diff --git a/e2e/components/Tooltip/Tooltip-test.avt.e2e.js b/e2e/components/Tooltip/Tooltip-test.avt.e2e.js
index 1fa765bcd6c9..dd35ae669b3f 100644
--- a/e2e/components/Tooltip/Tooltip-test.avt.e2e.js
+++ b/e2e/components/Tooltip/Tooltip-test.avt.e2e.js
@@ -44,8 +44,7 @@ test.describe('@avt Tooltip', () => {
     await expect(page).toHaveNoACViolations('Tooltip - duration');
   });
 
-  // Prevent timeout
-  test.slow('@avt-keyboard-nav - tooltip default', async ({ page }) => {
+  test('@avt-keyboard-nav - tooltip default', async ({ page }) => {
     await visitStory(page, {
       component: 'Tooltip',
       id: 'components-tooltip--default',
@@ -54,7 +53,6 @@ test.describe('@avt Tooltip', () => {
       },
     });
 
-    await page.keyboard.press('Tab');
     await expect(page.getByRole('button')).toBeVisible();
     // Expect tooltip to be focused
     await page.keyboard.press('Tab');
@@ -62,4 +60,29 @@ test.describe('@avt Tooltip', () => {
     // Expect tooltip content to be visible
     await expect(page.locator('.cds--popover-container')).toBeVisible();
   });
+
+  test('@avt-keyboard-nav - tooltip default Escape key on hover', async ({
+    page,
+  }) => {
+    await visitStory(page, {
+      component: 'Tooltip',
+      id: 'components-tooltip--default',
+      globals: {
+        theme: 'white',
+      },
+    });
+
+    const tooltipTrigger = page.getByRole('button');
+    await expect(tooltipTrigger).toBeVisible();
+
+    await tooltipTrigger.hover();
+
+    const tooltipContent = page.getByText(
+      'Occasionally, services are updated in a specified time window to ensure no down time for customers.'
+    );
+    await expect(tooltipContent).toBeVisible();
+    // Press ESCAPE key while hover is active
+    await page.keyboard.press('Escape');
+    await expect(tooltipContent).toBeHidden();
+  });
 });
diff --git a/packages/react/src/components/Tooltip/Tooltip.tsx b/packages/react/src/components/Tooltip/Tooltip.tsx
index ccd00475933b..fd10188cb656 100644
--- a/packages/react/src/components/Tooltip/Tooltip.tsx
+++ b/packages/react/src/components/Tooltip/Tooltip.tsx
@@ -15,6 +15,7 @@ import { useId } from '../../internal/useId';
 import { useNoInteractiveChildren } from '../../internal/useNoInteractiveChildren';
 import { usePrefix } from '../../internal/usePrefix';
 import { type PolymorphicProps } from '../../types/common';
+import useIsomorphicEffect from '../../internal/useIsomorphicEffect';
 
 /**
  * Event types that trigger a "drag" to stop.
@@ -144,19 +145,40 @@ function Tooltip<T extends React.ElementType>({
     triggerProps['aria-describedby'] = id;
   }
 
-  function onKeyDown(event: React.KeyboardEvent) {
-    if (open && match(event, keys.Escape)) {
-      event.stopPropagation();
-      setOpen(false);
+  const onKeyDown = useCallback(
+    (event: React.SyntheticEvent | Event) => {
+      if (open && match(event, keys.Escape)) {
+        event.stopPropagation();
+        setOpen(false);
+      }
+      if (
+        open &&
+        closeOnActivation &&
+        (match(event, keys.Enter) || match(event, keys.Space))
+      ) {
+        setOpen(false);
+      }
+    },
+    [closeOnActivation, open, setOpen]
+  );
+
+  useIsomorphicEffect(() => {
+    if (!open) {
+      return undefined;
     }
-    if (
-      open &&
-      closeOnActivation &&
-      (match(event, keys.Enter) || match(event, keys.Space))
-    ) {
-      setOpen(false);
+
+    function handleKeyDown(event: KeyboardEvent) {
+      if (match(event, keys.Escape)) {
+        onKeyDown(event);
+      }
     }
-  }
+
+    document.addEventListener('keydown', handleKeyDown);
+
+    return () => {
+      document.removeEventListener('keydown', handleKeyDown);
+    };
+  }, [open, onKeyDown]);
 
   function onMouseEnter() {
     // Interactive Tags should not support onMouseEnter
@@ -221,7 +243,8 @@ function Tooltip<T extends React.ElementType>({
   }, [isDragging, onDragStop]);
 
   return (
-    <Popover<any>
+    // @ts-ignore-error Popover throws a TS error everytime is imported
+    <Popover
       {...rest}
       align={align}
       className={cx(`${prefix}--tooltip`, customClassName)}
@@ -242,6 +265,7 @@ function Tooltip<T extends React.ElementType>({
         aria-hidden={open ? 'false' : 'true'}
         className={`${prefix}--tooltip-content`}
         id={id}
+        onMouseEnter={onMouseEnter}
         role="tooltip">
         {label || description}
       </PopoverContent>