diff --git a/packages/calcite-components/src/components/flow-item/flow-item.e2e.ts b/packages/calcite-components/src/components/flow-item/flow-item.e2e.ts
index 56b34c2390b..c95699698d2 100644
--- a/packages/calcite-components/src/components/flow-item/flow-item.e2e.ts
+++ b/packages/calcite-components/src/components/flow-item/flow-item.e2e.ts
@@ -287,4 +287,18 @@ describe("calcite-flow-item", () => {
 
     expect(toggleSpy).toHaveReceivedEventTimes(1);
   });
+
+  it("honors calciteFlowItemClose event", async () => {
+    const page = await newE2EPage({
+      html: "<calcite-flow-item closable>test</calcite-flow-item>",
+    });
+
+    const toggleSpy = await page.spyOnEvent("calciteFlowItemClose");
+    const panel = await page.find("calcite-flow-item >>> calcite-panel");
+    panel.triggerEvent("calcitePanelClose");
+    await page.waitForChanges();
+
+    expect(toggleSpy).toHaveReceivedEventTimes(1);
+    expect(await panel.getProperty("closed")).toBe(true);
+  });
 });
diff --git a/packages/calcite-components/src/components/flow-item/flow-item.tsx b/packages/calcite-components/src/components/flow-item/flow-item.tsx
index 9d87efa0715..4851ec3aad6 100644
--- a/packages/calcite-components/src/components/flow-item/flow-item.tsx
+++ b/packages/calcite-components/src/components/flow-item/flow-item.tsx
@@ -294,6 +294,7 @@ export class FlowItem
 
   handlePanelClose = (event: CustomEvent<void>): void => {
     event.stopPropagation();
+    this.closed = true;
     this.calciteFlowItemClose.emit();
   };