diff --git a/include/sway/input/seat.h b/include/sway/input/seat.h
index 5ef8e2f39..35a96ace9 100644
--- a/include/sway/input/seat.h
+++ b/include/sway/input/seat.h
@@ -104,8 +104,9 @@ struct sway_seat {
 	struct sway_workspace *workspace;
 	char *prev_workspace_name; // for workspace back_and_forth
 
-	// If the focused layer is set, views cannot receive keyboard focus
 	struct wlr_layer_surface_v1 *focused_layer;
+	// If the exclusive layer is set, views cannot receive keyboard focus
+	bool has_exclusive_layer;
 
 	// If exclusive_client is set, no other clients will receive input events
 	struct wl_client *exclusive_client;
diff --git a/include/sway/layers.h b/include/sway/layers.h
index f85084934..9220bdb54 100644
--- a/include/sway/layers.h
+++ b/include/sway/layers.h
@@ -55,6 +55,10 @@ struct sway_layer_subsurface {
 };
 
 struct sway_output;
+
+struct wlr_layer_surface_v1 *toplevel_layer_surface_from_surface(
+		struct wlr_surface *surface);
+
 void arrange_layers(struct sway_output *output);
 
 struct sway_layer_surface *layer_from_wlr_layer_surface_v1(
diff --git a/sway/desktop/layer_shell.c b/sway/desktop/layer_shell.c
index 50aa69381..d990d92af 100644
--- a/sway/desktop/layer_shell.c
+++ b/sway/desktop/layer_shell.c
@@ -17,6 +17,39 @@
 #include "sway/tree/arrange.h"
 #include "sway/tree/workspace.h"
 
+struct wlr_layer_surface_v1 *toplevel_layer_surface_from_surface(
+		struct wlr_surface *surface) {
+	struct wlr_layer_surface_v1 *layer;
+	do {
+		if (!surface) {
+			return NULL;
+		}
+		// Topmost layer surface
+		if ((layer = wlr_layer_surface_v1_try_from_wlr_surface(surface))) {
+			return layer;
+		}
+		// Layer subsurface
+		if (wlr_subsurface_try_from_wlr_surface(surface)) {
+			surface = wlr_surface_get_root_surface(surface);
+			continue;
+		}
+
+		// Layer surface popup
+		struct wlr_xdg_surface * xdg_popup = NULL;
+		if ((xdg_popup = wlr_xdg_surface_try_from_wlr_surface(surface)) &&
+				xdg_popup->role == WLR_XDG_SURFACE_ROLE_POPUP) {
+			if (!xdg_popup->popup->parent) {
+				return NULL;
+			}
+			surface = wlr_surface_get_root_surface(xdg_popup->popup->parent);
+			continue;
+		}
+
+		// Return early if the surface is not a layer/xdg_popup/sub surface
+		return NULL;
+	} while (true);
+}
+
 static void apply_exclusive(struct wlr_box *usable_area,
 		uint32_t anchor, int32_t exclusive,
 		int32_t margin_top, int32_t margin_right,
@@ -218,7 +251,8 @@ void arrange_layers(struct sway_output *output) {
 	for (size_t i = 0; i < nlayers; ++i) {
 		wl_list_for_each_reverse(layer,
 				&output->layers[layers_above_shell[i]], link) {
-			if (layer->layer_surface->current.keyboard_interactive &&
+			if (layer->layer_surface->current.keyboard_interactive
+					== ZWLR_LAYER_SURFACE_V1_KEYBOARD_INTERACTIVITY_EXCLUSIVE &&
 					layer->layer_surface->surface->mapped) {
 				topmost = layer;
 				break;
@@ -231,10 +265,12 @@ void arrange_layers(struct sway_output *output) {
 
 	struct sway_seat *seat;
 	wl_list_for_each(seat, &server.input->seats, link) {
+		seat->has_exclusive_layer = false;
 		if (topmost != NULL) {
 			seat_set_focus_layer(seat, topmost->layer_surface);
 		} else if (seat->focused_layer &&
-				!seat->focused_layer->current.keyboard_interactive) {
+				seat->focused_layer->current.keyboard_interactive
+					!= ZWLR_LAYER_SURFACE_V1_KEYBOARD_INTERACTIVITY_EXCLUSIVE) {
 			seat_set_focus_layer(seat, NULL);
 		}
 	}
diff --git a/sway/input/seat.c b/sway/input/seat.c
index 5795f40ff..fdd210575 100644
--- a/sway/input/seat.c
+++ b/sway/input/seat.c
@@ -1295,11 +1295,15 @@ static void seat_set_workspace_focus(struct sway_seat *seat, struct sway_node *n
 }
 
