diff --git a/packages/components/src/components/dropdown/dropdown.js b/packages/components/src/components/dropdown/dropdown.js
index 2aae903315c2..99fd277dcb53 100644
--- a/packages/components/src/components/dropdown/dropdown.js
+++ b/packages/components/src/components/dropdown/dropdown.js
@@ -74,6 +74,22 @@ class Dropdown extends mixin(
       this.navigate(direction);
       event.preventDefault(); // Prevents up/down keys from scrolling container
     } else {
+      // get selected item
+      // in v10.0, the anchor elements fire click events on Enter keypress when a dropdown item is selected
+      // in v10.5 (#3586), focus is no longer placed on the dropdown items and is instead kept fixed on the ul menu
+      // so we need to manually call getCurrentNavigation and select the item
+      const item = this.getCurrentNavigation();
+      if (
+        item &&
+        isOpen &&
+        (event.which === 13 || event.which === 32) &&
+        !this.element.ownerDocument.activeElement.matches(
+          this.options.selectorItem
+        )
+      ) {
+        event.preventDefault();
+        this.select(item);
+      }
       this._toggle(event);
     }
   }
@@ -101,8 +117,8 @@ class Dropdown extends mixin(
       // User presses down arrow
       (event.which === 40 &&
         !event.target.matches(this.options.selectorItem)) ||
-      // User presses space or enter and the trigger is not a button
-      (!triggerNode &&
+      // User presses space or enter and the trigger is not a button OR event is not fired by trigger
+      ((!triggerNode || !triggerNode.contains(event.target)) &&
         [13, 32].indexOf(event.which) >= 0 &&
         !event.target.matches(this.options.selectorItem)) ||
       // User presses esc
@@ -158,15 +174,20 @@ class Dropdown extends mixin(
         }
       } else if (changedState && (isOfSelf || actions.remove)) {
         // toggled close
-        (triggerNode || this.element).focus();
+        // timer is used to call focus AFTER the click event on
+        // trigger button (which is caused by keypress e.g. during keyboard navigation)
+        setTimeout(() => (triggerNode || this.element).focus(), 0);
         if (triggerNode) {
           triggerNode.setAttribute('aria-expanded', 'false');
         }
         if (listNode) {
           listNode.removeAttribute('aria-activedescendant');
-          this.element
-            .querySelector(this.options.selectorItemFocused)
-            .classList.remove(this.options.classFocused);
+          const focusedItem = this.element.querySelector(
+            this.options.selectorItemFocused
+          );
+          if (focusedItem) {
+            focusedItem.classList.remove(this.options.classFocused);
+          }
         }
       }
 
diff --git a/packages/components/tests/spec/dropdown_spec.js b/packages/components/tests/spec/dropdown_spec.js
index c7fc175b6040..ea3fe390ee94 100644
--- a/packages/components/tests/spec/dropdown_spec.js
+++ b/packages/components/tests/spec/dropdown_spec.js
@@ -1,3 +1,4 @@
+import { delay } from 'bluebird'; // For testing on browsers not supporting Promise
 import EventManager from '../utils/event-manager';
 import Dropdown from '../../src/components/dropdown/dropdown';
 
@@ -96,7 +97,7 @@ describe('Dropdown', function() {
       expect(element.focus, 'Focus requested').toHaveBeenCalledTimes(1);
     });
 
-    it('Should close dropdown with enter key', function() {
+    it('Should close dropdown with enter key', async function() {
       spyOn(element, 'focus');
       element.classList.add('bx--dropdown--open');
       element.dispatchEvent(
@@ -106,6 +107,7 @@ describe('Dropdown', function() {
         element.classList.contains('bx--dropdown--open'),
         'Open state'
       ).toBe(false);
+      await delay(0);
       expect(element.focus, 'Focus requested').toHaveBeenCalledTimes(1);
     });
 
@@ -121,7 +123,7 @@ describe('Dropdown', function() {
       expect(element.focus, 'Focus requested').toHaveBeenCalledTimes(1);
     });
 
-    it('Should close dropdown with space key', function() {
+    it('Should close dropdown with space key', async function() {
       spyOn(element, 'focus');
       element.classList.add('bx--dropdown--open');
       element.dispatchEvent(
@@ -131,6 +133,7 @@ describe('Dropdown', function() {
         element.classList.contains('bx--dropdown--open'),
         'Open state'
       ).toBe(false);
+      await delay(0);
       expect(element.focus, 'Focus requested').toHaveBeenCalledTimes(1);
     });
 
@@ -149,7 +152,7 @@ describe('Dropdown', function() {
       expect(element.focus, 'Focus requested').not.toHaveBeenCalled();
     });
 
