diff --git a/packages/core/package.json b/packages/core/package.json
index de1551a103..5fea095acd 100644
--- a/packages/core/package.json
+++ b/packages/core/package.json
@@ -84,7 +84,7 @@
     "prosemirror-model": "^1.23.0",
     "prosemirror-state": "^1.4.3",
     "prosemirror-tables": "^1.6.1",
-    "prosemirror-transform": "^1.9.0",
+    "prosemirror-transform": "^1.10.2",
     "prosemirror-view": "^1.33.7",
     "rehype-format": "^5.0.0",
     "rehype-parse": "^8.0.4",
diff --git a/packages/core/src/api/clipboard/__snapshots__/external/pasteEndOfParagraph.html b/packages/core/src/api/clipboard/__snapshots__/external/pasteEndOfParagraph.html
new file mode 100644
index 0000000000..326207757a
--- /dev/null
+++ b/packages/core/src/api/clipboard/__snapshots__/external/pasteEndOfParagraph.html
@@ -0,0 +1,96 @@
+[
+  {
+    "children": [],
+    "content": [
+      {
+        "styles": {},
+        "text": "ParagraphParagraph",
+        "type": "text",
+      },
+    ],
+    "id": "0",
+    "props": {
+      "backgroundColor": "default",
+      "textAlignment": "left",
+      "textColor": "default",
+    },
+    "type": "paragraph",
+  },
+  {
+    "children": [],
+    "content": {
+      "columnWidths": [
+        undefined,
+        undefined,
+      ],
+      "rows": [
+        {
+          "cells": [
+            [
+              {
+                "styles": {},
+                "text": "Table Cell",
+                "type": "text",
+              },
+            ],
+            [
+              {
+                "styles": {},
+                "text": "Table Cell",
+                "type": "text",
+              },
+            ],
+          ],
+        },
+        {
+          "cells": [
+            [
+              {
+                "styles": {},
+                "text": "Table Cell",
+                "type": "text",
+              },
+            ],
+            [
+              {
+                "styles": {},
+                "text": "Table Cell",
+                "type": "text",
+              },
+            ],
+          ],
+        },
+      ],
+      "type": "tableContent",
+    },
+    "id": "1",
+    "props": {
+      "textColor": "default",
+    },
+    "type": "table",
+  },
+  {
+    "children": [],
+    "content": [
+      {
+        "styles": {},
+        "text": "Custom Paragraph",
+        "type": "text",
+      },
+    ],
+    "id": "2",
+    "props": {},
+    "type": "customParagraph",
+  },
+  {
+    "children": [],
+    "content": [],
+    "id": "3",
+    "props": {
+      "backgroundColor": "default",
+      "textAlignment": "left",
+      "textColor": "default",
+    },
+    "type": "paragraph",
+  },
+]
\ No newline at end of file
diff --git a/packages/core/src/api/clipboard/__snapshots__/external/pasteEndOfParagraphText.html b/packages/core/src/api/clipboard/__snapshots__/external/pasteEndOfParagraphText.html
new file mode 100644
index 0000000000..326207757a
--- /dev/null
+++ b/packages/core/src/api/clipboard/__snapshots__/external/pasteEndOfParagraphText.html
@@ -0,0 +1,96 @@
+[
+  {
+    "children": [],
+    "content": [
+      {
+        "styles": {},
+        "text": "ParagraphParagraph",
+        "type": "text",
+      },
+    ],
+    "id": "0",
+    "props": {
+      "backgroundColor": "default",
+      "textAlignment": "left",
+      "textColor": "default",
+    },
+    "type": "paragraph",
+  },
+  {
+    "children": [],
+    "content": {
+      "columnWidths": [
+        undefined,
+        undefined,
+      ],
+      "rows": [
+        {
+          "cells": [
+            [
+              {
+                "styles": {},
+                "text": "Table Cell",
+                "type": "text",
+              },
+            ],
+            [
+              {
+                "styles": {},
+                "text": "Table Cell",
+                "type": "text",
+              },
+            ],
+          ],
+        },
+        {
+          "cells": [
+            [
+              {
+                "styles": {},
+                "text": "Table Cell",
+                "type": "text",
+              },
+            ],
+            [
+              {
+                "styles": {},
+                "text": "Table Cell",
+                "type": "text",
+              },
+            ],
+          ],
+        },
+      ],
+      "type": "tableContent",
+    },
+    "id": "1",
+    "props": {
+      "textColor": "default",
+    },
+    "type": "table",
+  },
+  {
+    "children": [],
+    "content": [
+      {
+        "styles": {},
+        "text": "Custom Paragraph",
+        "type": "text",
+      },
+    ],
+    "id": "2",
+    "props": {},
+    "type": "customParagraph",
+  },
+  {
+    "children": [],
+    "content": [],
+    "id": "3",
+    "props": {
+      "backgroundColor": "default",
+      "textAlignment": "left",
+      "textColor": "default",
+    },
+    "type": "paragraph",
+  },
+]
\ No newline at end of file
diff --git a/packages/core/src/api/clipboard/__snapshots__/external/pasteImage.html b/packages/core/src/api/clipboard/__snapshots__/external/pasteImage.html
new file mode 100644
index 0000000000..5bf0ff1271
--- /dev/null
+++ b/packages/core/src/api/clipboard/__snapshots__/external/pasteImage.html
@@ -0,0 +1,111 @@
+[
+  {
+    "children": [],
+    "content": [
+      {
+        "styles": {},
+        "text": "Paragraph",
+        "type": "text",
+      },
+    ],
+    "id": "0",
+    "props": {
+      "backgroundColor": "default",
