diff --git a/app/dashboard/categories/page.tsx b/app/dashboard/categories/page.tsx
index 8a84f8f..aef0102 100644
--- a/app/dashboard/categories/page.tsx
+++ b/app/dashboard/categories/page.tsx
@@ -1,10 +1,10 @@
 "use client";
 
-import { useState, useEffect } from "react";
+import { useState, useEffect, useRef } from "react";
 import Layout from "@/components/layout/layout";
 import { Button } from "@/components/ui/button";
 import { Input } from "@/components/ui/input";
-import { Plus, Pencil, Trash2, ChevronRight, ChevronDown } from "lucide-react";
+import { Plus, Pencil, Trash2, ChevronRight, ChevronDown, MoveVertical } from "lucide-react";
 import { toast } from "sonner";
 import {
   Select,
@@ -27,17 +27,39 @@ import { apiRequest } from "@/lib/api";
 import type { Category } from "@/models/categories";
 import { Card, CardContent, CardHeader, CardTitle } from "@/components/ui/card";
 
+// Drag and Drop imports
+import { DndProvider, useDrag, useDrop, DropTargetMonitor } from 'react-dnd';
+import { HTML5Backend } from 'react-dnd-html5-backend';
+
+// Define interfaces for drag item
+interface DragItem {
+  id: string;
+  parentId?: string;
+}
+
+// Item Types
+const ItemTypes = {
+  CATEGORY: 'category',
+};
+
 export default function CategoriesPage() {
   const [categories, setCategories] = useState<Category[]>([]);
   const [newCategoryName, setNewCategoryName] = useState("");
   const [selectedParentId, setSelectedParentId] = useState<string>("");
   const [editingCategory, setEditingCategory] = useState<Category | null>(null);
   const [categoryToDelete, setCategoryToDelete] = useState<Category | null>(null);
+  const [expanded, setExpanded] = useState<Record<string, boolean>>({});
 
-  const rootCategories = categories.filter(cat => !cat.parentId);
+  // Get root categories sorted by order
+  const rootCategories = categories
+    .filter(cat => !cat.parentId)
+    .sort((a, b) => (a.order || 0) - (b.order || 0));
   
+  // Get subcategories sorted by order
   const getSubcategories = (parentId: string) => 
-    categories.filter(cat => cat.parentId === parentId);
+    categories
+      .filter(cat => cat.parentId === parentId)
+      .sort((a, b) => (a.order || 0) - (b.order || 0));
 
   useEffect(() => {
     fetchCategories();
@@ -59,9 +81,18 @@ export default function CategoriesPage() {
     }
 
     try {
+      // Find the highest order in the selected parent group
+      const siblings = selectedParentId 
+        ? categories.filter(cat => cat.parentId === selectedParentId)
+        : categories.filter(cat => !cat.parentId);
+      
+      const maxOrder = siblings.reduce((max, cat) => 
+        Math.max(max, cat.order || 0), 0);
+      
       const response = await apiRequest("/categories", "POST", {
         name: newCategoryName,
         parentId: selectedParentId || undefined,
+        order: maxOrder + 1,
       });
 
       setCategories([...categories, response]);
@@ -103,21 +134,142 @@ export default function CategoriesPage() {
     }
   };
 
