diff --git a/packages/@headlessui-react/src/components/dialog/dialog.tsx b/packages/@headlessui-react/src/components/dialog/dialog.tsx
index 8d4b42cec8..859fda748f 100644
--- a/packages/@headlessui-react/src/components/dialog/dialog.tsx
+++ b/packages/@headlessui-react/src/components/dialog/dialog.tsx
@@ -32,7 +32,7 @@ import { Description, useDescriptions } from '../description/description'
 import { useOpenClosed, State } from '../../internal/open-closed'
 import { useServerHandoffComplete } from '../../hooks/use-server-handoff-complete'
 import { StackProvider, StackMessage } from '../../internal/stack-context'
-import { useOutsideClick, Features as OutsideClickFeatures } from '../../hooks/use-outside-click'
+import { useOutsideClick } from '../../hooks/use-outside-click'
 import { getOwnerDocument } from '../../utils/owner'
 import { useOwnerDocument } from '../../hooks/use-owner'
 import { useEventListener } from '../../hooks/use-event-listener'
@@ -100,13 +100,7 @@ let DEFAULT_DIALOG_TAG = 'div' as const
 interface DialogRenderPropArg {
   open: boolean
 }
-type DialogPropsWeControl =
-  | 'id'
-  | 'role'
-  | 'aria-modal'
-  | 'aria-describedby'
-  | 'aria-labelledby'
-  | 'onClick'
+type DialogPropsWeControl = 'id' | 'role' | 'aria-modal' | 'aria-describedby' | 'aria-labelledby'
 
 let DialogRenderFeatures = Features.RenderStrategy | Features.Static
 
@@ -224,7 +218,7 @@ let DialogRoot = forwardRefWithAs(function Dialog<
 
       close()
     },
-    OutsideClickFeatures.IgnoreScrollbars
+    enabled
   )
 
   // Handle `Escape` to close
@@ -311,9 +305,6 @@ let DialogRoot = forwardRefWithAs(function Dialog<
     'aria-modal': dialogState === DialogStates.Open ? true : undefined,
     'aria-labelledby': state.titleId,
     'aria-describedby': describedby,
-    onClick(event: ReactMouseEvent) {
-      event.stopPropagation()
-    },
   }
 
   return (
@@ -492,10 +483,17 @@ let Panel = forwardRefWithAs(function Panel<TTag extends ElementType = typeof DE
     [dialogState]
   )
 
+  // Prevent the click events inside the Dialog.Panel from bubbling through the React Tree which
+  // could submit wrapping <form> elements even if we portalled the Dialog.
+  let handleClick = useEvent((event: ReactMouseEvent) => {
+    event.stopPropagation()
+  })
+
   let theirProps = props
   let ourProps = {
     ref: panelRef,
     id,
+    onClick: handleClick,
   }
 
   return render({
diff --git a/packages/@headlessui-react/src/components/focus-trap/focus-trap.tsx b/packages/@headlessui-react/src/components/focus-trap/focus-trap.tsx
index 0cdf662b65..bbab04b213 100644
--- a/packages/@headlessui-react/src/components/focus-trap/focus-trap.tsx
+++ b/packages/@headlessui-react/src/components/focus-trap/focus-trap.tsx
@@ -147,7 +147,10 @@ function useRestoreFocus({ ownerDocument }: { ownerDocument: Document | null },
   useWatch(() => {
     if (enabled) return
 
-    focusElement(restoreElement.current)
+    if (ownerDocument?.activeElement === ownerDocument?.body) {
+      focusElement(restoreElement.current)
+    }
+
     restoreElement.current = null
   }, [enabled])
 
diff --git a/packages/@headlessui-react/src/components/menu/menu.tsx b/packages/@headlessui-react/src/components/menu/menu.tsx
index 1dae520d4a..a46609b2eb 100644
--- a/packages/@headlessui-react/src/components/menu/menu.tsx
+++ b/packages/@headlessui-react/src/components/menu/menu.tsx
@@ -344,7 +344,6 @@ let Button = forwardRefWithAs(function Button<TTag extends ElementType = typeof
       d.nextFrame(() => state.buttonRef.current?.focus({ preventScroll: true }))
     } else {
       event.preventDefault()
-      event.stopPropagation()
       dispatch({ type: ActionTypes.OpenMenu })
     }
   })
diff --git a/packages/@headlessui-vue/src/components/dialog/dialog.ts b/packages/@headlessui-vue/src/components/dialog/dialog.ts
index 0845d073f8..0cf90f18de 100644
--- a/packages/@headlessui-vue/src/components/dialog/dialog.ts
+++ b/packages/@headlessui-vue/src/components/dialog/dialog.ts
@@ -29,7 +29,7 @@ import { ForcePortalRoot } from '../../internal/portal-force-root'
 import { Description, useDescriptions } from '../description/description'
 import { dom } from '../../utils/dom'
 import { useOpenClosed, State } from '../../internal/open-closed'
-import { useOutsideClick, Features as OutsideClickFeatures } from '../../hooks/use-outside-click'
+import { useOutsideClick } from '../../hooks/use-outside-click'
 import { getOwnerDocument } from '../../utils/owner'
 import { useEventListener } from '../../hooks/use-event-listener'
 import { Hidden, Features as HiddenFeatures } from '../../internal/hidden'
@@ -196,8 +196,7 @@ export let Dialog = defineComponent({
 
         api.close()
         nextTick(() => target?.focus())
-      },
-      OutsideClickFeatures.IgnoreScrollbars
+      }
     )
 
     // Handle `Escape` to close
@@ -264,10 +263,6 @@ export let Dialog = defineComponent({
       onInvalidate(() => observer.disconnect())
     })
 
-    function handleClick(event: MouseEvent) {
-      event.stopPropagation()
-    }
-
     return () => {
       let ourProps = {
         // Manually passthrough the attributes, because Vue can't automatically pass
@@ -279,7 +274,6 @@ export let Dialog = defineComponent({
         'aria-modal': dialogState.value === DialogStates.Open ? true : undefined,
         'aria-labelledby': titleId.value,
         'aria-describedby': describedby.value,
-        onClick: handleClick,
       }
       let { open: _, initialFocus, ...incomingProps } = props
 
@@ -417,10 +411,15 @@ export let DialogPanel = defineComponent({
 
     expose({ el: api.panelRef, $el: api.panelRef })
 
+    function handleClick(event: MouseEvent) {
+      event.stopPropagation()
+    }
+
     return () => {
       let ourProps = {
         id,
         ref: api.panelRef,
+        onClick: handleClick,
       }
       let incomingProps = props
 
diff --git a/packages/@headlessui-vue/src/components/menu/menu.ts b/packages/@headlessui-vue/src/components/menu/menu.ts
index e34a831462..5e29c4c18d 100644
--- a/packages/@headlessui-vue/src/components/menu/menu.ts
+++ b/packages/@headlessui-vue/src/components/menu/menu.ts
@@ -289,7 +289,6 @@ export let MenuButton = defineComponent({
         nextTick(() => dom(api.buttonRef)?.focus({ preventScroll: true }))
       } else {
         event.preventDefault()
-        event.stopPropagation()
         api.openMenu()
         nextFrame(() => dom(api.itemsRef)?.focus({ preventScroll: true }))
       }