diff --git a/iron-button-state.html b/iron-button-state.html
index 8114e2d..c5221b8 100644
--- a/iron-button-state.html
+++ b/iron-button-state.html
@@ -91,7 +91,7 @@
     },
 
     observers: [
-      '_detectKeyboardFocus(focused)',
+      '_focusChanged(focused)',
       '_activeChanged(active, ariaActiveAttribute)'
     ],
 
@@ -112,6 +112,14 @@
       }
     },
 
+    _focusChanged: function(focused) {
+      this._detectKeyboardFocus(focused);
+
+      if (!focused) {
+        this._setPressed(false);
+      }
+    },
+
     _detectKeyboardFocus: function(focused) {
       this._setReceivedFocusFromKeyboard(!this.pointerDown && focused);
     },
diff --git a/test/active-state.html b/test/active-state.html
index 8735aaf..e1ed479 100644
--- a/test/active-state.html
+++ b/test/active-state.html
@@ -125,6 +125,16 @@
             });
           });
         });
+
+        suite('on blur', function() {
+          test('the pressed property becomes false', function() {
+            MockInteractions.focus(activeTarget);
+            MockInteractions.down(activeTarget);
+            expect(activeTarget.hasAttribute('pressed')).to.be.eql(true);
+            MockInteractions.blur(activeTarget);
+            expect(activeTarget.hasAttribute('pressed')).to.be.eql(false);
+          });
+        });
       });
 
       suite('without toggles attribute', function() {