+      "textAlignment": "left",
+      "textColor": "default",
+    },
+    "type": "paragraph",
+  },
+  {
+    "children": [],
+    "content": undefined,
+    "id": "4",
+    "props": {
+      "backgroundColor": "default",
+      "caption": "",
+      "name": "",
+      "previewWidth": 512,
+      "showPreview": true,
+      "textAlignment": "left",
+      "url": "exampleURL",
+    },
+    "type": "image",
+  },
+  {
+    "children": [],
+    "content": {
+      "columnWidths": [
+        undefined,
+        undefined,
+      ],
+      "rows": [
+        {
+          "cells": [
+            [
+              {
+                "styles": {},
+                "text": "Table Cell",
+                "type": "text",
+              },
+            ],
+            [
+              {
+                "styles": {},
+                "text": "Table Cell",
+                "type": "text",
+              },
+            ],
+          ],
+        },
+        {
+          "cells": [
+            [
+              {
+                "styles": {},
+                "text": "Table Cell",
+                "type": "text",
+              },
+            ],
+            [
+              {
+                "styles": {},
+                "text": "Table Cell",
+                "type": "text",
+              },
+            ],
+          ],
+        },
+      ],
+      "type": "tableContent",
+    },
+    "id": "1",
+    "props": {
+      "textColor": "default",
+    },
+    "type": "table",
+  },
+  {
+    "children": [],
+    "content": [
+      {
+        "styles": {},
+        "text": "Custom Paragraph",
+        "type": "text",
+      },
+    ],
+    "id": "2",
+    "props": {},
+    "type": "customParagraph",
+  },
+  {
+    "children": [],
+    "content": [],
+    "id": "3",
+    "props": {
+      "backgroundColor": "default",
+      "textAlignment": "left",
+      "textColor": "default",
+    },
+    "type": "paragraph",
+  },
+]
\ No newline at end of file
diff --git a/packages/core/src/api/clipboard/__snapshots__/external/pasteParagraphInCustomBlock.html b/packages/core/src/api/clipboard/__snapshots__/external/pasteParagraphInCustomBlock.html
new file mode 100644
index 0000000000..8b979aa417
--- /dev/null
+++ b/packages/core/src/api/clipboard/__snapshots__/external/pasteParagraphInCustomBlock.html
@@ -0,0 +1,96 @@
+[
+  {
+    "children": [],
+    "content": [
+      {
+        "styles": {},
+        "text": "Paragraph",
+        "type": "text",
+      },
+    ],
+    "id": "0",
+    "props": {
+      "backgroundColor": "default",
+      "textAlignment": "left",
+      "textColor": "default",
+    },
+    "type": "paragraph",
+  },
+  {
+    "children": [],
+    "content": {
+      "columnWidths": [
+        undefined,
+        undefined,
+      ],
+      "rows": [
+        {
+          "cells": [
+            [
+              {
+                "styles": {},
+                "text": "Table Cell",
+                "type": "text",
+              },
+            ],
+            [
+              {
+                "styles": {},
+                "text": "Table Cell",
+                "type": "text",
+              },
+            ],
+          ],
+        },
+        {
+          "cells": [
+            [
+              {
+                "styles": {},
+                "text": "Table Cell",
+                "type": "text",
+              },
+            ],
+            [
+              {
+                "styles": {},
+                "text": "Table Cell",
+                "type": "text",
+              },
+            ],
+          ],
+        },
+      ],
+      "type": "tableContent",
+    },
+    "id": "1",
+    "props": {
+      "textColor": "default",
+    },
+    "type": "table",
+  },
+  {
+    "children": [],
+    "content": [
+      {
+        "styles": {},
+        "text": "Paragraph",
+        "type": "text",
+      },
+    ],
+    "id": "2",
+    "props": {},
+    "type": "customParagraph",
+  },
+  {
+    "children": [],
+    "content": [],
+    "id": "3",
+    "props": {
+      "backgroundColor": "default",
+      "textAlignment": "left",
+      "textColor": "default",
+    },
+    "type": "paragraph",
+  },
+]
\ No newline at end of file
diff --git a/packages/core/src/api/clipboard/__snapshots__/external/pasteTable.html b/packages/core/src/api/clipboard/__snapshots__/external/pasteTable.html
new file mode 100644
index 0000000000..4e9713621a
--- /dev/null
+++ b/packages/core/src/api/clipboard/__snapshots__/external/pasteTable.html
@@ -0,0 +1,149 @@
+[
+  {
+    "children": [],
+    "content": [
+      {
+        "styles": {},
+        "text": "Paragraph",
+        "type": "text",
+      },
+    ],
+    "id": "0",
+    "props": {
+      "backgroundColor": "default",
+      "textAlignment": "left",
+      "textColor": "default",
+    },
+    "type": "paragraph",
+  },
+  {
+    "children": [],
+    "content": {
+      "columnWidths": [
+        undefined,
+        undefined,
+      ],
+      "rows": [
+        {
+          "cells": [
+            [
+              {
+                "styles": {},
+                "text": "Cell 1",
+                "type": "text",
+              },
+            ],
+            [
+              {
+                "styles": {},
+                "text": "Cell 2",
+                "type": "text",
+              },
+            ],
+          ],
+        },
+        {
+          "cells": [
+            [
+              {
+                "styles": {},
+                "text": "Cell 3",