-  const renderCategoryItem = (category: Category, level: number = 0) => {
+  const moveCategory = async (dragId: string, hoverId: string, parentId?: string) => {
+    // Create new array with updated orders
+    const dragIndex = categories.findIndex(cat => cat._id === dragId);
+    const hoverIndex = categories.findIndex(cat => cat._id === hoverId);
+    
+    if (dragIndex === -1 || hoverIndex === -1) return;
+    
+    const draggedCategory = categories[dragIndex];
+    
+    // Make sure we're only reordering within the same parent group
+    if (draggedCategory.parentId !== parentId) return;
+    
+    // Create a copy for reordering
+    const updatedCategories = [...categories];
+    
+    // Get only categories with the same parent for reordering
+    const siblingCategories = updatedCategories
+      .filter(cat => cat.parentId === parentId)
+      .sort((a, b) => (a.order || 0) - (b.order || 0));
+    
+    // Remove the dragged category from its position
+    const draggedItem = siblingCategories.find(cat => cat._id === dragId);
+    if (!draggedItem) return;
+    
+    const filteredSiblings = siblingCategories.filter(cat => cat._id !== dragId);
+    
+    // Find where to insert the dragged item
+    const hoverItem = siblingCategories.find(cat => cat._id === hoverId);
+    if (!hoverItem) return;
+    
+    const hoverPos = filteredSiblings.findIndex(cat => cat._id === hoverId);
+    
+    // Insert the dragged item at the new position
+    filteredSiblings.splice(hoverPos, 0, draggedItem);
+    
+    // Update the order for all siblings
+    filteredSiblings.forEach((cat, index) => {
+      cat.order = index;
+    });
+    
+    // Update the categories state
+    setCategories(updatedCategories.map(cat => {
+      const updatedCat = filteredSiblings.find(c => c._id === cat._id);
+      return updatedCat || cat;
+    }));
+    
+    // Save the new order to the server
+    try {
+      await apiRequest(`/categories/${dragId}`, "PUT", {
+        order: filteredSiblings.find(cat => cat._id === dragId)?.order,
+      });
+    } catch (error) {
+      toast.error("Failed to update category order");
+      // Revert to original order
+      fetchCategories();
+    }
+  };
+
+  const toggleExpand = (categoryId: string) => {
+    setExpanded(prev => ({
+      ...prev,
+      [categoryId]: !prev[categoryId]
+    }));
+  };
+
+  // Category Item Component with Drag & Drop
+  const CategoryItem = ({ category, level = 0 }: { category: Category, level?: number }) => {
     const subcategories = getSubcategories(category._id);
     const hasSubcategories = subcategories.length > 0;
     const isEditing = editingCategory?._id === category._id;
+    const isExpanded = expanded[category._id];
+    
+    const ref = useRef<HTMLDivElement>(null);
+    
+    // Set up drag
+    const [{ isDragging }, drag] = useDrag({
+      type: ItemTypes.CATEGORY,
+      item: { id: category._id, parentId: category.parentId },
+      collect: (monitor) => ({
+        isDragging: monitor.isDragging(),
+      }),
+    });
+    
+    // Set up drop
+    const [{ handlerId, isOver }, drop] = useDrop<DragItem, void, { handlerId: string | symbol | null; isOver: boolean }>({
+      accept: ItemTypes.CATEGORY,
+      collect: (monitor) => ({
+        handlerId: monitor.getHandlerId(),
+        isOver: monitor.isOver(),
+      }),
+      hover(item: DragItem, monitor) {
+        if (!ref.current) return;
+        
+        const dragId = item.id;
+        const hoverId = category._id;
+        
+        // Don't replace items with themselves
+        if (dragId === hoverId) return;
+        
+        // Only allow reordering within the same parent
+        if (item.parentId !== category.parentId) return;
+        
+        moveCategory(dragId, hoverId, category.parentId);
+      },
+    });
+    
+    // Connect the drag and drop refs
+    drag(drop(ref));
     
