* Arc-style New Tab Button - styled like a tab at the bottom */}
+			{selectedWorktreeId && (
+				<div className="space-y-0.5 mt-2">
+					<div className="relative">
+						<button
+							ref={buttonRef}
+							type="button"
+							onClick={handleCreateDefault}
+							className={`group flex items-center gap-1.5 w-full h-7 px-2.5 text-xs rounded-md transition-all hover:bg-neutral-800/40 text-neutral-400 hover:text-neutral-300`}
+						>
+							<Plus size={12} className="shrink-0" />
+							<span className="truncate flex-1 text-left">
+								{defaultTabType === "terminal" ? "New Terminal" : "New Preview"}
+							</span>
+							<button
+								ref={chevronRef}
+								type="button"
+								onClick={handleChevronClick}
+								className="shrink-0 opacity-0 group-hover:opacity-60 hover:opacity-100 p-1 rounded transition-opacity"
+								onMouseDown={(e) => e.stopPropagation()}
+							>
+								<ChevronDown
+									size={14}
+									className={`transition-transform ${isDropdownOpen ? "rotate-180" : ""}`}
+								/>
+							</button>
+						</button>
+
+						{/* Dropdown Menu */}
+						{isDropdownOpen && (
+							<div
+								ref={dropdownRef}
+								className="absolute bottom-full left-0 right-0 mb-1 bg-neutral-800 border border-neutral-700 rounded-md shadow-lg z-50 overflow-hidden"
+							>
+								<button
+									type="button"
+									onClick={() =>
+										handleAddTerminal(defaultTabType !== "terminal")
+									}
+									className={`w-full px-3 py-2 text-left text-sm flex items-center gap-2 transition-colors ${defaultTabType === "terminal"
+										? "bg-neutral-700/50 text-neutral-200"
+										: "text-neutral-300 hover:bg-neutral-700/50"
+										}`}
+								>
+									<SquareTerminal size={14} className="text-neutral-400" />
+									<span>New Terminal</span>
+								</button>
+								<button
+									type="button"
+									onClick={() =>
+										handleAddPreview(defaultTabType !== "preview")
+									}
+									className={`w-full px-3 py-2 text-left text-sm flex items-center gap-2 transition-colors ${defaultTabType === "preview"
+										? "bg-neutral-700/50 text-neutral-200"
+										: "text-neutral-300 hover:bg-neutral-700/50"
+										}`}
+								>
+									<Monitor size={14} className="text-neutral-400" />
+									<span>New Preview</span>
+								</button>
+							</div>
+						)}
+					</div>
+				</div>
+			)}
 		</>
 	);
 }