diff --git a/services/core/java/com/android/server/wm/ActivityRecord.java b/services/core/java/com/android/server/wm/ActivityRecord.java
index d93778e18748b..fd74dacaf2d65 100644
--- a/services/core/java/com/android/server/wm/ActivityRecord.java
+++ b/services/core/java/com/android/server/wm/ActivityRecord.java
@@ -8445,21 +8445,23 @@ final class ActivityRecord extends WindowToken implements WindowManagerService.A
     private void updateResolvedBoundsPosition(Configuration newParentConfiguration) {
         final Configuration resolvedConfig = getResolvedOverrideConfiguration();
         final Rect resolvedBounds = resolvedConfig.windowConfiguration.getBounds();
+        if (resolvedBounds.isEmpty()) {
+            return;
+        }
         final Rect screenResolvedBounds =
                 mSizeCompatBounds != null ? mSizeCompatBounds : resolvedBounds;
         final Rect parentAppBounds = newParentConfiguration.windowConfiguration.getAppBounds();
         final Rect parentBounds = newParentConfiguration.windowConfiguration.getBounds();
-        if (resolvedBounds.isEmpty()) {
-            return;
-        }
+        final float screenResolvedBoundsWidth = screenResolvedBounds.width();
+        final float parentAppBoundsWidth = parentAppBounds.width();
         // Horizontal position
         int offsetX = 0;
-        if (parentBounds.width() != screenResolvedBounds.width()) {
-            if (screenResolvedBounds.width() <= parentAppBounds.width()) {
+        if (parentBounds.width() != screenResolvedBoundsWidth) {
+            if (screenResolvedBoundsWidth <= parentAppBoundsWidth) {
                 float positionMultiplier = mLetterboxUiController.getHorizontalPositionMultiplier(
                         newParentConfiguration);
-                offsetX = Math.max(0, (int) Math.ceil((parentAppBounds.width()
-                        - screenResolvedBounds.width()) * positionMultiplier)
+                offsetX = Math.max(0, (int) Math.ceil((parentAppBoundsWidth
+                        - screenResolvedBoundsWidth) * positionMultiplier)
                         // This is added to make sure that insets added inside
                         // CompatDisplayInsets#getContainerBounds() do not break the alignment
                         // provided by the positionMultiplier
@@ -8467,14 +8469,21 @@ final class ActivityRecord extends WindowToken implements WindowManagerService.A
             }
         }
 
+        final float parentAppBoundsHeight = parentAppBounds.height();
+        final float parentBoundsHeight = parentBounds.height();
+        final float screenResolvedBoundsHeight = screenResolvedBounds.height();
         // Vertical position
         int offsetY = 0;
-        if (parentBounds.height() != screenResolvedBounds.height()) {
-            if (screenResolvedBounds.height() <= parentAppBounds.height()) {
+        if (parentBoundsHeight != screenResolvedBoundsHeight) {
+            if (screenResolvedBoundsHeight <= parentAppBoundsHeight) {
                 float positionMultiplier = mLetterboxUiController.getVerticalPositionMultiplier(
                         newParentConfiguration);
-                offsetY = Math.max(0, (int) Math.ceil((parentAppBounds.height()
-                        - screenResolvedBounds.height()) * positionMultiplier)
+                // If in immersive mode, always align to bottom and overlap bottom insets (nav bar,
+                // task bar) as they are transient and hidden. This removes awkward bottom spacing.
+                final float newHeight = mDisplayContent.getDisplayPolicy().isImmersiveMode()
+                        ? parentBoundsHeight : parentAppBoundsHeight;
+                offsetY = Math.max(0, (int) Math.ceil((newHeight
+                        - screenResolvedBoundsHeight) * positionMultiplier)
                         // This is added to make sure that insets added inside
                         // CompatDisplayInsets#getContainerBounds() do not break the alignment
                         // provided by the positionMultiplier
diff --git a/services/core/java/com/android/server/wm/DisplayPolicy.java b/services/core/java/com/android/server/wm/DisplayPolicy.java
index 899c36c4a1a73..77e70a25d497f 100644
--- a/services/core/java/com/android/server/wm/DisplayPolicy.java
+++ b/services/core/java/com/android/server/wm/DisplayPolicy.java
@@ -1254,6 +1254,10 @@ public class DisplayPolicy {
         return mNavigationBar;
     }
 
