diff --git a/src/__testing__/ActionButton.test.tsx b/src/__testing__/ActionButton.test.tsx
new file mode 100644
index 000000000..0a802b0e7
--- /dev/null
+++ b/src/__testing__/ActionButton.test.tsx
@@ -0,0 +1,142 @@
+import { fireEvent, render, screen } from '@testing-library/react';
+import React from 'react';
+import { ActionButton, Option } from '../custom/ActionButton';
+
+describe('ActionButton Component', () => {
+  const mockOptions: Option[] = [
+    {
+      label: 'Validate',
+      icon: <span data-testid="icon-validate">V</span>,
+      onClick: jest.fn()
+    },
+    {
+      label: 'Dry Run',
+      icon: <span data-testid="icon-dryrun">D</span>,
+      onClick: jest.fn()
+    },
+    {
+      label: 'Deploy',
+      icon: <span data-testid="icon-deploy">Dep</span>,
+      onClick: jest.fn(),
+      disabled: true
+    },
+    {
+      label: 'Hidden Option',
+      icon: <span>H</span>,
+      onClick: jest.fn(),
+      show: false
+    },
+    {
+      label: 'Divider',
+      icon: null,
+      onClick: jest.fn(),
+      isDivider: true
+    },
+    {
+      label: 'Undeploy',
+      icon: <span data-testid="icon-undeploy">U</span>,
+      onClick: jest.fn()
+    }
+  ];
+
+  beforeEach(() => {
+    jest.clearAllMocks();
+  });
+
+  it('renders with default label "Action" when no label is passed', () => {
+    render(<ActionButton options={mockOptions} />);
+    expect(screen.getByRole('button', { name: /Action/i })).not.toBeNull();
+  });
+
+  it('renders with custom label when provided', () => {
+    render(<ActionButton label="Actions" options={mockOptions} />);
+    expect(screen.getByRole('button', { name: /^Actions$/i })).not.toBeNull();
+  });
+
+  it('executes defaultActionClick when primary button is clicked and callback provided', () => {
+    const handleDefaultClick = jest.fn();
+    render(
+      <ActionButton
+        label="Actions"
+        defaultActionClick={handleDefaultClick}
+        options={mockOptions}
+      />
+    );
+
+    const mainButton = screen.getByRole('button', { name: /^Actions$/i });
+    fireEvent.click(mainButton);
+    expect(handleDefaultClick).toHaveBeenCalledTimes(1);
+  });
+
+  it('toggles dropdown menu when primary button is clicked and defaultActionClick is not provided', () => {
+    render(<ActionButton label="Actions" options={mockOptions} />);
+
+    expect(screen.queryByRole('menu')).toBeNull();
+    const mainButton = screen.getByRole('button', { name: /^Actions$/i });
+    fireEvent.click(mainButton);
+
+    expect(screen.getByRole('menu')).not.toBeNull();
+    expect(screen.getByText('Validate')).not.toBeNull();
+  });
+
+  it('toggles dropdown menu when the dropdown arrow button is clicked', () => {
+    render(<ActionButton label="Actions" options={mockOptions} />);
+
+    expect(screen.queryByRole('menu')).toBeNull();
+
+    const buttons = screen.getAllByRole('button');
+    const dropdownArrowButton = buttons[1];
+
+    // Open menu
+    fireEvent.click(dropdownArrowButton);
+    expect(screen.getByRole('menu')).not.toBeNull();
+    expect(screen.getByText('Validate')).not.toBeNull();
+    expect(screen.getByText('Dry Run')).not.toBeNull();
+
+    // Toggle menu closed
+    fireEvent.click(dropdownArrowButton);
+    expect(screen.queryByRole('menu')).toBeNull();
+  });
+
+  it('calls option onClick handler and closes menu when an option is clicked', () => {
+    render(<ActionButton label="Actions" options={mockOptions} />);
+
+    const buttons = screen.getAllByRole('button');
+    const dropdownArrowButton = buttons[1];
+    fireEvent.click(dropdownArrowButton);
+
+    const validateItem = screen.getByText('Validate');
+    fireEvent.click(validateItem);
+
+    expect(mockOptions[0].onClick).toHaveBeenCalledTimes(1);
+    expect(screen.queryByRole('menu')).toBeNull();
+  });
+
+  it('does not invoke onClick for disabled options', () => {
+    render(<ActionButton label="Actions" options={mockOptions} />);
+
+    const buttons = screen.getAllByRole('button');
+    fireEvent.click(buttons[1]);
+
+    const deployItem = screen.getByText('Deploy');
+    fireEvent.click(deployItem);
+
+    expect(mockOptions[2].onClick).not.toHaveBeenCalled();
+  });
+
+  it('does not render options with show set to false', () => {
+    render(<ActionButton label="Actions" options={mockOptions} />);
+
+    const buttons = screen.getAllByRole('button');
+    fireEvent.click(buttons[1]);
+
+    expect(screen.queryByText('Hidden Option')).toBeNull();
+  });
+
+  it('disables primary button when defaultActionDisabled is true', () => {
+    render(<ActionButton label="Actions" defaultActionDisabled={true} options={mockOptions} />);
+
+    const mainButton = screen.getByRole('button', { name: /^Actions$/i });
+    expect(mainButton.hasAttribute('disabled')).toBe(true);
+  });
+});
diff --git a/src/custom/ActionButton/ActionButton.tsx b/src/custom/ActionButton/ActionButton.tsx
index 791f72e97..fc5bd04c4 100644
--- a/src/custom/ActionButton/ActionButton.tsx
+++ b/src/custom/ActionButton/ActionButton.tsx
@@ -10,55 +10,77 @@ import {
   Popper
 } from '../../base';
 import { DropDownIcon } from '../../icons';
+
 export interface Option {
   icon: React.ReactNode;
   label: string;
   onClick: (event: React.MouseEvent<HTMLLIElement, MouseEvent>, index: number) => void;
   isDivider?: boolean;
   show?: boolean;
+  disabled?: boolean;
 }
 
