diff --git a/packages/insomnia-smoke-test/tests/smoke/debug-sidebar-interactions.test.ts b/packages/insomnia-smoke-test/tests/smoke/debug-sidebar-interactions.test.ts
index fdf006b1d..e0720b4d4 100644
--- a/packages/insomnia-smoke-test/tests/smoke/debug-sidebar-interactions.test.ts
+++ b/packages/insomnia-smoke-test/tests/smoke/debug-sidebar-interactions.test.ts
@@ -144,80 +144,5 @@ test.describe('Debug-Sidebar', async () => {
       await page.getByRole('menuitemradio', { name: 'Http Request' }).click();
       await page.getByLabel('Request Collection').getByRole('row', { name: 'New Request' }).click();
     });
-
-    test('Add new string variable via environment overrides', async ({ page }) => {
-      // Create new Folder
-      await page.getByLabel('Create in collection').click();
-      await page.getByLabel('New Folder').click();
-      await page.locator('#prompt-input').fill('New Folder');
-      await page.getByText('New Folder').press('Enter');
-
-      // Open 'New folder' folder
-      const folderLocator = page.getByTestId('Dropdown-New-Folder');
-      const environmentLocator = page.getByRole('menuitemradio', { name: 'Environment' });
-      await folderLocator.click();
-      await environmentLocator.click();
-
-      // Add a new string environment variable
-      const expected = '{ "foo":"bar" }';
-      const editorTextLocator = await page.getByTestId('CodeEditor').getByRole('textbox');
-      const selectAllShortcut = process.platform === 'darwin' ? 'Meta+A' : 'Control+A';
-      await editorTextLocator.press(selectAllShortcut);
-      await editorTextLocator.fill(expected);
-
-      // Close and re-open modal
-      await page.getByText('Close').click();
-      await folderLocator.click();
-      await environmentLocator.click();
-
-      // Validate expected values persisted
-      const actualRows = await page.getByTestId('CodeEditor').locator('.CodeMirror-line').allInnerTexts();
-      expect(actualRows.length).toBeGreaterThan(0);
-
-      const actualJSON = JSON.parse(actualRows.join(' '));
-      expect(actualJSON).toEqual(JSON.parse(expected));
-    });
-
-    test('Add new string variable to an existing environment overrides folder', async ({ page }) => {
-      // Open 'Test Folder' folder
-      const folderLocator = page.getByTestId('Dropdown-test-folder');
-      const environmentLocator = page.getByRole('menuitemradio', { name: 'Environment' });
-      await folderLocator.click();
-      await environmentLocator.click();
-
-      // Add a new string environment variable to existing overrides
-
-      // 1. Retrieve current editor rows
-      const editorLocator = page.getByTestId('CodeEditor').locator('.CodeMirror-line');
-      const rows = await editorLocator.allInnerTexts();
-
-      // 2. Merge rows and convert to JSON
-      const editorJSON = JSON.parse(rows.join(' '));
-
-      // 3. Modify JSON with new string environment variable
-      editorJSON.REQUEST = 'HTTP';
-      const expected = editorJSON;
-
-      // 4. Apply new JSON to editor
-      const editorTextLocator = await page.getByTestId('CodeEditor').getByRole('textbox');
-      const selectAllShortcut = process.platform === 'darwin' ? 'Meta+A' : 'Control+A';
-      await editorTextLocator.press(selectAllShortcut);
-      await editorTextLocator.fill(JSON.stringify(expected));
-
-      // Close and re-open Modal
-      await page.getByText('Close').click();
-      await folderLocator.click();
-      await environmentLocator.click();
-
-      // Validate expected values persisted
-      const actualRows = await editorLocator.allInnerTexts();
-      expect(actualRows.length).toBeGreaterThan(0);
