diff --git a/frontend/src/components/network/hooks/useDiagramCommands.ts b/frontend/src/components/network/hooks/useDiagramCommands.ts
index 4d57e08b..0e728ffb 100644
--- a/frontend/src/components/network/hooks/useDiagramCommands.ts
+++ b/frontend/src/components/network/hooks/useDiagramCommands.ts
@@ -123,7 +123,7 @@ export function useDiagramCommands({
   const canDistribute = selectedNodes.length >= 3
 
   // ── Grouping ───────────────────────────────────────────────────────────
-  const groupSelection = useCallback(() => {
+  const groupSelection = useCallback((groupType: string = 'custom') => {
     if (selectedNodes.length < 2) return
     pushHistory(nodes, edges)
     const PADDING = 24
@@ -137,7 +137,7 @@ export function useDiagramCommands({
       type: 'group',
       position: { x: minX, y: minY },
       style: { width: maxX - minX, height: maxY - minY },
-      data: { label: 'Group', groupType: 'custom' },
+      data: { label: groupType.charAt(0).toUpperCase() + groupType.slice(1), groupType },
       selected: false,
     }
     setNodes(prev => [
diff --git a/frontend/src/components/network/panels/PropertiesPanel.tsx b/frontend/src/components/network/panels/PropertiesPanel.tsx
index d319a4da..229da3b7 100644
--- a/frontend/src/components/network/panels/PropertiesPanel.tsx
+++ b/frontend/src/components/network/panels/PropertiesPanel.tsx
@@ -4,6 +4,7 @@ import {
   AlignStartVertical, AlignCenterHorizontal, AlignEndVertical,
   AlignStartHorizontal, AlignCenterVertical, AlignEndHorizontal,
   AlignHorizontalSpaceAround, AlignVerticalSpaceAround,
+  BoxSelect, Ungroup,
 } from 'lucide-react'
 import { cn } from '@/lib/utils'
 import type { DeviceProperties, DiagramEdge } from '@/types'
@@ -31,6 +32,10 @@ interface PropertiesPanelProps {
   onDistributeV: () => void
   canAlign: boolean
   canDistribute: boolean
+  canGroup: boolean
+  canUngroup: boolean
+  onGroupSelection: (groupType: string) => void
+  onUngroupSelection: () => void
 }
 
 type NodeStatus = 'online' | 'offline' | 'degraded' | 'unknown'
@@ -84,6 +89,14 @@ function SectionDivider({ label }: { label: string }) {
   )
 }
 
+const GROUP_TYPES = [
+  { value: 'subnet', label: 'Subnet' },
+  { value: 'vlan',   label: 'VLAN' },
+  { value: 'site',   label: 'Site' },
+  { value: 'dmz',    label: 'DMZ' },
+  { value: 'custom', label: 'Custom' },
+]
+
 export function PropertiesPanel({
   selectedNode,
   selectedEdge,
@@ -105,8 +118,13 @@ export function PropertiesPanel({
   onDistributeV,
   canAlign,
   canDistribute,
+  canGroup,
+  canUngroup,
+  onGroupSelection,
+  onUngroupSelection,
 }: PropertiesPanelProps) {
   const [deleteConfirm, setDeleteConfirm] = useState(false)
+  const [pendingGroupType, setPendingGroupType] = useState('subnet')
 
   // Reset confirm state whenever the selection changes
   // eslint-disable-next-line react-hooks/set-state-in-effect
@@ -178,6 +196,38 @@ export function PropertiesPanel({
               </div>
             </div>
           )}
+          {(canGroup || canUngroup) && (
+            <div className="flex flex-col gap-2">
+              <div className="text-[10px] font-medium text-muted uppercase tracking-wider">Grouping</div>
+              {canGroup && (
+                <div className="flex flex-col gap-1.5">
+                  <select
+                    value={pendingGroupType}
+                    onChange={e => setPendingGroupType(e.target.value)}
+                    className="w-full rounded border border-default bg-input px-2 py-1.5 text-xs text-primary focus:border-accent focus:outline-none"
+                  >
+                    {GROUP_TYPES.map(gt => (
+                      <option key={gt.value} value={gt.value}>{gt.label}</option>
+                    ))}
+                  </select>
+                  <button
+                    onClick={() => onGroupSelection(pendingGroupType)}
+                    className="flex items-center justify-center gap-1.5 px-2 py-1.5 rounded bg-elevated hover:bg-card border border-default hover:border-hover transition-colors text-muted-foreground hover:text-primary text-xs"
+                  >
+                    <BoxSelect size={13} /> Group into {GROUP_TYPES.find(g => g.value === pendingGroupType)?.label}
+                  </button>
+                </div>
+              )}
+              {canUngroup && (
+                <button
+                  onClick={onUngroupSelection}
+                  className="flex items-center justify-center gap-1.5 px-2 py-1.5 rounded bg-elevated hover:bg-card border border-default hover:border-hover transition-colors text-muted-foreground hover:text-primary text-xs"
+                >
+                  <Ungroup size={13} /> Ungroup
+                </button>
+              )}
+            </div>
+          )}
         </div>
       </div>
     )
diff --git a/frontend/src/pages/NetworkDiagrams/DiagramEditor.tsx b/frontend/src/pages/NetworkDiagrams/DiagramEditor.tsx
index 5259f39a..a810cd93 100644
--- a/frontend/src/pages/NetworkDiagrams/DiagramEditor.tsx
+++ b/frontend/src/pages/NetworkDiagrams/DiagramEditor.tsx
@@ -399,11 +399,22 @@ function DiagramEditorInner() {
 
   const handlePaneContextMenu = useCallback((event: MouseEvent | React.MouseEvent) => {
     event.preventDefault()
-    setContextMenu({
-      type: 'canvas',
-      position: { x: event.clientX, y: event.clientY },
-    })
-  }, [])
+    // Group nodes pass pointer events through to children, so right-clicking a group
+    // may fire onPaneContextMenu instead of onNodeContextMenu. If nodes are selected,
+    // show the node context menu so group/align/ungroup options are accessible.
+    const selected = getNodes().filter(n => n.selected)
+    if (selected.length > 0) {
+      setContextMenu({
+        type: 'node',
+        position: { x: event.clientX, y: event.clientY },
+      })
+    } else {
+      setContextMenu({
+        type: 'canvas',
+        position: { x: event.clientX, y: event.clientY },
+      })
+    }
+  }, [getNodes])
 
   const closeContextMenu = useCallback(() => {
     setContextMenu(null)
@@ -735,6 +746,10 @@ function DiagramEditorInner() {
           onDistributeV={diagramCommands.distributeVertically}
           canAlign={diagramCommands.canAlign}
           canDistribute={diagramCommands.canDistribute}
+          canGroup={diagramCommands.canGroup}
+          canUngroup={diagramCommands.canUngroup}
+          onGroupSelection={diagramCommands.groupSelection}
+          onUngroupSelection={diagramCommands.ungroupSelection}
         />
       </div>
       {contextMenu && (