diff --git a/CHANGELOG.md b/CHANGELOG.md
index a1e07319d9..a2191a65e1 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -4,7 +4,7 @@
 
 ### Fixed
 
-- Fixed retained terminals not regaining keyboard focus after switching back to their workspace with a number shortcut.
+- Fixed retained terminals not regaining keyboard focus after switching back to their workspace, including when an overlay or another input delays focus until it is released.
 
 ## 0.11.0-beta.5 - 2026-10-06
 
diff --git a/packages/app/e2e/browser/terminal-retained-tab-stream.spec.ts b/packages/app/e2e/browser/terminal-retained-tab-stream.spec.ts
index 9a4b9cc31d..8a46d9b1b4 100644
--- a/packages/app/e2e/browser/terminal-retained-tab-stream.spec.ts
+++ b/packages/app/e2e/browser/terminal-retained-tab-stream.spec.ts
@@ -1,6 +1,7 @@
 import type { Page } from "@playwright/test";
 import { expect, test } from "../support/fixtures";
 import { TerminalE2EHarness } from "../support/helpers/terminal-dsl";
+import { openCommandCenter, closeCommandCenter } from "../support/helpers/command-center";
 
 interface AttachOverlayProbeWindow extends Window {
   __terminalAttachOverlaySeen?: boolean;
@@ -62,42 +63,43 @@ test.describe("retained terminal tab streams", () => {
 
   test("workspace number shortcuts refocus a retained terminal", async ({ page }) => {
     const first = await harness.createTerminal({ name: "focus-first" });
-    const other = await TerminalE2EHarness.create({ tempPrefix: "terminal-workspace-focus-" });
-    try {
-      const second = await other.createTerminal({ name: "focus-second" });
-      await harness.openTerminal(page, { terminalId: first.id });
-      await other.openTerminal(page, { terminalId: second.id });
-      const rows = page
-        .locator('[data-testid^="sidebar-workspace-row-"]')
-        .filter({ visible: true });
-      const rowIds = await rows.evaluateAll((elements) => {
-        const ids: Array<string | null> = [];
-        for (const element of elements) ids.push(element.getAttribute("data-testid"));
-        return ids;
-      });
-      const firstIndex = rowIds.findIndex((id) => id?.endsWith(`:${harness.workspaceId}`)) + 1;
-      const secondIndex = rowIds.findIndex((id) => id?.endsWith(`:${other.workspaceId}`)) + 1;
-      expect(firstIndex).toBeGreaterThan(0);
-      expect(secondIndex).toBeGreaterThan(0);
-      const terminalInput = page
-        .getByTestId("terminal-surface")
-        .filter({ visible: true })
-        .locator("textarea");
-      await expect(terminalInput).toBeFocused();
-      // Browser Alt+Digit routes the same workspace action as desktop Cmd+Digit.
-      await page.keyboard.press(`Alt+${firstIndex}`);
-      await expect(page).toHaveURL(new RegExp(`/workspace/${harness.workspaceId}`));
-      await expect(terminalInput).toBeFocused();
-      await page.keyboard.press(`Alt+${secondIndex}`);
-      await expect(page).toHaveURL(new RegExp(`/workspace/${other.workspaceId}`));
-      await expect(terminalInput).toBeFocused();
-      await page.keyboard.type("printf 'WORKSPACE_FOCUS_OK\\n'");
-      await page.keyboard.press("Enter");
-      await expect
-        .poll(async () => (await other.client.captureTerminal(second.id)).lines)
-        .toContain("WORKSPACE_FOCUS_OK");
-    } finally {
-      await other.cleanup();
-    }
+    const other = await harness.createOtherWorkspace();
+    const second = await other.createTerminal({ name: "focus-second" });
+    await harness.openTerminal(page, { terminalId: first.id });
+    await other.openTerminal(page, { terminalId: second.id });
+    await other.expectTerminalFocused(page);
+    await harness.switchToWorkspaceByShortcut(page);
+    await harness.expectTerminalFocused(page);
+    await other.switchToWorkspaceByShortcut(page);
+    await other.expectTerminalFocused(page);
+    await other.typeCommandAndExpectOutput(page, {
+      terminalId: second.id,
+      command: "printf 'WORKSPACE_FOCUS_OK\\n'",
+      output: "WORKSPACE_FOCUS_OK",
+    });
+  });
+
+  test("closing an overlay after returning to a workspace refocuses its terminal", async ({
+    page,
+  }) => {
+    const first = await harness.createTerminal({ name: "overlay-first" });
+    const other = await harness.createOtherWorkspace();
+    const second = await other.createTerminal({ name: "overlay-second" });
+    await harness.openTerminal(page, { terminalId: first.id });
+    await other.openTerminal(page, { terminalId: second.id });
+    await harness.switchToWorkspaceByShortcut(page);
+    await harness.expectTerminalFocused(page);
+    await harness.rememberWorkspaceForHistoryReturn(page);
+    await other.switchToWorkspaceByShortcut(page);
+    const overlay = await openCommandCenter(page);
+    await harness.returnToWorkspaceThroughHistory(page);
+    await expect(overlay.getByTestId("command-center-input")).toBeFocused();
+    await closeCommandCenter(page);
+    await harness.expectTerminalFocused(page);
+    await harness.typeCommandAndExpectOutput(page, {
+      terminalId: first.id,
+      command: "printf 'OVERLAY_FOCUS_OK\\n'",
+      output: "OVERLAY_FOCUS_OK",
+    });
   });
 });
diff --git a/packages/app/e2e/support/helpers/terminal-dsl.ts b/packages/app/e2e/support/helpers/terminal-dsl.ts
index bf16276464..c9698a14c3 100644
--- a/packages/app/e2e/support/helpers/terminal-dsl.ts
+++ b/packages/app/e2e/support/helpers/terminal-dsl.ts
@@ -1,4 +1,4 @@
-import type { Page } from "@playwright/test";
+import { expect, type Page } from "@playwright/test";
 import type { TerminalActivity, TerminalActivityState } from "@getpaseo/protocol/terminal-activity";
 import { createTempGitRepo } from "./workspace";
 import { navigateToTerminal, setupDeterministicPrompt } from "./terminal-perf";
@@ -30,6 +30,7 @@ export class TerminalE2EHarness {
   readonly tempRepo: TempRepo;
   readonly projectId: string;
   readonly workspaceId: string;
+  private readonly otherWorkspaces: TerminalE2EHarness[] = [];
 