-    it('Should close dropdown with ESC key', function() {
+    it('Should close dropdown with ESC key', async function() {
       spyOn(element, 'focus');
       element.classList.add('bx--dropdown--open');
       element.dispatchEvent(
@@ -159,10 +162,11 @@ describe('Dropdown', function() {
         element.classList.contains('bx--dropdown--open'),
         'Open state'
       ).toBe(false);
+      await delay(0);
       expect(element.focus, 'Focus requested').toHaveBeenCalledTimes(1);
     });
 
-    it('Should close dropdown with ESC key on an item', function() {
+    it('Should close dropdown with ESC key on an item', async function() {
       spyOn(element, 'focus');
       element.classList.add('bx--dropdown--open');
       itemNode.dispatchEvent(
@@ -174,6 +178,7 @@ describe('Dropdown', function() {
         element.classList.contains('bx--dropdown--open'),
         'Open state'
       ).toBe(false);
+      await delay(0);
       expect(element.focus, 'Focus requested').toHaveBeenCalledTimes(1);
     });
 
@@ -271,6 +276,91 @@ describe('Dropdown', function() {
       expect(itemNode.classList.contains('bx--dropdown--focused')).toBe(false);
     });
 
+    it('Should open dropdown with enter key', function() {
+      spyOn(list, 'focus');
+      element.dispatchEvent(
+        Object.assign(new CustomEvent('keydown'), { which: 13 })
+      );
+      expect(element.classList.contains('bx--dropdown--open')).toBe(true);
+      expect(list.focus, 'Focus requested').toHaveBeenCalledTimes(1);
+    });
+
+    it('Should close dropdown with enter key', async function() {
+      spyOn(trigger, 'focus');
+      element.classList.add('bx--dropdown--open');
+      element.dispatchEvent(
+        Object.assign(new CustomEvent('keydown'), { which: 13 })
+      );
+      expect(element.classList.contains('bx--dropdown--open')).toBe(false);
+      await delay(0);
+      expect(trigger.focus, 'Focus requested').toHaveBeenCalledTimes(1);
+    });
+
+    it('Should open dropdown with space key', function() {
+      spyOn(list, 'focus');
+      element.dispatchEvent(
+        Object.assign(new CustomEvent('keydown'), { which: 32 })
+      );
+      expect(element.classList.contains('bx--dropdown--open')).toBe(true);
+      expect(list.focus, 'Focus requested').toHaveBeenCalledTimes(1);
+    });
+
+    it('Should close dropdown with space key', async function() {
+      spyOn(trigger, 'focus');
+      element.classList.add('bx--dropdown--open');
+      element.dispatchEvent(
+        Object.assign(new CustomEvent('keydown'), { which: 32 })
+      );
+      expect(element.classList.contains('bx--dropdown--open')).toBe(false);
+      await delay(0);
+      expect(trigger.focus, 'Focus requested').toHaveBeenCalledTimes(1);
+    });
+
+    it('Should not close dropdown with space key on an item', function() {
+      spyOn(element, 'focus');
+      element.classList.add('bx--dropdown--open');
+      itemNode.dispatchEvent(
+        Object.assign(new CustomEvent('keydown', { bubbles: true }), {
+          which: 32,
+        })
+      );
+      expect(element.classList.contains('bx--dropdown--open')).toBe(true);
+      expect(element.focus, 'Focus requested').not.toHaveBeenCalled();
+    });
+
+    it('Should close dropdown with ESC key', async function() {
+      spyOn(trigger, 'focus');
+      element.classList.add('bx--dropdown--open');
+      element.dispatchEvent(
+        Object.assign(new CustomEvent('keydown'), { which: 27 })
+      );
+      expect(element.classList.contains('bx--dropdown--open')).toBe(false);
+      await delay(0);
+      expect(trigger.focus, 'Focus requested').toHaveBeenCalledTimes(1);
+    });
+
+    it('Should close dropdown with ESC key on an item', async function() {
+      spyOn(trigger, 'focus');
+      element.classList.add('bx--dropdown--open');
+      itemNode.dispatchEvent(
+        Object.assign(new CustomEvent('keydown', { bubbles: true }), {
+          which: 27,
+        })
+      );
+      expect(element.classList.contains('bx--dropdown--open')).toBe(false);
+      await delay(0);
+      expect(trigger.focus, 'Focus requested').toHaveBeenCalledTimes(1);
+    });
+
+    it('Should not open dropdown with ESC key', function() {
+      spyOn(element, 'focus');
+      element.dispatchEvent(
+        Object.assign(new CustomEvent('keydown'), { which: 27 })
+      );
+      expect(element.classList.contains('bx--dropdown--open')).toBe(false);
+      expect(element.focus, 'Focus requested').not.toHaveBeenCalled();
+    });
+
     afterEach(function() {
       element.classList.remove('bx--dropdown--disabled');
       element.classList.remove('bx--dropdown--open');