diff --git a/cspell.json b/cspell.json
index 236d02cc..087ede4e 100644
--- a/cspell.json
+++ b/cspell.json
@@ -98,6 +98,7 @@
     "minlength",
     "monospace",
     "mousedown",
+    "mousemove",
     "mouseup",
     "multiselectable",
     "nextjs",
diff --git a/docs/pages/components/popup.md b/docs/pages/components/popup.md
index 5a35c0c6..f378a539 100644
--- a/docs/pages/components/popup.md
+++ b/docs/pages/components/popup.md
@@ -1511,3 +1511,178 @@ const App = () => {
   );
 };
 ```
+
+### Virtual Elements
+
+In most cases, popups are anchored to an actual element. Sometimes, it can be useful to anchor them to a non-element. To do this, you can pass a `VirtualElement` to the anchor property. A virtual element must contain a function called `getBoundingClientRect()` that returns a [`DOMRect`](https://developer.mozilla.org/en-US/docs/Web/API/DOMRect) object as shown below.
+
+```ts
+const virtualElement = {
+  getBoundingClientRect() {
+    // ...
+    return { width, height, x, y, top, left, right, bottom };
+  }
+};
+```
+
+This example anchors a popup to the mouse cursor using a virtual element. As such, a mouse is required to properly view it.
+
+```html:preview
+<div class="popup-virtual-element">
+  <sl-popup placement="right-start">
+    <div class="circle"></div>
+  </sl-popup>
+
+  <sl-switch>Highlight mouse cursor</sl-switch>
+</div>
+
+<script>
+  const container = document.querySelector('.popup-virtual-element');
+  const popup = container.querySelector('sl-popup');
+  const circle = container.querySelector('.circle');
+  const enabled = container.querySelector('sl-switch');
+  let clientX = 0;
+  let clientY = 0;
+
+  // Set the virtual element as a property
+  popup.anchor = {
+    getBoundingClientRect() {
+      return {
+        width: 0,
+        height: 0,
+        x: clientX,
+        y: clientY,
+        top: clientY,
+        left: clientX,
+        right: clientX,
+        bottom: clientY
+      };
+    }
+  };
+
+  // Only activate the popup when the switch is checked
+  enabled.addEventListener('sl-change', () => {
+    popup.active = enabled.checked;
+  });
+
+  // Listen for the mouse to move
+  document.addEventListener('mousemove', handleMouseMove);
+
+  // Update the virtual element as the mouse moves
+  function handleMouseMove(event) {
+    clientX = event.clientX;
+    clientY = event.clientY;
+
+    // Reposition the popup when the virtual anchor moves
+    if (popup.active) {
+      popup.reposition();
+    }
+  }
+</script>
+
+<style>
+  /* If you need to set a z-index, set it on the popup part like this */
+  .popup-virtual-element sl-popup::part(popup) {
+    z-index: 1000;
+    pointer-events: none;
+  }
+
+  .popup-virtual-element .circle {
+    width: 100px;
+    height: 100px;
+    border: solid 4px var(--sl-color-primary-600);
+    border-radius: 50%;
+    translate: -50px -50px;
+    animation: 1s virtual-cursor infinite;
+  }
+
+  @keyframes virtual-cursor {
+    0% { scale: 1; }
+    50% { scale: 1.1; }
+  }
+</style>
+```
+
+```jsx:react
+import { useRef, useState } from 'react';
+import { SlPopup, SlSwitch } from '@shoelace-style/shoelace/dist/react';
+
+const css = `
+  /* If you need to set a z-index, set it on the popup part like this */
+  .popup-virtual-element sl-popup::part(popup) {
+    z-index: 1000;
+    pointer-events: none;
+  }
+
+  .popup-virtual-element .circle {
+    width: 100px;
+    height: 100px;
+    border: solid 4px var(--sl-color-primary-600);
+    border-radius: 50%;
+    translate: -50px -50px;
+    animation: 1s virtual-cursor infinite;
+  }
+
+  @keyframes virtual-cursor {
+    0% { scale: 1; }
+    50% { scale: 1.1; }
+  }
+`;
+
+const App = () => {
+  const [enabled, setEnabled] = useState(false);
+  const [clientX, setClientX] = useState(0);
+  const [clientY, setClientY] = useState(0);
+  const popup = useRef(null);
+  const circle = useRef(null);
+  const virtualElement = {
+    getBoundingClientRect() {
+      return {
+        width: 0,
+        height: 0,
+        x: clientX,
+        y: clientY,
+        top: clientY,
+        left: clientX,
+        right: clientX,
+        bottom: clientY
+      };
+    }
+  };
+
+  // Listen for the mouse to move
+  document.addEventListener('mousemove', handleMouseMove);
+
+  // Update the virtual element as the mouse moves
+  function handleMouseMove(event) {
+    setClientX(event.clientX);
+    setClientY(event.clientY);
+
+    // Reposition the popup when the virtual anchor moves
+    if (popup.active) {
+      popup.current.reposition();
+    }
+  }
+
+  return (
+    <>
+      <div className="popup-virtual-element">
+        <SlPopup
+          ref={popup}
+          placement="right-start"