+    boolean isImmersiveMode() {
+        return mIsImmersiveMode;
+    }
+
     /**
      * Control the animation to run when a window's state changes.  Return a positive number to
      * force the animation to a specific resource ID, {@link #ANIMATION_STYLEABLE} to use the
diff --git a/services/tests/wmtests/src/com/android/server/wm/SizeCompatTests.java b/services/tests/wmtests/src/com/android/server/wm/SizeCompatTests.java
index 06bcbf34e0427..2dd34eb5ac4d7 100644
--- a/services/tests/wmtests/src/com/android/server/wm/SizeCompatTests.java
+++ b/services/tests/wmtests/src/com/android/server/wm/SizeCompatTests.java
@@ -3510,6 +3510,51 @@ public class SizeCompatTests extends WindowTestsBase {
         assertEquals(expectedHeight, capturedCrops.get(1).bottom);
     }
 
+    @Test
+    public void testLetterboxAlignedToBottom_NotOverlappingNavbar() {
+        assertLandscapeActivityAlignedToBottomWithNavbar(false /* immersive */);
+    }
+
+    @Test
+    public void testImmersiveLetterboxAlignedToBottom_OverlappingNavbar() {
+        assertLandscapeActivityAlignedToBottomWithNavbar(true /* immersive */);
+    }
+
+    private void assertLandscapeActivityAlignedToBottomWithNavbar(boolean immersive) {
+        final int screenHeight = 2800;
+        final int screenWidth = 1400;
+        final int taskbarHeight = 200;
+        setUpDisplaySizeWithApp(screenWidth, screenHeight);
+
+        mActivity.mDisplayContent.setIgnoreOrientationRequest(true);
+        mActivity.mWmService.mLetterboxConfiguration.setLetterboxVerticalPositionMultiplier(1.0f);
+
+        final InsetsSource navSource = new InsetsSource(
+                InsetsSource.createId(null, 0, navigationBars()), navigationBars());
+        navSource.setInsetsRoundedCornerFrame(true);
+        // Immersive activity has transient navbar
+        navSource.setVisible(!immersive);
+        navSource.setFrame(new Rect(0, screenHeight - taskbarHeight, screenWidth, screenHeight));
+        mActivity.mWmService.mLetterboxConfiguration.setLetterboxActivityCornersRadius(15);
+
+        final WindowState w1 = addWindowToActivity(mActivity);
+        w1.mAboveInsetsState.addSource(navSource);
+
+        // Prepare unresizable landscape activity
+        prepareUnresizable(mActivity, SCREEN_ORIENTATION_LANDSCAPE);
+        final DisplayPolicy displayPolicy = mActivity.mDisplayContent.getDisplayPolicy();
+        doReturn(immersive).when(displayPolicy).isImmersiveMode();
+
+        mActivity.mRootWindowContainer.performSurfacePlacement();
+
+        LetterboxDetails letterboxDetails = mActivity.mLetterboxUiController.getLetterboxDetails();
+
+        // Letterboxed activity at bottom
+        assertEquals(new Rect(0, 2100, 1400, 2800), mActivity.getBounds());
+        final int expectedHeight = immersive ? screenHeight : screenHeight - taskbarHeight;
+        assertEquals(expectedHeight, letterboxDetails.getLetterboxInnerBounds().bottom);
+    }
+
     @Test
     public void testSplitScreenLetterboxDetailsForStatusBar_twoLetterboxedApps() {
         mAtm.mDevEnableNonResizableMultiWindow = true;
@@ -3938,7 +3983,7 @@ public class SizeCompatTests extends WindowTestsBase {
         mActivity.mDisplayContent.setIgnoreOrientationRequest(true /* ignoreOrientationRequest */);
         mWm.mLetterboxConfiguration.setIsAutomaticReachabilityInBookModeEnabled(true);
         mWm.mLetterboxConfiguration.setLetterboxHorizontalPositionMultiplier(
-                1.0f /*letterboxVerticalPositionMultiplier*/);
+                1.0f /*letterboxHorizontalPositionMultiplier*/);
         prepareUnresizable(mActivity, SCREEN_ORIENTATION_PORTRAIT);
 
         Rect letterboxNoFold = new Rect(2100, 0, 2800, 1400);