diff --git a/packages/components/CHANGELOG.md b/packages/components/CHANGELOG.md
index 025d342073aac..970341765bfe6 100644
--- a/packages/components/CHANGELOG.md
+++ b/packages/components/CHANGELOG.md
@@ -14,6 +14,7 @@
 ### Bug Fix
 
 -   `Button`: Fix logic of `has-text` class addition ([#56949](https://github.com/WordPress/gutenberg/pull/56949)).
+-   `FormTokenField`: Fix a regression where the suggestion list would re-open after clicking away from the input ([#57002](https://github.com/WordPress/gutenberg/pull/57002)).
 
 ## 25.14.0 (2023-12-13)
 
diff --git a/packages/components/src/form-token-field/index.tsx b/packages/components/src/form-token-field/index.tsx
index bdc3c2a53ae1d..895cbad033212 100644
--- a/packages/components/src/form-token-field/index.tsx
+++ b/packages/components/src/form-token-field/index.tsx
@@ -177,13 +177,17 @@ export function FormTokenField( props: FormTokenFieldProps ) {
 			setInputOffsetFromEnd( 0 );
 			setIsActive( false );
 
-			// If `__experimentalExpandOnFocus` is true, don't close the suggestions list when
-			// the user clicks on it (`tokensAndInput` will be the element that caused the blur).
-			const shouldKeepSuggestionsExpanded =
-				! __experimentalExpandOnFocus ||
-				( __experimentalExpandOnFocus &&
-					event.relatedTarget === tokensAndInput.current );
-			setIsExpanded( shouldKeepSuggestionsExpanded );
+			if ( __experimentalExpandOnFocus ) {
+				// If `__experimentalExpandOnFocus` is true, don't close the suggestions list when
+				// the user clicks on it (`tokensAndInput` will be the element that caused the blur).
+				const hasFocusWithin =
+					event.relatedTarget === tokensAndInput.current;
+				setIsExpanded( hasFocusWithin );
+			} else {
+				// Else collapse the suggestion list. This will result in the suggestion list closing
+				// after a suggestion has been submitted since that causes a blur.
+				setIsExpanded( false );
+			}
 
 			setSelectedSuggestionIndex( -1 );
 			setSelectedSuggestionScroll( false );