     return (
       <div key={category._id} className="space-y-1">
         <div 
-          className={`group flex items-center p-2 rounded-md hover:bg-gray-100 dark:hover:bg-gray-800 transition-colors
-            ${isEditing ? 'bg-gray-100 dark:bg-gray-800' : ''}`}
+          ref={ref}
+          className={`group flex items-center p-2 rounded-md transition-colors
+            ${isEditing ? 'bg-gray-100 dark:bg-gray-800' : ''}
+            ${isOver ? 'bg-gray-100 dark:bg-gray-800' : 'hover:bg-gray-100 dark:hover:bg-gray-800'}
+            ${isDragging ? 'opacity-50' : 'opacity-100'}`}
           style={{ marginLeft: `${level * 24}px` }}
+          data-handler-id={handlerId}
         >
+          <div className="cursor-grab mr-2 text-gray-400 hover:text-gray-600 dark:hover:text-gray-300">
+            <MoveVertical className="h-4 w-4" />
+          </div>
+          
           {hasSubcategories && (
-            <ChevronRight className="h-4 w-4 mr-2 text-muted-foreground" />
+            <button 
+              onClick={() => toggleExpand(category._id)}
+              className="mr-1 focus:outline-none"
+            >
+              {isExpanded ? 
+                <ChevronDown className="h-4 w-4 text-muted-foreground" /> : 
+                <ChevronRight className="h-4 w-4 text-muted-foreground" />
+              }
+            </button>
           )}
+          
           <div className="flex-1 flex items-center space-x-2">
             {isEditing ? (
               <Input
@@ -179,7 +331,9 @@ export default function CategoriesPage() {
             )}
           </div>
         </div>
-        {subcategories.map(subcat => renderCategoryItem(subcat, level + 1))}
+        {isExpanded && subcategories.map(subcat => 
+          <CategoryItem key={subcat._id} category={subcat} level={level + 1} />
+        )}
       </div>
     );
   };
@@ -242,40 +396,40 @@ export default function CategoriesPage() {
             <CardTitle className="text-xl font-semibold">Category List</CardTitle>
           </CardHeader>
           <CardContent>
-            <div className="space-y-1">
-              {rootCategories.length === 0 ? (
-                <p className="text-sm text-muted-foreground text-center py-4">
-                  No categories yet. Add your first category above.
-                </p>
-              ) : (
-                rootCategories.map(category => renderCategoryItem(category))
-              )}
-            </div>
+            <DndProvider backend={HTML5Backend}>
+              <div className="space-y-1">
+                {rootCategories.length === 0 ? (
+                  <p className="text-sm text-muted-foreground text-center py-4">
+                    No categories yet. Add your first category above.
+                  </p>
+                ) : (
+                  rootCategories.map(category => (
+                    <CategoryItem key={category._id} category={category} />
+                  ))
+                )}
+              </div>
+            </DndProvider>
           </CardContent>
         </Card>
-
+        
         {/* Delete Confirmation Dialog */}
-        <AlertDialog open={!!categoryToDelete} onOpenChange={() => setCategoryToDelete(null)}>
-          <AlertDialogContent>
-            <AlertDialogHeader>
-              <AlertDialogTitle>Are you absolutely sure?</AlertDialogTitle>
-              <AlertDialogDescription>
-                This will permanently delete the category &quot;{categoryToDelete?.name}&quot;
-                {getSubcategories(categoryToDelete?._id || "").length > 0 && 
-                  " and all its subcategories"}. This action cannot be undone.
-              </AlertDialogDescription>
-            </AlertDialogHeader>
-            <AlertDialogFooter>
-              <AlertDialogCancel>Cancel</AlertDialogCancel>
