diff --git a/src/vs/workbench/browser/parts/editor/sideBySideEditorControl.ts b/src/vs/workbench/browser/parts/editor/sideBySideEditorControl.ts
index 6931fd531f1..5505a0b0b71 100644
--- a/src/vs/workbench/browser/parts/editor/sideBySideEditorControl.ts
+++ b/src/vs/workbench/browser/parts/editor/sideBySideEditorControl.ts
@@ -1014,7 +1014,7 @@ export class SideBySideEditorControl implements ISideBySideEditorControl, IVerti
 						overlay.once(DOM.EventType.MOUSE_OVER, () => {
 							setTimeout(() => {
 								cleanUp();
-							}, 100);
+							}, 300);
 						});
 					}
 				});
diff --git a/src/vs/workbench/electron-browser/window.ts b/src/vs/workbench/electron-browser/window.ts
index c894c8f4b55..8df2e2a6889 100644
--- a/src/vs/workbench/electron-browser/window.ts
+++ b/src/vs/workbench/electron-browser/window.ts
@@ -110,6 +110,18 @@ export class ElectronWindow {
 						})
 						.on([DOM.EventType.DRAG_LEAVE, DOM.EventType.DRAG_END], () => {
 							cleanUp();
+						}).once(DOM.EventType.MOUSE_OVER, () => {
+							// Under some circumstances we have seen reports where the drop overlay is not being
+							// cleaned up and as such the editor area remains under the overlay so that you cannot
+							// type into the editor anymore. This seems related to using VMs and DND via host and
+							// guest OS, though some users also saw it without VMs.
+							// To protect against this issue we always destroy the overlay as soon as we detect a
+							// mouse event over it. The delay is used to guarantee we are not interfering with the
+							// actual DROP event that can also trigger a mouse over event.
+							// See also: https://github.com/Microsoft/vscode/issues/10970
+							setTimeout(() => {
+								cleanUp();
+							}, 300);
 						});
 				}
 			}