diff --git a/pages/calendar/simple.page.tsx b/pages/calendar/simple.page.tsx
index 6d031bc545..debd2016c3 100644
--- a/pages/calendar/simple.page.tsx
+++ b/pages/calendar/simple.page.tsx
@@ -16,7 +16,7 @@ export default function CalendarPage() {
         maxWidth="trigger"
         stretchHeight={true}
         open={true}
-        onDropdownClose={() => {}}
+        onOutsideClick={() => {}}
         onMouseDown={() => {}}
         trigger={null}
         content={
diff --git a/pages/date-range-picker/month-calendar-permutations.page.tsx b/pages/date-range-picker/month-calendar-permutations.page.tsx
index 1ee8a85208..1a458e8976 100644
--- a/pages/date-range-picker/month-calendar-permutations.page.tsx
+++ b/pages/date-range-picker/month-calendar-permutations.page.tsx
@@ -93,7 +93,7 @@ export default function DateRangePickerCalendarPage() {
               <Dropdown
                 stretchHeight={true}
                 open={true}
-                onDropdownClose={() => {}}
+                onOutsideClick={() => {}}
                 onMouseDown={() => {}}
                 trigger={null}
                 content={
diff --git a/pages/date-range-picker/year-calendar-permutations.page.tsx b/pages/date-range-picker/year-calendar-permutations.page.tsx
index 673dc47cbe..7b0a3888c9 100644
--- a/pages/date-range-picker/year-calendar-permutations.page.tsx
+++ b/pages/date-range-picker/year-calendar-permutations.page.tsx
@@ -73,7 +73,7 @@ export default function DateRangePickerCalendarPage() {
               <Dropdown
                 stretchHeight={true}
                 open={true}
-                onDropdownClose={() => {}}
+                onOutsideClick={() => {}}
                 onMouseDown={() => {}}
                 trigger={null}
                 content={
diff --git a/pages/dropdown/common.tsx b/pages/dropdown/common.tsx
index 1c61f6490b..bcef0fbc3a 100644
--- a/pages/dropdown/common.tsx
+++ b/pages/dropdown/common.tsx
@@ -16,7 +16,7 @@ export function SampleDropdown({ id, children }: { id: string; children: React.R
         </Button>
       }
       open={isOpened}
-      onDropdownClose={() => setOpened(false)}
+      onOutsideClick={() => setOpened(false)}
       content={children}
     />
   );
diff --git a/pages/dropdown/fixed-container.page.tsx b/pages/dropdown/fixed-container.page.tsx
index a8ec130287..02ac5e7b5c 100644
--- a/pages/dropdown/fixed-container.page.tsx
+++ b/pages/dropdown/fixed-container.page.tsx
@@ -32,7 +32,7 @@ export default function () {
               </button>
             }
             open={open}
-            onDropdownClose={() => setOpen(false)}
+            onOutsideClick={() => setOpen(false)}
             content={<ListContent n={5} />}
             minWidth={'trigger'}
           />
diff --git a/pages/dropdown/focus-trap.page.tsx b/pages/dropdown/focus-trap.page.tsx
index b43eeb667b..d72ad1712f 100644
--- a/pages/dropdown/focus-trap.page.tsx
+++ b/pages/dropdown/focus-trap.page.tsx
@@ -91,7 +91,7 @@ export default function DropdownScenario() {
                 </Button>
               }
               open={isOpen}
-              onDropdownClose={() => setIsOpen(false)}
+              onOutsideClick={() => setIsOpen(false)}
               header={
                 <div style={{ padding: 8 }}>
                   <Button disabled={disableHeader}>header-1</Button>
diff --git a/pages/dropdown/interior-fitting.page.tsx b/pages/dropdown/interior-fitting.page.tsx
index 87cc078a62..483ba32297 100644
--- a/pages/dropdown/interior-fitting.page.tsx
+++ b/pages/dropdown/interior-fitting.page.tsx
@@ -40,7 +40,7 @@ export default function DropdownScenario() {
               </Button>
             }
             open={openParent1}
-            onDropdownClose={() => setOpenParent1(false)}
+            onOutsideClick={() => setOpenParent1(false)}
             content={
               <ul className={styles.list}>
                 <li id="childDropdown1">
@@ -53,7 +53,7 @@ export default function DropdownScenario() {
                       </div>
                     }
                     open={openChild1}
-                    onDropdownClose={() => setOpenChild1(false)}
+                    onOutsideClick={() => setOpenChild1(false)}
                     content={<ListContent n={5} withSpaces={true} repeat={8} />}
                   />
                 </li>
@@ -72,7 +72,7 @@ export default function DropdownScenario() {
               </Button>
             }
             open={openParent2}
-            onDropdownClose={() => setOpenParent2(false)}
+            onOutsideClick={() => setOpenParent2(false)}
             content={
               <ul className={styles.list} style={{ overflowY: 'auto', blockSize: '100px' }}>
                 <li id="childDropdown2">
@@ -85,7 +85,7 @@ export default function DropdownScenario() {
                       </div>