+          active={enabled}
+          anchor={virtualElement}
+        >
+          <div ref={circle} className="circle" />
+        </SlPopup>
+
+        <SlSwitch checked={enabled} onSlChange={event => setEnabled(event.target.checked)}>
+          Highlight mouse cursor
+        </SlSwitch>
+      </div>
+
+      <style>{css}</style>
+    </>
+  );
+};
+```
diff --git a/docs/pages/resources/changelog.md b/docs/pages/resources/changelog.md
index 88a5c73d..00ca8b2e 100644
--- a/docs/pages/resources/changelog.md
+++ b/docs/pages/resources/changelog.md
@@ -16,6 +16,7 @@ New versions of Shoelace are released as-needed and generally occur when a criti
 
 - Added tests for `<sl-qr-code>` [#1416]
 - Added support for pressing [[Space]] to select/toggle selected `<sl-menu-item>` elements [#1429]
+- Added support for virtual elements in `<sl-popup>` [#1449]
 - Fixed a bug in focus trapping of modal elements like `<sl-dialog>`. We now manually handle focus ordering as well as added `offsetParent()` check for tabbable boundaries in Safari. Test cases added for `<sl-dialog>` inside a shadowRoot [#1403]
 - Fixed a bug in `valueAsDate` on `<sl-input>` where it would always set `type="date"` for the underlying `<input>` element. It now falls back to the native browser implementation for the in-memory input. This may cause unexpected behavior if you're using `valueAsDate` on any input elements that aren't `type="date"`. [#1399]
 - Fixed a bug in `<sl-qr-code>` where the `background` attribute was never passed to the QR code [#1416]
diff --git a/scripts/build.js b/scripts/build.js
index 315d70ea..463bcd45 100644
--- a/scripts/build.js
+++ b/scripts/build.js
@@ -263,13 +263,16 @@ if (serve) {
   });
 
   // Rebuild and reload when source files change
-  bs.watch(['src/**/!(*.test).*']).on('change', async filename => {
+  bs.watch('src/**/!(*.test).*').on('change', async filename => {
+    console.log('updated file: ', filename);
+
     try {
       const isTheme = /^src\/themes/.test(filename);
       const isStylesheet = /(\.css|\.styles\.ts)$/.test(filename);
 
       // Rebuild the source
-      await Promise.all([buildResults.map(result => result.rebuild())]);
+      const rebuildResults = buildResults.map(result => result.rebuild());
+      await Promise.all(rebuildResults);
 
       // Rebuild stylesheets when a theme file changes
       if (isTheme) {
diff --git a/src/components/popup/popup.ts b/src/components/popup/popup.ts
index f2ac9fb0..205a501f 100644
--- a/src/components/popup/popup.ts
+++ b/src/components/popup/popup.ts
@@ -35,11 +35,20 @@ import type { CSSResultGroup } from 'lit';
  *  popup can be before overflowing. Useful for positioning child elements that need to overflow. This property is only
  *  available when using `auto-size`.
  */
+
+export interface VirtualElement {
+  getBoundingClientRect: () => DOMRect;
+}
+
+function isVirtualElement(e: unknown): e is VirtualElement {
+  return e !== null && typeof e === 'object' && 'getBoundingClientRect' in e;
+}
+
 @customElement('sl-popup')
 export default class SlPopup extends ShoelaceElement {
   static styles: CSSResultGroup = styles;
 
-  private anchorEl: Element | null;
+  private anchorEl: Element | VirtualElement | null;
   private cleanup: ReturnType<typeof autoUpdate> | undefined;
 
   /** A reference to the internal popup container. Useful for animating and styling the popup with JavaScript. */
@@ -47,10 +56,11 @@ export default class SlPopup extends ShoelaceElement {
   @query('.popup__arrow') private arrowEl: HTMLElement;
 
   /**
-   * The element the popup will be anchored to. If the anchor lives outside of the popup, you can provide its `id` or a
-   * reference to it here. If the anchor lives inside the popup, use the `anchor` slot instead.
+   * The element the popup will be anchored to. If the anchor lives outside of the popup, you can provide the anchor
+   * element `id`, a DOM element reference, or a `VirtualElement`. If the anchor lives inside the popup, use the
+   * `anchor` slot instead.
    */
-  @property() anchor: Element | string;
+  @property() anchor: Element | string | VirtualElement;
 
   /**
    * Activates the positioning logic and shows the popup. When this attribute is removed, the positioning logic is torn
@@ -224,7 +234,7 @@ export default class SlPopup extends ShoelaceElement {
       // Locate the anchor by id
       const root = this.getRootNode() as Document | ShadowRoot;
       this.anchorEl = root.getElementById(this.anchor);
-    } else if (this.anchor instanceof Element) {
+    } else if (this.anchor instanceof Element || isVirtualElement(this.anchor)) {
       // Use the anchor's reference
       this.anchorEl = this.anchor;
     } else {