diff --git a/projects/igniteui-angular/grids/grid/src/grid-base.directive.ts b/projects/igniteui-angular/grids/grid/src/grid-base.directive.ts
index a84a12c0d17..801efe8c04f 100644
--- a/projects/igniteui-angular/grids/grid/src/grid-base.directive.ts
+++ b/projects/igniteui-angular/grids/grid/src/grid-base.directive.ts
@@ -7234,20 +7234,24 @@ export abstract class IgxGridBaseDirective implements GridType,
         if (!this._height) {
             return null;
         }
+        const styles = this.document.defaultView.getComputedStyle(this.nativeElement);
         const actualTheadRow = this.getTheadRowHeight();
         const footerHeight = this.getFooterHeight();
         const toolbarHeight = this.getToolbarHeight();
         const pagingHeight = this.getPagingFooterHeight();
         const groupAreaHeight = this.getGroupAreaHeight();
         const scrHeight = this.getComputedHeight(this.scr.nativeElement);
+        const borderTop = parseFloat(styles.getPropertyValue('border-top-width')) || 0;
+        const borderBottom = parseFloat(styles.getPropertyValue('border-bottom-width')) || 0;
+
         const renderedHeight = toolbarHeight + actualTheadRow +
             footerHeight + pagingHeight + groupAreaHeight +
-            scrHeight;
+            scrHeight + borderTop + borderBottom;
 
         let gridHeight = 0;
 
         if (this.isPercentHeight) {
-            const computed = this.document.defaultView.getComputedStyle(this.nativeElement).getPropertyValue('height');
+            const computed = styles.getPropertyValue('height');
             const autoSize = this._shouldAutoSize(renderedHeight);
             if (autoSize || computed.indexOf('%') !== -1) {
                 const bodyHeight = this.getDataBasedBodyHeight();
diff --git a/projects/igniteui-angular/grids/grid/src/grid.component.spec.ts b/projects/igniteui-angular/grids/grid/src/grid.component.spec.ts
index 3dbf7acad9b..2ccd8f07ee0 100644
--- a/projects/igniteui-angular/grids/grid/src/grid.component.spec.ts
+++ b/projects/igniteui-angular/grids/grid/src/grid.component.spec.ts
@@ -1307,6 +1307,30 @@ describe('IgxGrid Component Tests #grid', () => {
             expect(parseInt(window.getComputedStyle(domGrid).height, 10)).toBe(300);
         }));
 
+        it('should account for CSS border widths in body height calculation when height is percent #16640', fakeAsync(() => {
+            const fix = TestBed.createComponent(IgxGridWrappedInContComponent);
+            fix.componentInstance.outerHeight = 600;
+            fix.componentInstance.data = fix.componentInstance.fullData;
+            tick();
+            fix.detectChanges();
+
+            const grid = fix.componentInstance.grid;
+            const calcHeightNoBorder = grid.calcHeight;
+            expect(calcHeightNoBorder).not.toBeNull();
+
+            // Apply a 2px border (top and bottom) to the grid's native element
+            grid.nativeElement.style.borderTop = '2px solid black';
+            grid.nativeElement.style.borderBottom = '2px solid black';
+
+            // Trigger height recalculation
+            grid.reflow();
+            fix.detectChanges();
+
+            // The fix ensures border widths are included in the rendered height calculation,
+            // reducing the available body height accordingly and preventing continuous reflow growth
+            expect(grid.calcHeight).toBe(calcHeightNoBorder - 4);
+        }));
+
         it('should keep auto-sizing if initial data is empty then set to a new array', fakeAsync(() => {
             const fix = TestBed.createComponent(IgxGridWrappedInContComponent);
             tick();
diff --git a/src/app/grid-auto-size/grid-auto-size.sample.scss b/src/app/grid-auto-size/grid-auto-size.sample.scss
index 5e9b37fd2f3..381adfb8f86 100644
--- a/src/app/grid-auto-size/grid-auto-size.sample.scss
+++ b/src/app/grid-auto-size/grid-auto-size.sample.scss
@@ -11,3 +11,7 @@
     margin-bottom: 16px;
     max-width: 900px;
 }
+
+igx-grid {
+    border: 1px solid lightgray;
+}