                     }
                     open={openChild2}
-                    onDropdownClose={() => setOpenChild2(false)}
+                    onOutsideClick={() => setOpenChild2(false)}
                     content={<ListContent n={5} withSpaces={true} repeat={8} />}
                   />
                 </li>
@@ -104,7 +104,7 @@ export default function DropdownScenario() {
               </Button>
             }
             open={openParent3}
-            onDropdownClose={() => setOpenParent3(false)}
+            onOutsideClick={() => setOpenParent3(false)}
             content={
               <ul className={styles.list}>
                 <li id="childDropdown3">
@@ -117,7 +117,7 @@ export default function DropdownScenario() {
                       </div>
                     }
                     open={openChild3}
-                    onDropdownClose={() => setOpenChild3(false)}
+                    onOutsideClick={() => setOpenChild3(false)}
                     content={<ListContent n={5} withSpaces={true} repeat={8} />}
                   />
                 </li>
@@ -140,7 +140,7 @@ export default function DropdownScenario() {
               </Button>
             }
             open={openParent4}
-            onDropdownClose={() => setOpenParent4(false)}
+            onOutsideClick={() => setOpenParent4(false)}
             content={
               <ul className={styles.list}>
                 <li id="childDropdown4">
@@ -153,7 +153,7 @@ export default function DropdownScenario() {
                       </div>
                     }
                     open={openChild4}
-                    onDropdownClose={() => setOpenChild4(false)}
+                    onOutsideClick={() => setOpenChild4(false)}
                     content={<ListContent n={5} withSpaces={true} repeat={8} />}
                   />
                 </li>
diff --git a/pages/dropdown/interior-stretch-height.page.tsx b/pages/dropdown/interior-stretch-height.page.tsx
index ed5ef7aea9..e9e6ee94df 100644
--- a/pages/dropdown/interior-stretch-height.page.tsx
+++ b/pages/dropdown/interior-stretch-height.page.tsx
@@ -41,7 +41,7 @@ export default function DropdownScenario() {
               </Button>
             }
             open={openParent1}
-            onDropdownClose={() => setOpenParent1(false)}
+            onOutsideClick={() => setOpenParent1(false)}
             content={<ListContent n={15} withSpaces={true} repeat={20} />}
           />
         </div>
@@ -60,7 +60,7 @@ export default function DropdownScenario() {
               </Button>
             }
             open={openParent2}
-            onDropdownClose={() => setOpenParent2(false)}
+            onOutsideClick={() => setOpenParent2(false)}
             content={<ListContent n={15} withSpaces={true} repeat={20} />}
           />
         </div>
@@ -80,7 +80,7 @@ export default function DropdownScenario() {
               </Button>
             }
             open={openParent3}
-            onDropdownClose={() => setOpenParent3(false)}
+            onOutsideClick={() => setOpenParent3(false)}
             content={
               <div style={{ inlineSize: '400px' }}>
                 <ListContent n={15} withSpaces={true} repeat={20} />
diff --git a/pages/dropdown/interior-with-wrapping.page.tsx b/pages/dropdown/interior-with-wrapping.page.tsx
index 6cb887209d..870728cee4 100644
--- a/pages/dropdown/interior-with-wrapping.page.tsx
+++ b/pages/dropdown/interior-with-wrapping.page.tsx
@@ -37,7 +37,7 @@ export default function DropdownScenario() {
               </Button>
             }
             open={openParent5}
-            onDropdownClose={() => setOpenParent5(false)}
+            onOutsideClick={() => setOpenParent5(false)}
             content={
               <ul className={styles.list}>
                 <li id="childDropdown5">
@@ -50,7 +50,7 @@ export default function DropdownScenario() {
                       </div>
                     }
                     open={openChild5}
-                    onDropdownClose={() => setOpenChild5(false)}
+                    onOutsideClick={() => setOpenChild5(false)}
                     content={<ListContent n={5} withSpaces={true} repeat={18} />}
                   />
                 </li>
@@ -73,7 +73,7 @@ export default function DropdownScenario() {
               </Button>
             }
             open={openParent6}
-            onDropdownClose={() => setOpenParent6(false)}
+            onOutsideClick={() => setOpenParent6(false)}
             content={
               <ul className={styles.list}>
                 <li id="childDropdown6">
@@ -86,7 +86,7 @@ export default function DropdownScenario() {
                       </div>
                     }
                     open={openChild6}
-                    onDropdownClose={() => setOpenChild6(false)}