+                "type": "text",
+              },
+            ],
+            [
+              {
+                "styles": {},
+                "text": "Cell 4",
+                "type": "text",
+              },
+            ],
+          ],
+        },
+      ],
+      "type": "tableContent",
+    },
+    "id": "4",
+    "props": {
+      "textColor": "default",
+    },
+    "type": "table",
+  },
+  {
+    "children": [],
+    "content": {
+      "columnWidths": [
+        undefined,
+        undefined,
+      ],
+      "rows": [
+        {
+          "cells": [
+            [
+              {
+                "styles": {},
+                "text": "Table Cell",
+                "type": "text",
+              },
+            ],
+            [
+              {
+                "styles": {},
+                "text": "Table Cell",
+                "type": "text",
+              },
+            ],
+          ],
+        },
+        {
+          "cells": [
+            [
+              {
+                "styles": {},
+                "text": "Table Cell",
+                "type": "text",
+              },
+            ],
+            [
+              {
+                "styles": {},
+                "text": "Table Cell",
+                "type": "text",
+              },
+            ],
+          ],
+        },
+      ],
+      "type": "tableContent",
+    },
+    "id": "1",
+    "props": {
+      "textColor": "default",
+    },
+    "type": "table",
+  },
+  {
+    "children": [],
+    "content": [
+      {
+        "styles": {},
+        "text": "Custom Paragraph",
+        "type": "text",
+      },
+    ],
+    "id": "2",
+    "props": {},
+    "type": "customParagraph",
+  },
+  {
+    "children": [],
+    "content": [],
+    "id": "3",
+    "props": {
+      "backgroundColor": "default",
+      "textAlignment": "left",
+      "textColor": "default",
+    },
+    "type": "paragraph",
+  },
+]
\ No newline at end of file
diff --git a/packages/core/src/api/clipboard/__snapshots__/external/pasteTableInExistingTable.html b/packages/core/src/api/clipboard/__snapshots__/external/pasteTableInExistingTable.html
new file mode 100644
index 0000000000..2e6fbce5d2
--- /dev/null
+++ b/packages/core/src/api/clipboard/__snapshots__/external/pasteTableInExistingTable.html
@@ -0,0 +1,124 @@
+[
+  {
+    "children": [],
+    "content": [
+      {
+        "styles": {},
+        "text": "Paragraph",
+        "type": "text",
+      },
+    ],
+    "id": "0",
+    "props": {
+      "backgroundColor": "default",
+      "textAlignment": "left",
+      "textColor": "default",
+    },
+    "type": "paragraph",
+  },
+  {
+    "children": [],
+    "content": {
+      "columnWidths": [
+        undefined,
+        undefined,
+        undefined,
+      ],
+      "rows": [
+        {
+          "cells": [
+            [
+              {
+                "styles": {},
+                "text": "Table Cell",
+                "type": "text",
+              },
+            ],
+            [
+              {
+                "styles": {},
+                "text": "Table Cell",
+                "type": "text",
+              },
+            ],
+            [],
+          ],
+        },
+        {
+          "cells": [
+            [
+              {
+                "styles": {},
+                "text": "Table Cell",
+                "type": "text",
+              },
+            ],
+            [
+              {
+                "styles": {},
+                "text": "Cell 1",
+                "type": "text",
+              },
+            ],
+            [
+              {
+                "styles": {},
+                "text": "Cell 2",
+                "type": "text",
+              },
+            ],
+          ],
+        },
+        {
+          "cells": [
+            [],
+            [
+              {
+                "styles": {},
+                "text": "Cell 3",
+                "type": "text",
+              },
+            ],
+            [
+              {
+                "styles": {},
+                "text": "Cell 4",
+                "type": "text",
+              },
+            ],
+          ],
+        },
+      ],
+      "type": "tableContent",
+    },
+    "id": "1",
+    "props": {
+      "textColor": "default",
+    },
+    "type": "table",
+  },
+  {
+    "children": [],
+    "content": [
+      {
+        "styles": {},
+        "text": "Custom Paragraph",
+        "type": "text",
+      },
+    ],
+    "id": "2",
+    "props": {},
+    "type": "customParagraph",
+  },
+  {
+    "children": [],
+    "content": [],
+    "id": "3",
+    "props": {
+      "backgroundColor": "default",
+      "textAlignment": "left",
+      "textColor": "default",
+    },
+    "type": "paragraph",
+  },
+]
\ No newline at end of file
diff --git a/packages/core/src/api/clipboard/__snapshots__/childToParent.html b/packages/core/src/api/clipboard/__snapshots__/internal/childToParent.html
similarity index 100%
rename from packages/core/src/api/clipboard/__snapshots__/childToParent.html
rename to packages/core/src/api/clipboard/__snapshots__/internal/childToParent.html
diff --git a/packages/core/src/api/clipboard/__snapshots__/childrenToNextParent.html b/packages/core/src/api/clipboard/__snapshots__/internal/childrenToNextParent.html
similarity index 100%
rename from packages/core/src/api/clipboard/__snapshots__/childrenToNextParent.html
rename to packages/core/src/api/clipboard/__snapshots__/internal/childrenToNextParent.html
