diff --git a/packages/toolpad-app/src/toolpad/AppEditor/PageEditor/RenderPanel/OverlayGrid.tsx b/packages/toolpad-app/src/toolpad/AppEditor/PageEditor/RenderPanel/OverlayGrid.tsx
index bb1be6234e3..a96cc0719bb 100644
--- a/packages/toolpad-app/src/toolpad/AppEditor/PageEditor/RenderPanel/OverlayGrid.tsx
+++ b/packages/toolpad-app/src/toolpad/AppEditor/PageEditor/RenderPanel/OverlayGrid.tsx
@@ -1,5 +1,6 @@
 import * as React from 'react';
 import { Grid, styled } from '@mui/material';
+import invariant from 'invariant';
 
 export interface OverlayGridHandle {
   gridElement: HTMLDivElement | null;
@@ -37,17 +38,18 @@ export const OverlayGrid = React.forwardRef<OverlayGridHandle>(function OverlayG
   React.useImperativeHandle(
     forwardedRef,
     () => {
+      const gridElement = gridRef.current;
+      invariant(gridElement, 'Overlay grid ref not bound');
+
       let columnEdges: number[] = [];
-      if (gridRef.current) {
-        const gridColumnContainers = Array.from(gridRef.current.children);
-        const gridColumnEdges = gridColumnContainers.map((container: Element) => {
-          const containerRect = container.firstElementChild?.getBoundingClientRect();
-          return containerRect
-            ? [Math.round(containerRect.x), Math.round(containerRect.x + containerRect.width)]
-            : [];
-        });
-        columnEdges = gridColumnEdges.flat();
-      }
+      const gridColumnContainers = Array.from(gridElement.children);
+      const gridColumnEdges = gridColumnContainers.map((container: Element) => {
+        const containerRect = container.firstElementChild?.getBoundingClientRect();
+        return containerRect
+          ? [Math.round(containerRect.x), Math.round(containerRect.x + containerRect.width)]
+          : [];
+      });
+      columnEdges = gridColumnEdges.flat();
 
       return {
         gridElement: gridRef.current,
diff --git a/packages/toolpad-app/src/toolpad/AppEditor/PageEditor/RenderPanel/RenderOverlay.tsx b/packages/toolpad-app/src/toolpad/AppEditor/PageEditor/RenderPanel/RenderOverlay.tsx
index 0da48a4598e..972ef881bc3 100644
--- a/packages/toolpad-app/src/toolpad/AppEditor/PageEditor/RenderPanel/RenderOverlay.tsx
+++ b/packages/toolpad-app/src/toolpad/AppEditor/PageEditor/RenderPanel/RenderOverlay.tsx
@@ -2,6 +2,7 @@ import * as React from 'react';
 import { NodeId } from '@mui/toolpad-core';
 import { styled } from '@mui/material';
 import clsx from 'clsx';
+import invariant from 'invariant';
 
 import * as appDom from '../../../../appDom';
 import { useDom, useDomApi } from '../../../DomLoader';
@@ -164,6 +165,8 @@ export default function RenderOverlay({ canvasHostRef }: RenderOverlayProps) {
 
   const selectedNode = selection && appDom.getNode(dom, selection);
 
+  const overlayRef = React.useRef<HTMLDivElement | null>(null);
+
   const draggedNode = React.useMemo(
     (): appDom.ElementNode | null =>
       newNode || (draggedNodeId && appDom.getNode(dom, draggedNodeId, 'element')),
@@ -1011,14 +1014,19 @@ export default function RenderOverlay({ canvasHostRef }: RenderOverlayProps) {
         }
       }
 
-      api.dragEnd();
-
       if (selection) {
         deleteOrphanedLayoutComponents(draggedNode, dragOverNodeId);
       }
 
+      api.dragEnd();
+
       if (newNode) {
         api.select(newNode.id);
+
+        // Refocus on overlay so that keyboard events can keep being caught by it
+        const overlayElement = overlayRef.current;
+        invariant(overlayElement, 'Overlay ref not bound');
+        overlayElement.focus();
       }
     },
     [
@@ -1309,6 +1317,7 @@ export default function RenderOverlay({ canvasHostRef }: RenderOverlayProps) {
 
   return (
     <OverlayRoot
+      ref={overlayRef}
       className={clsx({
         [overlayClasses.nodeDrag]: isDraggingOver,
         [overlayClasses.resizeHorizontal]: