diff --git a/src/vs/workbench/contrib/inlineChat/browser/inlineChatAffordance.ts b/src/vs/workbench/contrib/inlineChat/browser/inlineChatAffordance.ts
index f0ec896f0bb..58db6c0bd36 100644
--- a/src/vs/workbench/contrib/inlineChat/browser/inlineChatAffordance.ts
+++ b/src/vs/workbench/contrib/inlineChat/browser/inlineChatAffordance.ts
@@ -111,7 +111,6 @@ export class InlineChatAffordance extends Disposable {
 			const pos = this._inputWidget.position.read(r);
 			if (pos === null) {
 				this._menuData.set(undefined, undefined);
-				this._editor.focus();
 			}
 		}));
 	}
diff --git a/src/vs/workbench/contrib/inlineChat/browser/inlineChatOverlayWidget.ts b/src/vs/workbench/contrib/inlineChat/browser/inlineChatOverlayWidget.ts
index 5094ab2e70d..0284206c2bf 100644
--- a/src/vs/workbench/contrib/inlineChat/browser/inlineChatOverlayWidget.ts
+++ b/src/vs/workbench/contrib/inlineChat/browser/inlineChatOverlayWidget.ts
@@ -278,6 +278,11 @@ export class InlineChatInputWidget extends Disposable {
 	 * Hide the widget (removes from editor but does not dispose).
 	 */
 	private _hide(): void {
+		// Focus editor if focus is still within the editor's DOM
+		const editorDomNode = this._editorObs.editor.getDomNode();
+		if (editorDomNode && dom.isAncestorOfActiveElement(editorDomNode)) {
+			this._editorObs.editor.focus();
+		}
 		this._position.set(null, undefined);
 		this._showStore.clear();
 	}