+                    onOutsideClick={() => setOpenChild6(false)}
                     content={<ListContent n={5} withSpaces={true} repeat={18} />}
                   />
                 </li>
diff --git a/pages/dropdown/list-with-sticky-item.page.tsx b/pages/dropdown/list-with-sticky-item.page.tsx
index 44cf32b7ce..a2a396a65f 100644
--- a/pages/dropdown/list-with-sticky-item.page.tsx
+++ b/pages/dropdown/list-with-sticky-item.page.tsx
@@ -78,7 +78,7 @@ export default function MultiselectPage() {
             <Dropdown
               trigger={<Button onClick={() => setOpen(!open)}>Open dropdown</Button>}
               open={open}
-              onDropdownClose={() => setOpen(false)}
+              onOutsideClick={() => setOpen(false)}
               expandToViewport={urlParams.expandToViewport}
               header={
                 urlParams.withHeader ? (
diff --git a/pages/dropdown/min-width.page.tsx b/pages/dropdown/min-width.page.tsx
index ded52c01b4..8e2c0cd91a 100644
--- a/pages/dropdown/min-width.page.tsx
+++ b/pages/dropdown/min-width.page.tsx
@@ -35,7 +35,7 @@ export default function DropdownScenario() {
             </div>
           }
           open={open}
-          onDropdownClose={() => setOpen(false)}
+          onOutsideClick={() => setOpen(false)}
           minWidth={800}
           content={<ListContent n={10} />}
         />
diff --git a/pages/dropdown/positioning.page.tsx b/pages/dropdown/positioning.page.tsx
index f4b28544b7..9c05f82976 100644
--- a/pages/dropdown/positioning.page.tsx
+++ b/pages/dropdown/positioning.page.tsx
@@ -43,7 +43,7 @@ export default function DropdownScenario() {
               </Button>
             }
             open={open1}
-            onDropdownClose={() => setOpen1(false)}
+            onOutsideClick={() => setOpen1(false)}
             content={<ListContent n={10} withSpaces={true} repeat={12} />}
           />
         </div>
@@ -58,7 +58,7 @@ export default function DropdownScenario() {
               </Button>
             }
             open={open2}
-            onDropdownClose={() => setOpen2(false)}
+            onOutsideClick={() => setOpen2(false)}
             content={<ListContent n={10} withSpaces={true} repeat={12} />}
           />
         </div>
@@ -73,7 +73,7 @@ export default function DropdownScenario() {
               </Button>
             }
             open={open3}
-            onDropdownClose={() => setOpen3(false)}
+            onOutsideClick={() => setOpen3(false)}
             content={<ListContent n={10} withSpaces={true} repeat={2} />}
           />
         </div>
@@ -88,7 +88,7 @@ export default function DropdownScenario() {
               </Button>
             }
             open={open4}
-            onDropdownClose={() => setOpen4(false)}
+            onOutsideClick={() => setOpen4(false)}
             content={<ListContent n={10} withSpaces={true} repeat={22} />}
           />
         </div>
@@ -107,7 +107,7 @@ export default function DropdownScenario() {
               </Button>
             }
             open={open5}
-            onDropdownClose={() => setOpen5(false)}
+            onOutsideClick={() => setOpen5(false)}
             content={<ListContent n={10} withSpaces={true} repeat={18} />}
           />
         </div>
diff --git a/pages/dropdown/prefer-center.page.tsx b/pages/dropdown/prefer-center.page.tsx
index 589c18f40a..2e9890922e 100644
--- a/pages/dropdown/prefer-center.page.tsx
+++ b/pages/dropdown/prefer-center.page.tsx
@@ -35,7 +35,7 @@ export default function DropdownScenario() {
               </Button>
             }
             open={open1}
-            onDropdownClose={() => setOpen1(false)}
+            onOutsideClick={() => setOpen1(false)}
             content={<ListContent n={10} withSpaces={true} repeat={12} />}
           />
         </div>
@@ -51,7 +51,7 @@ export default function DropdownScenario() {
               </Button>
             }
             open={open2}
-            onDropdownClose={() => setOpen2(false)}
+            onOutsideClick={() => setOpen2(false)}
             content={<ListContent n={10} withSpaces={true} repeat={12} />}
           />
         </div>
@@ -67,7 +67,7 @@ export default function DropdownScenario() {
               </Button>
             }
             open={open3}
-            onDropdownClose={() => setOpen3(false)}
+            onOutsideClick={() => setOpen3(false)}
             content={<ListContent n={10} withSpaces={true} repeat={12} />}
           />
         </div>
diff --git a/pages/dropdown/simple.page.tsx b/pages/dropdown/simple.page.tsx
index ce341ab0cd..37493678b6 100644
--- a/pages/dropdown/simple.page.tsx
+++ b/pages/dropdown/simple.page.tsx
@@ -21,7 +21,7 @@ export default function DropdownScenario() {
           Dropdown opens up or down depending on the size of the content and available space above and below the trigger
