diff --git a/cypress/integration/rendering/xyChart.spec.js b/cypress/integration/rendering/xyChart.spec.js
index 32a4f34984a..c45ca20a497 100644
--- a/cypress/integration/rendering/xyChart.spec.js
+++ b/cypress/integration/rendering/xyChart.spec.js
@@ -879,4 +879,41 @@ describe('XY Chart', () => {
       });
     });
   });
+
+  describe('Point label collision avoidance', () => {
+    it('should flip labels below line when steep descent causes collision', () => {
+      imgSnapshotTest(
+        `
+        xychart
+          title "Smallest AI models scoring above 60% on MMLU"
+          x-axis "Date" ["Apr 2022", "Feb 2023", "Jul 2023", "Sep 2023", "Apr 2024"]
+          y-axis "Parameters (B)" 0 --> 600
+          line [540 "PaLM", 65 "LLaMA-65B", 34 "Llama 2 34B", 7 "Mistral 7B", 3.8 "Phi-3-mini"]
+        `,
+        {}
+      );
+    });
+    it('should keep labels above line when no collision on gentle slope', () => {
+      imgSnapshotTest(
+        `
+        xychart
+          x-axis ["A", "B", "C"]
+          y-axis 0 --> 100
+          line [40 "Start", 50 "Mid", 45 "End"]
+        `,
+        {}
+      );
+    });
+    it('should handle mixed collision: some labels above, some below', () => {
+      imgSnapshotTest(
+        `
+        xychart
+          x-axis ["P1", "P2", "P3", "P4"]
+          y-axis 0 --> 500
+          line [400 "High", 50 "Low", 450 "Peak", 30 "Bottom"]
+        `,
+        {}
+      );
+    });
+  });
 });
diff --git a/demos/xychart.html b/demos/xychart.html
index bfc22c351e8..27f005fff8f 100644
--- a/demos/xychart.html
+++ b/demos/xychart.html
@@ -336,6 +336,25 @@ <h1>Line chart with mixed labels (some points labeled, some not)</h1>
       line [25 "Launch", 45, 72, 90 "Target Hit"]
     </pre>
 
+    <hr />
+    <h1>Label collision avoidance: steep descent</h1>
+    <pre class="mermaid">
+    xychart
+      title "Smallest AI models scoring above 60% on MMLU"
+      x-axis "Date" ["Apr 2022", "Feb 2023", "Jul 2023", "Sep 2023", "Apr 2024"]
+      y-axis "Parameters (B)" 0 --> 600
+      line [540 "PaLM", 65 "LLaMA-65B", 34 "Llama 2 34B", 7 "Mistral 7B", 3.8 "Phi-3-mini"]
+    </pre>
+
+    <hr />
+    <h1>Label collision avoidance: zigzag pattern</h1>
+    <pre class="mermaid">
+    xychart
+      x-axis ["P1", "P2", "P3", "P4"]
+      y-axis 0 --> 500
+      line [400 "High", 50 "Low", 450 "Peak", 30 "Bottom"]
+    </pre>
+
     <script type="module">
       import mermaid from './mermaid.esm.mjs';
       mermaid.initialize({
diff --git a/packages/mermaid/src/diagrams/xychart/chartBuilder/components/plot/linePlot.ts b/packages/mermaid/src/diagrams/xychart/chartBuilder/components/plot/linePlot.ts
index 75e2a9632c5..bfa19bf6aac 100644
--- a/packages/mermaid/src/diagrams/xychart/chartBuilder/components/plot/linePlot.ts
+++ b/packages/mermaid/src/diagrams/xychart/chartBuilder/components/plot/linePlot.ts
@@ -2,6 +2,177 @@ import { line } from 'd3';
 import type { DrawableElem, LinePlotData, TextElem, XYChartConfig } from '../../interfaces.js';
 import type { Axis } from '../axis/index.js';
 
+const CHAR_WIDTH_FACTOR = 0.7;
+
+/**
+ * Interpolate a line segment's y-value at a given x.
