diff --git a/apps/openmw/mwgui/tooltips.cpp b/apps/openmw/mwgui/tooltips.cpp
index 635e9481b..6f8434535 100644
--- a/apps/openmw/mwgui/tooltips.cpp
+++ b/apps/openmw/mwgui/tooltips.cpp
@@ -17,6 +17,8 @@ ToolTips::ToolTips(WindowManager* windowManager) :
     , mWindowManager(windowManager)
     , mFullHelp(false)
     , mEnabled(true)
+    , mFocusToolTipX(0.0)
+    , mFocusToolTipY(0.0)
 {
     getWidget(mDynamicToolTipBox, "DynamicToolTipBox");
 
@@ -118,11 +120,8 @@ void ToolTips::onFrame(float frameDuration)
         {
             IntSize tooltipSize = getToolTipViaPtr();
 
-            // adjust tooltip size to fit its content, position it above the crosshair
-            /// \todo Slide the tooltip along the bounding box of the focused object (like in Morrowind)
-            /// relevant link: http://www.ogre3d.org/tikiwiki/ObjectTextDisplay
-            setCoord(std::max(0, viewSize.width/2 - (tooltipSize.width)/2),
-                    std::max(0, viewSize.height/2 - (tooltipSize.height) - 32),
+            setCoord(viewSize.width/2 - tooltipSize.width/2,
+                    std::max(0, int(mFocusToolTipY*viewSize.height - tooltipSize.height)),
                     tooltipSize.width,
                     tooltipSize.height);
         }
@@ -387,3 +386,9 @@ bool ToolTips::getFullHelp() const
 {
     return mFullHelp;
 }
+
+void ToolTips::setFocusObjectScreenCoords(float min_x, float min_y, float max_x, float max_y)
+{
+    mFocusToolTipX = (min_x + max_x) / 2;
+    mFocusToolTipY = min_y;
+}
diff --git a/apps/openmw/mwgui/tooltips.hpp b/apps/openmw/mwgui/tooltips.hpp
index 87b9e97bf..4be0baff9 100644
--- a/apps/openmw/mwgui/tooltips.hpp
+++ b/apps/openmw/mwgui/tooltips.hpp
@@ -45,6 +45,8 @@ namespace MWGui
         bool getFullHelp() const;
 
         void setFocusObject(const MWWorld::Ptr& focus);
+        void setFocusObjectScreenCoords(float min_x, float min_y, float max_x, float max_y);
+        ///< set the screen-space position of the tooltip for focused object 
 
         static std::string getValueString(const int value, const std::string& prefix);
         ///< @return "prefix: value" or "" if value is 0
@@ -73,6 +75,9 @@ namespace MWGui
         MyGUI::IntSize createToolTip(const ToolTipInfo& info);
         ///< @return requested tooltip size
 
+        float mFocusToolTipX;
+        float mFocusToolTipY;
+
         bool mGameMode;
 
         bool mEnabled;
diff --git a/apps/openmw/mwgui/window_manager.cpp b/apps/openmw/mwgui/window_manager.cpp
index bb533e698..c93d5303c 100644
--- a/apps/openmw/mwgui/window_manager.cpp
+++ b/apps/openmw/mwgui/window_manager.cpp
@@ -540,6 +540,11 @@ void WindowManager::setFocusObject(const MWWorld::Ptr& focus)
     mToolTips->setFocusObject(focus);
 }
 
+void WindowManager::setFocusObjectScreenCoords(float min_x, float min_y, float max_x, float max_y)
+{
+    mToolTips->setFocusObjectScreenCoords(min_x, min_y, max_x, max_y);
+}
+
 void WindowManager::toggleFullHelp()
 {
     mToolTips->toggleFullHelp();
diff --git a/apps/openmw/mwgui/window_manager.hpp b/apps/openmw/mwgui/window_manager.hpp
index 5dfcf6470..cff93266c 100644
--- a/apps/openmw/mwgui/window_manager.hpp
+++ b/apps/openmw/mwgui/window_manager.hpp
@@ -165,6 +165,7 @@ namespace MWGui
     void setPlayerDir(const float x, const float y); ///< set player view direction in map space
 
     void setFocusObject(const MWWorld::Ptr& focus);
+    void setFocusObjectScreenCoords(float min_x, float min_y, float max_x, float max_y);
 
     void setMouseVisible(bool visible);
     void setDragDrop(bool dragDrop);
diff --git a/apps/openmw/mwrender/renderingmanager.cpp b/apps/openmw/mwrender/renderingmanager.cpp
index a95a179c6..f795ed372 100644
--- a/apps/openmw/mwrender/renderingmanager.cpp
+++ b/apps/openmw/mwrender/renderingmanager.cpp
@@ -518,4 +518,43 @@ void RenderingManager::switchToExterior()
     mRendering.getScene()->setCameraRelativeRendering(true);
 }
 