         </li>
         <li>
-          Dropdown fires an <code>onDropdownClose</code> event a click outside of the fly-out content
+          Dropdown fires an <code>onOutsideClick</code> event a click outside of the fly-out content
         </li>
       </ul>
       <div id="smallDropDown">
@@ -32,7 +32,7 @@ export default function DropdownScenario() {
             </Button>
           }
           open={open1}
-          onDropdownClose={() => setOpen1(false)}
+          onOutsideClick={() => setOpen1(false)}
           content={<ListContent n={10} />}
         />
       </div>
@@ -44,7 +44,7 @@ export default function DropdownScenario() {
             </Button>
           }
           open={open2}
-          onDropdownClose={() => setOpen2(false)}
+          onOutsideClick={() => setOpen2(false)}
           header={<div style={{ blockSize: '30px' }} />}
           footer={<div className="footer" style={{ blockSize: '30px' }} />}
           content={<ListContent n={100} />}
@@ -60,7 +60,7 @@ export default function DropdownScenario() {
             </Button>
           }
           open={open3}
-          onDropdownClose={() => setOpen3(false)}
+          onOutsideClick={() => setOpen3(false)}
           content={<ListContent n={10} />}
         />
       </div>
diff --git a/pages/options-list/simple.page.tsx b/pages/options-list/simple.page.tsx
index b57f8f6240..a6cb34f092 100644
--- a/pages/options-list/simple.page.tsx
+++ b/pages/options-list/simple.page.tsx
@@ -35,7 +35,7 @@ export default function OptionsListScenario() {
             Dropdown trigger
           </Button>
         }
-        onDropdownClose={toggleDropdown}
+        onOutsideClick={toggleDropdown}
         content={
           <OptionsList onLoadMore={handleLoadMore} id={'list'} open={open} statusType="pending">
             {[...Array(50)].map((_, index) => (
diff --git a/src/button-dropdown/internal.tsx b/src/button-dropdown/internal.tsx
index cf3345105f..cd01ce6aae 100644
--- a/src/button-dropdown/internal.tsx
+++ b/src/button-dropdown/internal.tsx
@@ -364,7 +364,7 @@ const InternalButtonDropdown = React.forwardRef(
           hideBlockBorder={false}
           expandToViewport={expandToViewport}
           preferCenter={preferCenter}
-          onDropdownClose={() => toggleDropdown()}
+          onOutsideClick={() => toggleDropdown()}
           trigger={trigger}
           dropdownId={dropdownId}
           content={
diff --git a/src/date-picker/index.tsx b/src/date-picker/index.tsx
index 216d0aed0f..7cfcfa213e 100644
--- a/src/date-picker/index.tsx
+++ b/src/date-picker/index.tsx
@@ -190,7 +190,7 @@ const DatePicker = React.forwardRef(
             maxWidth="trigger"
             stretchHeight={true}
             open={isDropDownOpen}
-            onDropdownClose={onDropdownCloseHandler}
+            onOutsideClick={onDropdownCloseHandler}
             trigger={trigger}
             expandToViewport={expandToViewport}
             scrollable={false}
diff --git a/src/date-range-picker/dropdown.tsx b/src/date-range-picker/dropdown.tsx
index 4ac388c1d4..521dcac98e 100644
--- a/src/date-range-picker/dropdown.tsx
+++ b/src/date-range-picker/dropdown.tsx
@@ -58,7 +58,7 @@ interface DateRangePickerDropdownProps
     Pick<CalendarProps, 'granularity'> {
   onClear: () => void;
   onApply: (value: null | DateRangePickerProps.Value) => DateRangePickerProps.ValidationResult;
-  onDropdownClose: () => void;
+  onOutsideClick: () => void;
   isSingleGrid: boolean;
   customAbsoluteRangeControl: DateRangePickerProps.AbsoluteRangeControl | undefined;
   renderRelativeRangeContent: DateRangePickerProps.RelativeRangeControl | undefined;
@@ -75,7 +75,7 @@ export function DateRangePickerDropdown({
   onApply: applyValue,
   getTimeOffset,
   timeOffset,
-  onDropdownClose,
+  onOutsideClick,
   relativeOptions,
   showClearButton,
   isSingleGrid,
@@ -120,7 +120,7 @@ export function DateRangePickerDropdown({
 
   const closeDropdown = () => {
     setApplyClicked(false);
-    onDropdownClose();
+    onOutsideClick();
   };
 
   const onClear = () => {
diff --git a/src/date-range-picker/index.tsx b/src/date-range-picker/index.tsx
index d6453290f0..eb369a8538 100644
--- a/src/date-range-picker/index.tsx
+++ b/src/date-range-picker/index.tsx
@@ -314,7 +314,7 @@ const DateRangePicker = React.forwardRef(
         <Dropdown
           stretchHeight={true}
           open={isDropDownOpen}
-          onDropdownClose={() => closeDropdown()}
+          onOutsideClick={() => closeDropdown()}
           trigger={trigger}
           expandToViewport={expandToViewport}
           dropdownId={dropdownId}
@@ -326,7 +326,7 @@ const DateRangePicker = React.forwardRef(
                   startOfWeek={startOfWeek}
                   locale={normalizedLocale}