+ * Returns null if x is outside the segment's x-range.
+ */
+function lineYAtX(segStart: [number, number], segEnd: [number, number], x: number): number | null {
+  const [x0, y0] = segStart;
+  const [x1, y1] = segEnd;
+  const minX = Math.min(x0, x1);
+  const maxX = Math.max(x0, x1);
+  if (x < minX || x > maxX) {
+    return null;
+  }
+  if (x0 === x1) {
+    return null; // vertical segment — can't interpolate by x
+  }
+  const t = (x - x0) / (x1 - x0);
+  return y0 + t * (y1 - y0);
+}
+
+/**
+ * Check if a line segment passes through an axis-aligned bounding box.
+ *
+ * Computes the y-range of the segment within the box's x-range and checks
+ * if it overlaps with the box's y-range. This correctly detects the case
+ * where a steep line enters from above and exits below the box (or vice
+ * versa) even if neither endpoint nor any single sample point falls inside.
+ */
+function doesSegmentIntersectBox(
+  segStart: [number, number],
+  segEnd: [number, number],
+  boxLeft: number,
+  boxRight: number,
+  boxTop: number,
+  boxBottom: number
+): boolean {
+  // Check if either endpoint is inside the box
+  for (const [ex, ey] of [segStart, segEnd]) {
+    if (ex >= boxLeft && ex <= boxRight && ey >= boxTop && ey <= boxBottom) {
+      return true;
+    }
+  }
+
+  // Compute the y-values of the line at the box's left and right x-edges
+  const yAtLeft = lineYAtX(segStart, segEnd, boxLeft);
+  const yAtRight = lineYAtX(segStart, segEnd, boxRight);
+
+  // Collect valid y-values (where segment overlaps box's x-range)
+  const ys: number[] = [];
+  if (yAtLeft !== null) {
+    ys.push(yAtLeft);
+  }
+  if (yAtRight !== null) {
+    ys.push(yAtRight);
+  }
+
+  // Also include segment endpoints that fall within the box's x-range
+  for (const [ex, ey] of [segStart, segEnd]) {
+    if (ex >= boxLeft && ex <= boxRight) {
+      ys.push(ey);
+    }
+  }
+
+  if (ys.length === 0) {
+    return false;
+  }
+
+  // The segment's y-range within the box's x-range
+  const segMinY = Math.min(...ys);
+  const segMaxY = Math.max(...ys);
+
+  // Check if the segment's y-range overlaps with the box's y-range
+  return segMaxY >= boxTop && segMinY <= boxBottom;
+}
+
+/**
+ * Determine if a label placed above (vertical) or to the right (horizontal)
+ * of a data point would collide with an adjacent line segment.
+ */
+function shouldFlipLabelVertical(
+  finalData: [number, number][],
+  index: number,
+  labelText: string,
+  fontSize: number,
+  labelOffset: number
+): boolean {
+  const [px, py] = finalData[index];
+  const textWidth = fontSize * labelText.length * CHAR_WIDTH_FACTOR;
+  const halfWidth = textWidth / 2;
+  const halfHeight = fontSize / 2;
+
+  // Bounding box of label placed above the point
+  const boxLeft = px - halfWidth;
+  const boxRight = px + halfWidth;
+  const boxTop = py - labelOffset - halfHeight;
+  const boxBottom = py - labelOffset + halfHeight;
+
+  // Check previous segment
+  if (
+    index > 0 &&
+    doesSegmentIntersectBox(
+      finalData[index - 1],
+      finalData[index],
+      boxLeft,
+      boxRight,
+      boxTop,
+      boxBottom
+    )
+  ) {
+    return true;
+  }
+  // Check next segment
+  if (
+    index < finalData.length - 1 &&
+    doesSegmentIntersectBox(
+      finalData[index],
+      finalData[index + 1],
+      boxLeft,
+      boxRight,
+      boxTop,
+      boxBottom
+    )
+  ) {
+    return true;
+  }
+  return false;
+}
+
+function shouldFlipLabelHorizontal(
+  finalData: [number, number][],
+  index: number,
+  labelText: string,
+  fontSize: number,
+  labelOffset: number
+): boolean {
+  // In horizontal orientation, finalData is still [xScaled, yScaled] but
+  // the path uses y(d[0]) and x(d[1]), so pixel positions are swapped.
