diff --git a/packages/components/src/tools-panel/context.ts b/packages/components/src/tools-panel/context.ts
index d0104db26e6b7..7b13e59a92acd 100644
--- a/packages/components/src/tools-panel/context.ts
+++ b/packages/components/src/tools-panel/context.ts
@@ -18,6 +18,7 @@ export const ToolsPanelContext = createContext< ToolsPanelContextType >( {
 	registerPanelItem: noop,
 	deregisterPanelItem: noop,
 	flagItemCustomization: noop,
+	areAllOptionalControlsHidden: true,
 } );
 
 export const useToolsPanelContext = () =>
diff --git a/packages/components/src/tools-panel/stories/index.js b/packages/components/src/tools-panel/stories/index.js
index 230a407bff6fc..95a33301da56c 100644
--- a/packages/components/src/tools-panel/stories/index.js
+++ b/packages/components/src/tools-panel/stories/index.js
@@ -35,7 +35,10 @@ export const _default = () => {
 	return (
 		<PanelWrapperView>
 			<Panel>
-				<ToolsPanel label="Tools Panel" resetAll={ resetAll }>
+				<ToolsPanel
+					label="Tools Panel (default example)"
+					resetAll={ resetAll }
+				>
 					<ToolsPanelItem
 						className="single-column"
 						hasValue={ () => !! width }
@@ -66,6 +69,7 @@ export const _default = () => {
 						hasValue={ () => !! minHeight }
 						label="Minimum height"
 						onDeselect={ () => setMinHeight( undefined ) }
+						isShownByDefault={ true }
 					>
 						<UnitControl
 							label="Minimum height"
@@ -79,6 +83,54 @@ export const _default = () => {
 	);
 };
 
+export const WithOptionalItemsPlusIcon = () => {
+	const [ height, setHeight ] = useState();
+	const [ width, setWidth ] = useState();
+
+	const resetAll = () => {
+		setHeight( undefined );
+		setWidth( undefined );
+	};
+
+	return (
+		<PanelWrapperView>
+			<Panel>
+				<ToolsPanel
+					label="Tools Panel (optional items only)"
+					resetAll={ resetAll }
+				>
+					<ToolsPanelItem
+						className="single-column"
+						hasValue={ () => !! width }
+						label="Width"
+						onDeselect={ () => setWidth( undefined ) }
+						isShownByDefault={ false }
+					>
+						<UnitControl
+							label="Width"
+							value={ width }
+							onChange={ ( next ) => setWidth( next ) }
+						/>
+					</ToolsPanelItem>
+					<ToolsPanelItem
+						className="single-column"
+						hasValue={ () => !! height }
+						label="Height"
+						onDeselect={ () => setHeight( undefined ) }
+						isShownByDefault={ false }
+					>
+						<UnitControl
+							label="Height"
+							value={ height }
+							onChange={ ( next ) => setHeight( next ) }
+						/>
+					</ToolsPanelItem>
+				</ToolsPanel>
+			</Panel>
+		</PanelWrapperView>
+	);
+};
+
 const { Fill: ToolsPanelItems, Slot } = createSlotFill( 'ToolsPanelSlot' );
 const panelId = 'unique-tools-panel-id';
 
diff --git a/packages/components/src/tools-panel/test/index.js b/packages/components/src/tools-panel/test/index.js
index b8aaba1914972..f8379fe4d551d 100644
--- a/packages/components/src/tools-panel/test/index.js
+++ b/packages/components/src/tools-panel/test/index.js
@@ -139,10 +139,17 @@ const renderPanel = () => {
 	);
 };
 
-// Helper to find the menu button and simulate a user click.
+/**
+ * Helper to find the menu button and simulate a user click.
+ *
+ * @return {HTMLElement} The menuButton.
+ */
 const openDropdownMenu = () => {
-	const menuButton = screen.getByLabelText( defaultProps.label );
+	const menuButton = screen.getByRole( 'button', {
+		name: /view([\w\s]+)options/i,
+	} );
 	fireEvent.click( menuButton );
+	return menuButton;
 };
 
 // Opens dropdown then selects the menu item by label before simulating a click.
@@ -212,7 +219,7 @@ describe( 'ToolsPanel', () => {
 		it( 'should render panel menu when at least one panel item', () => {
 			renderPanel();
 
-			const menuButton = screen.getByLabelText( defaultProps.label );
+			const menuButton = openDropdownMenu();
 			expect( menuButton ).toBeInTheDocument();
 		} );
 
