diff --git a/packages/material_ui/lib/src/menu_anchor.dart b/packages/material_ui/lib/src/menu_anchor.dart
index 78d69aa7fb0..a163b3eebe5 100644
--- a/packages/material_ui/lib/src/menu_anchor.dart
+++ b/packages/material_ui/lib/src/menu_anchor.dart
@@ -3466,7 +3466,32 @@ class _MenuLayout extends SingleChildLayoutDelegate {
   BoxConstraints getConstraintsForChild(BoxConstraints constraints) {
     // The menu can be at most the size of the overlay minus the view padding
     // in each direction.
-    return BoxConstraints.loose(constraints.biggest).deflate(reservedPadding);
+    final BoxConstraints result = BoxConstraints.loose(
+      constraints.biggest,
+    ).deflate(reservedPadding);
+    if (menuPosition != null || orientation == Axis.horizontal) {
+      return result;
+    }
+    // A vertical menu is placed either above or below the anchor, so it can
+    // only ever occupy the space on one of those two sides. Capping its height
+    // to the larger of the two keeps a tall menu from growing past the anchor
+    // and covering it; the menu scrolls instead.
+    //
+    // This uses the same bounds as the positioning logic below, so that the cap
+    // matches the space the menu is actually allowed to be placed in.
+    final Rect overlayRect = mediaQueryData.padding.deflateRect(
+      mediaQueryData.viewInsets.deflateRect(Offset.zero & constraints.biggest),
+    );
+    final double availableHeight = math.max(
+      anchorRect.top - overlayRect.top,
+      overlayRect.bottom - anchorRect.bottom,
+    );
+    if (availableHeight <= 0.0) {
+      // The anchor leaves no room on either side, so there is nothing to cap
+      // the menu to. Leave it to the positioning logic to fit what it can.
+      return result;
+    }
+    return result.copyWith(maxHeight: math.min(availableHeight, result.maxHeight));
   }
 
   @override
diff --git a/packages/material_ui/pending_changelogs/change_2026_09_12_menu_anchor_overlap.yaml b/packages/material_ui/pending_changelogs/change_2026_09_12_menu_anchor_overlap.yaml
new file mode 100644
index 00000000000..d152b17191b
--- /dev/null
+++ b/packages/material_ui/pending_changelogs/change_2026_09_12_menu_anchor_overlap.yaml
@@ -0,0 +1,3 @@
+changelog: |
+  - Fixes `MenuAnchor` covering its anchor when the menu is too tall to fit above it.
+version: patch
diff --git a/packages/material_ui/test/menu_anchor_test.dart b/packages/material_ui/test/menu_anchor_test.dart
index db9c3b4c696..b500ded0683 100644
--- a/packages/material_ui/test/menu_anchor_test.dart
+++ b/packages/material_ui/test/menu_anchor_test.dart
@@ -4114,6 +4114,55 @@ void main() {
       );
     });
 
+    // Regression test for https://github.com/flutter/flutter/issues/161474
+    testWidgets('Menu does not cover the anchor when it does not fit above it', (
+      WidgetTester tester,
+    ) async {
+      tester.view.physicalSize = const Size(400, 200);
+      tester.view.devicePixelRatio = 1.0;
+      addTearDown(tester.view.reset);
+
+      final controller = MenuController();
+      final anchorKey = UniqueKey();
+
+      await tester.pumpWidget(
+        MaterialApp(
+          home: Scaffold(
+            body: Column(
+              mainAxisAlignment: MainAxisAlignment.end,
+              children: <Widget>[
+                MenuAnchor(
+                  controller: controller,
+                  menuChildren: List<MenuItemButton>.generate(
+                    3,
+                    (int index) =>
+                        MenuItemButton(onPressed: () {}, child: Text('Item ${index + 1}')),
+                  ),
+                  builder: (BuildContext context, MenuController controller, Widget? child) {
+                    return SizedBox(key: anchorKey, width: 56, height: 56);
+                  },
+                ),
+              ],
+            ),
+          ),
+        ),
+      );
+
+      controller.open();
+      await tester.pumpAndSettle();
+
+      final Rect anchorRect = tester.getRect(find.byKey(anchorKey));
+      final Rect menuRect = tester.getRect(findMenuPanels());
+      // There is not enough room above the anchor to show the whole menu, so
+      // the menu is shortened rather than being pushed down over the anchor.
+      expect(
+        menuRect.bottom,
+        lessThanOrEqualTo(anchorRect.top),
+        reason:
+            'Menu bottom (${menuRect.bottom}) should not cover the anchor top (${anchorRect.top})',
+      );
+    });
+
     testWidgets(
       'Menu is correctly offset when a LayerLink is provided and alignmentOffset is set',
       (WidgetTester tester) async {