If the user drops an item on the form, the Form_DragDrop event handler removes the item from the list.

If the user drops an item on the list, the List1_DragDrop event handler moves the item to its new position.

Private Sub List1_MouseDown(Button As Integer, Shift As _
    Integer, X As Single, Y As Single)
    ' Start the drag.
    List1.Drag
End Sub

Private Sub Form_DragDrop(Source As Control, X As Single, Y _
    As Single)
    If Not (Source Is List1) Then Exit Sub
    If List1.ListIndex >= 0 Then List1.RemoveItem _
        List1.ListIndex
End Sub

Private Sub List1_DragDrop(Source As Control, X As Single, _
    Y As Single)
Dim new_pos As Integer

    If Not (Source Is List1) Then Exit Sub

    ' Add the item in its new position.
    new_pos = Y / item_height
    If new_pos > List1.ListCount Then
        List1.AddItem List1.List(List1.ListIndex)
    Else
        List1.AddItem List1.List(List1.ListIndex), new_pos
    End If

    ' Remove the item from its old position.
    If List1.ListIndex >= 0 Then List1.RemoveItem _
        List1.ListIndex
End Sub