diff --git a/src/components/DragAndDrop/Provider/index.native.tsx b/src/components/DragAndDrop/Provider/index.native.tsx
index ba32599c62b5..838b9439c313 100644
--- a/src/components/DragAndDrop/Provider/index.native.tsx
+++ b/src/components/DragAndDrop/Provider/index.native.tsx
@@ -1,6 +1,7 @@
+import React from 'react';
 import type {DragAndDropContextParams, DragAndDropProviderProps} from './types';
 
-const DragAndDropContext: DragAndDropContextParams = {};
+const DragAndDropContext = React.createContext<DragAndDropContextParams>({});
 
 function DragAndDropProvider({children}: DragAndDropProviderProps) {
     return children;
diff --git a/src/hooks/useDragAndDrop.ts b/src/hooks/useDragAndDrop.ts
index c34b32db6425..0e82cb22505f 100644
--- a/src/hooks/useDragAndDrop.ts
+++ b/src/hooks/useDragAndDrop.ts
@@ -1,6 +1,7 @@
 import {useIsFocused} from '@react-navigation/native';
-import React, {useCallback, useEffect, useRef, useState} from 'react';
+import React, {useCallback, useContext, useEffect, useRef, useState} from 'react';
 import {View} from 'react-native';
+import {PopoverContext} from '@components/PopoverProvider';
 
 const COPY_DROP_EFFECT = 'copy';
 const NONE_DROP_EFFECT = 'none';
@@ -27,6 +28,7 @@ type DragAndDropOptions = {
 export default function useDragAndDrop({dropZone, onDrop = () => {}, shouldAllowDrop = true, isDisabled = false, shouldAcceptDrop = () => true}: DragAndDropParams): DragAndDropOptions {
     const isFocused = useIsFocused();
     const [isDraggingOver, setIsDraggingOver] = useState(false);
+    const {close: closePopover} = useContext(PopoverContext);
 
     // This solution is borrowed from this SO: https://stackoverflow.com/questions/7110353/html5-dragleave-fired-when-hovering-a-child-element
     // This is necessary because dragging over children will cause dragleave to execute on the parent.
@@ -43,9 +45,15 @@ export default function useDragAndDrop({dropZone, onDrop = () => {}, shouldAllow
         setIsDraggingOver(false);
     }, [isFocused, isDisabled]);
 
-    const setDropEffect = useCallback(
+    const handleDragEvent = useCallback(
         (event: DragEvent) => {
-            const effect = shouldAllowDrop && shouldAcceptDrop(event) ? COPY_DROP_EFFECT : NONE_DROP_EFFECT;
+            const shouldAcceptThisDrop = shouldAllowDrop && shouldAcceptDrop(event);
+
+            if (shouldAcceptThisDrop && event.type === DRAG_ENTER_EVENT) {
+                closePopover();
+            }
+
+            const effect = shouldAcceptThisDrop ? COPY_DROP_EFFECT : NONE_DROP_EFFECT;
 
             if (event.dataTransfer) {
                 // eslint-disable-next-line no-param-reassign
@@ -54,7 +62,7 @@ export default function useDragAndDrop({dropZone, onDrop = () => {}, shouldAllow
                 event.dataTransfer.effectAllowed = effect;
             }
         },
-        [shouldAllowDrop, shouldAcceptDrop],
+        [shouldAllowDrop, shouldAcceptDrop, closePopover],
     );
 
     /**
@@ -71,11 +79,11 @@ export default function useDragAndDrop({dropZone, onDrop = () => {}, shouldAllow
 
             switch (event.type) {
                 case DRAG_OVER_EVENT:
-                    setDropEffect(event);
+                    handleDragEvent(event);
                     break;
                 case DRAG_ENTER_EVENT:
                     dragCounter.current++;
-                    setDropEffect(event);
+                    handleDragEvent(event);
                     if (isDraggingOver) {
                         return;
                     }
@@ -98,7 +106,7 @@ export default function useDragAndDrop({dropZone, onDrop = () => {}, shouldAllow
                     break;
             }
         },
-        [isFocused, isDisabled, shouldAcceptDrop, setDropEffect, isDraggingOver, onDrop],
+        [isFocused, isDisabled, shouldAcceptDrop, isDraggingOver, onDrop, handleDragEvent],
     );
 