diff --git a/packages/core/src/api/clipboard/__snapshots__/childrenToNextParentsChildren.html b/packages/core/src/api/clipboard/__snapshots__/internal/childrenToNextParentsChildren.html
similarity index 100%
rename from packages/core/src/api/clipboard/__snapshots__/childrenToNextParentsChildren.html
rename to packages/core/src/api/clipboard/__snapshots__/internal/childrenToNextParentsChildren.html
diff --git a/packages/core/src/api/clipboard/__snapshots__/image.html b/packages/core/src/api/clipboard/__snapshots__/internal/image.html
similarity index 100%
rename from packages/core/src/api/clipboard/__snapshots__/image.html
rename to packages/core/src/api/clipboard/__snapshots__/internal/image.html
diff --git a/packages/core/src/api/clipboard/__snapshots__/multipleChildren.html b/packages/core/src/api/clipboard/__snapshots__/internal/multipleChildren.html
similarity index 100%
rename from packages/core/src/api/clipboard/__snapshots__/multipleChildren.html
rename to packages/core/src/api/clipboard/__snapshots__/internal/multipleChildren.html
diff --git a/packages/core/src/api/clipboard/__snapshots__/multipleStyledText.html b/packages/core/src/api/clipboard/__snapshots__/internal/multipleStyledText.html
similarity index 100%
rename from packages/core/src/api/clipboard/__snapshots__/multipleStyledText.html
rename to packages/core/src/api/clipboard/__snapshots__/internal/multipleStyledText.html
diff --git a/packages/core/src/api/clipboard/__snapshots__/nestedImage.html b/packages/core/src/api/clipboard/__snapshots__/internal/nestedImage.html
similarity index 100%
rename from packages/core/src/api/clipboard/__snapshots__/nestedImage.html
rename to packages/core/src/api/clipboard/__snapshots__/internal/nestedImage.html
diff --git a/packages/core/src/api/clipboard/__snapshots__/internal/paragraphInCustomBlock.html b/packages/core/src/api/clipboard/__snapshots__/internal/paragraphInCustomBlock.html
new file mode 100644
index 0000000000..c5c4d1fc71
--- /dev/null
+++ b/packages/core/src/api/clipboard/__snapshots__/internal/paragraphInCustomBlock.html
@@ -0,0 +1 @@
+Paragraph
\ No newline at end of file
diff --git a/packages/core/src/api/clipboard/__snapshots__/partialChildToParent.html b/packages/core/src/api/clipboard/__snapshots__/internal/partialChildToParent.html
similarity index 100%
rename from packages/core/src/api/clipboard/__snapshots__/partialChildToParent.html
rename to packages/core/src/api/clipboard/__snapshots__/internal/partialChildToParent.html
diff --git a/packages/core/src/api/clipboard/__snapshots__/styledText.html b/packages/core/src/api/clipboard/__snapshots__/internal/styledText.html
similarity index 100%
rename from packages/core/src/api/clipboard/__snapshots__/styledText.html
rename to packages/core/src/api/clipboard/__snapshots__/internal/styledText.html
diff --git a/packages/core/src/api/clipboard/__snapshots__/tableAllCells.html b/packages/core/src/api/clipboard/__snapshots__/internal/tableAllCells.html
similarity index 100%
rename from packages/core/src/api/clipboard/__snapshots__/tableAllCells.html
rename to packages/core/src/api/clipboard/__snapshots__/internal/tableAllCells.html
diff --git a/packages/core/src/api/clipboard/__snapshots__/tableCell.html b/packages/core/src/api/clipboard/__snapshots__/internal/tableCell.html
similarity index 100%
rename from packages/core/src/api/clipboard/__snapshots__/tableCell.html
rename to packages/core/src/api/clipboard/__snapshots__/internal/tableCell.html
diff --git a/packages/core/src/api/clipboard/__snapshots__/tableCellText.html b/packages/core/src/api/clipboard/__snapshots__/internal/tableCellText.html
similarity index 100%
rename from packages/core/src/api/clipboard/__snapshots__/tableCellText.html
rename to packages/core/src/api/clipboard/__snapshots__/internal/tableCellText.html
diff --git a/packages/core/src/api/clipboard/__snapshots__/tableRow.html b/packages/core/src/api/clipboard/__snapshots__/internal/tableRow.html
similarity index 100%
rename from packages/core/src/api/clipboard/__snapshots__/tableRow.html
rename to packages/core/src/api/clipboard/__snapshots__/internal/tableRow.html
diff --git a/packages/core/src/api/clipboard/__snapshots__/unstyledText.html b/packages/core/src/api/clipboard/__snapshots__/internal/unstyledText.html
similarity index 100%
rename from packages/core/src/api/clipboard/__snapshots__/unstyledText.html
rename to packages/core/src/api/clipboard/__snapshots__/internal/unstyledText.html
diff --git a/packages/core/src/api/clipboard/clipboardExternal.test.ts b/packages/core/src/api/clipboard/clipboardExternal.test.ts
new file mode 100644
index 0000000000..5ce02d9e56
--- /dev/null
+++ b/packages/core/src/api/clipboard/clipboardExternal.test.ts
@@ -0,0 +1,161 @@
+import { Node } from "prosemirror-model";
+import { Selection, TextSelection } from "prosemirror-state";
+import { afterAll, beforeAll, beforeEach, describe, expect, it } from "vitest";
+
+import { PartialBlock } from "../../blocks/defaultBlocks.js";
+import { BlockNoteEditor } from "../../editor/BlockNoteEditor.js";
+import { initializeESMDependencies } from "../../util/esmDependencies.js";
+import { doPaste } from "../testUtil/paste.js";
+import { schema } from "./testUtil.js";
+
+type SelectionTestCase = {
+  testName: string;
+  createSelection: (doc: Node) => Selection;
+} & (
+  | {
+      html: string;
+    }
+  | {
+      plainText: string;
+    }
+);
+
+// These tests are meant to test the pasting of external HTML in the editor.
