diff --git a/packages/grafana-ui/src/components/ColorPicker/ColorPickerInput.test.tsx b/packages/grafana-ui/src/components/ColorPicker/ColorPickerInput.test.tsx
index 8b81be33bf0..9f13e67918b 100644
--- a/packages/grafana-ui/src/components/ColorPicker/ColorPickerInput.test.tsx
+++ b/packages/grafana-ui/src/components/ColorPicker/ColorPickerInput.test.tsx
@@ -12,6 +12,24 @@ describe('ColorPickerInput', () => {
     expect(screen.getByTestId('color-popover')).toBeInTheDocument();
   });
 
+  it('should hide color popover on blur', async () => {
+    render(<ColorPickerInput onChange={noop} />);
+    expect(screen.queryByTestId('color-popover')).not.toBeInTheDocument();
+    await userEvent.click(screen.getByRole('textbox'));
+    expect(screen.getByTestId('color-popover')).toBeInTheDocument();
+    await userEvent.click(document.body);
+    expect(screen.queryByTestId('color-popover')).not.toBeInTheDocument();
+  });
+
+  it('should not hide color popover on blur if clicked inside the color picker', async () => {
+    render(<ColorPickerInput onChange={noop} />);
+    expect(screen.queryByTestId('color-popover')).not.toBeInTheDocument();
+    await userEvent.click(screen.getByRole('textbox'));
+    expect(screen.getByTestId('color-popover')).toBeInTheDocument();
+    await userEvent.click(screen.getAllByRole('slider')[0]);
+    expect(screen.queryByTestId('color-popover')).toBeInTheDocument();
+  });
+
   it('should pass correct color to onChange callback', async () => {
     const mockOnChange = jest.fn();
     render(<ColorPickerInput onChange={mockOnChange} />);
diff --git a/packages/grafana-ui/src/components/ColorPicker/ColorPickerInput.tsx b/packages/grafana-ui/src/components/ColorPicker/ColorPickerInput.tsx
index add799af11c..381ad0403b2 100644
--- a/packages/grafana-ui/src/components/ColorPicker/ColorPickerInput.tsx
+++ b/packages/grafana-ui/src/components/ColorPicker/ColorPickerInput.tsx
@@ -1,5 +1,5 @@
 import { css, cx } from '@emotion/css';
-import { useState, forwardRef } from 'react';
+import { useState, forwardRef, FocusEvent } from 'react';
 import { RgbaStringColorPicker } from 'react-colorful';
 import { useThrottleFn } from 'react-use';
 
@@ -48,6 +48,14 @@ export const ColorPickerInput = forwardRef<HTMLInputElement, ColorPickerInputPro
       [currentColor]
     );
 
+    const handleBlur = (evt: FocusEvent<HTMLInputElement>) => {
+      // Unless the user clicked inside the color picker, close it on blur
+      const isClickInPopover = document.querySelector('[data-testid="color-popover"]')?.contains(evt.relatedTarget);
+      if (!isClickInPopover) {
+        setIsOpen(false);
+      }
+    };
+
     return (
       <ClickOutsideWrapper onClick={() => setIsOpen(false)}>
         <div className={styles.wrapper}>
@@ -66,7 +74,7 @@ export const ColorPickerInput = forwardRef<HTMLInputElement, ColorPickerInputPro
             onChange={setColor}
             buttonAriaLabel="Open color picker"
             onClick={() => setIsOpen(true)}
-            onBlur={() => setIsOpen(false)}
+            onBlur={(e) => handleBlur(e)}
             ref={ref}
             isClearable
           />