diff --git a/packages/components/CHANGELOG.md b/packages/components/CHANGELOG.md
index 68cfb5b4e46aa..b4f6e5253469d 100644
--- a/packages/components/CHANGELOG.md
+++ b/packages/components/CHANGELOG.md
@@ -16,6 +16,7 @@
 -   `Button`: Fix RTL alignment for buttons containing an icon and text ([#44787](https://github.com/WordPress/gutenberg/pull/44787)).
 -   `TabPanel`: Call `onSelect()` on every tab selection, regardless of whether it was triggered by user interaction ([#44028](https://github.com/WordPress/gutenberg/pull/44028)).
 -   `FontSizePicker`: Fallback to font size `slug` if `name` is undefined  ([#45041](https://github.com/WordPress/gutenberg/pull/45041)).
+-   `AutocompleterUI`: fix issue where autocompleter UI would appear on top of other UI elements ([#44795](https://github.com/WordPress/gutenberg/pull/44795/))
 
 ### Internal
 
diff --git a/packages/components/src/autocomplete/autocompleter-ui.js b/packages/components/src/autocomplete/autocompleter-ui.js
index f8a9fd08eaf95..13da75123c417 100644
--- a/packages/components/src/autocomplete/autocompleter-ui.js
+++ b/packages/components/src/autocomplete/autocompleter-ui.js
@@ -7,7 +7,7 @@ import { map } from 'lodash';
 /**
  * WordPress dependencies
  */
-import { useLayoutEffect } from '@wordpress/element';
+import { useLayoutEffect, useRef, useEffect } from '@wordpress/element';
 import { useAnchor } from '@wordpress/rich-text';
 
 /**
@@ -31,6 +31,7 @@ export function getAutoCompleterUI( autocompleter ) {
 		onChangeOptions,
 		onSelect,
 		onReset,
+		reset,
 		value,
 		contentRef,
 	} ) {
@@ -40,6 +41,10 @@ export function getAutoCompleterUI( autocompleter ) {
 			value,
 		} );
 
+		const popoverRef = useRef();
+
+		useOnClickOutside( popoverRef, reset );
+
 		useLayoutEffect( () => {
 			onChangeOptions( items );
 			// Temporarily disabling exhaustive-deps to avoid introducing unexpected side effecst.
@@ -58,6 +63,7 @@ export function getAutoCompleterUI( autocompleter ) {
 				position="top right"
 				className="components-autocomplete__popover"
 				anchor={ popoverAnchor }
+				ref={ popoverRef }
 			>
 				<div
 					id={ listBoxId }
@@ -90,3 +96,24 @@ export function getAutoCompleterUI( autocompleter ) {
 
 	return AutocompleterUI;
 }
+
+function useOnClickOutside( ref, handler ) {
+	useEffect( () => {
+		const listener = ( event ) => {
+			// Do nothing if clicking ref's element or descendent elements, or if the ref is not referencing an element
+			if ( ! ref.current || ref.current.contains( event.target ) ) {
+				return;
+			}
+			handler( event );
+		};
+		document.addEventListener( 'mousedown', listener );
+		document.addEventListener( 'touchstart', listener );
+		return () => {
+			document.removeEventListener( 'mousedown', listener );
+			document.removeEventListener( 'touchstart', listener );
+		};
+		// Disable reason: `ref` is a ref object and should not be included in a
+		// hook's dependency list.
+		// eslint-disable-next-line react-hooks/exhaustive-deps
+	}, [ handler ] );
+}
diff --git a/packages/components/src/autocomplete/test/index.js b/packages/components/src/autocomplete/test/index.js
new file mode 100644
index 0000000000000..b33f585ea9d5f
--- /dev/null
+++ b/packages/components/src/autocomplete/test/index.js
@@ -0,0 +1,89 @@
+/**
+ * External dependencies
+ */
+import { render, screen } from '@testing-library/react';
+import userEvent from '@testing-library/user-event';
+
+/**
+ * WordPress dependencies
+ */
+import { useRef } from '@wordpress/element';
+
+/**
+ * Internal dependencies
+ */
+import { getAutoCompleterUI } from '../autocompleter-ui';
+
+describe( 'AutocompleterUI', () => {
+	describe( 'click outside behavior', () => {
+		it( 'should call reset function when a click on another element occurs', async () => {
+			const user = userEvent.setup( {
+				advanceTimers: jest.advanceTimersByTime,
+			} );
+
+			const resetSpy = jest.fn();
+
+			const autocompleter = {
+				name: 'fruit',
+				// The prefix that triggers this completer
+				triggerPrefix: '~',
+				// Mock useItems function to return a autocomplete item.
+				useItems: () => {
+					return [
+						[
+							{
+								isDisabled: false,
+								key: 'Apple',
+								value: 'Apple',
+								label: (
+									<span>
+										<span className="icon">🍎</span>
+										{ 'Apple' }
+									</span>
+								),
+							},
+						],
+					];
+				},
+			};
+
+			const AutocompleterUI = getAutoCompleterUI( autocompleter );
+
+			const OtherElement = <div>Other Element</div>;
+
+			const Container = () => {
+				const contentRef = useRef();
+
+				return (
+					<div>
+						<AutocompleterUI
+							className={ 'test' }
+							filterValue={ '~' }
+							instanceId={ '1' }
+							listBoxId={ '1' }
+							selectedIndex={ 0 }
+							onChangeOptions={ () => {} }
+							onSelect={ () => {} }
+							value={ { visual: '🍎', name: 'Apple', id: 1 } }
+							contentRef={ contentRef }
+							reset={ resetSpy }
+						/>
+						{ OtherElement }
+					</div>
+				);
+			};
+
+			render( <Container /> );
+
+			// Click on autocompleter.
+			await user.click( screen.getByText( 'Apple' ) );
+
+			expect( resetSpy ).toHaveBeenCalledTimes( 0 );
+
+			// Click on other element out side of the tree.
+			await user.click( screen.getByText( 'Other Element' ) );
+
+			expect( resetSpy ).toHaveBeenCalledTimes( 1 );
+		} );
+	} );
+} );