                   isSingleGrid={isSingleGrid}
-                  onDropdownClose={() => closeDropdown(true)}
+                  onOutsideClick={() => closeDropdown(true)}
                   value={value}
                   showClearButton={showClearButton}
                   isDateEnabled={isDateEnabled}
diff --git a/src/internal/components/dropdown/__tests__/dropdown.test.tsx b/src/internal/components/dropdown/__tests__/dropdown.test.tsx
index 321782f16e..31dc37ede1 100644
--- a/src/internal/components/dropdown/__tests__/dropdown.test.tsx
+++ b/src/internal/components/dropdown/__tests__/dropdown.test.tsx
@@ -48,24 +48,24 @@ describe('Dropdown Component', () => {
       expect(wrapper.find(`#${id}`)).toBeTruthy();
     });
   });
-  describe('"DropdownClose" Event', () => {
-    test('fires close event on outside click', async () => {
-      const handleCloseDropdown = jest.fn();
+  describe('"OutsideClick" Event', () => {
+    test('fires event on outside click', async () => {
+      const handleOutsideClick = jest.fn();
       const [, outsideElement] = renderDropdown(
-        <Dropdown trigger={<button />} onDropdownClose={handleCloseDropdown} open={true} />
+        <Dropdown trigger={<button />} onOutsideClick={handleOutsideClick} open={true} />
       );
       await runPendingEvents();
 
       act(() => outsideElement.click());
-      expect(handleCloseDropdown).toHaveBeenCalled();
+      expect(handleOutsideClick).toHaveBeenCalled();
     });
 
-    test('does not fire close event when a portaled element inside dropdown is clicked', async () => {
-      const handleCloseDropdown = jest.fn();
+    test('does not fire event when a portaled element inside dropdown is clicked', async () => {
+      const handleOutsideClick = jest.fn();
       renderDropdown(
         <Dropdown
           trigger={<button />}
-          onDropdownClose={handleCloseDropdown}
+          onOutsideClick={handleOutsideClick}
           open={true}
           content={
             <Dropdown
@@ -80,10 +80,10 @@ describe('Dropdown Component', () => {
       await runPendingEvents();
 
       act(() => screen.getByTestId('inside').click());
-      expect(handleCloseDropdown).not.toHaveBeenCalled();
+      expect(handleOutsideClick).not.toHaveBeenCalled();
     });
 
-    test('does not fire close event when a self-destructible element inside dropdown was clicked', async () => {
+    test('does not fire event when a self-destructible element inside dropdown was clicked', async () => {
       function SelfDestructible() {
         const [visible, setVisible] = useState(true);
         return visible ? (
@@ -94,21 +94,16 @@ describe('Dropdown Component', () => {
           <span data-testid="after-dismiss">Gone!</span>
         );
       }
-      const handleCloseDropdown = jest.fn();
+      const handleOutsideClick = jest.fn();
       const [wrapper] = renderDropdown(
-        <Dropdown
-          trigger={<button />}
-          onDropdownClose={handleCloseDropdown}
-          open={true}
-          content={<SelfDestructible />}
-        />
+        <Dropdown trigger={<button />} onOutsideClick={handleOutsideClick} open={true} content={<SelfDestructible />} />
       );
       await runPendingEvents();
 
       // NB: this should NOT be wrapped into act or React re-render will happen too late to reproduce the issue
       wrapper.find('[data-testid="dismiss"]')!.click();
 
-      expect(handleCloseDropdown).not.toHaveBeenCalled();
+      expect(handleOutsideClick).not.toHaveBeenCalled();
       expect(screen.getByTestId('after-dismiss')).toBeTruthy();
     });
   });
@@ -159,6 +154,235 @@ describe('Dropdown Component', () => {
     });
   });
 
+  describe('dropdown content focus events (onFocusEnter/onFocusLeave)', () => {
+    test('fires onFocusEnter only when focus enters dropdown content from outside', async () => {
+      const handleFocusEnter = jest.fn();
+      const [, outsideElement] = renderDropdown(
+        <Dropdown
+          trigger={<button data-testid="trigger" />}
+          onFocusEnter={handleFocusEnter}
+          open={true}
+          content={
+            <>
+              <button data-testid="button1">Button 1</button>
+              <button data-testid="button2">Button 2</button>
+            </>
+          }
+        />
+      );
+      await runPendingEvents();
+
+      // Focus on first button in dropdown content - onFocusEnter fires
+      screen.getByTestId('button1').focus();
+      expect(handleFocusEnter).toHaveBeenCalledTimes(1);
+
+      // Focus on second button in dropdown content - onFocusEnter should NOT fire (focus already inside)
+      screen.getByTestId('button2').focus();
+      expect(handleFocusEnter).toHaveBeenCalledTimes(1);
+
+      // Focus outside
+      outsideElement.focus();
+      expect(handleFocusEnter).toHaveBeenCalledTimes(1);
