diff --git a/misc/drupal.js b/misc/drupal.js
index 9d7ec808903..d6f7597c346 100644
--- a/misc/drupal.js
+++ b/misc/drupal.js
@@ -299,24 +299,6 @@ Drupal.getSelection = function (element) {
   return { 'start': element.selectionStart, 'end': element.selectionEnd };
 };
 
-/**
- * Checks if position:fixed is supported.
- *
- * @return
- *   Boolean indicating whether or not position:fixed is supported.
- *
- * @see http://yura.thinkweb2.com/cft/#IS_POSITION_FIXED_SUPPORTED
- */
-Drupal.positionFixedSupported = function () {
-  if (this._positionFixedSupported === undefined) {
-    var el = $('<div style="position:fixed; top:10px" />').appendTo(document.body);
-    this._positionFixedSupported = el[0].offsetTop === 10;
-    el.remove();
-  }
-
-  return this._positionFixedSupported;
-};
-
 /**
  * Build an error message from an AJAX response.
  */
diff --git a/misc/tableheader.js b/misc/tableheader.js
index daae1924d6a..4efe26a43e1 100644
--- a/misc/tableheader.js
+++ b/misc/tableheader.js
@@ -42,7 +42,7 @@ Drupal.behaviors.tableHeader = {
     // Track positioning and visibility.
     function tracker(e) {
       // Reset top position of sticky table headers to the current top offset.
-      var topOffset = Drupal.displace ? Drupal.displace.getDisplacement('top') : 0;
+      var topOffset = Drupal.settings.tableHeaderOffset ? eval(Drupal.settings.tableHeaderOffset + '()') : 0;
       $('.sticky-header').css('top', topOffset + 'px');
       // Save positioning data.
       var viewHeight = document.documentElement.scrollHeight || document.body.scrollHeight;
diff --git a/modules/overlay/overlay-parent.js b/modules/overlay/overlay-parent.js
index e33543580ca..f4688af69ac 100644
--- a/modules/overlay/overlay-parent.js
+++ b/modules/overlay/overlay-parent.js
@@ -650,9 +650,15 @@ Drupal.overlay.outerResize = function () {
     return;
   }
 
-  var displaceTop = Drupal.displace ? Drupal.displace.getDisplacement('top') : 0;
+  // Consider any region that should be visible above the overlay (such as
+  // an admin toolbar).
+  var $displaceTop = $('.overlay-displace-top');
+  var displaceTopHeight = 0;
+  $displaceTop.each(function () {
+    displaceTopHeight += $(this).height();
+  });
 
-  self.$wrapper.css('top', displaceTop);
+  self.$wrapper.css('top', displaceTopHeight);
 
   // When the overlay has no height yet, make it fit exactly in the window,
   // or the configured height when autoFit is disabled.
@@ -660,7 +666,7 @@ Drupal.overlay.outerResize = function () {
     var titleBarHeight = self.$dialogTitlebar.outerHeight(true);
 
     if (self.options.autoFit || self.options.height == undefined ||!isNan(self.options.height)) {
-      self.lastHeight = parseInt($(window).height() - displaceTop - titleBarHeight - 45);
+      self.lastHeight = parseInt($(window).height() - displaceTopHeight - titleBarHeight - 45);
     }
     else {
       self.lastHeight = self.options.height;
@@ -697,11 +703,11 @@ Drupal.overlay.clickHandler = function (event) {
 
   var $target = $(event.target);
 
-  if (self.isOpen && $target.closest('.displace-top, .displace-bottom').length) {
+  if (self.isOpen && $target.closest('.overlay-displace-top, .overlay-displace-bottom').length) {
     // Click events in displaced regions could potentionally change the size of
     // that region (e.g. the toggle button of the toolbar module). Trigger the
     // resize event to force a recalculation of overlay's size/position.
-    $(window).triggerHandler('resize');
+    $(window).triggerHandler('resize.overlay-event');
   }
 
   // Only continue by left-click or right-click.
@@ -923,7 +929,7 @@ Drupal.overlay.resetActiveClass = function(activePath) {
   var self = this;
   var windowDomain = window.location.protocol + window.location.hostname;
 
-  $('.displace-top, .displace-bottom')
+  $('.overlay-displace-top, .overlay-displace-bottom')
   .find('a[href]')
   // Remove active class from all links in displaced regions.
   .removeClass('active')
diff --git a/modules/overlay/overlay.module b/modules/overlay/overlay.module
index 5ac362ed983..c5b123b7bdf 100644
--- a/modules/overlay/overlay.module
+++ b/modules/overlay/overlay.module
@@ -299,6 +299,16 @@ function overlay_preprocess_page(&$variables) {
   }
 }
 
+/**
+ * Preprocess template variables for toolbar.tpl.php.
+ *
+ * Adding the 'overlay-displace-top' class to the toolbar pushes the overlay
+ * down, so it appears below the toolbar.
+ */
+function overlay_preprocess_toolbar(&$variables) {
+  $variables['classes_array'][] = "overlay-displace-top";
+}
+
 /**
  * Form after_build callback.
  *
diff --git a/modules/system/system.css b/modules/system/system.css
index adf9eee1858..a871005fd9c 100644
--- a/modules/system/system.css
+++ b/modules/system/system.css
@@ -274,6 +274,26 @@ tr.selected td {
   position: absolute;
 }
 
