diff --git a/docs/resources/changelog.md b/docs/resources/changelog.md
index 21098a0f2..46ca13791 100644
--- a/docs/resources/changelog.md
+++ b/docs/resources/changelog.md
@@ -11,6 +11,7 @@ New versions of Shoelace are released as-needed and generally occur when a criti
 ## Next
 
 - Fixed a bug that prevented `hoist` from working correctly in `<sl-dropdown>` after updating Floating UI [#1024](https://github.com/shoelace-style/shoelace/issues/1024)
+- Fixed a bug in `<sl-dropdown>` that caused containing dialogs, drawers, etc. to close when pressing <kbd>Escape</kbd> while focused [#1024](https://github.com/shoelace-style/shoelace/issues/1024)
 
 ## 2.0.0-beta.84
 
diff --git a/src/components/dropdown/dropdown.ts b/src/components/dropdown/dropdown.ts
index a72347fa2..13651784f 100644
--- a/src/components/dropdown/dropdown.ts
+++ b/src/components/dropdown/dropdown.ts
@@ -214,7 +214,8 @@ export default class SlDropdown extends ShoelaceElement {
 
   handleTriggerKeyDown(event: KeyboardEvent) {
     // Close when escape or tab is pressed
-    if (event.key === 'Escape') {
+    if (event.key === 'Escape' && this.open) {
+      event.stopPropagation();
       this.focusOnTrigger();
       this.hide();
       return;