+
+      // Focus back into dropdown - onFocusEnter fires again
+      screen.getByTestId('button1').focus();
+      expect(handleFocusEnter).toHaveBeenCalledTimes(2);
+    });
+
+    test('fires onFocusLeave when focus leaves dropdown content entirely', async () => {
+      const handleFocusLeave = jest.fn();
+      const [, outsideElement] = renderDropdown(
+        <Dropdown
+          trigger={<button data-testid="trigger" />}
+          onFocusLeave={handleFocusLeave}
+          open={true}
+          content={
+            <>
+              <button data-testid="button1">Button 1</button>
+              <button data-testid="button2">Button 2</button>
+            </>
+          }
+        />
+      );
+      await runPendingEvents();
+
+      // Focus on first button in dropdown content
+      screen.getByTestId('button1').focus();
+      expect(handleFocusLeave).not.toHaveBeenCalled();
+
+      // Move focus between elements in dropdown - onFocusLeave should not fire
+      screen.getByTestId('button2').focus();
+      expect(handleFocusLeave).not.toHaveBeenCalled();
+
+      // Focus outside dropdown content - onFocusLeave should fire
+      outsideElement.focus();
+      expect(handleFocusLeave).toHaveBeenCalledTimes(1);
+    });
+
+    test('fires onFocusLeave when focus moves from dropdown content to trigger', async () => {
+      const handleFocusLeave = jest.fn();
+      renderDropdown(
+        <Dropdown
+          trigger={<button data-testid="trigger" />}
+          onFocusLeave={handleFocusLeave}
+          open={true}
+          content={<button data-testid="button1">Button 1</button>}
+        />
+      );
+      await runPendingEvents();
+
+      // Focus on button in dropdown content
+      screen.getByTestId('button1').focus();
+      expect(handleFocusLeave).not.toHaveBeenCalled();
+
+      // Move focus to trigger - onFocusLeave SHOULD fire because trigger is outside dropdown content
+      screen.getByTestId('trigger').focus();
+      expect(handleFocusLeave).toHaveBeenCalledTimes(1);
+    });
+
+    test('onFocusEnter fires only once when entering dropdown, not for internal focus changes', async () => {
+      const handleFocusEnter = jest.fn();
+      const handleFocusLeave = jest.fn();
+      const [, outsideElement] = renderDropdown(
+        <Dropdown
+          trigger={<button data-testid="trigger" />}
+          onFocusEnter={handleFocusEnter}
+          onFocusLeave={handleFocusLeave}
+          open={true}
+          content={
+            <div>
+              <input data-testid="input" />
+              <a href="#" data-testid="link">
+                Link
+              </a>
+            </div>
+          }
+        />
+      );
+      await runPendingEvents();
+
+      // Focus on input - onFocusEnter fires
+      screen.getByTestId('input').focus();
+      expect(handleFocusEnter).toHaveBeenCalledTimes(1);
+      expect(handleFocusLeave).not.toHaveBeenCalled();
+
+      // Move to link - onFocusEnter should NOT fire again (already inside), onFocusLeave does not fire
+      screen.getByTestId('link').focus();
+      expect(handleFocusEnter).toHaveBeenCalledTimes(1);
+      expect(handleFocusLeave).not.toHaveBeenCalled();
+
+      // Move outside - onFocusLeave fires
+      outsideElement.focus();
+      expect(handleFocusEnter).toHaveBeenCalledTimes(1);
+      expect(handleFocusLeave).toHaveBeenCalledTimes(1);
+    });
+
+    test('works correctly with expandToViewport (portaled content)', async () => {
+      const handleFocusEnter = jest.fn();
+      const handleFocusLeave = jest.fn();
+      const [, outsideElement] = renderDropdown(
+        <Dropdown
+          trigger={<button data-testid="trigger" />}
+          onFocusEnter={handleFocusEnter}
+          onFocusLeave={handleFocusLeave}
+          open={true}
+          expandToViewport={true}
+          content={<button data-testid="inside">inside</button>}
+        />
+      );
+      await runPendingEvents();
+
+      // Focus on portaled content - onFocusEnter fires
+      screen.getByTestId('inside').focus();
+      expect(handleFocusEnter).toHaveBeenCalledTimes(1);
+      expect(handleFocusLeave).not.toHaveBeenCalled();
+
+      // Move focus outside - onFocusLeave fires
+      outsideElement.focus();
+      expect(handleFocusEnter).toHaveBeenCalledTimes(1);
+      expect(handleFocusLeave).toHaveBeenCalledTimes(1);
+    });
+
+    test('onFocusEnter does not fire when trigger gains focus', async () => {
+      const handleFocusEnter = jest.fn();
+      renderDropdown(
+        <Dropdown
+          trigger={<button data-testid="trigger" />}
+          onFocusEnter={handleFocusEnter}
+          open={true}
+          content={<button data-testid="button1">Button 1</button>}
+        />
+      );
+      await runPendingEvents();
+