+// Each test case has an HTML string to be pasted, and a selection in the editor
+// to paste at.
+describe("Test external clipboard HTML", () => {
+  const initialContent: PartialBlock<typeof schema.blockSchema>[] = [
+    {
+      type: "paragraph",
+      content: "Paragraph",
+    },
+    {
+      type: "table",
+      content: {
+        type: "tableContent",
+        rows: [
+          {
+            cells: ["Table Cell", "Table Cell"],
+          },
+          {
+            cells: ["Table Cell", "Table Cell"],
+          },
+        ],
+      },
+    },
+    {
+      type: "customParagraph",
+      content: "Custom Paragraph",
+    },
+    {
+      type: "paragraph",
+    },
+  ];
+
+  let editor: BlockNoteEditor<typeof schema.blockSchema>;
+  const div = document.createElement("div");
+
+  beforeEach(() => {
+    editor.replaceBlocks(editor.document, initialContent);
+  });
+
+  beforeAll(async () => {
+    (window as any).__TEST_OPTIONS = (window as any).__TEST_OPTIONS || {};
+
+    editor = BlockNoteEditor.create({ schema });
+    editor.mount(div);
+
+    await initializeESMDependencies();
+  });
+
+  afterAll(() => {
+    editor.mount(undefined);
+    editor._tiptapEditor.destroy();
+    editor = undefined as any;
+
+    delete (window as Window & { __TEST_OPTIONS?: any }).__TEST_OPTIONS;
+  });
+
+  // Sets the editor selection to the given start and end positions, then
+  // pastes the HTML and compares it the document after to a snapshot.
+  async function testPasteExternalHTML(testCase: SelectionTestCase) {
+    if (!editor.prosemirrorView) {
+      throw new Error("Editor view not initialized.");
+    }
+
+    editor.dispatch(
+      editor._tiptapEditor.state.tr.setSelection(
+        testCase.createSelection(editor.prosemirrorView.state.doc)
+      )
+    );
+
+    doPaste(
+      editor.prosemirrorView,
+      "plainText" in testCase ? testCase.plainText : "",
+      "html" in testCase ? testCase.html : "",
+      "plainText" in testCase,
+      new ClipboardEvent("paste")
+    );
+
+    expect(editor.document).toMatchFileSnapshot(
+      `./__snapshots__/external/${testCase.testName}.html`
+    );
+  }
+
+  const testCases: SelectionTestCase[] = [
+    {
+      testName: "pasteEndOfParagraph",
+      createSelection: (doc) => TextSelection.create(doc, 12),
+      html: `<p>Paragraph</p>`,
+    },
+    {
+      testName: "pasteEndOfParagraphText",
+      createSelection: (doc) => TextSelection.create(doc, 12),
+      plainText: `Paragraph`,
+    },
+    {
+      testName: "pasteImage",
+      createSelection: (doc) => TextSelection.create(doc, 12),
+      html: `<img src="exampleURL">`,
+    },
+    {
+      testName: "pasteTable",
+      createSelection: (doc) => TextSelection.create(doc, 12),
+      html: `<table>
+  <tr>
+    <td>Cell 1</td>
+    <td>Cell 2</td>
+  </tr>
+  <tr>
+    <td>Cell 3</td>
+    <td>Cell 4</td>
+  </tr>
+</table>`,
+    },
+    {
+      testName: "pasteTableInExistingTable",
+      createSelection: (doc) => TextSelection.create(doc, 73),
+      html: `<table>
+  <tr>
+    <td>Cell 1</td>
+    <td>Cell 2</td>
+  </tr>
+  <tr>
+    <td>Cell 3</td>
+    <td>Cell 4</td>
+  </tr>
+</table>`,
+    },
+    {
+      testName: "pasteParagraphInCustomBlock",
+      createSelection: (doc) => TextSelection.create(doc, 80, 96),
+      html: `<p>Paragraph</p>`,
+    },
+  ];
+
+  for (const testCase of testCases) {
+    it(`${testCase.testName}`, async () => {
+      await testPasteExternalHTML(testCase);
+    });
+  }
+});
diff --git a/packages/core/src/api/clipboard/clipboard.test.ts b/packages/core/src/api/clipboard/clipboardInternal.test.ts
similarity index 65%
rename from packages/core/src/api/clipboard/clipboard.test.ts
rename to packages/core/src/api/clipboard/clipboardInternal.test.ts
index 58a9d5da36..29b5393f07 100644
--- a/packages/core/src/api/clipboard/clipboard.test.ts
+++ b/packages/core/src/api/clipboard/clipboardInternal.test.ts
@@ -7,11 +7,13 @@ import { PartialBlock } from "../../blocks/defaultBlocks.js";
 import { BlockNoteEditor } from "../../editor/BlockNoteEditor.js";
 import { initializeESMDependencies } from "../../util/esmDependencies.js";
 import { doPaste } from "../testUtil/paste.js";
+import { schema } from "./testUtil.js";
 import { selectedFragmentToHTML } from "./toClipboard/copyExtension.js";
 
 type SelectionTestCase = {
   testName: string;
-  createSelection: (doc: Node) => Selection;
+  createCopySelection: (doc: Node) => Selection;
+  createPasteSelection?: (doc: Node) => Selection;
 };
 
 // These tests are meant to test the copying of user selections in the editor.