     useEffect(() => {
diff --git a/src/pages/home/report/ReportActionCompose/SuggestionEmoji.js b/src/pages/home/report/ReportActionCompose/SuggestionEmoji.js
index 6e8d8d12afaf..e35d1e90bd5a 100644
--- a/src/pages/home/report/ReportActionCompose/SuggestionEmoji.js
+++ b/src/pages/home/report/ReportActionCompose/SuggestionEmoji.js
@@ -63,7 +63,7 @@ function SuggestionEmoji({
 }) {
     const [suggestionValues, setSuggestionValues] = useState(defaultSuggestionsValues);
 
-    const isEmojiSuggestionsMenuVisible = !_.isEmpty(suggestionValues.suggestedEmojis) && suggestionValues.shouldShowEmojiSuggestionMenu;
+    const isEmojiSuggestionsMenuVisible = !_.isEmpty(suggestionValues.suggestedEmojis) && suggestionValues.shouldShowSuggestionMenu;
 
     const [highlightedEmojiIndex, setHighlightedEmojiIndex] = useArrowKeyFocusManager({
         isActive: isEmojiSuggestionsMenuVisible,
@@ -166,13 +166,13 @@ function SuggestionEmoji({
             const nextState = {
                 suggestedEmojis: [],
                 colonIndex,
-                shouldShowEmojiSuggestionMenu: false,
+                shouldShowSuggestionMenu: false,
             };
             const newSuggestedEmojis = EmojiUtils.suggestEmojis(leftString, preferredLocale);
 
             if (newSuggestedEmojis.length && isCurrentlyShowingEmojiSuggestion) {
                 nextState.suggestedEmojis = newSuggestedEmojis;
-                nextState.shouldShowEmojiSuggestionMenu = !_.isEmpty(newSuggestedEmojis);
+                nextState.shouldShowSuggestionMenu = !_.isEmpty(newSuggestedEmojis);
             }
 
             setSuggestionValues((prevState) => ({...prevState, ...nextState}));
diff --git a/src/pages/home/report/ReportActionCompose/Suggestions.js b/src/pages/home/report/ReportActionCompose/Suggestions.js
index 05f35713c5f8..5dc71fec6419 100644
--- a/src/pages/home/report/ReportActionCompose/Suggestions.js
+++ b/src/pages/home/report/ReportActionCompose/Suggestions.js
@@ -1,6 +1,8 @@
 import PropTypes from 'prop-types';
-import React, {useCallback, useImperativeHandle, useRef} from 'react';
+import React, {useCallback, useContext, useEffect, useImperativeHandle, useRef} from 'react';
 import {View} from 'react-native';
+import {DragAndDropContext} from '@components/DragAndDrop/Provider';
+import usePrevious from '@hooks/usePrevious';
 import SuggestionEmoji from './SuggestionEmoji';
 import SuggestionMention from './SuggestionMention';
 import * as SuggestionProps from './suggestionProps';
@@ -45,6 +47,8 @@ function Suggestions({
 }) {
     const suggestionEmojiRef = useRef(null);
     const suggestionMentionRef = useRef(null);
+    const {isDraggingOver} = useContext(DragAndDropContext);
+    const prevIsDraggingOver = usePrevious(isDraggingOver);
 
     const getSuggestions = useCallback(() => {
         if (suggestionEmojiRef.current && suggestionEmojiRef.current.getSuggestions) {
@@ -111,6 +115,13 @@ function Suggestions({
         [onSelectionChange, resetSuggestions, setShouldBlockSuggestionCalc, triggerHotkeyActions, updateShouldShowSuggestionMenuToFalse, getSuggestions],
     );
 
+    useEffect(() => {
+        if (!(!prevIsDraggingOver && isDraggingOver)) {
+            return;
+        }
+        updateShouldShowSuggestionMenuToFalse();
+    }, [isDraggingOver, prevIsDraggingOver, updateShouldShowSuggestionMenuToFalse]);
+
     const baseProps = {
         value,
         setValue,