+Ogre::Vector4 RenderingManager::boundingBoxToScreen(Ogre::AxisAlignedBox bounds)
+{
+    Ogre::Matrix4 mat = mRendering.getCamera()->getViewMatrix();
+
+    const Ogre::Vector3* corners = bounds.getAllCorners();
+
+    float min_x = 1.0f, max_x = 0.0f, min_y = 1.0f, max_y = 0.0f;
+
+    // expand the screen-space bounding-box so that it completely encloses 
+    // the object's AABB
+    for (int i=0; i<8; i++)
+    {
+        Ogre::Vector3 corner = corners[i];
+
+        // multiply the AABB corner vertex by the view matrix to 
+        // get a camera-space vertex
+        corner = mat * corner;
+
+        // make 2D relative/normalized coords from the view-space vertex
+        // by dividing out the Z (depth) factor -- this is an approximation
+        float x = corner.x / corner.z + 0.5;
+        float y = corner.y / corner.z + 0.5;
+
+        if (x < min_x) 
+        min_x = x;
+
+        if (x > max_x) 
+        max_x = x;
+
+        if (y < min_y) 
+        min_y = y;
+
+        if (y > max_y) 
+        max_y = y;
+    }
+
+    return Vector4(min_x, min_y, max_x, max_y);
+}
+
 } // namespace
diff --git a/apps/openmw/mwrender/renderingmanager.hpp b/apps/openmw/mwrender/renderingmanager.hpp
index 0d11b3d57..8b457997d 100644
--- a/apps/openmw/mwrender/renderingmanager.hpp
+++ b/apps/openmw/mwrender/renderingmanager.hpp
@@ -151,6 +151,10 @@ class RenderingManager: private RenderingInterface {
     ///< Skip the animation for the given MW-reference for one frame. Calls to this function for
     /// references that are currently not in the rendered scene should be ignored.
 
+    Ogre::Vector4 boundingBoxToScreen(Ogre::AxisAlignedBox bounds);
+    ///< transform the specified bounding box (in world coordinates) into screen coordinates.
+    /// @return packed vector4 (min_x, min_y, max_x, max_y)
+
   private:
 
     void setAmbientMode();
diff --git a/apps/openmw/mwworld/world.cpp b/apps/openmw/mwworld/world.cpp
index d2b687742..0474d894c 100644
--- a/apps/openmw/mwworld/world.cpp
+++ b/apps/openmw/mwworld/world.cpp
@@ -768,7 +768,24 @@ namespace MWWorld
         // inform the GUI about focused object
         try
         {
-            MWBase::Environment::get().getWindowManager()->setFocusObject(getPtrViaHandle(mFacedHandle));
+            MWWorld::Ptr object = getPtrViaHandle(mFacedHandle);
+            MWBase::Environment::get().getWindowManager()->setFocusObject(object);
+
+            // retrieve object dimensions so we know where to place the floating label
+            Ogre::SceneNode* node = object.getRefData().getBaseNode();
+            Ogre::AxisAlignedBox bounds;
+            int i;
+            for (i=0; i<node->numAttachedObjects(); ++i)
+            {
+                Ogre::MovableObject* ob = node->getAttachedObject(i);
+                bounds.merge(ob->getWorldBoundingBox());
+            }
+            if (bounds.isFinite())
+            {
+                Vector4 screenCoords = mRendering->boundingBoxToScreen(bounds);
+                MWBase::Environment::get().getWindowManager()->setFocusObjectScreenCoords(
+                    screenCoords[0], screenCoords[1], screenCoords[2], screenCoords[3]);
+            }
         }
         catch (std::runtime_error&)
         {