-
-      const actualJSON = JSON.parse(actualRows.join(' '));
-      expect(actualJSON).toEqual(expected);
-
-    });
-
-  // TODO: more scenarios will be added in follow-up iterations of increasing test coverage
   });
 });
diff --git a/packages/insomnia/src/ui/components/codemirror/code-editor.tsx b/packages/insomnia/src/ui/components/codemirror/code-editor.tsx
index 6743cd81c..dac0bda90 100644
--- a/packages/insomnia/src/ui/components/codemirror/code-editor.tsx
+++ b/packages/insomnia/src/ui/components/codemirror/code-editor.tsx
@@ -91,7 +91,7 @@ export interface CodeEditorProps {
   noLint?: boolean;
   noMatchBrackets?: boolean;
   noStyleActiveLine?: boolean;
-  // used only for saving env editor state
+  // used only for saving env editor state, focusEvent doesn't work well
   onBlur?: (e: FocusEvent) => void;
   onChange?: (value: string) => void;
   onPaste?: (value: string) => string;
diff --git a/packages/insomnia/src/ui/components/dropdowns/request-group-actions-dropdown.tsx b/packages/insomnia/src/ui/components/dropdowns/request-group-actions-dropdown.tsx
index 20f608d42..6318feb20 100644
--- a/packages/insomnia/src/ui/components/dropdowns/request-group-actions-dropdown.tsx
+++ b/packages/insomnia/src/ui/components/dropdowns/request-group-actions-dropdown.tsx
@@ -19,7 +19,6 @@ import { type DropdownHandle, type DropdownProps } from '../base/dropdown';
 import { Icon } from '../icon';
 import { showError, showModal, showPrompt } from '../modals';
 import { AskModal } from '../modals/ask-modal';
-import { EnvironmentEditModal } from '../modals/environment-edit-modal';
 import { PasteCurlModal } from '../modals/paste-curl-modal';
 import { RequestGroupSettingsModal } from '../modals/request-group-settings-modal';
 interface Props extends Partial<DropdownProps> {
@@ -226,12 +225,6 @@ export const RequestGroupActionsDropdown = ({
         hint: hotKeyRegistry.request_createHTTP,
         action: () => handleRequestGroupDuplicate(),
       },
-      {
-        id: 'Environment',
-        name: 'Environment',
-        icon: 'code',
-        action: () => showModal(EnvironmentEditModal, { requestGroup }),
-      },
       {
         id: 'Rename',
         name: 'Rename',
diff --git a/packages/insomnia/src/ui/components/modals/environment-edit-modal.tsx b/packages/insomnia/src/ui/components/modals/environment-edit-modal.tsx
deleted file mode 100644
index 935001372..000000000
--- a/packages/insomnia/src/ui/components/modals/environment-edit-modal.tsx
+++ /dev/null
@@ -1,86 +0,0 @@
-import React, { forwardRef, useImperativeHandle, useRef, useState } from 'react';
-
-import { RequestGroup } from '../../../models/request-group';
-import { useRequestGroupPatcher } from '../../hooks/use-request';
-import { Modal, type ModalHandle, ModalProps } from '../base/modal';
-import { ModalBody } from '../base/modal-body';
-import { ModalFooter } from '../base/modal-footer';
-import { ModalHeader } from '../base/modal-header';
-import { EnvironmentEditor, EnvironmentEditorHandle } from '../editors/environment-editor';
-
-interface State {
-  requestGroup: RequestGroup | null;
-}
-
-export interface EnvironmentEditModalOptions {
-  requestGroup: RequestGroup;
-}
-export interface EnvironmentEditModalHandle {
-  show: (options: EnvironmentEditModalOptions) => void;
-  hide: () => void;
-}
-export const EnvironmentEditModal = forwardRef<EnvironmentEditModalHandle, ModalProps>((props, ref) => {
-  const modalRef = useRef<ModalHandle>(null);
-  const environmentEditorRef = useRef<EnvironmentEditorHandle>(null);
-  const [state, setState] = useState<State>({
-    requestGroup: null,
