diff --git a/apps/builder/app/builder/features/style-panel/shared/css-value-input/css-value-input.test.ts b/apps/builder/app/builder/features/style-panel/shared/css-value-input/css-value-input.test.ts
new file mode 100644
index 000000000000..761a206496cd
--- /dev/null
+++ b/apps/builder/app/builder/features/style-panel/shared/css-value-input/css-value-input.test.ts
@@ -0,0 +1,98 @@
+import { describe, test, expect } from "vitest";
+import { __testing__ } from "./css-value-input";
+const { getItemColor } = __testing__;
+
+describe("getItemColor", () => {
+  test("returns undefined for non-color keyword", () => {
+    expect(getItemColor({ type: "keyword", value: "auto" })).toBeUndefined();
+    expect(getItemColor({ type: "keyword", value: "flex" })).toBeUndefined();
+  });
+
+  test("returns the keyword value for a named color keyword", () => {
+    expect(getItemColor({ type: "keyword", value: "red" })).toBe("red");
+    expect(getItemColor({ type: "keyword", value: "transparent" })).toBe(
+      "transparent"
+    );
+  });
+
+  test("returns undefined for non-color var fallback types", () => {
+    expect(
+      getItemColor({
+        type: "var",
+        value: "spacing",
+        fallback: { type: "unit", value: 8, unit: "px" },
+      })
+    ).toBeUndefined();
+    expect(
+      getItemColor({
+        type: "var",
+        value: "display",
+        fallback: { type: "keyword", value: "flex" },
+      })
+    ).toBeUndefined();
+  });
+
+  test("returns color string for rgb var fallback", () => {
+    expect(
+      getItemColor({
+        type: "var",
+        value: "brand",
+        fallback: { type: "rgb", r: 255, g: 0, b: 0, alpha: 1 },
+      })
+    ).toBe("rgb(255 0 0 / 1)");
+  });
+
+  test("returns color string for color var fallback", () => {
+    const result = getItemColor({
+      type: "var",
+      value: "brand",
+      fallback: {
+        type: "color",
+        colorSpace: "srgb",
+        components: [1, 0, 0],
+        alpha: 1,
+      },
+    });
+    expect(result).toMatch(/rgb/);
+  });
+
+  test("returns value for unparsed var fallback that is a valid color", () => {
+    expect(
+      getItemColor({
+        type: "var",
+        value: "brand",
+        fallback: { type: "unparsed", value: "red" },
+      })
+    ).toBe("red");
+  });
+
+  test("returns undefined for unparsed var fallback that is not a color", () => {
+    expect(
+      getItemColor({
+        type: "var",
+        value: "spacing",
+        fallback: { type: "unparsed", value: "1rem" },
+      })
+    ).toBeUndefined();
+  });
+
+  test("returns value for keyword var fallback that is a named color", () => {
+    expect(
+      getItemColor({
+        type: "var",
+        value: "brand",
+        fallback: { type: "keyword", value: "red" },
+      })
+    ).toBe("red");
+  });
+
+  test("returns undefined for var without fallback", () => {
+    expect(getItemColor({ type: "var", value: "brand" })).toBeUndefined();
+  });
+
+  test("returns undefined for unit item", () => {
+    expect(
+      getItemColor({ type: "unit", value: 16, unit: "px" })
+    ).toBeUndefined();
+  });
+});
diff --git a/apps/builder/app/builder/features/style-panel/shared/css-value-input/css-value-input.tsx b/apps/builder/app/builder/features/style-panel/shared/css-value-input/css-value-input.tsx
index d4175be0b176..3d614f8e2d82 100644
--- a/apps/builder/app/builder/features/style-panel/shared/css-value-input/css-value-input.tsx
+++ b/apps/builder/app/builder/features/style-panel/shared/css-value-input/css-value-input.tsx
@@ -16,7 +16,6 @@ import {
   theme,
   Flex,
   styled,
-  Text,
   ColorThumb,
 } from "@webstudio-is/design-system";
 import type {
@@ -45,6 +44,7 @@ import {
   camelCaseProperty,
   declarationDescriptions,
   isValidDeclaration,
+  parseColor,
 } from "@webstudio-is/css-data";
 import { $selectedInstanceSizes } from "~/shared/nano-states";
 import { convertUnits } from "./convert-units";
@@ -363,6 +363,20 @@ const itemToString = (item: CssValueInputValue | null) => {
 
 const Description = styled(Box, { width: theme.spacing[27] });
 
+// Returns the CSS color string to show as a color swatch for a dropdown item,
+// or undefined if the item has no meaningful color preview.
+const getItemColor = (item: CssValueInputValue): string | undefined => {
+  let colorString: string | undefined;
+  if (item.type === "var" && item.fallback !== undefined) {
+    colorString = toValue(item.fallback);
+  } else if (item.type === "keyword") {
+    colorString = item.value;
+  }
+  if (colorString !== undefined && parseColor(colorString) !== undefined) {
+    return colorString;
+  }
+};
+
 /**
  * Common:
  * - Free text editing
@@ -943,22 +957,19 @@ export const CssValueInput = ({
                     {...getItemProps({ item, index })}
                     key={index}
                   >
-                    {item.type === "var" ? (
-                      <Flex justify="between" align="center" grow gap={2}>
-                        <Box>--{item.value}</Box>
-                        {item.fallback?.type === "unit" && (
-                          <Text variant="small" color="subtle">
-                            {toValue(item.fallback)}
-                          </Text>
-                        )}
-                        {(item.fallback?.type === "rgb" ||
-                          item.fallback?.type === "color") && (
-                          <ColorThumb color={toValue(item.fallback)} />
-                        )}
-                      </Flex>
-                    ) : (
-                      itemToString(item)
-                    )}
+                    {(() => {
+                      const label = itemToString(item);
+                      const colorValue = getItemColor(item);
+                      if (colorValue === undefined) {
+                        return label;
+                      }
+                      return (
+                        <Flex justify="between" align="center" grow gap={2}>
+                          <Box>{label}</Box>
+                          <ColorThumb color={colorValue} />
+                        </Flex>
+                      );
+                    })()}
                   </ComboboxListboxItem>
                 ))}
               </ComboboxScrollArea>
@@ -974,3 +985,5 @@ export const CssValueInput = ({
     </ComboboxRoot>
   );
 };
+
+export const __testing__ = { getItemColor };
diff --git a/apps/builder/app/builder/features/style-panel/shared/css-value-input/parse-intermediate-or-invalid-value.ts.test.ts b/apps/builder/app/builder/features/style-panel/shared/css-value-input/parse-intermediate-or-invalid-value.test.ts
similarity index 100%
rename from apps/builder/app/builder/features/style-panel/shared/css-value-input/parse-intermediate-or-invalid-value.ts.test.ts
rename to apps/builder/app/builder/features/style-panel/shared/css-value-input/parse-intermediate-or-invalid-value.test.ts