diff --git a/Code/Editor/Lib/Tests/test_ViewportManipulatorController.cpp b/Code/Editor/Lib/Tests/test_ViewportManipulatorController.cpp
index 8c7023634e..63e59ea940 100644
--- a/Code/Editor/Lib/Tests/test_ViewportManipulatorController.cpp
+++ b/Code/Editor/Lib/Tests/test_ViewportManipulatorController.cpp
@@ -85,6 +85,7 @@ namespace UnitTest
 
             m_rootWidget = AZStd::make_unique<QWidget>();
             m_rootWidget->setFixedSize(QSize(100, 100));
+            QApplication::setActiveWindow(m_rootWidget.get());
 
             m_controllerList = AZStd::make_shared<AzFramework::ViewportControllerList>();
             m_controllerList->RegisterViewportContext(TestViewportId);
@@ -100,6 +101,8 @@ namespace UnitTest
             m_controllerList.reset();
             m_rootWidget.reset();
 
+            QApplication::setActiveWindow(nullptr);
+
             AllocatorsTestFixture::TearDown();
         }
 
@@ -110,7 +113,7 @@ namespace UnitTest
 
     const AzFramework::ViewportId ViewportManipulatorControllerFixture::TestViewportId = AzFramework::ViewportId(0);
 
-    TEST_F(ViewportManipulatorControllerFixture, An_event_is_not_propagated_to_the_viewport_when_a_manipulator_handles_it_first)
+    TEST_F(ViewportManipulatorControllerFixture, AnEventIsNotPropagatedToTheViewportWhenAManipulatorHandlesItFirst)
     {
         // forward input events to our controller list
         QObject::connect(
@@ -151,4 +154,77 @@ namespace UnitTest
 
         editorInteractionViewportFake.Disconnect();
     }
+
+    TEST_F(ViewportManipulatorControllerFixture, ChangingFocusDoesNotClearInput)
+    {
+        bool endedEvent = false;
+        // detect input events and ensure that the Alt key press does not end before the end of the test
+        QObject::connect(
+            m_inputChannelMapper.get(), &AzToolsFramework::QtEventToAzInputMapper::InputChannelUpdated, m_rootWidget.get(),
+            [&endedEvent](const AzFramework::InputChannel* inputChannel, [[maybe_unused]] QEvent* event)
+            {
+                if (inputChannel->GetInputChannelId() == AzFramework::InputDeviceKeyboard::Key::ModifierAltL &&
+                    inputChannel->IsStateEnded())
+                {
+                    endedEvent = true;
+                }
+            });
+
+        // given
+        auto* secondaryWidget = new QWidget(m_rootWidget.get());
+
+        m_rootWidget->show();
+        secondaryWidget->show();
+
+        m_rootWidget->setFocus();
+
+        // simulate a key press when root widget has focus
+        QTest::keyPress(m_rootWidget.get(), Qt::Key_Alt, Qt::KeyboardModifier::AltModifier);
+
+        // when
+        // change focus to secondary widget
+        secondaryWidget->setFocus();
+
+        // then
+        // the alt key was not released (cleared)
+        EXPECT_FALSE(endedEvent);
+    }
+
+    // note: Application State Change includes events such as switching to another application or minimizing
+    // the current application
+    TEST_F(ViewportManipulatorControllerFixture, ApplicationStateChangeDoesClearInput)
+    {
+        bool endedEvent = false;
+        // detect input events and ensure that the Alt key press does not end before the end of the test
+        QObject::connect(
+            m_inputChannelMapper.get(), &AzToolsFramework::QtEventToAzInputMapper::InputChannelUpdated, m_rootWidget.get(),
+            [&endedEvent](const AzFramework::InputChannel* inputChannel, [[maybe_unused]] QEvent* event)
+            {
+                if (inputChannel->GetInputChannelId() == AzFramework::InputDeviceKeyboard::Key::AlphanumericW &&
+                    inputChannel->IsStateEnded())
+                {
+                    endedEvent = true;
+                }
+            });
+
+        // given
+        auto* secondaryWidget = new QWidget(m_rootWidget.get());
+
+        m_rootWidget->show();
+        secondaryWidget->show();
+
+        m_rootWidget->setFocus();
+
+        // simulate a key press when root widget has focus
+        QTest::keyPress(m_rootWidget.get(), Qt::Key_W);
+
+        // when
+        // simulate changing the window state
+        QApplicationStateChangeEvent applicationStateChangeEvent(Qt::ApplicationState::ApplicationInactive);
+        QCoreApplication::sendEvent(m_rootWidget.get(), &applicationStateChangeEvent);
+
+        // then
+        // the key was released (cleared)
+        EXPECT_TRUE(endedEvent);
+    }
 } // namespace UnitTest
diff --git a/Code/Framework/AzToolsFramework/AzToolsFramework/Input/QtEventToAzInputManager.cpp b/Code/Framework/AzToolsFramework/AzToolsFramework/Input/QtEventToAzInputManager.cpp
index 574470ad6e..7ee20997f9 100644
--- a/Code/Framework/AzToolsFramework/AzToolsFramework/Input/QtEventToAzInputManager.cpp
+++ b/Code/Framework/AzToolsFramework/AzToolsFramework/Input/QtEventToAzInputManager.cpp
@@ -210,8 +210,8 @@ namespace AzToolsFramework
         m_enabled = enabled;
         if (!enabled)
         {
-            // Send an internal focus change event to reset our input state to fresh if we're disabled.
-            HandleFocusChange(nullptr);
+            // Clear input channels to reset our input state if we're disabled.
+            ClearInputChannels(nullptr);
         }
     }
 