@@ -19,7 +21,7 @@ type SelectionTestCase = {
 // as they are represented in the BlockNote API, whereas here we want to test
 // ProseMirror/TipTap selections directly.
 describe("Test ProseMirror selection clipboard HTML", () => {
-  const initialContent: PartialBlock[] = [
+  const initialContent: PartialBlock<typeof schema.blockSchema>[] = [
     {
       type: "heading",
       props: {
@@ -138,9 +140,17 @@ describe("Test ProseMirror selection clipboard HTML", () => {
       //   },
       // ],
     },
+    {
+      type: "paragraph",
+      content: "Paragraph",
+    },
+    {
+      type: "customParagraph",
+      content: "Paragraph",
+    },
   ];
 
-  let editor: BlockNoteEditor;
+  let editor: BlockNoteEditor<typeof schema.blockSchema>;
   const div = document.createElement("div");
 
   beforeEach(() => {
@@ -150,7 +160,7 @@ describe("Test ProseMirror selection clipboard HTML", () => {
   beforeAll(async () => {
     (window as any).__TEST_OPTIONS = (window as any).__TEST_OPTIONS || {};
 
-    editor = BlockNoteEditor.create();
+    editor = BlockNoteEditor.create({ schema });
     editor.mount(div);
 
     await initializeESMDependencies();
@@ -173,7 +183,7 @@ describe("Test ProseMirror selection clipboard HTML", () => {
 
     editor.dispatch(
       editor._tiptapEditor.state.tr.setSelection(
-        testCase.createSelection(editor.prosemirrorView.state.doc)
+        testCase.createCopySelection(editor.prosemirrorView.state.doc)
       )
     );
 
@@ -183,9 +193,17 @@ describe("Test ProseMirror selection clipboard HTML", () => {
     );
 
     expect(externalHTML).toMatchFileSnapshot(
-      `./__snapshots__/${testCase.testName}.html`
+      `./__snapshots__/internal/${testCase.testName}.html`
     );
 
+    if (testCase.createPasteSelection) {
+      editor.dispatch(
+        editor._tiptapEditor.state.tr.setSelection(
+          testCase.createPasteSelection(editor.prosemirrorView.state.doc)
+        )
+      );
+    }
+
     const originalDocument = editor.document;
     doPaste(
       editor.prosemirrorView,
@@ -201,81 +219,85 @@ describe("Test ProseMirror selection clipboard HTML", () => {
 
   const testCases: SelectionTestCase[] = [
     // TODO: Consider adding test cases for nested blocks & double nested blocks.
-    // Selection spans all of first heading's children.
+    // Copy/paste all of first heading's children.
     {
       testName: "multipleChildren",
-      createSelection: (doc) => TextSelection.create(doc, 16, 78),
+      createCopySelection: (doc) => TextSelection.create(doc, 16, 78),
     },
-    // Selection spans from start of first heading to end of its first child.
+    // Copy/paste from start of first heading to end of its first child.
     {
       testName: "childToParent",
-      createSelection: (doc) => TextSelection.create(doc, 3, 34),
+      createCopySelection: (doc) => TextSelection.create(doc, 3, 34),
     },
-    // Selection spans from middle of first heading to the middle of its first
-    // child.
+    // Copy/paste from middle of first heading to the middle of its first child.
     {
       testName: "partialChildToParent",
-      createSelection: (doc) => TextSelection.create(doc, 6, 23),
+      createCopySelection: (doc) => TextSelection.create(doc, 6, 23),
     },
-    // Selection spans from start of first heading's first child to end of
-    // second heading's content (does not include second heading's children).
+    // Copy/paste from start of first heading's first child to end of second
+    // heading's content (does not include second heading's children).
     {
       testName: "childrenToNextParent",
-      createSelection: (doc) => TextSelection.create(doc, 16, 93),
+      createCopySelection: (doc) => TextSelection.create(doc, 16, 93),
     },
-    // Selection spans from start of first heading's first child to end of
-    // second heading's last child.
+    // Copy/paste from start of first heading's first child to end of second
+    // heading's last child.