-  });
-
-  useImperativeHandle(ref, () => ({
-    hide: () => {
-      modalRef.current?.hide();
-    },
-    show: ({ requestGroup }) => {
-      setState(state => ({ ...state, requestGroup }));
-      modalRef.current?.show();
-    },
-  }), []);
-
-  const patchGroup = useRequestGroupPatcher();
-  const { requestGroup } = state;
-  const environmentInfo = {
-    object: requestGroup ? requestGroup.environment : {},
-    propertyOrder: requestGroup && requestGroup.environmentPropertyOrder,
-  };
-
-  const saveChanges = () => {
-    setState({ requestGroup });
-    if (environmentEditorRef.current?.isValid()) {
-      try {
-        const data = environmentEditorRef.current?.getValue();
-        if (state.requestGroup && data) {
-          patchGroup(state.requestGroup._id, {
-            environment: data.object,
-            environmentPropertyOrder: data.propertyOrder,
-          });
-        }
-      } catch (err) {
-        console.warn('Failed to update environment', err);
-      }
-    }
-
-  };
-
-  return (
-    <Modal ref={modalRef} tall {...props} onHide={saveChanges}>
-      <ModalHeader>Environment Overrides (JSON Format)</ModalHeader>
-      <ModalBody noScroll className="pad-top-sm">
-        <EnvironmentEditor
-          ref={environmentEditorRef}
-          key={requestGroup ? requestGroup._id : 'n/a'}
-          environmentInfo={environmentInfo}
-          onBlur={saveChanges}
-        />
-      </ModalBody>
-      <ModalFooter>
-        <div className="margin-left italic txt-sm">
-          * Used to override data in the global environment
-        </div>
-        <button className="btn" onClick={() => modalRef.current?.hide()}>
-          Close
-        </button>
-      </ModalFooter>
-    </Modal >
-  );
-});
-EnvironmentEditModal.displayName = 'EnvironmentEditModal';
diff --git a/packages/insomnia/src/ui/components/panes/request-group-pane.tsx b/packages/insomnia/src/ui/components/panes/request-group-pane.tsx
index 40e0440db..773c62238 100644
--- a/packages/insomnia/src/ui/components/panes/request-group-pane.tsx
+++ b/packages/insomnia/src/ui/components/panes/request-group-pane.tsx
@@ -1,4 +1,4 @@
-import React, { FC, useState } from 'react';
+import React, { FC, useRef, useState } from 'react';
 import { Tab, TabList, TabPanel, Tabs } from 'react-aria-components';
 import { useRouteLoaderData } from 'react-router-dom';
 
@@ -8,6 +8,7 @@ import { useActiveRequestSyncVCSVersion, useGitVCSVersion } from '../../hooks/us
 import { RequestGroupLoaderData } from '../../routes/request-group';
 import { WorkspaceLoaderData } from '../../routes/workspace';
 import { AuthWrapper } from '../editors/auth/auth-wrapper';
+import { EnvironmentEditor, EnvironmentEditorHandle } from '../editors/environment-editor';
 import { RequestHeadersEditor } from '../editors/request-headers-editor';
 import { RequestScriptEditor } from '../editors/request-script-editor';
 import { ErrorBoundary } from '../error-boundary';
@@ -25,7 +26,24 @@ export const RequestGroupPane: FC<{ settings: Settings }> = ({ settings }) => {
   const uniqueKey = `${activeEnvironment?.modified}::${activeRequestGroup._id}::${gitVersion}::${activeRequestSyncVersion}`;
   const folderHeaders = activeRequestGroup?.headers || [];
   const headersCount = folderHeaders.filter(h => !h.disabled)?.length || 0;
+  const environmentEditorRef = useRef<EnvironmentEditorHandle>(null);
+  const patchGroup = useRequestGroupPatcher();
 
+  const saveChanges = () => {
+    if (environmentEditorRef.current?.isValid()) {
+      try {
+        const data = environmentEditorRef.current?.getValue();
+        if (activeRequestGroup && data) {
