diff --git a/packages/block-editor/src/components/block-settings-menu/block-settings-dropdown.js b/packages/block-editor/src/components/block-settings-menu/block-settings-dropdown.js
index 01d78c49814c8c..ac72c55836f748 100644
--- a/packages/block-editor/src/components/block-settings-menu/block-settings-dropdown.js
+++ b/packages/block-editor/src/components/block-settings-menu/block-settings-dropdown.js
@@ -270,6 +270,7 @@ export function BlockSettingsDropdown( {
 								canInsertDefaultBlock
 							) {
 								event.preventDefault();
+								setOpenedBlockSettingsMenu( undefined );
 								onInsertAfter();
 							} else if (
 								isMatch(
@@ -279,6 +280,7 @@ export function BlockSettingsDropdown( {
 								canInsertDefaultBlock
 							) {
 								event.preventDefault();
+								setOpenedBlockSettingsMenu( undefined );
 								onInsertBefore();
 							}
 						},
diff --git a/test/e2e/specs/editor/various/list-view.spec.js b/test/e2e/specs/editor/various/list-view.spec.js
index 130bd9b7952fde..e0ac030d1fd24b 100644
--- a/test/e2e/specs/editor/various/list-view.spec.js
+++ b/test/e2e/specs/editor/various/list-view.spec.js
@@ -784,6 +784,10 @@ test.describe( 'List View', () => {
 		).toBeHidden();
 
 		await optionsForFileToggle.click();
+		await expect(
+			optionsForFileMenu,
+			'Pressing Space should also open the menu dropdown'
+		).toBeVisible();
 		await pageUtils.pressKeys( 'access+z' ); // Keyboard shortcut for Delete.
 		await expect
 			.poll(