diff --git a/www/api-reference/components/Search/Hits/index.tsx b/www/api-reference/components/Search/Hits/index.tsx
index 4d4acd4d6d..677faa889e 100644
--- a/www/api-reference/components/Search/Hits/index.tsx
+++ b/www/api-reference/components/Search/Hits/index.tsx
@@ -141,7 +141,7 @@ const SearchHits = ({ indexName, setNoResults }: SearchHitsProps) => {
                 "overflow-x-hidden text-ellipsis whitespace-nowrap break-words",
                 "hover:bg-medusa-bg-base-hover dark:hover:bg-medusa-bg-base-hover-dark",
                 "focus:bg-medusa-bg-base-hover dark:focus:bg-medusa-bg-base-hover-dark",
-                "focus:outline-none"
+                "last:mb-1 focus:outline-none"
               )}
               key={index}
               tabIndex={index}
diff --git a/www/api-reference/components/Search/Modal/index.tsx b/www/api-reference/components/Search/Modal/index.tsx
index 1b59140237..e9a4dc6d26 100644
--- a/www/api-reference/components/Search/Modal/index.tsx
+++ b/www/api-reference/components/Search/Modal/index.tsx
@@ -1,6 +1,6 @@
 "use client"
 
-import React, { useEffect, useMemo, useRef, useState } from "react"
+import React, { useCallback, useEffect, useMemo, useRef, useState } from "react"
 import algoliasearch, { SearchClient } from "algoliasearch/lite"
 import { InstantSearch, SearchBox } from "react-instantsearch"
 import Modal from "../../Modal"
@@ -110,6 +110,17 @@ const SearchModal = () => {
   useEffect(() => {
     if (isOpen && searchBoxRef.current) {
       focusSearchInput()
+    } else if (!isOpen) {
+      const focusedItem = modalRef.current?.querySelector(
+        ":focus"
+      ) as HTMLElement
+      if (
+        focusedItem &&
+        focusedItem === searchBoxRef.current?.querySelector("input")
+      ) {
+        // remove focus
+        focusedItem.blur()
+      }
     }
   }, [isOpen])
 
@@ -179,14 +190,51 @@ const SearchModal = () => {
     }
   }
 
+  const shortcutKeys = useMemo(() => ["ArrowUp", "ArrowDown", "Enter"], [])
+
   useKeyboardShortcut({
     metakey: false,
-    shortcutKeys: ["ArrowUp", "ArrowDown", "Enter"],
+    shortcutKeys,
     action: handleKeyAction,
     checkEditing: false,
     preventDefault: false,
   })
 