   private constructor(input: {
     client: SeedDaemonClient;
@@ -63,6 +64,7 @@ export class TerminalE2EHarness {
   }
 
   async cleanup(): Promise<void> {
+    for (const workspace of this.otherWorkspaces) await workspace.cleanup();
     await this.client.removeProject(this.projectId).catch(() => {});
     await this.client.close().catch(() => {});
     await this.tempRepo.cleanup().catch(() => {});
@@ -131,6 +133,54 @@ export class TerminalE2EHarness {
     });
   }
 
+  async createOtherWorkspace(): Promise<TerminalE2EHarness> {
+    const workspace = await TerminalE2EHarness.create({ tempPrefix: "terminal-workspace-focus-" });
+    this.otherWorkspaces.push(workspace);
+    return workspace;
+  }
+
+  async switchToWorkspaceByShortcut(page: Page): Promise<void> {
+    const rows = page.locator('[data-testid^="sidebar-workspace-row-"]').filter({ visible: true });
+    const rowIds = await rows.evaluateAll((elements) =>
+      elements.map((element) => element.getAttribute("data-testid")),
+    );
+    const index = rowIds.findIndex((id) => id?.endsWith(`:${this.workspaceId}`)) + 1;
+    expect(index).toBeGreaterThan(0);
+    expect(index).toBeLessThanOrEqual(9);
+    // Browser Alt+Digit routes the same workspace action as desktop Cmd+Digit.
+    await page.keyboard.press(`Alt+${index}`);
+    await expect(page).toHaveURL(new RegExp(`/workspace/${this.workspaceId}`));
+  }
+
+  async rememberWorkspaceForHistoryReturn(page: Page): Promise<void> {
+    // Workspace shortcuts replace the current route; preserve an in-app history entry.
+    await page.evaluate(() =>
+      window.history.pushState(window.history.state, "", window.location.href),
+    );
+  }
+
+  async returnToWorkspaceThroughHistory(page: Page): Promise<void> {
+    await page.goBack();
+    await expect(page).toHaveURL(new RegExp(`/workspace/${this.workspaceId}`));
+  }
+
+  async expectTerminalFocused(page: Page): Promise<void> {
+    await expect(
+      this.terminalSurface(page).filter({ visible: true }).locator(".xterm-helper-textarea"),
+    ).toBeFocused();
+  }
+
+  async typeCommandAndExpectOutput(
+    page: Page,
+    input: { terminalId: string; command: string; output: string },
+  ): Promise<void> {
+    await page.keyboard.type(input.command);
+    await page.keyboard.press("Enter");
+    await expect
+      .poll(async () => (await this.client.captureTerminal(input.terminalId)).lines)
+      .toContain(input.output);
+  }
+
   terminalSurface(page: Page) {
     return page.locator('[data-testid="terminal-surface"]');
   }
diff --git a/packages/app/src/components/terminal-pane.tsx b/packages/app/src/components/terminal-pane.tsx
index 7344d004a1..6c31fe07c1 100644
--- a/packages/app/src/components/terminal-pane.tsx
+++ b/packages/app/src/components/terminal-pane.tsx
@@ -2,7 +2,7 @@ import { TerminalFind, type TerminalPaneFindHandle } from "@/terminal/find";
 import type { TerminalFindResult } from "@/terminal/runtime/terminal-emulator-runtime";
 import { LoadingSpinner } from "@/components/ui/loading-spinner";
 import { useRetainedPanelActive } from "@/components/retained-panel";
-import { hasActiveWebOverlay } from "@/lib/overlay-root";
+import { hasActiveWebOverlay, subscribeWebOverlayChanges } from "@/lib/overlay-root";
 import { useCallback, useEffect, useMemo, useRef, useState } from "react";
