diff --git a/public/app/core/components/NavBar/Next/NavBarItemMenu.tsx b/public/app/core/components/NavBar/Next/NavBarItemMenu.tsx
index bcc3b3863f3..a865dac6196 100644
--- a/public/app/core/components/NavBar/Next/NavBarItemMenu.tsx
+++ b/public/app/core/components/NavBar/Next/NavBarItemMenu.tsx
@@ -8,10 +8,11 @@ import React, { ReactElement, useEffect, useRef } from 'react';
 import { GrafanaTheme2, NavMenuItemType, NavModelItem } from '@grafana/data';
 import { useTheme2 } from '@grafana/ui';
 
-import { NavBarItemMenuItem } from '../NavBarItemMenuItem';
 import { useNavBarItemMenuContext } from '../context';
 import { getNavModelItemKey } from '../utils';
 
+import { NavBarItemMenuItem } from './NavBarItemMenuItem';
+
 export interface NavBarItemMenuProps extends SpectrumMenuProps<NavModelItem> {
   onNavigate: (item: NavModelItem) => void;
   adjustHeightForBorder: boolean;
diff --git a/public/app/core/components/NavBar/Next/NavBarItemMenuItem.tsx b/public/app/core/components/NavBar/Next/NavBarItemMenuItem.tsx
new file mode 100644
index 00000000000..122b4fb38a3
--- /dev/null
+++ b/public/app/core/components/NavBar/Next/NavBarItemMenuItem.tsx
@@ -0,0 +1,98 @@
+import { css } from '@emotion/css';
+import { useFocus, useKeyboard } from '@react-aria/interactions';
+import { useMenuItem } from '@react-aria/menu';
+import { mergeProps } from '@react-aria/utils';
+import { TreeState } from '@react-stately/tree';
+import { Node } from '@react-types/shared';
+import React, { ReactElement, useRef, useState } from 'react';
+
+import { GrafanaTheme2, NavModelItem } from '@grafana/data';
+import { useTheme2 } from '@grafana/ui';
+
+import { useNavBarItemMenuContext, useNavBarContext } from '../context';
+
+export interface NavBarItemMenuItemProps {
+  item: Node<NavModelItem>;
+  state: TreeState<NavModelItem>;
+  onNavigate: (item: NavModelItem) => void;
+}
+
+export function NavBarItemMenuItem({ item, state, onNavigate }: NavBarItemMenuItemProps): ReactElement {
+  const { onClose, onLeft } = useNavBarItemMenuContext();
+  const { setMenuIdOpen } = useNavBarContext();
+  const { key, rendered } = item;
+  const ref = useRef<HTMLLIElement>(null);
+  const isDisabled = state.disabledKeys.has(key);
+
+  // style to the focused menu item
+  const [isFocused, setFocused] = useState(false);
+  const { focusProps } = useFocus({ onFocusChange: setFocused, isDisabled });
+  const theme = useTheme2();
+  const isSection = item.value.menuItemType === 'section';
+  const styles = getStyles(theme, isFocused, isSection);
+  const onAction = () => {
+    setMenuIdOpen(undefined);
+    onNavigate(item.value);
+    onClose();
+  };
+
+  let { menuItemProps } = useMenuItem(
+    {
+      isDisabled,
+      'aria-label': item['aria-label'],
+      key,
+      closeOnSelect: true,
+      onClose,
+      onAction,
+    },
+    state,
+    ref
+  );
+
+  const { keyboardProps } = useKeyboard({
+    onKeyDown: (e) => {
+      if (e.key === 'ArrowLeft') {
+        onLeft();
+      }
+      e.continuePropagation();
+    },
+  });
+
+  return (
+    <>
+      <li {...mergeProps(menuItemProps, focusProps, keyboardProps)} ref={ref} className={styles.menuItem}>
+        {rendered}
+      </li>
+    </>
+  );
+}
+
+function getStyles(theme: GrafanaTheme2, isFocused: boolean, isSection: boolean) {
+  let backgroundColor = 'transparent';
+  if (isFocused) {
+    backgroundColor = theme.colors.action.hover;
+  } else if (isSection) {
+    backgroundColor = theme.colors.background.secondary;
+  }
+  return {
+    menuItem: css`
+      background-color: ${backgroundColor};
+      color: ${theme.colors.text.primary};
+
+      &:focus-visible {
+        background-color: ${theme.colors.action.hover};
+        box-shadow: none;
+        color: ${theme.colors.text.primary};
+        outline: 2px solid ${theme.colors.primary.main};
+        outline-offset: -2px;
+        transition: none;
+      }
+    `,
+    upgradeBoxContainer: css`
+      padding: ${theme.spacing(1)};
+    `,
+    upgradeBox: css`
+      width: 300px;
+    `,
+  };
+}
diff --git a/public/app/core/components/NavBar/Next/NavBarItemMenuTrigger.tsx b/public/app/core/components/NavBar/Next/NavBarItemMenuTrigger.tsx
index b2d148439b7..dbd3d26dc98 100644
--- a/public/app/core/components/NavBar/Next/NavBarItemMenuTrigger.tsx
+++ b/public/app/core/components/NavBar/Next/NavBarItemMenuTrigger.tsx
@@ -60,8 +60,7 @@ export function NavBarItemMenuTrigger(props: NavBarItemMenuTriggerProps): ReactE
 
   useEffect(() => {
     // close the menu when changing submenus
-    // or when the state of the overlay changes (i.e hovering outside)
-    if (menuIdOpen !== item.id || !state.isOpen) {
+    if (menuIdOpen !== item.id) {
       state.close();
       setMenuHasFocus(false);
     } else {