diff --git a/src/index.ts b/src/index.ts
index 615cfcc..cf0d0bd 100644
--- a/src/index.ts
+++ b/src/index.ts
@@ -44,6 +44,12 @@ type AvailableVariants = {
     he: number;
 };
 
+type AvailableArrowVariants = {
+    s: number;
+    m: number;
+    e: number;
+};
+
 type PositionPairs = [Direction, Direction];
 
 export type PositionMatch = 'ts' | 'tm' | 'te' | 'bs' | 'bm' | 'be' | 'ls' | 'lm' | 'le' | 'rs' | 'rm' | 're';
@@ -190,19 +196,37 @@ export const reposition = (
             if (arrow) {
                 // Calculate refBox's center offset from its variant position for arrow positioning
                 const refBoxCenterOffset = vertical ? refBox.width / 2 : refBox.height / 2;
-
-                // When refBox is larger than popBox, have the arrow's variant position be the center of popBox instead.
-                const arrowVariantVal = refBoxCenterOffset * 2 < variantSize ?
-                    refBox[variantKey] + refBoxCenterOffset : variantVal + variantSize / 2;
-
-                // Arrow position is either on one side of the popBox or the other.
-                if (positionVal < refBox[positionKey]) {
-                    positionVal += positionSize;
-                }
+                const popBoxCenterOffset = variantSize / 2;
+
+                // Check if refBox is larger than popBox
+                const isRefBoxLarger = refBoxCenterOffset > popBoxCenterOffset;
+
+                /**
+                 * Holds corresponding offset variants (start, middle, end) of arrow from the popper variant values.
+                 * When refBox is larger than popBox, have the arrow's variant position be the center of popBox instead.
+                 */
+                const arrowVariantStore: AvailableArrowVariants = {
+                    s: isRefBoxLarger ? popBoxCenterOffset : refBoxCenterOffset,
+                    m: popBoxCenterOffset,
+                    e: isRefBoxLarger ? popBoxCenterOffset : variantSize - refBoxCenterOffset,
+                };
+
+                /**
+                 * Holds offsets of top, left, bottom and right alignment of arrow from the popper position values.
+                 */
+                const arrowPositionStore: AvailablePositions = {
+                    t: positionSize,
+                    b: 0,
+                    r: 0,
+                    l: positionSize
+                };
+
+                const arrowVariantVal = variantVal + arrowVariantStore[v as keyof AvailableArrowVariants];
+                const arrowPositionVal = positionVal + arrowPositionStore[p as keyof AvailablePositions];
 
                 // Apply styles to arrow
                 arrow.style[variantKey] = `${arrowVariantVal}px`;
-                arrow.style[positionKey] = `${positionVal}px`;
+                arrow.style[positionKey] = `${arrowPositionVal}px`;
             }
 
             return (p + v) as PositionMatch;
diff --git a/tests/_pages/with-arrow-transformed-parent.html b/tests/_pages/with-arrow-transformed-parent.html
new file mode 100644
index 0000000..34f9794
--- /dev/null
+++ b/tests/_pages/with-arrow-transformed-parent.html
@@ -0,0 +1,55 @@
+<div id="container">
+    <div id="transform">
+        <div id="reference"></div>
+        <div id="popper"></div>
+        <div id="arrow"></div>
+    </div>
+</div>
+
+<style>
+    @import '_reset.css';
+
+    #container {
+        display: flex;
+        align-items: center;
+        justify-content: center;
+    }
+
+    #transform {
+        transform: translate(10px, 10px);
+        display: flex;
+        align-items: center;
+        justify-content: center;
+    }
+
+    #reference {
+        width: 40px;
+        height: 40px;
+    }
+
+    #popper {
+        width: 100px;
+        height: 100px;
+    }
+
+    #arrow{
+        position: fixed;
+        width: 10px;
+        height: 10px;
+        background: black;
+        transform: translate(-50%, -50%) rotate(45deg);
+    }
+</style>
+
+<script type="module">
+    import {reposition} from '/dist/nanopop.mjs';
+
+    const reference = document.querySelector('#reference');
+    const popper = document.querySelector('#popper');
+    const arrow = document.querySelector('#arrow');
+
+    reposition(reference, popper, {
+        position: location.hash.slice(1),
+        arrow: arrow
+    });
+</script>
diff --git a/tests/arrow.spec.ts b/tests/arrow.spec.ts
index 1d590d8..a7a4e78 100644
--- a/tests/arrow.spec.ts
+++ b/tests/arrow.spec.ts
@@ -13,6 +13,7 @@ test.describe('Popper with arrow option', () => {
             test(`Should position ${pos} with proper arrow placement`, async ({ page }) => {
                 await testPage(page, `with-arrow-custom-position.html#${pos}`);
                 await testPage(page, `with-arrow-large-popper.html#${pos}`);
+                await testPage(page, `with-arrow-transformed-parent.html#${pos}`);
             });
         }
     }
diff --git a/tests/arrow.spec.ts-snapshots/with-arrow-transformed-parent-html-bottom-end.png b/tests/arrow.spec.ts-snapshots/with-arrow-transformed-parent-html-bottom-end.png
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