 export interface ActionButtonProps {
-  defaultActionClick: () => void;
+  defaultActionClick?: () => void;
   defaultActionDisabled?: boolean;
   options: Option[];
-  label: string;
+  label?: string;
+  placement?: 'bottom-start' | 'bottom' | 'bottom-end' | 'top-start' | 'top' | 'top-end';
 }
 
 export default function ActionButton({
   defaultActionClick,
   defaultActionDisabled = false,
   options,
-  label
+  label = 'Action',
+  placement = 'bottom-start'
 }: ActionButtonProps): JSX.Element {
   const [open, setOpen] = React.useState(false);
-  const [anchorEl, setAnchorEl] = React.useState<null | HTMLElement>(null);
+  const anchorRef = React.useRef<HTMLDivElement>(null);
+
   const handleMenuItemClick = () => {
     setOpen(false);
   };
 
   const handleToggle = (event: React.MouseEvent<HTMLButtonElement, MouseEvent>) => {
     event.stopPropagation();
-    setAnchorEl(event.currentTarget);
     setOpen((prevOpen) => !prevOpen);
   };
 
-  const handleClose = () => {
-    setAnchorEl(null);
+  const handleClose = (event: MouseEvent | TouchEvent) => {
+    if (anchorRef.current && anchorRef.current.contains(event.target as Node)) {
+      return;
+    }
     setOpen(false);
   };
 
+  const handleMainClick = (event: React.MouseEvent<HTMLButtonElement, MouseEvent>) => {
+    if (defaultActionClick) {
+      defaultActionClick();
+    } else {
+      handleToggle(event);
+    }
+  };
+
   return (
     <React.Fragment>
       <ButtonGroup
         variant="contained"
         style={{ boxShadow: 'none' }}
+        ref={anchorRef}
         aria-label="Button group with a nested menu"
       >
-        <Button onClick={defaultActionClick} variant="contained" disabled={defaultActionDisabled}>
+        <Button onClick={handleMainClick} variant="contained" disabled={defaultActionDisabled}>
           {label}
         </Button>
-        <Button size="small" onClick={handleToggle} variant="contained">
+        <Button
+          size="small"
+          onClick={handleToggle}
+          variant="contained"
+          aria-controls={open ? 'split-button-menu' : undefined}
+          aria-expanded={open ? 'true' : undefined}
+          aria-haspopup="menu"
+        >
           <DropDownIcon />
         </Button>
       </ButtonGroup>
@@ -67,8 +89,9 @@ export default function ActionButton({
           zIndex: 1
         }}
         open={open}
-        anchorEl={anchorEl}
+        anchorEl={anchorRef.current}
         role={undefined}
+        placement={placement}
       >
         <Paper>
           <ClickAwayListener onClickAway={handleClose}>
@@ -77,11 +100,15 @@ export default function ActionButton({
                 .filter((option) => option?.show !== false)
                 .map((option, index) =>
                   option.isDivider ? (
-                    <Divider />
+                    <Divider key={index} />
                   ) : (
                     <MenuItem
                       key={index}
+                      disabled={option.disabled}
                       onClick={(event) => {
+                        if (option.disabled) {
+                          return;
+                        }
                         handleMenuItemClick();
                         option.onClick(event, index);
                       }}