 import * as Clipboard from "expo-clipboard";
 import {
@@ -386,8 +386,8 @@ export function TerminalPane({
       return;
     }
     const focusKey = `${scopeKey}:${terminalId}`;
-    if (lastAutoFocusKeyRef.current !== focusKey) {
-      lastAutoFocusKeyRef.current = focusKey;
+    if (lastAutoFocusKeyRef.current === focusKey) return;
+    function tryAutoFocus(): boolean {
       if (isWeb) {
         const active = document.activeElement;
         const hasFocusedInput =
@@ -396,11 +396,32 @@ export function TerminalPane({
           !active.matches(".xterm-helper-textarea") &&
           active.getClientRects().length > 0;
         if (hasActiveWebOverlay() || hasFocusedInput) {
-          return;
+          return false;
         }
       }
       requestTerminalFocus();
+      lastAutoFocusKeyRef.current = focusKey;
+      return true;
     }
+    if (tryAutoFocus() || !isWeb) return;
+
+    let retryFrame: number | null = null;
+    function stopRetrying(): void {
+      document.removeEventListener("focusout", scheduleRetry);
+      unsubscribeOverlayChanges();
+      if (retryFrame !== null) window.cancelAnimationFrame(retryFrame);
+    }
+    function scheduleRetry(): void {
+      if (retryFrame !== null) return;
+      // Let blur, overlay teardown, and focus restoration settle before checking ownership.
+      retryFrame = window.requestAnimationFrame(() => {
+        retryFrame = null;
+        if (tryAutoFocus()) stopRetrying();
+      });
+    }
+    const unsubscribeOverlayChanges = subscribeWebOverlayChanges(scheduleRetry);
+    document.addEventListener("focusout", scheduleRetry);
+    return stopRetrying;
   }, [
     isMobile,
     isPaneFocused,
diff --git a/packages/app/src/lib/overlay-root.ts b/packages/app/src/lib/overlay-root.ts
index 9ffd81725f..0043456509 100644
--- a/packages/app/src/lib/overlay-root.ts
+++ b/packages/app/src/lib/overlay-root.ts
@@ -95,6 +95,7 @@ const webOverlayEntries: WebOverlayEntry[] = [];
 let webOverlayOrder = 0;
 let webOverlayListenersAttached = false;
 let webOverlayFocusCheckQueued = false;
+const webOverlayChangeListeners = new Set<() => void>();
 
 interface RemoveWebOverlayOptions {
   restoreFocus?: boolean;
@@ -112,6 +113,17 @@ export function hasActiveWebOverlay(): boolean {
   return getTopWebOverlay() !== undefined;
 }
 
+export function subscribeWebOverlayChanges(listener: () => void): () => void {
+  webOverlayChangeListeners.add(listener);
+  return () => {
+    webOverlayChangeListeners.delete(listener);
+  };
+}
+
+function notifyWebOverlayChanges(): void {
+  for (const listener of webOverlayChangeListeners) listener();
+}
+
 function getFocusableElements(scope: HTMLElement): HTMLElement[] {
   const selector = [
     "a[href]",
@@ -214,6 +226,7 @@ function detachWebOverlayListeners(): void {
 function addWebOverlay(entry: WebOverlayEntry): (options?: RemoveWebOverlayOptions) => void {
   webOverlayEntries.push(entry);
   attachWebOverlayListeners();
+  notifyWebOverlayChanges();
 
   const focusFrame = window.requestAnimationFrame(() => {
     const scope = entry.getScope();
@@ -240,6 +253,7 @@ function addWebOverlay(entry: WebOverlayEntry): (options?: RemoveWebOverlayOptio
     ) {
       entry.restoreFocus.focus();
     }
+    notifyWebOverlayChanges();
   };
 }