diff --git a/packages/overlays/src/OverlayController.js b/packages/overlays/src/OverlayController.js
index 200abbe83..9c6958772 100644
--- a/packages/overlays/src/OverlayController.js
+++ b/packages/overlays/src/OverlayController.js
@@ -610,7 +610,7 @@ export class OverlayController {
   _handleTrapsKeyboardFocus({ phase }) {
     if (phase === 'show') {
       this.enableTrapsKeyboardFocus();
-    } else if (phase === 'hide') {
+    } else if (phase === 'hide' || phase === 'teardown') {
       this.disableTrapsKeyboardFocus();
     }
   }
diff --git a/packages/overlays/src/utils/contain-focus.js b/packages/overlays/src/utils/contain-focus.js
index fb74ca851..0a06f7a70 100644
--- a/packages/overlays/src/utils/contain-focus.js
+++ b/packages/overlays/src/utils/contain-focus.js
@@ -74,6 +74,7 @@ export function containFocus(rootElement) {
   const focusableElements = getFocusableElements(rootElement);
   // Initial focus goes to first element with autofocus, or the root element
   const initialFocus = focusableElements.find(e => e.hasAttribute('autofocus')) || rootElement;
+  let /** @type {HTMLElement} */ tabDetectionElement;
 
   // If root element will receive focus, it should have a tabindex of -1.
   // This makes it focusable through js, but it won't appear in the tab order
@@ -95,12 +96,47 @@ export function containFocus(rootElement) {
     }
   }
 
+  function createHelpersDetectingTabDirection() {
+    tabDetectionElement = document.createElement('div');
+    tabDetectionElement.style.display = 'none';
+    rootElement.insertBefore(tabDetectionElement, rootElement.children[0]);
+  }
+
+  function isForwardTabInWindow() {
+    const compareMask = tabDetectionElement.compareDocumentPosition(document.activeElement);
+    return compareMask === Node.DOCUMENT_POSITION_PRECEDING;
+  }
+
+  /**
+   * @desc When we simulate a modal dialog, we need to restore the focus to the first or last
+   * element of the rootElement
+   */
+  function setFocusInRootElement() {
+    window.removeEventListener('focusin', setFocusInRootElement);
+    if (rootElement.contains(document.activeElement)) {
+      return;
+    }
+    const nextActive = focusableElements[isForwardTabInWindow() ? 0 : focusableElements.length - 1];
+    if (nextActive) {
+      nextActive.focus();
+    }
+  }
+
+  function addFocusinListener() {
+    window.addEventListener('focusin', setFocusInRootElement);
+  }
+
   function disconnect() {
     window.removeEventListener('keydown', handleKeydown);
+    window.removeEventListener('focusin', setFocusInRootElement);
+    window.removeEventListener('blur', addFocusinListener);
+    rootElement.removeChild(tabDetectionElement);
     rootElement.style.removeProperty('outline');
   }
 
   window.addEventListener('keydown', handleKeydown);
+  window.addEventListener('blur', addFocusinListener);
+  createHelpersDetectingTabDirection();
 
   return { disconnect };
 }
diff --git a/packages/overlays/test/utils-tests/contain-focus.test.js b/packages/overlays/test/utils-tests/contain-focus.test.js
index 679d03da7..53ebd6fe5 100644
--- a/packages/overlays/test/utils-tests/contain-focus.test.js
+++ b/packages/overlays/test/utils-tests/contain-focus.test.js
@@ -1,9 +1,9 @@
-import { expect, fixture } from '@open-wc/testing';
+import { expect, fixture, html } from '@open-wc/testing';
+import { renderLitAsNode } from '@lion/helpers';
 
 import { getDeepActiveElement } from '../../src/utils/get-deep-active-element.js';
 import { getFocusableElements } from '../../src/utils/get-focusable-elements.js';
 import { keyCodes } from '../../src/utils/key-codes.js';
-
 import { containFocus } from '../../src/utils/contain-focus.js';
 
 function simulateTabWithinContainFocus() {
@@ -12,7 +12,37 @@ function simulateTabWithinContainFocus() {
   window.dispatchEvent(event);
 }
 
-const lightDomTemplate = `
+function simulateTabInWindow(elToRecieveFocus) {
+  window.dispatchEvent(new Event('blur'));
+  elToRecieveFocus.focus();
+  window.dispatchEvent(new Event('focusin'));
+}
+
+const interactionElementsNode = renderLitAsNode(html`
+  <div>
+    <button id="el1"></button>
+    <a id="el2" href="#"></a>
+    <div id="el3" tabindex="0"></div>
+    <input id="el4" />
+    <div id="el5" contenteditable="true"></div>
+    <textarea id="el6"></textarea>
+    <select id="el7">
+      <option>1</option>
+    </select>
+  </div>
+`);
+
+const lightDomTemplate = html`
+  <div>
+    <button id="outside-1">outside 1</button>
+    <div id="rootElement">
+      ${interactionElementsNode}
+    </div>
+    <button id="outside-2">outside 2</button>
+  </div>
+`;
+
+const lightDomAutofocusTemplate = html`
   <div>
     <button id="outside-1">outside 1</button>
 
@@ -20,8 +50,8 @@ const lightDomTemplate = `
       <button id="el1"></button>
       <a id="el2" href="#"></a>
       <div id="el3" tabindex="0"></div>
-      <input id="el4">
-      <div id="el5" contenteditable></div>
+      <input id="el4" autofocus />
+      <div id="el5" contenteditable="true"></div>
       <textarea id="el6"></textarea>
       <select id="el7">
         <option>1</option>
@@ -32,75 +62,77 @@ const lightDomTemplate = `
   </div>
 `;
 