+  const handleKeyDown = useCallback(
+    (e: KeyboardEvent) => {
+      if (!isOpen) {
+        return
+      }
+      // check if shortcut keys were pressed
+      const lowerPressedKey = e.key.toLowerCase()
+      const pressedShortcut = [...shortcutKeys, "Escape"].some(
+        (s) => s.toLowerCase() === lowerPressedKey
+      )
+      if (pressedShortcut) {
+        return
+      }
+
+      const focusedItem = modalRef.current?.querySelector(
+        ":focus"
+      ) as HTMLElement
+      const searchInput = searchBoxRef.current?.querySelector(
+        "input"
+      ) as HTMLInputElement
+      if (searchInput && focusedItem !== searchInput) {
+        searchInput.focus()
+      }
+    },
+    [shortcutKeys, isOpen]
+  )
+
+  useEffect(() => {
+    window.addEventListener("keydown", handleKeyDown)
+
+    return () => {
+      window.removeEventListener("keydown", handleKeyDown)
+    }
+  }, [handleKeyDown])
+
   return (
     <Modal
       contentClassName={clsx(
diff --git a/www/api-reference/components/Search/Suggestions/index.tsx b/www/api-reference/components/Search/Suggestions/index.tsx
index e2316795b7..3114717f02 100644
--- a/www/api-reference/components/Search/Suggestions/index.tsx
+++ b/www/api-reference/components/Search/Suggestions/index.tsx
@@ -21,7 +21,7 @@ const SearchSuggestions = () => {
             "cursor-pointer rounded-sm p-0.5",
             "hover:bg-medusa-bg-base-hover dark:hover:bg-medusa-bg-base-hover-dark",
             "focus:bg-medusa-bg-base-hover dark:focus:bg-medusa-bg-base-hover-dark",
-            "focus:outline-none"
+            "last:mb-1 focus:outline-none"
           )}
           onClick={() =>
             setIndexUiState({
diff --git a/www/docs/src/components/Search/Hits/index.tsx b/www/docs/src/components/Search/Hits/index.tsx
index f1869b7b3e..90ba582ba8 100644
--- a/www/docs/src/components/Search/Hits/index.tsx
+++ b/www/docs/src/components/Search/Hits/index.tsx
@@ -129,7 +129,7 @@ const SearchHits = ({ indexName, setNoResults }: SearchHitsProps) => {
                 "overflow-x-hidden text-ellipsis whitespace-nowrap break-words",
                 "hover:bg-medusa-bg-base-hover dark:hover:bg-medusa-bg-base-hover-dark",
                 "focus:bg-medusa-bg-base-hover dark:focus:bg-medusa-bg-base-hover-dark",
-                "focus:outline-none"
+                "focus:outline-none last:mb-1"
               )}
               key={index}
               tabIndex={index}
diff --git a/www/docs/src/components/Search/Modal/index.tsx b/www/docs/src/components/Search/Modal/index.tsx
index 1be624d44a..bc75d05e3a 100644
--- a/www/docs/src/components/Search/Modal/index.tsx
+++ b/www/docs/src/components/Search/Modal/index.tsx
@@ -1,4 +1,4 @@
-import React, { useEffect, useMemo, useRef, useState } from "react"
+import React, { useCallback, useEffect, useMemo, useRef, useState } from "react"
 import algoliasearch, { SearchClient } from "algoliasearch/lite"
 import { InstantSearch, SearchBox } from "react-instantsearch"
 import Modal from "../../Modal"
@@ -86,6 +86,17 @@ const SearchModal = () => {
   useEffect(() => {
     if (isOpen && searchBoxRef.current) {
       focusSearchInput()
+    } else if (!isOpen) {
+      const focusedItem = modalRef.current?.querySelector(
+        ":focus"
+      ) as HTMLElement
+      if (
+        focusedItem &&
+        focusedItem === searchBoxRef.current?.querySelector("input")
+      ) {
+        // remove focus
+        focusedItem.blur()
+      }
     }
   }, [isOpen])
 
@@ -155,14 +166,51 @@ const SearchModal = () => {
     }
   }
 
+  const shortcutKeys = useMemo(() => ["ArrowUp", "ArrowDown", "Enter"], [])
+
   useKeyboardShortcut({
     metakey: false,
-    shortcutKeys: ["ArrowUp", "ArrowDown", "Enter"],
+    shortcutKeys,
     action: handleKeyAction,
     checkEditing: false,
     preventDefault: false,
   })
 
+  const handleKeyDown = useCallback(
+    (e: KeyboardEvent) => {
+      if (!isOpen) {
+        return
+      }
+      // check if shortcut keys were pressed
+      const lowerPressedKey = e.key.toLowerCase()
+      const pressedShortcut = [...shortcutKeys, "Escape"].some(
+        (s) => s.toLowerCase() === lowerPressedKey
+      )
+      if (pressedShortcut) {
+        return
+      }
+
+      const focusedItem = modalRef.current?.querySelector(
+        ":focus"
+      ) as HTMLElement
+      const searchInput = searchBoxRef.current?.querySelector(
+        "input"
+      ) as HTMLInputElement
+      if (searchInput && focusedItem !== searchInput) {
+        searchInput.focus()
+      }
+    },
+    [shortcutKeys, isOpen]
+  )
+
+  useEffect(() => {
+    window.addEventListener("keydown", handleKeyDown)
+
+    return () => {
+      window.removeEventListener("keydown", handleKeyDown)
+    }
+  }, [handleKeyDown])
+
   return (
     <Modal
       contentClassName={clsx(
diff --git a/www/docs/src/components/Search/Suggestions/index.tsx b/www/docs/src/components/Search/Suggestions/index.tsx
index c7750cc45e..fa6e443b4d 100644
--- a/www/docs/src/components/Search/Suggestions/index.tsx
+++ b/www/docs/src/components/Search/Suggestions/index.tsx
@@ -39,7 +39,7 @@ const SearchSuggestions = () => {
                 "cursor-pointer rounded-sm p-0.5",
                 "hover:bg-medusa-bg-base-hover dark:hover:bg-medusa-bg-base-hover-dark",
                 "focus:bg-medusa-bg-base-hover dark:focus:bg-medusa-bg-base-hover-dark",
-                "focus:outline-none"
+                "focus:outline-none last:mb-1"
               )}
               onClick={() =>
                 setIndexUiState({