+  // px = xAxis.getScaleValue (maps to SVG y), py = yAxis.getScaleValue (maps to SVG x)
+  // Label is placed at SVG (py + labelOffset, px) — to the right of the point.
+  // We check if that box collides with adjacent segments in SVG space.
+  const [px, py] = finalData[index];
+  const textWidth = fontSize * labelText.length * CHAR_WIDTH_FACTOR;
+  const halfHeight = fontSize / 2;
+
+  // In SVG space for horizontal: svgX = py, svgY = px
+  // Label "to the right": svgX = py + labelOffset, svgY = px
+  // Box in SVG coords:
+  const boxLeft = py + labelOffset;
+  const boxRight = py + labelOffset + textWidth;
+  const boxTop = px - halfHeight;
+  const boxBottom = px + halfHeight;
+
+  // Segments in SVG space: point i has svgX=py_i, svgY=px_i
+  const toSvg = (idx: number): [number, number] => [finalData[idx][1], finalData[idx][0]];
+
+  if (
+    index > 0 &&
+    doesSegmentIntersectBox(toSvg(index - 1), toSvg(index), boxLeft, boxRight, boxTop, boxBottom)
+  ) {
+    return true;
+  }
+  if (
+    index < finalData.length - 1 &&
+    doesSegmentIntersectBox(toSvg(index), toSvg(index + 1), boxLeft, boxRight, boxTop, boxBottom)
+  ) {
+    return true;
+  }
+  return false;
+}
+
 export class LinePlot {
   constructor(
     private plotData: LinePlotData,
@@ -57,20 +228,22 @@ export class LinePlot {
         }
 
         if (this.orientation === 'horizontal') {
+          const flip = shouldFlipLabelHorizontal(finalData, i, label, fontSize, labelOffset);
           textData.push({
-            x: py + labelOffset,
+            x: flip ? py - labelOffset : py + labelOffset,
             y: px,
             text: label,
             fill: this.plotData.strokeFill,
             verticalPos: 'middle',
-            horizontalPos: 'left',
+            horizontalPos: flip ? 'right' : 'left',
             fontSize,
             rotation: 0,
           });
         } else {
+          const flip = shouldFlipLabelVertical(finalData, i, label, fontSize, labelOffset);
           textData.push({
             x: px,
-            y: py - labelOffset,
+            y: flip ? py + labelOffset : py - labelOffset,
             text: label,
             fill: this.plotData.strokeFill,
             verticalPos: 'middle',
diff --git a/qa-screenshots/01-basic-labels.png b/qa-screenshots/01-basic-labels.png
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diff --git a/qa-screenshots/02-mixed-labels.png b/qa-screenshots/02-mixed-labels.png
new file mode 100644
index 00000000000..1400d335ec3
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diff --git a/qa-screenshots/03-no-labels.png b/qa-screenshots/03-no-labels.png
new file mode 100644
index 00000000000..9c4e5d6f8b1
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diff --git a/qa-screenshots/04-horizontal.png b/qa-screenshots/04-horizontal.png
new file mode 100644
index 00000000000..1291521e9dd
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diff --git a/qa-screenshots/05-multi-lines.png b/qa-screenshots/05-multi-lines.png
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index 00000000000..d1d7c03d1ce
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diff --git a/qa-screenshots/06-real-world.png b/qa-screenshots/06-real-world.png
new file mode 100644
index 00000000000..0101bfe7420
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