diff --git a/packages/react/src/components/MultiSelect/FilterableMultiSelect.tsx b/packages/react/src/components/MultiSelect/FilterableMultiSelect.tsx
index 482f5414b542..87806aa44f51 100644
--- a/packages/react/src/components/MultiSelect/FilterableMultiSelect.tsx
+++ b/packages/react/src/components/MultiSelect/FilterableMultiSelect.tsx
@@ -464,8 +464,6 @@ const FilterableMultiSelect = React.forwardRef(function FilterableMultiSelect<
         return changes;
       case InputBlur:
       case InputKeyDownEscape:
-        setInputFocused(false);
-        setInputValue('');
         setIsOpen(false);
         return changes;
       case FunctionToggleMenu:
@@ -660,6 +658,10 @@ const FilterableMultiSelect = React.forwardRef(function FilterableMultiSelect<
         }
       },
       onFocus: () => setInputFocused(true),
+      onBlur: () => {
+        !isOpen && setInputFocused(false);
+        setInputValue('');
+      },
     })
   );
   const menuProps = getMenuProps({}, { suppressRefError: true });
diff --git a/packages/react/src/components/MultiSelect/__tests__/FilterableMultiSelect-test.js b/packages/react/src/components/MultiSelect/__tests__/FilterableMultiSelect-test.js
index 9a4185a207cc..25bee6d3b931 100644
--- a/packages/react/src/components/MultiSelect/__tests__/FilterableMultiSelect-test.js
+++ b/packages/react/src/components/MultiSelect/__tests__/FilterableMultiSelect-test.js
@@ -151,7 +151,21 @@ describe('FilterableMultiSelect', () => {
     expect(screen.getByPlaceholderText('test')).toHaveDisplayValue(3);
   });
 
-  it('should respect slug prop', () => {
+  it('should clear input value when clicking on cross button', async () => {
+    render(<FilterableMultiSelect {...mockProps} placeholder="test" />);
+    await openMenu();
+
+    await userEvent.type(screen.getByPlaceholderText('test'), '3');
+
+    const clearButton = screen.getByRole('button', {
+      name: 'Clear selected item',
+    });
+    await userEvent.click(clearButton);
+
+    expect(screen.getByPlaceholderText('test')).toHaveDisplayValue('');
+  });
+
+  it('should respect slug prop', async () => {
     const { container } = render(
       <FilterableMultiSelect {...mockProps} slug={<Slug />} />
     );