@@ -246,7 +246,7 @@ namespace AzToolsFramework
 
         if (eventType == QEvent::Type::MouseMove)
         {
-            // clear override cursor when moving outside of the viewport
+            // Clear override cursor when moving outside of the viewport
             const auto* mouseEvent = static_cast<const QMouseEvent*>(event);
             if (m_overrideCursor && !m_sourceWidget->geometry().contains(m_sourceWidget->mapFromGlobal(mouseEvent->globalPos())))
             {
@@ -255,6 +255,13 @@ namespace AzToolsFramework
             }
         }
 
+        // If the application state changes (e.g. we have alt-tabbed or minimized the
+        // main editor window) then ensure all input channels are cleared
+        if (eventType == QEvent::ApplicationStateChange)
+        {
+            ClearInputChannels(event);
+        }
+
         // Only accept mouse & key release events that originate from an object that is not our target widget,
         // as we don't want to erroneously intercept user input meant for another component.
         if (object != m_sourceWidget && eventType != QEvent::Type::KeyRelease && eventType != QEvent::Type::MouseButtonRelease)
@@ -264,9 +271,6 @@ namespace AzToolsFramework
 
         if (eventType == QEvent::FocusIn || eventType == QEvent::FocusOut)
         {
-            // If our focus changes, go ahead and reset all input devices.
-            HandleFocusChange(event);
-
             // If we focus in on the source widget and the mouse is contained in its
             // bounds, refresh the cached cursor position to ensure it is up to date (this
             // ensures cursor positions are refreshed correctly with context menu focus changes)
@@ -451,7 +455,7 @@ namespace AzToolsFramework
         NotifyUpdateChannelIfNotIdle(cursorZChannel, wheelEvent);
     }
 
-    void QtEventToAzInputMapper::HandleFocusChange(QEvent* event)
+    void QtEventToAzInputMapper::ClearInputChannels(QEvent* event)
     {
         for (auto& channelData : m_channels)
         {
diff --git a/Code/Framework/AzToolsFramework/AzToolsFramework/Input/QtEventToAzInputManager.h b/Code/Framework/AzToolsFramework/AzToolsFramework/Input/QtEventToAzInputManager.h
index 4cb391e63b..4c4e09ea05 100644
--- a/Code/Framework/AzToolsFramework/AzToolsFramework/Input/QtEventToAzInputManager.h
+++ b/Code/Framework/AzToolsFramework/AzToolsFramework/Input/QtEventToAzInputManager.h
@@ -138,8 +138,9 @@ namespace AzToolsFramework
         void HandleKeyEvent(QKeyEvent* keyEvent);
         // Handles mouse wheel events.
         void HandleWheelEvent(QWheelEvent* wheelEvent);
-        // Handles focus change events.
-        void HandleFocusChange(QEvent* event);
+
+        // Clear all input channels (set all channel states to 'ended').
+        void ClearInputChannels(QEvent* event);
 
         // Populates m_keyMappings.
         void InitializeKeyMappings();