+      // Focus on trigger - onFocusEnter should not fire (trigger is not part of dropdown content)
+      screen.getByTestId('trigger').focus();
+      expect(handleFocusEnter).not.toHaveBeenCalled();
+
+      // Focus on dropdown content - onFocusEnter should fire
+      screen.getByTestId('button1').focus();
+      expect(handleFocusEnter).toHaveBeenCalledTimes(1);
+    });
+  });
+
+  describe('Escape key event', () => {
+    test('fires onEscape when Escape key is pressed while dropdown is open', async () => {
+      const handleEscape = jest.fn();
+      renderDropdown(<Dropdown trigger={<button data-testid="trigger" />} onEscape={handleEscape} open={true} />);
+      await runPendingEvents();
+
+      fireEvent.keyDown(window, { key: 'Escape' });
+      expect(handleEscape).toHaveBeenCalledTimes(1);
+    });
+
+    test('does not fire onEscape when dropdown is closed', async () => {
+      const handleEscape = jest.fn();
+      renderDropdown(<Dropdown trigger={<button data-testid="trigger" />} onEscape={handleEscape} open={false} />);
+      await runPendingEvents();
+
+      fireEvent.keyDown(window, { key: 'Escape' });
+      expect(handleEscape).not.toHaveBeenCalled();
+    });
+
+    test('stops propagation to prevent parent handlers from catching the event', async () => {
+      const handleEscape = jest.fn();
+      const parentHandler = jest.fn();
+
+      render(
+        <div onKeyDown={parentHandler}>
+          <button data-testid={outsideId} />
+          <Dropdown trigger={<button data-testid="trigger" />} onEscape={handleEscape} open={true} />
+        </div>
+      );
+      await runPendingEvents();
+
+      const event = new KeyboardEvent('keydown', { key: 'Escape', bubbles: true });
+      const stopPropagationSpy = jest.spyOn(event, 'stopPropagation');
+
+      window.dispatchEvent(event);
+
+      expect(handleEscape).toHaveBeenCalledTimes(1);
+      expect(stopPropagationSpy).toHaveBeenCalled();
+    });
+
+    test('works with expandToViewport (portaled content)', async () => {
+      const handleEscape = jest.fn();
+      renderDropdown(
+        <Dropdown
+          trigger={<button data-testid="trigger" />}
+          onEscape={handleEscape}
+          open={true}
+          expandToViewport={true}
+          content={<button data-testid="inside">inside</button>}
+        />
+      );
+      await runPendingEvents();
+
+      fireEvent.keyDown(window, { key: 'Escape' });
+      expect(handleEscape).toHaveBeenCalledTimes(1);
+    });
+  });
+
   describe('dropdown recalculate position on scroll', () => {
     beforeEach(() => {
       jest.useFakeTimers();
diff --git a/src/internal/components/dropdown/index.tsx b/src/internal/components/dropdown/index.tsx
index d0b3806874..fadee1d310 100644
--- a/src/internal/components/dropdown/index.tsx
+++ b/src/internal/components/dropdown/index.tsx
@@ -79,6 +79,8 @@ interface TransitionContentProps {
   position?: DropdownContextProviderProps['position'];
   open?: boolean;
   onMouseDown?: React.MouseEventHandler<Element>;
+  onFocusEnter?: React.FocusEventHandler<Element>;
+  onFocusLeave?: React.FocusEventHandler<Element>;
   id?: string;
   role?: string;
   ariaLabelledby?: string;
@@ -104,6 +106,8 @@ const TransitionContent = ({
   position,
   open,
   onMouseDown,
+  onFocusEnter,
+  onFocusLeave,
   id,
   role,
   ariaLabelledby,
@@ -138,6 +142,8 @@ const TransitionContent = ({
       aria-hidden={!open}
       style={dropdownStyles}
       onMouseDown={onMouseDown}
+      onFocus={onFocusEnter}
+      onBlur={onFocusLeave}
     >
       <div
         className={clsx(
@@ -162,7 +168,7 @@ const Dropdown = ({
   content,
   trigger,
   open,
-  onDropdownClose,
+  onOutsideClick,
   onMouseDown,
   header,
   footer,
@@ -179,6 +185,9 @@ const Dropdown = ({
   loopFocus = expandToViewport,
   onFocus,
   onBlur,
+  onFocusEnter,
+  onFocusLeave,
+  onEscape,
   contentKey,
   dropdownContentId,
   dropdownContentRole,
@@ -287,6 +296,21 @@ const Dropdown = ({
     }
   };
 
+  const isOutsideDropdownContent = (element: Element) =>
+    !dropdownRef.current || !nodeBelongs(dropdownRef.current, element);
+
+  const focusEnterHandler = (event: React.FocusEvent) => {
+    if (!event.relatedTarget || isOutsideDropdownContent(event.relatedTarget)) {
+      fireNonCancelableEvent(onFocusEnter, event);
+    }
+  };
+
+  const focusLeaveHandler = (event: React.FocusEvent) => {
+    if (!event.relatedTarget || isOutsideDropdownContent(event.relatedTarget)) {
+      fireNonCancelableEvent(onFocusLeave, event);
+    }
+  };
+
   // Check if the dropdown has enough space to fit with its desired width constraints
   // If not, remove the class that allows flexible width sizing
   const fixStretching = () => {
@@ -372,7 +396,7 @@ const Dropdown = ({
       // shadow root if the component is rendered inside shadow DOM.