-const lightDomAutofocusTemplate = `
-  <div>
-    <button id="outside-1">outside 1</button>
-
-    <div id="rootElement">
-      <button id="el1"></button>
-      <a id="el2" href="#"></a>
-      <div id="el3" tabindex="0"></div>
-      <input id="el4" autofocus>
-      <div id="el5" contenteditable></div>
-      <textarea id="el6"></textarea>
-      <select id="el7">
-        <option>1</option>
-      </select>
+function createShadowDomNode() {
+  const shadowDomNode = renderLitAsNode(html`
+    <div>
+      <button id="outside-1">outside 1</button>
+      <div id="rootElementShadow"></div>
+      <button id="outside-2">outside 2</button>
     </div>
-
-    <button id="outside-2">outside 2</button>
-  </div>
-`;
+  `);
+  const rootElementShadow = shadowDomNode.querySelector('#rootElementShadow');
+  rootElementShadow.attachShadow({ mode: 'open' });
+  rootElementShadow.shadowRoot.appendChild(interactionElementsNode);
+  return shadowDomNode;
+}
 
 describe('containFocus()', () => {
   it('starts focus at the root element when there is no element with [autofocus]', async () => {
     await fixture(lightDomTemplate);
     const root = document.getElementById('rootElement');
-    containFocus(root);
+    const { disconnect } = containFocus(root);
 
     expect(getDeepActiveElement()).to.equal(root);
     expect(root.getAttribute('tabindex')).to.equal('-1');
     expect(root.style.getPropertyValue('outline-style')).to.equal('none');
+
+    disconnect();
   });
 
   it('starts focus at the element with [autofocus] attribute', async () => {
     await fixture(lightDomAutofocusTemplate);
     const el = document.querySelector('input[autofocus]');
-    containFocus(el);
+    const { disconnect } = containFocus(el);
 
     expect(getDeepActiveElement()).to.equal(el);
+
+    disconnect();
   });
 
   it('on tab, focuses first focusable element if focus was on element outside root element', async () => {
     await fixture(lightDomTemplate);
     const root = document.getElementById('rootElement');
     const focusableElements = getFocusableElements(root);
+    const { disconnect } = containFocus(root);
 
-    containFocus(root);
     document.getElementById('outside-1').focus();
 
     simulateTabWithinContainFocus();
     expect(getDeepActiveElement()).to.equal(focusableElements[0]);
+
+    disconnect();
   });
 
   it('on tab, focuses first focusable element if focus was on the last focusable element', async () => {
     await fixture(lightDomTemplate);
     const root = document.getElementById('rootElement');
     const focusableElements = getFocusableElements(root);
+    const { disconnect } = containFocus(root);
 
-    containFocus(root);
     focusableElements[focusableElements.length - 1].focus();
 
     simulateTabWithinContainFocus();
     expect(getDeepActiveElement()).to.equal(focusableElements[0]);
+
+    disconnect();
   });
 
   it('on tab, does not interfere if focus remains within the root element', async () => {
     await fixture(lightDomTemplate);
     const root = document.getElementById('rootElement');
     const focusableElements = getFocusableElements(root);
+    const { disconnect } = containFocus(root);
 
-    containFocus(root);
     focusableElements[2].focus();
 
     simulateTabWithinContainFocus();
@@ -110,5 +142,60 @@ describe('containFocus()', () => {
      * to the first element.
      */
     expect(getDeepActiveElement()).to.equal(focusableElements[2]);
+
+    disconnect();
+  });
+
+  describe('Tabbing into window', () => {
+    it('restores focus within root element', async () => {
+      await fixture(lightDomTemplate);
+      const root = document.getElementById('rootElement');
+      const focusableElements = getFocusableElements(root);
+      const { disconnect } = containFocus(root);
+
+      // Simulate tab in window
+      simulateTabInWindow(document.getElementById('outside-1'));
+      expect(getDeepActiveElement()).to.equal(focusableElements[0]);
+
+      // Simulate shift+tab in window
+      simulateTabInWindow(document.getElementById('outside-2'));
+      expect(getDeepActiveElement()).to.equal(focusableElements[focusableElements.length - 1]);
+
+      disconnect();
+    });
+
+    it('restores focus within root element with shadow dom', async () => {
+      const el = await fixture(html`${createShadowDomNode()}`);
+      const root = el.querySelector('#rootElementShadow');
+      const focusableElements = getFocusableElements(root);
+      const { disconnect } = containFocus(root);
+
+      // Simulate tab in window
+      simulateTabInWindow(document.getElementById('outside-1'));
+      expect(getDeepActiveElement()).to.equal(focusableElements[0]);
+
+      // Simulate shift+tab in window
+      simulateTabInWindow(document.getElementById('outside-2'));
+      expect(getDeepActiveElement()).to.equal(focusableElements[focusableElements.length - 1]);
+
+      disconnect();
+    });
+
+    it('keeps focus if already in rootElement', async () => {
+      const el = await fixture(html`${createShadowDomNode()}`);
+      const root = el.querySelector('#rootElementShadow');
+      const focusableElements = getFocusableElements(root);
+      const { disconnect } = containFocus(root);
+
+      // Simulate tab in window
+      simulateTabInWindow(focusableElements[0]);
+      expect(getDeepActiveElement()).to.equal(focusableElements[0]);
+
+      // Simulate shift+tab in window
+      simulateTabInWindow(focusableElements[focusableElements.length - 1]);
+      expect(getDeepActiveElement()).to.equal(focusableElements[focusableElements.length - 1]);
+
+      disconnect();
+    });
   });
 });