 void seat_set_focus(struct sway_seat *seat, struct sway_node *node) {
-	if (seat->focused_layer) {
+	// Prevents the layer from losing focus if it has keyboard exclusivity
+	if (seat->has_exclusive_layer) {
 		struct wlr_layer_surface_v1 *layer = seat->focused_layer;
 		seat_set_focus_layer(seat, NULL);
 		seat_set_workspace_focus(seat, node);
 		seat_set_focus_layer(seat, layer);
+	} else if (seat->focused_layer) {
+		seat_set_focus_layer(seat, NULL);
+		seat_set_workspace_focus(seat, node);
 	} else {
 		seat_set_workspace_focus(seat, node);
 	}
@@ -1347,14 +1351,20 @@ void seat_set_focus_layer(struct sway_seat *seat,
 			seat_set_focus(seat, previous);
 		}
 		return;
-	} else if (!layer || seat->focused_layer == layer) {
+	} else if (!layer) {
 		return;
 	}
 	assert(layer->surface->mapped);
-	seat_set_focus_surface(seat, layer->surface, true);
-	if (layer->current.layer >= ZWLR_LAYER_SHELL_V1_LAYER_TOP) {
-		seat->focused_layer = layer;
+	if (layer->current.layer >= ZWLR_LAYER_SHELL_V1_LAYER_TOP &&
+			layer->current.keyboard_interactive
+			== ZWLR_LAYER_SURFACE_V1_KEYBOARD_INTERACTIVITY_EXCLUSIVE) {
+		seat->has_exclusive_layer = true;
 	}
+	if (seat->focused_layer == layer) {
+		return;
+	}
+	seat_set_focus_surface(seat, layer->surface, true);
+	seat->focused_layer = layer;
 }
 
 void seat_set_exclusive_client(struct sway_seat *seat,
diff --git a/sway/input/seatop_default.c b/sway/input/seatop_default.c
index 5a55c1866..f4c63808a 100644
--- a/sway/input/seatop_default.c
+++ b/sway/input/seatop_default.c
@@ -2,6 +2,7 @@
 #include <float.h>
 #include <libevdev/libevdev.h>
 #include <wlr/types/wlr_cursor.h>
+#include <wlr/types/wlr_subcompositor.h>
 #include <wlr/types/wlr_tablet_v2.h>
 #include <wlr/types/wlr_xcursor_manager.h>
 #include "gesture.h"
@@ -9,6 +10,7 @@
 #include "sway/input/cursor.h"
 #include "sway/input/seat.h"
 #include "sway/input/tablet.h"
+#include "sway/layers.h"
 #include "sway/output.h"
 #include "sway/tree/view.h"
 #include "sway/tree/workspace.h"
@@ -365,10 +367,9 @@ static void handle_button(struct sway_seat *seat, uint32_t time_msec,
 		return;
 	}
 
-	// Handle clicking a layer surface
-	struct wlr_layer_surface_v1 *layer;
-	if (surface &&
-			(layer = wlr_layer_surface_v1_try_from_wlr_surface(surface))) {
+	// Handle clicking a layer surface and its popups/subsurfaces
+	struct wlr_layer_surface_v1 *layer = NULL;
+	if ((layer = toplevel_layer_surface_from_surface(surface))) {
 		if (layer->current.keyboard_interactive) {
 			seat_set_focus_layer(seat, layer);
 			transaction_commit_dirty();
@@ -544,6 +545,21 @@ static void check_focus_follows_mouse(struct sway_seat *seat,
 		if (wlr_output == NULL) {
 			return;
 		}
+
+		struct wlr_surface *surface = NULL;
+		double sx, sy;
+		node_at_coords(seat, seat->cursor->cursor->x, seat->cursor->cursor->y,
+				&surface, &sx, &sy);
+
+		// Focus topmost layer surface
+		struct wlr_layer_surface_v1 *layer = NULL;
+		if ((layer = toplevel_layer_surface_from_surface(surface)) &&
+				layer->current.keyboard_interactive) {
+			seat_set_focus_layer(seat, layer);
+			transaction_commit_dirty();
+			return;
+		}
+
 		struct sway_output *hovered_output = wlr_output->data;
 		if (focus && hovered_output != node_get_output(focus)) {
 			struct sway_workspace *ws = output_get_active_workspace(hovered_output);
diff --git a/sway/server.c b/sway/server.c
index 0cf767b7e..c87e30fd4 100644
--- a/sway/server.c
+++ b/sway/server.c
@@ -55,7 +55,7 @@
 #endif
 
 #define SWAY_XDG_SHELL_VERSION 2
-#define SWAY_LAYER_SHELL_VERSION 3
+#define SWAY_LAYER_SHELL_VERSION 4
 
 #if WLR_HAS_DRM_BACKEND
 static void handle_drm_lease_request(struct wl_listener *listener, void *data) {