       const target = event.composedPath ? event.composedPath()[0] : event.target;
       if (!nodeBelongs(dropdownRef.current, target) && !nodeBelongs(triggerRef.current, target)) {
-        fireNonCancelableEvent(onDropdownClose);
+        fireNonCancelableEvent(onOutsideClick);
       }
     };
     window.addEventListener('click', clickListener, true);
@@ -380,7 +404,27 @@ const Dropdown = ({
     return () => {
       window.removeEventListener('click', clickListener, true);
     };
-  }, [open, onDropdownClose]);
+  }, [open, onOutsideClick]);
+
+  // subscribe to Escape key press
+  useEffect(() => {
+    // Only add the listener if onEscape callback is provided
+    if (!open || !onEscape) {
+      return;
+    }
+    const keydownListener = (event: KeyboardEvent) => {
+      if (event.key === 'Escape') {
+        // Prevent any surrounding modals or dialogs from acting on this Escape key
+        event.stopPropagation();
+        fireNonCancelableEvent(onEscape);
+      }
+    };
+    window.addEventListener('keydown', keydownListener, true);
+
+    return () => {
+      window.removeEventListener('keydown', keydownListener, true);
+    };
+  }, [open, onEscape]);
 
   // sync dropdown position on scroll and resize
   useLayoutEffect(() => {
@@ -484,6 +528,8 @@ const Dropdown = ({
                 maxWidth={getMaxWidthCssValue()}
                 footer={footer}
                 onMouseDown={onMouseDown}
+                onFocusEnter={focusEnterHandler}
+                onFocusLeave={focusLeaveHandler}
                 isRefresh={isRefresh}
                 dropdownRef={dropdownRef}
                 verticalContainerRef={verticalContainerRef}
diff --git a/src/internal/components/dropdown/interfaces.ts b/src/internal/components/dropdown/interfaces.ts
index d4603738e3..3a6b8d6ef5 100644
--- a/src/internal/components/dropdown/interfaces.ts
+++ b/src/internal/components/dropdown/interfaces.ts
@@ -82,9 +82,11 @@ export interface DropdownProps extends ExpandToViewport {
   open?: boolean;
 
   /**
-   * Called when a user clicks outside of the dropdown content, when it is open.
+   * Called when the user clicks outside the dropdown and trigger.
+   * The dropdown does not close automatically - the parent component
+   * must update the `open` prop to close the dropdown.
    */
-  onDropdownClose?: NonCancelableEventHandler<null>;
+  onOutsideClick?: NonCancelableEventHandler<null>;
 
   /**
    * Called when a mouse button is pressed inside the dropdown content.
@@ -158,6 +160,24 @@ export interface DropdownProps extends ExpandToViewport {
    */
   onBlur?: NonCancelableEventHandler<Pick<React.FocusEvent, 'target' | 'relatedTarget'>>;
 
+  /**
+   * Called when focus enters the dropdown content from outside.
+   * This fires only once when focus moves into the dropdown, not when moving between elements within it.
+   */
+  onFocusEnter?: NonCancelableEventHandler<Pick<React.FocusEvent, 'target' | 'relatedTarget'>>;
+
+  /**
+   * Called when focus leaves the dropdown content entirely.
+   */
+  onFocusLeave?: NonCancelableEventHandler<Pick<React.FocusEvent, 'target' | 'relatedTarget'>>;
+
+  /**
+   * Called when the user presses the Escape key while the dropdown is open.
+   * The dropdown does not close automatically - the parent component
+   * must update the `open` prop to close the dropdown.
+   */
+  onEscape?: NonCancelableEventHandler;
+
   /**
    * ID for the dropdown content wrapper
    */