+          patchGroup(activeRequestGroup._id, {
+            environment: data.object,
+            environmentPropertyOrder: data.propertyOrder,
+          });
+        }
+      } catch (err) {
+        console.warn('Failed to update environment', err);
+      }
+    }
+  };
   return (
     <>
       <Tabs aria-label='Request group tabs' className="flex-1 w-full h-full flex flex-col">
@@ -58,6 +76,12 @@ export const RequestGroupPane: FC<{ settings: Settings }> = ({ settings }) => {
               </span>
             )}
           </Tab>
+          <Tab
+            className='flex-shrink-0 h-full flex items-center justify-between cursor-pointer gap-2 outline-none select-none px-3 py-1 text-[--hl] aria-selected:text-[--color-font]  hover:bg-[--hl-sm] hover:text-[--color-font] aria-selected:bg-[--hl-xs] aria-selected:focus:bg-[--hl-sm] aria-selected:hover:bg-[--hl-sm] focus:bg-[--hl-sm] transition-colors duration-300'
+            id='environment'
+          >
+            Environment
+          </Tab>
           <Tab
             className='flex-shrink-0 h-full flex items-center justify-between cursor-pointer gap-2 outline-none select-none px-3 py-1 text-[--hl] aria-selected:text-[--color-font]  hover:bg-[--hl-sm] hover:text-[--color-font] aria-selected:bg-[--hl-xs] aria-selected:focus:bg-[--hl-sm] aria-selected:hover:bg-[--hl-sm] focus:bg-[--hl-sm] transition-colors duration-300'
             id='docs'
@@ -145,6 +169,22 @@ export const RequestGroupPane: FC<{ settings: Settings }> = ({ settings }) => {
             </TabPanel>
           </Tabs>
         </TabPanel>
+        <TabPanel className='w-full flex-1 overflow-y-auto ' id='environment'>
+          <ErrorBoundary
+            key={uniqueKey}
+            errorClassName="font-error pad text-center"
+          >
+            <EnvironmentEditor
+              ref={environmentEditorRef}
+              key={activeRequestGroup ? activeRequestGroup._id : 'n/a'}
+              environmentInfo={{
+                object: activeRequestGroup ? activeRequestGroup.environment : {},
+                propertyOrder: activeRequestGroup && activeRequestGroup.environmentPropertyOrder,
+              }}
+              onBlur={saveChanges}
+            />
+          </ErrorBoundary>
+        </TabPanel>
         <TabPanel className='w-full flex-1 overflow-y-auto ' id='docs'>
           {activeRequestGroup.description ? (
             <div>
diff --git a/packages/insomnia/src/ui/routes/modals.tsx b/packages/insomnia/src/ui/routes/modals.tsx
index 303aca4f7..96a8ce78c 100644
--- a/packages/insomnia/src/ui/routes/modals.tsx
+++ b/packages/insomnia/src/ui/routes/modals.tsx
@@ -7,7 +7,6 @@ import { AddKeyCombinationModal } from '../components/modals/add-key-combination
 import { AlertModal } from '../components/modals/alert-modal';
 import { AskModal } from '../components/modals/ask-modal';
 import { CodePromptModal } from '../components/modals/code-prompt-modal';
-import { EnvironmentEditModal } from '../components/modals/environment-edit-modal';
 import { ErrorModal } from '../components/modals/error-modal';
 import { FilterHelpModal } from '../components/modals/filter-help-modal';
 import { GenerateCodeModal } from '../components/modals/generate-code-modal';
@@ -72,10 +71,6 @@ const Modals: FC = () => {
           ref={instance => registerModal(instance, 'ResponseDebugModal')}
         />
 
-        <EnvironmentEditModal
-          ref={instance => registerModal(instance, 'EnvironmentEditModal')}
-        />
-
         <AddKeyCombinationModal
           ref={instance => registerModal(instance, 'AddKeyCombinationModal')}
         />