diff --git a/Cargo.lock b/Cargo.lock
index 8611596c2..f2b06b3cd 100644
--- a/Cargo.lock
+++ b/Cargo.lock
@@ -1458,9 +1458,9 @@ dependencies = [
 
 [[package]]
 name = "term_grid"
-version = "0.1.7"
+version = "0.2.0"
 source = "registry+https://github.com/rust-lang/crates.io-index"
-checksum = "230d3e804faaed5a39b08319efb797783df2fd9671b39b7596490cb486d702cf"
+checksum = "a7c9eb7705cb3f0fd71d3955b23db6d372142ac139e8c473952c93bf3c3dc4b7"
 dependencies = [
  "unicode-width 0.1.13",
 ]
diff --git a/Cargo.toml b/Cargo.toml
index 3c1af8968..cfca8197e 100644
--- a/Cargo.toml
+++ b/Cargo.toml
@@ -28,11 +28,10 @@ libc = "0.2.*"
 human-sort = "0.2.2"
 # should stick to 0.1, the 0.2 needs some adaptation
 # check https://github.com/lsd-rs/lsd/issues/1014
-term_grid = "0.1"
+term_grid = "0.2.0"
 terminal_size = "0.4.*"
 thiserror = "2.0"
 sys-locale = "0.3"
-#once_cell = "1.17.1"
 once_cell = "1.21"
 chrono = { version = "0.4", features = ["unstable-locales"] }
 chrono-humanize = "0.2"
diff --git a/src/display.rs b/src/display.rs
index 842ffb248..51bfde833 100644
--- a/src/display.rs
+++ b/src/display.rs
@@ -6,7 +6,7 @@ use crate::icon::Icons;
 use crate::meta::name::DisplayOption;
 use crate::meta::{FileType, Meta, OwnerCache};
 use std::collections::HashMap;
-use term_grid::{Cell, Direction, Filling, Grid, GridOptions};
+use term_grid::{Alignment, Cell, Direction, Filling, Grid, GridOptions};
 use terminal_size::terminal_size;
 use unicode_width::UnicodeWidthStr;
 
@@ -137,6 +137,7 @@ fn inner_display_grid(
             cells.push(Cell {
                 width: get_visible_width(&block, flags.hyperlink == HyperlinkOption::Always),
                 contents: block,
+                alignment: Alignment::Left,
             });
         }
     }
@@ -224,6 +225,8 @@ fn add_header(flags: &Flags, cells: &[Cell], grid: &mut Grid) {
         grid.add(Cell {
             width: widths[idx],
             contents: underlined_header,
+            // term_grid 0.2 only has Left/Right; centering is done above
+            alignment: Alignment::Left,
         });
     }
 }
@@ -269,6 +272,7 @@ fn inner_display_tree(
             cells.push(Cell {
                 width: get_visible_width(&block, flags.hyperlink == HyperlinkOption::Always),
                 contents: block,
+                alignment: Alignment::Left,
             });
         }
 
@@ -987,4 +991,89 @@ mod tests {
         drop(file);
         drop(link);
     }
+
+    /// Test for issue #1014: Grid layout should work correctly with colors
+    /// When files can fit on multiple columns, they should not be displayed vertically.
+    /// The fix is to use get_visible_width() for the Cell width field, which strips
+    /// ANSI escape codes from the width calculation.
+    #[test]
+    fn test_grid_layout_with_colors_issue_1014() {
+        // Force color output to ensure ANSI codes are present
+        crossterm::style::force_color_output(true);
+
+        let argv = ["lsd"]; // Default grid layout
+        let cli = Cli::try_parse_from(argv).unwrap();
+        let flags = Flags::configure_from(&cli, &Config::with_none()).unwrap();
+
+        // Create directory with multiple short-named files
+        let dir = assert_fs::TempDir::new().unwrap();
+        for i in 1..=10 {
+            dir.child(format!("f{}.txt", i)).touch().unwrap();
+        }
+
+        let metas = Meta::from_path(Path::new(dir.path()), false, PermissionFlag::Rwx)
+            .unwrap()
+            .recurse_into(1, &flags, None)
+            .unwrap()
+            .0
+            .unwrap();
+
+        // Use colors to ensure ANSI codes are in the output
+        let colors = Colors::new(color::ThemeOption::NoLscolors);
+        let icons = Icons::new(true, IconOption::Never, FlagTheme::Fancy, " ".to_string());
+        let git_theme = GitTheme::new();
+
+        // Build cells the same way inner_display_grid does
+        let padding_rules = get_padding_rules(&metas, &flags);
+        let mut test_cells = Vec::new();
+        let owner_cache = OwnerCache::default();
+
+        for meta in &metas {
+            let blocks = get_output(
+                meta,
+                &owner_cache,
+                &colors,
+                &icons,
+                &git_theme,
+                &flags,
+                &DisplayOption::FileName,
+                &padding_rules,
+                (0, ""),
+            );
+            for block in blocks {
+                test_cells.push(Cell {
+                    width: get_visible_width(&block, false),
+                    contents: block,
+                    alignment: Alignment::Left,
+                });
+            }
+        }
+
+        // Create grid with these cells
+        let mut grid = Grid::new(GridOptions {
+            filling: Filling::Spaces(2),
+            direction: Direction::TopToBottom,
+        });
+        for cell in &test_cells {
+            grid.add(cell.clone());
+        }
+
+        // With 200 columns and ~7 char filenames, fit_into_width should succeed
+        let result = grid.fit_into_width(200);
+        assert!(
+            result.is_some(),
+            "fit_into_width returned None - grid layout failed with ANSI colors"
+        );
+
+        // Verify multiple files fit per line
+        let output = result.unwrap().to_string();
+        let newline_count = output.matches('\n').count();
+        assert!(
+            newline_count < 10,
+            "Grid layout broken: {} newlines for 10 files (should fit multiple per line)",
+            newline_count
+        );
+
+        dir.close().unwrap();
+    }
 }