diff --git a/Code/Tools/ProjectManager/Source/GemCatalog/GemCatalogScreen.cpp b/Code/Tools/ProjectManager/Source/GemCatalog/GemCatalogScreen.cpp
index c11a9b9de1..1d4f354fb5 100644
--- a/Code/Tools/ProjectManager/Source/GemCatalog/GemCatalogScreen.cpp
+++ b/Code/Tools/ProjectManager/Source/GemCatalog/GemCatalogScreen.cpp
@@ -57,6 +57,7 @@ namespace O3DE::ProjectManager
         vLayout->addWidget(m_headerWidget);
 
         connect(m_gemModel, &GemModel::gemStatusChanged, this, &GemCatalogScreen::OnGemStatusChanged);
+        connect(m_gemModel, &GemModel::dependencyGemStatusChanged, this, &GemCatalogScreen::OnDependencyGemStatusChanged);
         connect(m_gemModel->GetSelectionModel(), &QItemSelectionModel::selectionChanged, this, [this]{ ShowInspector(); });
         connect(m_headerWidget, &GemCatalogHeaderWidget::RefreshGems, this, &GemCatalogScreen::Refresh);
         connect(m_headerWidget, &GemCatalogHeaderWidget::OpenGemsRepo, this, &GemCatalogScreen::HandleOpenGemRepo);
@@ -279,7 +280,8 @@ namespace O3DE::ProjectManager
                 {
                     notification += tr(" and ");
                 }
-                if (added && GemModel::GetDownloadStatus(modelIndex) == GemInfo::DownloadStatus::NotDownloaded)
+                if (added && (GemModel::GetDownloadStatus(modelIndex) == GemInfo::DownloadStatus::NotDownloaded) ||
+                    (GemModel::GetDownloadStatus(modelIndex) == GemInfo::DownloadStatus::DownloadFailed))
                 {
                     m_downloadController->AddGemDownload(GemModel::GetName(modelIndex));
                     GemModel::SetDownloadStatus(*m_gemModel, modelIndex, GemInfo::DownloadStatus::Downloading);
@@ -304,6 +306,18 @@ namespace O3DE::ProjectManager
         }
     }
 
+    void GemCatalogScreen::OnDependencyGemStatusChanged(const QString& gemName)
+    {
+        QModelIndex modelIndex = m_gemModel->FindIndexByNameString(gemName);
+        bool added = GemModel::IsAddedDependency(modelIndex);
+        if (added && (GemModel::GetDownloadStatus(modelIndex) == GemInfo::DownloadStatus::NotDownloaded) ||
+            (GemModel::GetDownloadStatus(modelIndex) == GemInfo::DownloadStatus::DownloadFailed))
+        {
+            m_downloadController->AddGemDownload(GemModel::GetName(modelIndex));
+            GemModel::SetDownloadStatus(*m_gemModel, modelIndex, GemInfo::DownloadStatus::Downloading);
+        }
+    }
+
     void GemCatalogScreen::SelectGem(const QString& gemName)
     {
         QModelIndex modelIndex = m_gemModel->FindIndexByNameString(gemName);
@@ -383,6 +397,7 @@ namespace O3DE::ProjectManager
 
             // Remove gem from gems to be added to update any dependencies
             GemModel::SetIsAdded(*m_gemModel, modelIndex, false);
+            GemModel::DeactivateDependentGems(*m_gemModel, modelIndex);
 
             // Unregister the gem
             auto unregisterResult = PythonBindingsInterface::Get()->UnregisterGem(selectedGemPath);
@@ -660,6 +675,8 @@ namespace O3DE::ProjectManager
             QModelIndex index = m_gemModel->FindIndexByNameString(gemName);
             if (index.isValid())
             {
+                GemModel::SetIsAdded(*m_gemModel, index, false);
+                GemModel::DeactivateDependentGems(*m_gemModel, index);
                 GemModel::SetDownloadStatus(*m_gemModel, index, GemInfo::DownloadFailed);
             }
         }
diff --git a/Code/Tools/ProjectManager/Source/GemCatalog/GemCatalogScreen.h b/Code/Tools/ProjectManager/Source/GemCatalog/GemCatalogScreen.h
index 2deaa41b9e..20b0c27ff8 100644
--- a/Code/Tools/ProjectManager/Source/GemCatalog/GemCatalogScreen.h
+++ b/Code/Tools/ProjectManager/Source/GemCatalog/GemCatalogScreen.h
@@ -53,6 +53,7 @@ namespace O3DE::ProjectManager
 
