diff --git a/Code/Framework/AzToolsFramework/AzToolsFramework/UI/Outliner/EntityOutlinerWidget.cpp b/Code/Framework/AzToolsFramework/AzToolsFramework/UI/Outliner/EntityOutlinerWidget.cpp
index 3b48cc4967..4d53102edb 100644
--- a/Code/Framework/AzToolsFramework/AzToolsFramework/UI/Outliner/EntityOutlinerWidget.cpp
+++ b/Code/Framework/AzToolsFramework/AzToolsFramework/UI/Outliner/EntityOutlinerWidget.cpp
@@ -553,6 +553,13 @@ namespace AzToolsFramework
             return;
         }
 
+        // Do not display the context menu if the item under the mouse cursor is not selectable.
+        if (const QModelIndex& index = m_gui->m_objectTree->indexAt(pos); index.isValid()
+            && (index.flags() & Qt::ItemIsSelectable) == 0)
+        {
+            return;
+        }
+
         QMenu* contextMenu = new QMenu(this);
 
         // Populate global context menu.