diff --git a/CHANGELOG.md b/CHANGELOG.md
index ca5a11c79d..668b86469a 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -4,8 +4,11 @@ Framer Motion adheres to [Semantic Versioning](http://semver.org/).
 
 ## [5.0.2] 2021-11-02
 
+### Fixed
+
 -   Convert x/y from percent to pixels before drag. [Issue](https://github.com/framer/motion/issues/424)
 -   Dynamic functions passed to `controls.start()` can now return variant names. [Issue](https://github.com/framer/motion/issues/503)
+-   Factors in padding when measuring elements for `width`/`height` unit conversion. [Issue](https://github.com/framer/motion/issues/368)
 
 ## [5.0.1] 2021-11-01
 
diff --git a/dev/examples/Animation-height-auto-padding.tsx b/dev/examples/Animation-height-auto-padding.tsx
new file mode 100644
index 0000000000..d126bcf531
--- /dev/null
+++ b/dev/examples/Animation-height-auto-padding.tsx
@@ -0,0 +1,59 @@
+import * as React from "react"
+import { useState } from "react"
+import { motion, AnimatePresence } from "@framer"
+
+export const App = () => {
+    const [isExpanded, setExpanded] = useState(false)
+
+    return (
+        <div className="example-container">
+            <AnimatePresence>
+                {isExpanded ? (
+                    <motion.div
+                        animate={{
+                            height: "auto",
+                            opacity: 1,
+                            paddingTop: 30,
+                            paddingBottom: 30,
+                        }}
+                        exit={{
+                            height: 0,
+                            opacity: 0,
+                            paddingTop: 0,
+                            paddingBottom: 0,
+                        }}
+                        initial={{
+                            height: 0,
+                            opacity: 0,
+                            paddingTop: 0,
+                            paddingBottom: 0,
+                        }}
+                        style={{ background: "white", width: 200 }}
+                    >
+                        Test
+                    </motion.div>
+                ) : null}
+            </AnimatePresence>
+            <button style={{}} onClick={() => setExpanded(!isExpanded)}>
+                Toggle
+            </button>
+            <style>{styles}</style>
+        </div>
+    )
+}
+
+const styles = `body {
+  background: white!important;
+  background-repeat: no-repeat;
+  padding: 0;
+  margin: 0;
+  display: flex;
+  justify-content: flex-start;
+  align-items: flex-start;
+}
+
+.example-container {
+  width: 320px;
+  padding: 20px;
+}
+}`
diff --git a/src/render/dom/utils/__tests__/unit-conversion.test.ts b/src/render/dom/utils/__tests__/unit-conversion.test.ts
new file mode 100644
index 0000000000..8765f579eb
--- /dev/null
+++ b/src/render/dom/utils/__tests__/unit-conversion.test.ts
@@ -0,0 +1,25 @@
+import { positionalValues } from "../unit-conversion"
+
+describe("Unit conversion", () => {
+    test("Correctly factors in padding when measuring width/height", () => {
+        const testDimensions = {
+            x: { min: 0, max: 100 },
+            y: { min: 0, max: 300 },
+        }
+        expect(
+            positionalValues.width(testDimensions, { paddingLeft: "50px" })
+        ).toBe(50)
+
+        expect(
+            positionalValues.width(testDimensions, { paddingRight: "25px" })
+        ).toBe(75)
+
+        expect(
+            positionalValues.height(testDimensions, { paddingTop: "50px" })
+        ).toBe(250)
+
+        expect(
+            positionalValues.height(testDimensions, { paddingBottom: "25px" })
+        ).toBe(275)
+    })
+})
diff --git a/src/render/dom/utils/unit-conversion.ts b/src/render/dom/utils/unit-conversion.ts
index 06ae02650d..f883777d01 100644
--- a/src/render/dom/utils/unit-conversion.ts
+++ b/src/render/dom/utils/unit-conversion.ts
@@ -93,20 +93,24 @@ function removeNonTranslationalTransform(visualElement: VisualElement) {
     return removedTransforms
 }
 
-const positionalValues: { [key: string]: GetActualMeasurementInPixels } = {
-    // Dimensions
-    width: ({ x }) => x.max - x.min,
-    height: ({ y }) => y.max - y.min,
-
-    top: (_bbox, { top }) => parseFloat(top as string),
-    left: (_bbox, { left }) => parseFloat(left as string),
-    bottom: ({ y }, { top }) => parseFloat(top as string) + (y.max - y.min),
-    right: ({ x }, { left }) => parseFloat(left as string) + (x.max - x.min),
-
-    // Transform
-    x: getTranslateFromMatrix(4, 13),
-    y: getTranslateFromMatrix(5, 14),
-}
+export const positionalValues: { [key: string]: GetActualMeasurementInPixels } =
+    {
+        // Dimensions
+        width: ({ x }, { paddingLeft = "0", paddingRight = "0" }) =>
+            x.max - x.min - parseFloat(paddingLeft) - parseFloat(paddingRight),
+        height: ({ y }, { paddingTop = "0", paddingBottom = "0" }) =>
+            y.max - y.min - parseFloat(paddingTop) - parseFloat(paddingBottom),
+
+        top: (_bbox, { top }) => parseFloat(top as string),
+        left: (_bbox, { left }) => parseFloat(left as string),
+        bottom: ({ y }, { top }) => parseFloat(top as string) + (y.max - y.min),
+        right: ({ x }, { left }) =>
+            parseFloat(left as string) + (x.max - x.min),
+
+        // Transform
+        x: getTranslateFromMatrix(4, 13),
+        y: getTranslateFromMatrix(5, 14),
+    }
 
 const convertChangedValueTypes = (
     target: TargetWithKeyframes,
@@ -116,9 +120,7 @@ const convertChangedValueTypes = (
     const originBbox = visualElement.measureViewportBox()
     const element = visualElement.getInstance()
     const elementComputedStyle = getComputedStyle(element)
-    const { display, top, left, bottom, right, transform } =
-        elementComputedStyle
-    const originComputedStyle = { top, left, bottom, right, transform }
+    const { display } = elementComputedStyle
 
     // If the element is currently set to display: "none", make it visible before
     // measuring the target bounding box
@@ -140,7 +142,7 @@ const convertChangedValueTypes = (
         const value = visualElement.getValue(key) as MotionValue
         setAndResetVelocity(
             value,
-            positionalValues[key](originBbox, originComputedStyle)
+            positionalValues[key](originBbox, elementComputedStyle)
         )
         target[key] = positionalValues[key](targetBbox, elementComputedStyle)
     })