     {
       testName: "childrenToNextParentsChildren",
-      createSelection: (doc) => TextSelection.create(doc, 16, 159),
+      createCopySelection: (doc) => TextSelection.create(doc, 16, 159),
     },
-    // Selection spans "Regular" text inside third heading.
+    // Copy/paste "Regular" text inside third heading.
     {
       testName: "unstyledText",
-      createSelection: (doc) => TextSelection.create(doc, 175, 182),
+      createCopySelection: (doc) => TextSelection.create(doc, 175, 182),
     },
-    // Selection spans "Italic" text inside third heading.
+    // Copy/paste "Italic" text inside third heading.
     {
       testName: "styledText",
-      createSelection: (doc) => TextSelection.create(doc, 169, 175),
+      createCopySelection: (doc) => TextSelection.create(doc, 169, 175),
     },
-    // Selection spans third heading's content (does not include third heading's
+    // Copy/paste third heading's content (does not include third heading's
     // children).
     {
       testName: "multipleStyledText",
-      createSelection: (doc) => TextSelection.create(doc, 165, 182),
+      createCopySelection: (doc) => TextSelection.create(doc, 165, 182),
     },
-    // Selection spans the image block content.
+    // Copy/paste the image block content.
     {
       testName: "image",
-      createSelection: (doc) => NodeSelection.create(doc, 185),
+      createCopySelection: (doc) => NodeSelection.create(doc, 185),
     },
-    // Selection spans from start of third heading to end of it's last
-    // descendant.
+    // Copy/paste from start of third heading to end of it's last descendant.
     {
       testName: "nestedImage",
-      createSelection: (doc) => TextSelection.create(doc, 165, 205),
+      createCopySelection: (doc) => TextSelection.create(doc, 165, 205),
     },
-    // Selection spans text in first cell of the table.
+    // Copy/paste text in first cell of the table.
     {
       testName: "tableCellText",
-      createSelection: (doc) => TextSelection.create(doc, 216, 226),
+      createCopySelection: (doc) => TextSelection.create(doc, 216, 226),
     },
-    // Selection spans first cell of the table.
+    // Copy/paste first cell of the table.
     // TODO: External HTML is wrapped in unnecessary `tr` element.
     {
       testName: "tableCell",
-      createSelection: (doc) => CellSelection.create(doc, 214),
+      createCopySelection: (doc) => CellSelection.create(doc, 214),
     },
-    // Selection spans first row of the table.
+    // Copy/paste first row of the table.
     {
       testName: "tableRow",
-      createSelection: (doc) => CellSelection.create(doc, 214, 228),
+      createCopySelection: (doc) => CellSelection.create(doc, 214, 228),
     },
-    // Selection spans all cells of the table.
+    // Copy/paste all cells of the table.
     {
       testName: "tableAllCells",
-      createSelection: (doc) => CellSelection.create(doc, 214, 258),
+      createCopySelection: (doc) => CellSelection.create(doc, 214, 258),
+    },
+    // Copy regular paragraph content and paste over custom block content.
+    {
+      testName: "paragraphInCustomBlock",
+      createCopySelection: (doc) => TextSelection.create(doc, 277, 286),
+      createPasteSelection: (doc) => TextSelection.create(doc, 290, 299),
     },
   ];
 
diff --git a/packages/core/src/api/clipboard/testUtil.ts b/packages/core/src/api/clipboard/testUtil.ts
new file mode 100644
index 0000000000..33bcf8305b
--- /dev/null
+++ b/packages/core/src/api/clipboard/testUtil.ts
@@ -0,0 +1,27 @@
+import { createBlockSpec } from "../../schema/index.js";
+import { BlockNoteSchema } from "../../editor/BlockNoteSchema.js";
+import { defaultBlockSpecs } from "../../blocks/defaultBlocks.js";
+
+const CustomParagraph = createBlockSpec(
+  {
+    type: "customParagraph",
+    content: "inline",
+    propSchema: {},
+  },
+  {
+    render: () => {
+      const customParagraph = document.createElement("p");
+
+      return {
+        dom: customParagraph,
+        contentDOM: customParagraph,
+      };
+    },
+  }
+);
+export const schema = BlockNoteSchema.create({
+  blockSpecs: {
+    ...defaultBlockSpecs,
+    customParagraph: CustomParagraph as any,
+  },
+});
diff --git a/packages/core/src/api/parsers/markdown/__snapshots__/pasted/styled.json b/packages/core/src/api/parsers/markdown/__snapshots__/pasted/styled.json
index 5d3c678201..43eeaff32d 100644
--- a/packages/core/src/api/parsers/markdown/__snapshots__/pasted/styled.json
+++ b/packages/core/src/api/parsers/markdown/__snapshots__/pasted/styled.json
@@ -1,6 +1,6 @@
 [
   {
-    "id": "2",
+    "id": "0",
     "type": "paragraph",
     "props": {
       "textColor": "default",
@@ -48,7 +48,7 @@
     "children": []
   },
   {
-    "id": "3",
+    "id": "2",
     "type": "paragraph",
     "props": {
       "textColor": "default",
diff --git a/packages/core/src/editor/transformPasted.ts b/packages/core/src/editor/transformPasted.ts
index b5225d6688..13017d3403 100644
--- a/packages/core/src/editor/transformPasted.ts
+++ b/packages/core/src/editor/transformPasted.ts
@@ -1,6 +1,8 @@
 import { Fragment, Schema, Slice } from "@tiptap/pm/model";
 import { EditorView } from "@tiptap/pm/view";
 
+import { getBlockInfoFromSelection } from "../api/getBlockInfoFromPos.js";
+
 // helper function to remove a child from a fragment
 function removeChild(node: Fragment, n: number) {
   const children: any[] = [];
@@ -49,16 +51,25 @@ export function wrapTableRows(f: Fragment, schema: Schema) {
 /**
  * fix for https://github.com/ProseMirror/prosemirror/issues/1430#issuecomment-1822570821
  *
- * Without this fix, pasting two paragraphs would cause the second one to be indented in the other
- * this fix wraps every element in the slice in it's own blockContainer, to prevent Prosemirror from nesting the
- * elements on paste.
