diff --git a/apps/builder/app/builder/features/workspace/canvas-tools/outline/block-utils.ts b/apps/builder/app/builder/features/workspace/canvas-tools/outline/block-utils.ts
index c20096643ceb..5648a0147eda 100644
--- a/apps/builder/app/builder/features/workspace/canvas-tools/outline/block-utils.ts
+++ b/apps/builder/app/builder/features/workspace/canvas-tools/outline/block-utils.ts
@@ -68,6 +68,75 @@ const getInsertionIndex = (
   return insertBefore ? index : index + 1;
 };
 
+export const insertListItemAt = (listItemSelector: InstanceSelector) => {
+  const instances = $instances.get();
+
+  const parentSelector = listItemSelector.slice(1);
+
+  const parentInstance = instances.get(parentSelector[0]);
+
+  if (parentInstance === undefined) {
+    return;
+  }
+
+  const position =
+    1 +
+    parentInstance.children.findIndex(
+      (child) => child.type === "id" && child.value === listItemSelector[0]
+    );
+
+  if (position === 0) {
+    return;
+  }
+
+  const target: DroppableTarget = {
+    parentSelector,
+    position,
+  };
+
+  const fragment = extractWebstudioFragment(
+    getWebstudioData(),
+    listItemSelector[0]
+  );
+
+  fragment.instances = structuredClone(fragment.instances);
+  fragment.instances.splice(1);
+  fragment.instances[0].children = [];
+
+  updateWebstudioData((data) => {
+    const { newInstanceIds } = insertWebstudioFragmentCopy({
+      data,
+      fragment,
+      availableDataSources: findAvailableDataSources(
+        data.dataSources,
+        data.instances,
+        target.parentSelector
+      ),
+    });
+    const newRootInstanceId = newInstanceIds.get(fragment.instances[0].id);
+    if (newRootInstanceId === undefined) {
+      return;
+    }
+    const children: Instance["children"] = [
+      { type: "id", value: newRootInstanceId },
+    ];
+
+    insertInstanceChildrenMutable(data, children, target);
+
+    const selectedInstanceSelector = [
+      newRootInstanceId,
+      ...target.parentSelector,
+    ];
+
+    $textEditingInstanceSelector.set({
+      selector: selectedInstanceSelector,
+      reason: "new",
+    });
+
+    selectInstance(selectedInstanceSelector);
+  });
+};
+
 export const insertTemplateAt = (
   templateSelector: InstanceSelector,
   anchor: InstanceSelector,
diff --git a/apps/builder/app/canvas/features/text-editor/text-editor.tsx b/apps/builder/app/canvas/features/text-editor/text-editor.tsx
index 3cfdcc4b916d..52ccc31ad4a8 100644
--- a/apps/builder/app/canvas/features/text-editor/text-editor.tsx
+++ b/apps/builder/app/canvas/features/text-editor/text-editor.tsx
@@ -92,7 +92,10 @@ import {
   selectInstance,
 } from "~/shared/awareness";
 import { shallowEqual } from "shallow-equal";
-import { insertTemplateAt } from "~/builder/features/workspace/canvas-tools/outline/block-utils";
+import {
+  insertListItemAt,
+  insertTemplateAt,
+} from "~/builder/features/workspace/canvas-tools/outline/block-utils";
 
 const BindInstanceToNodePlugin = ({
   refs,
@@ -1075,8 +1078,23 @@ const RichTextContentPluginInternal = ({
 
         if (event.key === "Backspace" || event.key === "Delete") {
           const rootNodeContent = $getRoot().getTextContent().trim();
-          // Delete current
+
           if (rootNodeContent.length === 0) {
+            const currentInstance = $instances
+              .get()
+              .get(rootInstanceSelector[0]);
+
+            if (currentInstance?.component === "ListItem") {
+              onNext(editor.getEditorState(), { reason: "left" });
+
+              updateWebstudioData((data) => {
+                deleteInstanceMutable(data, rootInstanceSelector);
+              });
+
+              event.preventDefault();
+              return true;
+            }
+
             const blockChildSelector =
               findBlockChildSelector(rootInstanceSelector);
 
@@ -1084,7 +1102,7 @@ const RichTextContentPluginInternal = ({
               onNext(editor.getEditorState(), { reason: "left" });
 
               updateWebstudioData((data) => {
-                deleteInstanceMutable(data, rootInstanceSelector);
+                deleteInstanceMutable(data, blockChildSelector);
               });
 
               event.preventDefault();
@@ -1095,6 +1113,18 @@ const RichTextContentPluginInternal = ({
 
         if (menuState === "closed") {
           if (event.key === "Enter" && !event.shiftKey) {
+            // Custom logic if we are editing ListItem
+            const currentInstance = $instances
+              .get()
+              .get(rootInstanceSelector[0]);
+
+            if (currentInstance?.component === "ListItem") {
+              // Instead of creating block component we need to add a new ListItem
+              insertListItemAt(rootInstanceSelector);
+              event.preventDefault();
+              return true;
+            }
+
             // Check if it pressed on the last line, last symbol
 
             const allowedComponents = ["Paragraph", "Text", "Heading"];