diff --git a/package.json b/package.json
index ac063ab..f326a95 100644
--- a/package.json
+++ b/package.json
@@ -1,6 +1,6 @@
 {
   "name": "@internxt/ui",
-  "version": "0.1.1",
+  "version": "0.1.2",
   "description": "Library of Internxt components",
   "repository": {
     "type": "git",
@@ -87,6 +87,7 @@
     "storybook:build": "storybook build"
   },
   "dependencies": {
+    "@headlessui/react": "1.7.5",
     "@internxt/css-config": "1.1.0",
     "@phosphor-icons/react": "^2.1.10",
     "@radix-ui/react-switch": "^1.2.6",
diff --git a/src/components/popover/HeadlessPopover.tsx b/src/components/popover/HeadlessPopover.tsx
new file mode 100644
index 0000000..d37ccfd
--- /dev/null
+++ b/src/components/popover/HeadlessPopover.tsx
@@ -0,0 +1,154 @@
+import { Popover as HPopover, Transition } from '@headlessui/react';
+import { ReactNode } from 'react';
+
+export interface HeadlessPopoverRenderProps {
+  open: boolean;
+  close: () => void;
+  Button: typeof HPopover.Button;
+  Panel: typeof HPopover.Panel;
+}
+
+interface HeadlessPopoverProps {
+  trigger?: ReactNode;
+  panel?: ReactNode | ((close: () => void) => ReactNode);
+  className?: string;
+  buttonClassName?: string;
+  panelClassName?: string;
+  panelStyle?: React.CSSProperties;
+  buttonAs?: React.ElementType;
+  isAnimated?: boolean;
+  isStatic?: boolean;
+  children?: (props: HeadlessPopoverRenderProps) => ReactNode;
+}
+
+const DEFAULT_PANEL_CLASS = 'absolute right-0 z-50 mt-1 rounded-md border border-gray-10 bg-surface py-1.5 shadow-subtle dark:bg-gray-5';
+
+const BUTTON_CONTAINER_STYLE = { lineHeight: 0 } as const;
+
+/**
+ * HeadlessPopover component - A flexible popover wrapper around HeadlessUI.
+ *
+ * ## Two usage modes:
+ *
+ * ### 1. Simple Mode (use trigger + panel props):
+ * ```tsx
+ * <HeadlessPopover
+ *   trigger={<button>Click me</button>}
+ *   panel={<div>Content</div>}
+ * />
+ * ```
+ *
+ * ### 2. Render Props Mode (use children for full control):
+ * ```tsx
+ * <HeadlessPopover>
+ *   {({ open, close, Button, Panel }) => (
+ *     <>
+ *       <Button>Custom Button</Button>
+ *       <Panel>Custom Panel</Panel>
+ *     </>
+ *   )}
+ * </HeadlessPopover>
+ * ```
+ *
+ * **Note:** If `children` prop is provided, all other props (trigger, panel, etc.) are ignored.
+ *
+ * @property {ReactNode} [trigger]
+ * - The content to be displayed inside the trigger button.
+ *
+ * @property {ReactNode | ((close: () => void) => ReactNode)} [panel]
+ * - The content to be displayed inside the popover panel.
+ * Can be a ReactNode or a function that receives a `close` function as a parameter.
+ *
+ * @property {string} [className]
+ * - Additional custom classes for the outermost container of the popover.
+ *
+ * @property {string} [buttonClassName]
+ * - Custom classes for the trigger button.
+ *
+ * @property {string} [panelClassName]
+ * - Custom classes for the panel container.
+ *
+ * @property {React.CSSProperties} [panelStyle]
+ * - Inline styles for the panel.
+ *
+ * @property {React.ElementType} [buttonAs]
+ * - Custom element type for the button (e.g., 'div', CustomComponent).
+ *
+ * @property {boolean} [isAnimated=true]
+ * - Whether to use transition animations when opening/closing.
+ *
+ * @property {boolean} [isStatic=false]
+ * - Whether to keep the panel mounted in the DOM even when closed (static mode).
+ *
+ * @property {(props: HeadlessPopoverRenderProps) => ReactNode} [children]
+ * - Render prop function for advanced customization. When provided, overrides all other props.
+ *
+ * @returns {JSX.Element}
+ * - The rendered HeadlessPopover component.