     public slots:
         void OnGemStatusChanged(const QString& gemName, uint32_t numChangedDependencies);
+        void OnDependencyGemStatusChanged(const QString& gemName);
         void OnAddGemClicked();
         void SelectGem(const QString& gemName);
         void OnGemDownloadResult(const QString& gemName, bool succeeded = true);
diff --git a/Code/Tools/ProjectManager/Source/GemCatalog/GemModel.cpp b/Code/Tools/ProjectManager/Source/GemCatalog/GemModel.cpp
index 95fdc8e1e2..ca9be341c6 100644
--- a/Code/Tools/ProjectManager/Source/GemCatalog/GemModel.cpp
+++ b/Code/Tools/ProjectManager/Source/GemCatalog/GemModel.cpp
@@ -357,6 +357,8 @@ namespace O3DE::ProjectManager
                     if (!IsAdded(dependency))
                     {
                         numChangedDependencies++;
+                        const QString dependencyName = gemModel->GetName(dependency);
+                        gemModel->emit dependencyGemStatusChanged(dependencyName);
                     }
                 }
             }
@@ -381,6 +383,8 @@ namespace O3DE::ProjectManager
                     if (!IsAdded(dependency))
                     {
                         numChangedDependencies++;
+                        const QString dependencyName = gemModel->GetName(dependency);
+                        gemModel->emit dependencyGemStatusChanged(dependencyName);
                     }
                 }
             }
@@ -479,6 +483,28 @@ namespace O3DE::ProjectManager
         return previouslyAdded && !added;
     }
 
+    void GemModel::DeactivateDependentGems(QAbstractItemModel& model, const QModelIndex& modelIndex)
+    {
+        GemModel* gemModel = GetSourceModel(&model);
+        AZ_Assert(gemModel, "Failed to obtain GemModel");
+
+        QVector<QModelIndex> dependentGems = gemModel->GatherDependentGems(modelIndex);
+        if (!dependentGems.isEmpty())
+        {
+            // we need to deactivate all gems that depend on this one
+            for (auto dependentModelIndex : dependentGems)
+            {
+                DeactivateDependentGems(model, dependentModelIndex);
+            }
+
+        }
+        else
+        {
+            // Deactivate this gem
+            SetIsAdded(model, modelIndex, false);
+        }
+    }
+
     void GemModel::SetDownloadStatus(QAbstractItemModel& model, const QModelIndex& modelIndex, GemInfo::DownloadStatus status)
     {
         model.setData(modelIndex, status, RoleDownloadStatus);
diff --git a/Code/Tools/ProjectManager/Source/GemCatalog/GemModel.h b/Code/Tools/ProjectManager/Source/GemCatalog/GemModel.h
index bb89d46861..cb99581468 100644
--- a/Code/Tools/ProjectManager/Source/GemCatalog/GemModel.h
+++ b/Code/Tools/ProjectManager/Source/GemCatalog/GemModel.h
@@ -99,6 +99,7 @@ namespace O3DE::ProjectManager
         static bool NeedsToBeRemoved(const QModelIndex& modelIndex, bool includeDependencies = false);
         static bool HasRequirement(const QModelIndex& modelIndex);
         static void UpdateDependencies(QAbstractItemModel& model, const QString& gemName, bool isAdded);
+        static void DeactivateDependentGems(QAbstractItemModel& model, const QModelIndex& modelIndex);
         static void SetDownloadStatus(QAbstractItemModel& model, const QModelIndex& modelIndex, GemInfo::DownloadStatus status);
 
         bool DoGemsToBeAddedHaveRequirements() const;
@@ -113,6 +114,7 @@ namespace O3DE::ProjectManager
 
     signals:
         void gemStatusChanged(const QString& gemName, uint32_t numChangedDependencies);
+        void dependencyGemStatusChanged(const QString& gemName);
 
     protected slots: 
         void OnRowsAboutToBeRemoved(const QModelIndex& parent, int first, int last);