-              <AlertDialogAction
-                onClick={handleDeleteConfirm}
-                className="bg-red-500 hover:bg-red-600"
-              >
-                Delete
-              </AlertDialogAction>
-            </AlertDialogFooter>
-          </AlertDialogContent>
-        </AlertDialog>
+        {categoryToDelete && (
+          <AlertDialog open={!!categoryToDelete} onOpenChange={() => setCategoryToDelete(null)}>
+            <AlertDialogContent>
+              <AlertDialogHeader>
+                <AlertDialogTitle>Are you sure?</AlertDialogTitle>
+                <AlertDialogDescription>
+                  This will permanently delete the category "{categoryToDelete.name}".
+                  This action cannot be undone.
+                </AlertDialogDescription>
+              </AlertDialogHeader>
+              <AlertDialogFooter>
+                <AlertDialogCancel>Cancel</AlertDialogCancel>
+                <AlertDialogAction onClick={handleDeleteConfirm}>Delete</AlertDialogAction>
+              </AlertDialogFooter>
+            </AlertDialogContent>
+          </AlertDialog>
+        )}
       </div>
     </Layout>
   );
diff --git a/models/categories.ts b/models/categories.ts
index 4920d41..d7f2728 100644
--- a/models/categories.ts
+++ b/models/categories.ts
@@ -1,5 +1,6 @@
 export interface Category {
     _id: string;
     name: string;
-    parentId?: string 
+    parentId?: string;
+    order?: number;
   }
\ No newline at end of file
diff --git a/package-lock.json b/package-lock.json
index 0c0ca60..503854e 100644
--- a/package-lock.json
+++ b/package-lock.json
@@ -55,6 +55,8 @@
         "pusher-js": "^8.4.0",
         "react": "^19.0.0",
         "react-day-picker": "8.10.1",
+        "react-dnd": "^16.0.1",
+        "react-dnd-html5-backend": "^16.0.1",
         "react-dom": "^19.0.0",
         "react-hook-form": "^7.54.1",
         "react-markdown": "^10.0.0",
@@ -2421,6 +2423,24 @@
       "integrity": "sha512-A9+lCBZoaMJlVKcRBz2YByCG+Cp2t6nAnMnNba+XiWxnj6r4JUFqfsgwocMBZU9LPtdxC6wB56ySYpc7LQIoJg==",
       "license": "MIT"
     },
+    "node_modules/@react-dnd/asap": {
+      "version": "5.0.2",
+      "resolved": "https://registry.npmjs.org/@react-dnd/asap/-/asap-5.0.2.tgz",
+      "integrity": "sha512-WLyfoHvxhs0V9U+GTsGilGgf2QsPl6ZZ44fnv0/b8T3nQyvzxidxsg/ZltbWssbsRDlYW8UKSQMTGotuTotZ6A==",
+      "license": "MIT"
+    },
+    "node_modules/@react-dnd/invariant": {
+      "version": "4.0.2",
+      "resolved": "https://registry.npmjs.org/@react-dnd/invariant/-/invariant-4.0.2.tgz",
+      "integrity": "sha512-xKCTqAK/FFauOM9Ta2pswIyT3D8AQlfrYdOi/toTPEhqCuAs1v5tcJ3Y08Izh1cJ5Jchwy9SeAXmMg6zrKs2iw==",
+      "license": "MIT"
+    },
+    "node_modules/@react-dnd/shallowequal": {
+      "version": "4.0.2",
+      "resolved": "https://registry.npmjs.org/@react-dnd/shallowequal/-/shallowequal-4.0.2.tgz",
+      "integrity": "sha512-/RVXdLvJxLg4QKvMoM5WlwNR9ViO9z8B/qPcc+C0Sa/teJY7QG7kJ441DwzOjMYEY7GmU4dj5EcGHIkKZiQZCA==",
+      "license": "MIT"
+    },
     "node_modules/@react-three/drei": {
       "version": "10.0.6",
       "resolved": "https://registry.npmjs.org/@react-three/drei/-/drei-10.0.6.tgz",
@@ -4463,6 +4483,17 @@
       "dev": true,
       "license": "MIT"
     },
+    "node_modules/dnd-core": {
+      "version": "16.0.1",
+      "resolved": "https://registry.npmjs.org/dnd-core/-/dnd-core-16.0.1.tgz",
+      "integrity": "sha512-HK294sl7tbw6F6IeuK16YSBUoorvHpY8RHO+9yFfaJyCDVb6n7PRcezrOEOa2SBCqiYpemh5Jx20ZcjKdFAVng==",
+      "license": "MIT",
+      "dependencies": {
+        "@react-dnd/asap": "^5.0.1",
+        "@react-dnd/invariant": "^4.0.1",
+        "redux": "^4.2.0"
+      }
+    },
     "node_modules/doctrine": {
       "version": "2.1.0",
       "resolved": "https://registry.npmjs.org/doctrine/-/doctrine-2.1.0.tgz",