@@ -509,4 +516,47 @@ describe( 'ToolsPanel', () => {
 			expect( items[ 1 ] ).toHaveTextContent( 'Item 2' );
 		} );
 	} );
+
+	describe( 'panel header icon toggle', () => {
+		const optionalControls = {
+			attributes: { value: false },
+			hasValue: jest.fn().mockImplementation( () => {
+				return !! optionalControls.attributes.value;
+			} ),
+			label: 'Optional',
+			onDeselect: jest.fn(),
+			onSelect: jest.fn(),
+			isShownByDefault: false,
+		};
+
+		it( 'should render appropriate icons for the dropdown menu', async () => {
+			render(
+				<ToolsPanel { ...defaultProps }>
+					<ToolsPanelItem { ...optionalControls }>
+						<div>Optional control</div>
+					</ToolsPanelItem>
+				</ToolsPanel>
+			);
+
+			// There are unactivated, optional menu items in the Tools Panel dropdown.
+			const optionsHiddenIcon = screen.getByRole( 'button', {
+				name: 'View and add options',
+			} );
+
+			expect( optionsHiddenIcon ).toBeInTheDocument();
+
+			await selectMenuItem( optionalControls.label );
+
+			// There are now NO unactivated, optional menu items in the Tools Panel dropdown.
+			expect(
+				screen.queryByRole( 'button', { name: 'View and add options' } )
+			).not.toBeInTheDocument();
+
+			const optionsDisplayedIcon = screen.getByRole( 'button', {
+				name: 'View options',
+			} );
+
+			expect( optionsDisplayedIcon ).toBeInTheDocument();
+		} );
+	} );
 } );
diff --git a/packages/components/src/tools-panel/tools-panel-header/component.tsx b/packages/components/src/tools-panel/tools-panel-header/component.tsx
index 3204615434b4b..537578c93da0c 100644
--- a/packages/components/src/tools-panel/tools-panel-header/component.tsx
+++ b/packages/components/src/tools-panel/tools-panel-header/component.tsx
@@ -7,8 +7,8 @@ import type { Ref } from 'react';
 /**
  * WordPress dependencies
  */
-import { check, reset, moreVertical } from '@wordpress/icons';
-import { __, sprintf } from '@wordpress/i18n';
+import { check, reset, moreVertical, plus } from '@wordpress/icons';
+import { __, _x, sprintf } from '@wordpress/i18n';
 
 /**
  * Internal dependencies
@@ -118,6 +118,7 @@ const ToolsPanelHeader = (
 	const {
 		dropdownMenuClassName,
 		hasMenuItems,
+		areAllOptionalControlsHidden,
 		label: labelText,
 		menuItems,
 		resetAll,
@@ -131,14 +132,21 @@ const ToolsPanelHeader = (
 
 	const defaultItems = Object.entries( menuItems?.default || {} );
 	const optionalItems = Object.entries( menuItems?.optional || {} );
+	const dropDownMenuIcon = areAllOptionalControlsHidden ? plus : moreVertical;
+	const dropDownMenuLabelText = areAllOptionalControlsHidden
+		? _x(
+				'View and add options',
+				'Button label to reveal tool panel options'
+		  )
+		: _x( 'View options', 'Button label to reveal tool panel options' );
 
 	return (
 		<h2 { ...headerProps } ref={ forwardedRef }>
 			{ labelText }
 			{ hasMenuItems && (
 				<DropdownMenu
-					icon={ moreVertical }
-					label={ labelText }
+					icon={ dropDownMenuIcon }
+					label={ dropDownMenuLabelText }
 					menuProps={ { className: dropdownMenuClassName } }
 				>
 					{ ( { onClose = noop } ) => (
diff --git a/packages/components/src/tools-panel/tools-panel-header/hook.ts b/packages/components/src/tools-panel/tools-panel-header/hook.ts
index f31e8cb6372df..064f324c163be 100644
--- a/packages/components/src/tools-panel/tools-panel-header/hook.ts
+++ b/packages/components/src/tools-panel/tools-panel-header/hook.ts
@@ -29,12 +29,17 @@ export function useToolsPanelHeader(
 		return cx( styles.DropdownMenu );
 	}, [] );
 
-	const { menuItems, hasMenuItems } = useToolsPanelContext();
+	const {
+		menuItems,
+		hasMenuItems,
+		areAllOptionalControlsHidden,
+	} = useToolsPanelContext();
 
 	return {
 		...otherProps,
 		dropdownMenuClassName,
 		hasMenuItems,
+		areAllOptionalControlsHidden,
 		menuItems,
 		className: classes,
 	};
diff --git a/packages/components/src/tools-panel/tools-panel/hook.ts b/packages/components/src/tools-panel/tools-panel/hook.ts
index afbf3174fae90..ab0f29c034830 100644
--- a/packages/components/src/tools-panel/tools-panel/hook.ts
+++ b/packages/components/src/tools-panel/tools-panel/hook.ts
@@ -109,17 +109,15 @@ export function useToolsPanel(
 		} );
 	};
 
-	// Track whether all optional controls are displayed or not.
-	// If no optional controls are present, then none are hidden and this will
-	// be `false`.
+	// Whether all optional menu items are hidden or not must be tracked
+	// in order to later determine if the panel display is empty and handle
+	// conditional display of a plus icon to indicate the presence of further
+	// menu items.
 	const [
 		areAllOptionalControlsHidden,
 		setAreAllOptionalControlsHidden,
 	] = useState( false );
 
-	// We need to track whether any optional menu items are active to later
-	// determine whether the panel is currently empty and any inner wrapper
-	// should be hidden.
 	useEffect( () => {
 		if ( menuItems.optional ) {
 			const optionalItems = Object.entries( menuItems.optional );
@@ -203,6 +201,7 @@ export function useToolsPanel(
 		registerPanelItem,
 		deregisterPanelItem,
 		flagItemCustomization,
+		areAllOptionalControlsHidden,
 		hasMenuItems: !! panelItems.length,
 		isResetting: isResetting.current,
 		shouldRenderPlaceholderItems,
diff --git a/packages/components/src/tools-panel/types.ts b/packages/components/src/tools-panel/types.ts
index 1617f32f313bc..374c98495c8c7 100644
--- a/packages/components/src/tools-panel/types.ts
+++ b/packages/components/src/tools-panel/types.ts
@@ -127,6 +127,7 @@ export type ToolsPanelContext = {
 	flagItemCustomization: ( label: string ) => void;
 	isResetting: boolean;
 	shouldRenderPlaceholderItems: boolean;
+	areAllOptionalControlsHidden: boolean;
 };
 
 export type ToolsPanelControlsGroupProps = {