+/*
+** To be used with displace.js
+*/
+.displace-top,
+.displace-bottom {
+  position: relative;
+  width: 100%;
+}
+.displace-processed .displace-top,
+.displace-processed .displace-bottom {
+  position: fixed;
+  width: auto;
+  left: 0;
+  right: 0;
+}
+.displace-unsupported .displace-top,
+.displace-unsupported .displace-bottom {
+  position: absolute;
+}
+
 /*
 ** Floating header for tableheader.js
 */
diff --git a/modules/toolbar/toolbar.css b/modules/toolbar/toolbar.css
index 7122e4ecc72..5fc8159baea 100644
--- a/modules/toolbar/toolbar.css
+++ b/modules/toolbar/toolbar.css
@@ -1,6 +1,12 @@
 /* $Id$ */
 
+body.toolbar {
+  padding-top: 2.2em;
+}
 
+body.toolbar-drawer {
+  padding-top: 5.3em;
+}
 
 /**
  * Aggressive resets so we can achieve a consistent look in hostile CSS
@@ -26,8 +32,10 @@
   font: normal 0.9em "Lucida Grande", Verdana, sans-serif;
   background: #666;
   color: #ccc;
-}
-.displace-processed #toolbar {
+  position: fixed;
+  top: 0;
+  left: 0;
+  right: 0;
   margin: 0 -20px;
   padding: 0 20px;
   z-index: 600;
@@ -37,14 +45,6 @@
   filter: progid:DXImageTransform.Microsoft.Shadow(color=#000000, direction='180', strength='10');
   -ms-filter: "progid:DXImageTransform.Microsoft.Shadow(color=#000000, direction='180', strength='10')";
 }
-.displace-unsupported #toolbar {
-  margin: 0;
-  padding-right: 0;
-  left: -20px;
-  right: 0;
-  width: 100%;
-}
-
 
 #toolbar div.collapsed {
   display: none;
@@ -132,3 +132,18 @@
   position: relative;
   padding: 0 10px;
 }
+
+/**
+ * IE 6 Fix.
+ *
+ * IE 6 shows elements with position:fixed as position:static so we replace
+ * it with position:absolute; toolbar needs it's z-index to stay above overlay.
+ */
+* html #toolbar {
+  position: absolute;
+  margin: 0;
+  padding-right: 0;
+  left: -20px;
+  right: 0;
+  width: 100%;
+}
diff --git a/modules/toolbar/toolbar.js b/modules/toolbar/toolbar.js
index be95c76abae..85129f8243a 100644
--- a/modules/toolbar/toolbar.js
+++ b/modules/toolbar/toolbar.js
@@ -15,8 +15,9 @@ Drupal.behaviors.toolbar = {
     // Toggling toolbar drawer.
     $('#toolbar a.toggle', context).once('toolbar-toggle').click(function(e) {
       Drupal.toolbar.toggle();
-      // Allow resize event handlers to recalculate sizes/positions.
-      $(window).triggerHandler('resize');
+      // As the toolbar is an overlay displaced region, overlay should be
+      // notified of it's height change to adapt its position.
+      $(window).triggerHandler('resize.overlay-event');
       return false;
     });
   }
@@ -48,6 +49,7 @@ Drupal.toolbar.collapse = function() {
     .removeClass('toggle-active')
     .attr('title',  toggle_text)
     .html(toggle_text);
+  $('body').removeClass('toolbar-drawer').css('paddingTop', Drupal.toolbar.height());
   $.cookie(
     'Drupal.toolbar.collapsed',
     1,
@@ -69,6 +71,7 @@ Drupal.toolbar.expand = function() {
     .addClass('toggle-active')
     .attr('title',  toggle_text)
     .html(toggle_text);
+  $('body').addClass('toolbar-drawer').css('paddingTop', Drupal.toolbar.height());
   $.cookie(
     'Drupal.toolbar.collapsed',
     0,
@@ -92,4 +95,14 @@ Drupal.toolbar.toggle = function() {
   }
 };
 
+Drupal.toolbar.height = function() {
+  var height = $('#toolbar').outerHeight();
+  // In IE, Shadow filter adds some extra height, so we need to remove it from
+  // the returned height.
+  if ($('#toolbar').css('filter').match(/DXImageTransform\.Microsoft\.Shadow/)) {
+    height -= $('#toolbar').get(0).filters.item("DXImageTransform.Microsoft.Shadow").strength;
+  }
+  return height;
+};
+
 })(jQuery);
diff --git a/modules/toolbar/toolbar.module b/modules/toolbar/toolbar.module
index 0c8ad802cc6..396c50f93ad 100644
--- a/modules/toolbar/toolbar.module
+++ b/modules/toolbar/toolbar.module
@@ -177,9 +177,12 @@ function toolbar_view() {
     '#theme' => 'toolbar',
     '#attached'=> array(
       'js' => array(
-        array('data' => 'misc/displace.js', 'weight' => JS_LIBRARY - 1),
-        array('data' => 'misc/jquery.cookie.js', 'weight' => JS_LIBRARY + 2),
         $module_path . '/toolbar.js',
+        array('data' => 'misc/jquery.cookie.js', 'weight' => JS_LIBRARY + 2),
+        array(
+          'data' => array('tableHeaderOffset' => 'Drupal.toolbar.height'),
+          'type' => 'setting'
+        ),
       ),
       'css' => array(
         $module_path . '/toolbar.css',
diff --git a/modules/toolbar/toolbar.tpl.php b/modules/toolbar/toolbar.tpl.php
index eac3e88ab0c..d38aae6965f 100644
--- a/modules/toolbar/toolbar.tpl.php
+++ b/modules/toolbar/toolbar.tpl.php
@@ -22,7 +22,7 @@
  * @see template_preprocess_toolbar()
  */
 ?>
-<div id="toolbar" class="<?php print $classes; ?> displace-top clearfix">
+<div id="toolbar" class="<?php print $classes; ?> clearfix">
   <div class="toolbar-menu clearfix">
     <?php print render($toolbar['toolbar_home']); ?>
     <?php print render($toolbar['toolbar_user']); ?>