@@ -5197,7 +5228,6 @@
       "version": "3.1.3",
       "resolved": "https://registry.npmjs.org/fast-deep-equal/-/fast-deep-equal-3.1.3.tgz",
       "integrity": "sha512-f3qQ9oQy9j2AhBe/H9VC91wLmKBCCU/gDOnKNAYG5hswO7BLKj09Hc5HYNz9cGI++xlpDCIgDaitVs03ATR84Q==",
-      "dev": true,
       "license": "MIT"
     },
     "node_modules/fast-equals": {
@@ -5842,6 +5872,15 @@
       "integrity": "sha512-7GOkcqn0Y9EqU2OJZlzkwxj9Uynuln7URvr7dRjgqNJNZ5UbbjL/v1BjAvQogy57Psdd/ek1u2s6IDEFYlabrA==",
       "license": "Apache-2.0"
     },
+    "node_modules/hoist-non-react-statics": {
+      "version": "3.3.2",
+      "resolved": "https://registry.npmjs.org/hoist-non-react-statics/-/hoist-non-react-statics-3.3.2.tgz",
+      "integrity": "sha512-/gGivxi8JPKWNm/W0jSmzcMPpfpPLc3dY/6GxhX2hQ9iGj3aDfklV4ET7NjKpSinLpJ5vafa9iiGIEZg10SfBw==",
+      "license": "BSD-3-Clause",
+      "dependencies": {
+        "react-is": "^16.7.0"
+      }
+    },
     "node_modules/html-url-attributes": {
       "version": "3.0.1",
       "resolved": "https://registry.npmjs.org/html-url-attributes/-/html-url-attributes-3.0.1.tgz",
@@ -8216,6 +8255,45 @@
         "react": "^16.8.0 || ^17.0.0 || ^18.0.0"
       }
     },
+    "node_modules/react-dnd": {
+      "version": "16.0.1",
+      "resolved": "https://registry.npmjs.org/react-dnd/-/react-dnd-16.0.1.tgz",
+      "integrity": "sha512-QeoM/i73HHu2XF9aKksIUuamHPDvRglEwdHL4jsp784BgUuWcg6mzfxT0QDdQz8Wj0qyRKx2eMg8iZtWvU4E2Q==",
+      "license": "MIT",
+      "dependencies": {
+        "@react-dnd/invariant": "^4.0.1",
+        "@react-dnd/shallowequal": "^4.0.1",
+        "dnd-core": "^16.0.1",
+        "fast-deep-equal": "^3.1.3",
+        "hoist-non-react-statics": "^3.3.2"
+      },
+      "peerDependencies": {
+        "@types/hoist-non-react-statics": ">= 3.3.1",
+        "@types/node": ">= 12",
+        "@types/react": ">= 16",
+        "react": ">= 16.14"
+      },
+      "peerDependenciesMeta": {
+        "@types/hoist-non-react-statics": {
+          "optional": true
+        },
+        "@types/node": {
+          "optional": true
+        },
+        "@types/react": {
+          "optional": true
+        }
+      }
+    },
+    "node_modules/react-dnd-html5-backend": {
+      "version": "16.0.1",
+      "resolved": "https://registry.npmjs.org/react-dnd-html5-backend/-/react-dnd-html5-backend-16.0.1.tgz",
+      "integrity": "sha512-Wu3dw5aDJmOGw8WjH1I1/yTH+vlXEL4vmjk5p+MHxP8HuHJS1lAGeIdG/hze1AvNeXWo/JgULV87LyQOr+r5jw==",
+      "license": "MIT",
+      "dependencies": {
+        "dnd-core": "^16.0.1"
+      }
+    },
     "node_modules/react-dom": {
       "version": "19.0.0",
       "resolved": "https://registry.npmjs.org/react-dom/-/react-dom-19.0.0.tgz",
@@ -8478,6 +8556,15 @@
       "integrity": "sha512-/LLMVyas0ljjAtoYiPqYiL8VWXzUUdThrmU5+n20DZv+a+ClRoevUzw5JxU+Ieh5/c87ytoTBV9G1FiKfNJdmg==",
       "license": "MIT"
     },
+    "node_modules/redux": {
+      "version": "4.2.1",
+      "resolved": "https://registry.npmjs.org/redux/-/redux-4.2.1.tgz",
+      "integrity": "sha512-LAUYz4lc+Do8/g7aeRa8JkyDErK6ekstQaqWQrNRW//MY1TvCEpMtpTWvlQ+FPbWCx+Xixu/6SHt5N0HR+SB4w==",
+      "license": "MIT",
+      "dependencies": {
+        "@babel/runtime": "^7.9.2"
+      }
+    },
     "node_modules/reflect.getprototypeof": {
       "version": "1.0.10",
       "resolved": "https://registry.npmjs.org/reflect.getprototypeof/-/reflect.getprototypeof-1.0.10.tgz",
diff --git a/package.json b/package.json
index 6fe345d..8d9404f 100644
--- a/package.json
+++ b/package.json
@@ -63,6 +63,8 @@
     "pusher-js": "^8.4.0",
     "react": "^19.0.0",
     "react-day-picker": "8.10.1",
+    "react-dnd": "^16.0.1",
+    "react-dnd-html5-backend": "^16.0.1",
     "react-dom": "^19.0.0",
     "react-hook-form": "^7.54.1",
     "react-markdown": "^10.0.0",