+ */
+export default function HeadlessPopover({
+  trigger,
+  panel,
+  className = '',
+  buttonClassName = '',
+  panelClassName,
+  panelStyle,
+  buttonAs,
+  isAnimated = true,
+  isStatic = false,
+  children,
+}: Readonly<HeadlessPopoverProps>): JSX.Element {
+  if (children) {
+    return (
+      <HPopover className={className}>
+        {({ open, close }: { open: boolean; close: () => void }) => <>{children({ open, close, Button: HPopover.Button, Panel: HPopover.Panel })}</>}
+      </HPopover>
+    );
+  }
+
+  const panelElement = (
+    <HPopover.Panel
+      className={panelClassName || DEFAULT_PANEL_CLASS}
+      style={panelStyle}
+      static={isStatic}
+    >
+      {({ close }: { close: () => void }) => (
+        <>{typeof panel === 'function' ? panel(close) : panel}</>
+      )}
+    </HPopover.Panel>
+  );
+
+  const containerClassName = `relative ${className}`;
+  const defaultButtonClassName = [
+    'cursor-pointer',
+    'outline-none',
+    'focus-visible:outline-2',
+    'focus-visible:outline-offset-2',
+    'focus-visible:outline-primary'
+  ].join(' ');
+  const finalButtonClassName = `${defaultButtonClassName} ${buttonClassName}`;
+
+  return (
+    <HPopover style={BUTTON_CONTAINER_STYLE} className={containerClassName}>
+      <HPopover.Button as={buttonAs} className={finalButtonClassName}>
+        {trigger}
+      </HPopover.Button>
+
+      {isAnimated ? (
+        <Transition
+          enter="transition duration-100 ease-out"
+          enterFrom="scale-95 opacity-0"
+          enterTo="scale-100 opacity-100"
+          leave="transition duration-75 ease-out"
+          leaveFrom="scale-100 opacity-100"
+          leaveTo="scale-95 opacity-0"
+          className="z-50"
+        >
+          {panelElement}
+        </Transition>
+      ) : (
+        panelElement
+      )}
+    </HPopover>
+  );
+}
diff --git a/src/components/popover/__test__/HeadlessPopover.test.tsx b/src/components/popover/__test__/HeadlessPopover.test.tsx
new file mode 100644
index 0000000..eb897cd
--- /dev/null
+++ b/src/components/popover/__test__/HeadlessPopover.test.tsx
@@ -0,0 +1,74 @@
+import React from 'react';
+import { render, fireEvent } from '@testing-library/react';
+import HeadlessPopover from '../HeadlessPopover';
+import { describe, it, expect } from 'vitest';
+
+describe('HeadlessPopover', () => {
+  it('shows and hides panel when button is clicked', () => {
+    const { getByText, queryByText } = render(
+      <HeadlessPopover
+        trigger={<span>Toggle</span>}
+        panel={(close) => <div>Panel Content</div>}
+      />
+    );
+
+    expect(queryByText('Panel Content')).not.toBeInTheDocument();
+
+    fireEvent.click(getByText('Toggle'));
+    expect(getByText('Panel Content')).toBeInTheDocument();
+
+    fireEvent.click(getByText('Toggle'));
+    expect(queryByText('Panel Content')).not.toBeInTheDocument();
+  });
+
+  it('closes when close button inside panel is clicked', () => {
+    const { getByText, queryByText } = render(
+      <HeadlessPopover
+        trigger={<span>Toggle</span>}
+        panel={(close) => <button onClick={close}>Close</button>}
+      />
+    );
+
+    fireEvent.click(getByText('Toggle'));
+    expect(getByText('Close')).toBeInTheDocument();
+
+    fireEvent.click(getByText('Close'));
+    expect(queryByText('Close')).not.toBeInTheDocument();
+  });
+
+  it('applies custom styling classes', () => {
+    const { container } = render(
+      <HeadlessPopover
+        trigger={<span>Toggle</span>}
+        panel={<div>Content</div>}
+        className="custom-container"
+        buttonClassName="custom-button"
+      />
+    );
+
+    expect(container.firstChild).toHaveClass('custom-container');
+    const button = container.querySelector('button');
+    expect(button).toHaveClass('custom-button');
+  });
+
+  it('works with custom children function', () => {
+    const { getByText, queryByText } = render(
+      <HeadlessPopover>
+        {({ open, close, Button, Panel }) => (
+          <>
+            <Button>Open Menu</Button>
+            <Panel>
+              <button onClick={close}>Close Menu</button>
+              {open && <div>Menu is open</div>}
+            </Panel>
+          </>
+        )}
+      </HeadlessPopover>
+    );
+
+    expect(queryByText('Menu is open')).not.toBeInTheDocument();
+
+    fireEvent.click(getByText('Open Menu'));
+    expect(getByText('Menu is open')).toBeInTheDocument();
+  });
+});
diff --git a/yarn.lock b/yarn.lock
index d67ef86..26c30b0 100644
--- a/yarn.lock
+++ b/yarn.lock
@@ -706,6 +706,13 @@
   resolved "https://registry.yarnpkg.com/@floating-ui/utils/-/utils-0.2.10.tgz#a2a1e3812d14525f725d011a73eceb41fef5bc1c"
   integrity sha512-aGTxbpbg8/b5JfU1HXSrbH3wXZuLPJcNEcZQFMxLs3oSzgtVu6nFPkbbGGUvBcUjKV2YyB9Wxxabo+HEH9tcRQ==
 
+"@headlessui/react@1.7.5":
+  version "1.7.5"
+  resolved "https://registry.yarnpkg.com/@headlessui/react/-/react-1.7.5.tgz#c8864b0731d95dbb34aa6b3a60d0ee9ae6f8a7ca"
+  integrity sha512-UZSxOfA0CYKO7QDT5OGlFvesvlR1SKkawwSjwQJwt7XQItpzRKdE3ZUQxHcg4LEz3C0Wler2s9psdb872ynwrQ==
+  dependencies:
+    client-only "^0.0.1"
+
 "@humanfs/core@^0.19.1":
   version "0.19.1"
   resolved "https://registry.yarnpkg.com/@humanfs/core/-/core-0.19.1.tgz#17c55ca7d426733fe3c561906b8173c336b40a77"