+ * This fix wraps pasted ProseMirror nodes in their own `blockContainer` nodes
+ * in most cases. This is to ensure that ProseMirror inserts them as separate
+ * blocks, which it sometimes doesn't do because it doesn't have enough context
+ * about the hierarchy of the pasted nodes. The issue can be seen when pasting
+ * e.g. an image or two consecutive paragraphs, where PM tries to nest the
+ * pasted block(s) when it shouldn't.
  *
- * The exception is when we encounter blockGroups with listitems, because those actually should be nested
+ * However, the fix is not applied in a few cases. See `shouldApplyFix` for
+ * which cases are excluded.
  */
 export function transformPasted(slice: Slice, view: EditorView) {
   let f = Fragment.from(slice.content);
   f = wrapTableRows(f, view.state.schema);
 
+  if (!shouldApplyFix(f, view)) {
+    // Don't apply the fix.
+    return new Slice(f, slice.openStart, slice.openEnd);
+  }
+
   for (let i = 0; i < f.childCount; i++) {
     if (f.child(i).type.spec.group === "blockContent") {
       const content = [f.child(i)];
@@ -92,3 +103,45 @@ export function transformPasted(slice: Slice, view: EditorView) {
   }
   return new Slice(f, slice.openStart, slice.openEnd);
 }
+
+/**
+ * Used in `transformPasted` to check if the fix there should be applied, i.e.
+ * if the pasted fragment should be wrapped in a `blockContainer` node. This
+ * will explicitly tell ProseMirror to treat it as a separate block.
+ */
+function shouldApplyFix(fragment: Fragment, view: EditorView) {
+  const nodeHasSingleChild = fragment.childCount === 1;
+  const nodeHasInlineContent =
+    fragment.firstChild?.type.spec.content === "inline*";
+  const nodeHasTableContent =
+    fragment.firstChild?.type.spec.content === "tableRow+";
+
+  if (nodeHasSingleChild) {
+    if (nodeHasInlineContent) {
+      // Case when we paste a single node with inline content, e.g. a paragraph
+      // or heading. We want to insert the content in-line for better UX instead
+      // of a separate block, so we return false.
+      return false;
+    }
+
+    if (nodeHasTableContent) {
+      // Not ideal that we check selection here, as `transformPasted` is called
+      // for both paste and drop events. Drop events can potentially cause
+      // issues as they don't always happen at the current selection.
+      const blockInfo = getBlockInfoFromSelection(view.state);
+      if (blockInfo.isBlockContainer) {
+        const selectedBlockHasTableContent =
+          blockInfo.blockContent.node.type.spec.content === "tableRow+";
+
+        // Case for when we paste a single node with table content, i.e. a
+        // table. Normally, we return true as we want to ensure the table is
+        // inserted as a separate block. However, if the selection is in an
+        // existing table, we return false, as we want the content of the pasted
+        // table to be added to the existing one for better UX.
+        return !selectedBlockHasTableContent;
+      }
+    }
+  }
+
+  return true;
+}
diff --git a/packages/core/src/schema/blocks/createSpec.ts b/packages/core/src/schema/blocks/createSpec.ts
index 2ee5f87693..f6d9c4ae45 100644
--- a/packages/core/src/schema/blocks/createSpec.ts
+++ b/packages/core/src/schema/blocks/createSpec.ts
@@ -148,7 +148,7 @@ export function createBlockSpec<
       : "") as T["content"] extends "inline" ? "inline*" : "",
     group: "blockContent",
     selectable: blockConfig.isSelectable ?? true,
-
+    isolating: true,
     addAttributes() {
       return propsToAttributes(blockConfig.propSchema);
     },
diff --git a/packages/react/src/schema/ReactBlockSpec.tsx b/packages/react/src/schema/ReactBlockSpec.tsx
index 021c1fe7ff..05673edb44 100644
--- a/packages/react/src/schema/ReactBlockSpec.tsx
+++ b/packages/react/src/schema/ReactBlockSpec.tsx
@@ -121,7 +121,7 @@ export function createReactBlockSpec<
       : "") as T["content"] extends "inline" ? "inline*" : "",
     group: "blockContent",
     selectable: blockConfig.isSelectable ?? true,
-
+    isolating: true,
     addAttributes() {
       return propsToAttributes(blockConfig.propSchema);
     },