diff --git a/packages/block-editor/src/components/observe-typing/index.js b/packages/block-editor/src/components/observe-typing/index.js
index c2d86f99347177..08764f5939a13f 100644
--- a/packages/block-editor/src/components/observe-typing/index.js
+++ b/packages/block-editor/src/components/observe-typing/index.js
@@ -115,9 +115,13 @@ export function useMouseMoveTypingReset() {
  *   field, presses ESC or TAB, or moves the mouse in the document.
  */
 export function useTypingObserver() {
-	const isTyping = useSelect( ( select ) =>
-		select( blockEditorStore ).isTyping()
-	);
+	const { isTyping, hasInlineToolbar } = useSelect( ( select ) => {
+		const { isTyping: _isTyping, getSettings } = select( blockEditorStore );
+		return {
+			isTyping: _isTyping(),
+			hasInlineToolbar: getSettings().hasInlineToolbar,
+		};
+	}, [] );
 	const { startTyping, stopTyping } = useDispatch( blockEditorStore );
 
 	const ref1 = useMouseMoveTypingReset();
@@ -125,6 +129,7 @@ export function useTypingObserver() {
 		( node ) => {
 			const { ownerDocument } = node;
 			const { defaultView } = ownerDocument;
+			const selection = defaultView.getSelection();
 
 			// Listeners to stop typing should only be added when typing.
 			// Listeners to start typing should only be added when not typing.
@@ -170,22 +175,20 @@ export function useTypingObserver() {
 				 * uncollapsed (shift) selection.
 				 */
 				function stopTypingOnSelectionUncollapse() {
-					const selection = defaultView.getSelection();
-					const isCollapsed =
-						selection.rangeCount > 0 &&
-						selection.getRangeAt( 0 ).collapsed;
-
-					if ( ! isCollapsed ) {
+					if ( ! selection.isCollapsed ) {
 						stopTyping();
 					}
 				}
 
 				node.addEventListener( 'focus', stopTypingOnNonTextField );
 				node.addEventListener( 'keydown', stopTypingOnEscapeKey );
-				ownerDocument.addEventListener(
-					'selectionchange',
-					stopTypingOnSelectionUncollapse
-				);
+
+				if ( ! hasInlineToolbar ) {
+					ownerDocument.addEventListener(
+						'selectionchange',
+						stopTypingOnSelectionUncollapse
+					);
+				}
 
 				return () => {
 					defaultView.clearTimeout( timerId );
@@ -242,7 +245,7 @@ export function useTypingObserver() {
 				node.removeEventListener( 'keydown', startTypingInTextField );
 			};
 		},
-		[ isTyping, startTyping, stopTyping ]
+		[ isTyping, hasInlineToolbar, startTyping, stopTyping ]
 	);
 
 	return useMergeRefs( [ ref1, ref2 ] );
diff --git a/packages/block-editor/src/components/rich-text/format-toolbar-container.js b/packages/block-editor/src/components/rich-text/format-toolbar-container.js
index 08ea1e7e66fdfb..24a931dc791754 100644
--- a/packages/block-editor/src/components/rich-text/format-toolbar-container.js
+++ b/packages/block-editor/src/components/rich-text/format-toolbar-container.js
@@ -2,32 +2,81 @@
  * WordPress dependencies
  */
 import { Popover, ToolbarGroup } from '@wordpress/components';
+import { useSelect } from '@wordpress/data';
+import {
+	isCollapsed,
+	getActiveFormats,
+	useAnchorRef,
+	store as richTextStore,
+} from '@wordpress/rich-text';
 
 /**
  * Internal dependencies
  */
 import BlockControls from '../block-controls';
 import FormatToolbar from './format-toolbar';
+import { store as blockEditorStore } from '../../store';
+
+function InlineSelectionToolbar( { value, anchorRef, activeFormats } ) {
+	const lastFormat = activeFormats[ activeFormats.length - 1 ];
+	const lastFormatType = lastFormat?.type;
+	const settings = useSelect(
+		( select ) => select( richTextStore ).getFormatType( lastFormatType ),
+		[ lastFormatType ]
+	);
+	const selectionRef = useAnchorRef( {
+		ref: anchorRef,
+		value,
+		settings,
+	} );
+
+	return <InlineToolbar anchorRef={ selectionRef } />;
+}
+
+function InlineToolbar( { anchorRef } ) {
+	return (
+		<Popover
+			position="top center"
+			focusOnMount={ false }
+			anchorRef={ anchorRef }
+			className="block-editor-rich-text__inline-format-toolbar"
+			__unstableSlotName="block-toolbar"
+		>
+			<div className="block-editor-rich-text__inline-format-toolbar-group">
+				<ToolbarGroup>
+					<FormatToolbar />
+				</ToolbarGroup>
+			</div>
+		</Popover>
+	);
+}
+
+const FormatToolbarContainer = ( { inline, anchorRef, value } ) => {
+	const hasInlineToolbar = useSelect(
+		( select ) => select( blockEditorStore ).getSettings().hasInlineToolbar,
+		[]
+	);
 
-const FormatToolbarContainer = ( { inline, anchorRef } ) => {
 	if ( inline ) {
-		// Render in popover.
+		return <InlineToolbar anchorRef={ anchorRef } />;
+	}
+
+	if ( hasInlineToolbar ) {
+		const activeFormats = getActiveFormats( value );
+
+		if ( isCollapsed( value ) && ! activeFormats.length ) {
+			return null;
+		}
+
 		return (
-			<Popover
-				position="top center"
-				focusOnMount={ false }
+			<InlineSelectionToolbar
 				anchorRef={ anchorRef }
-				className="block-editor-rich-text__inline-format-toolbar"
-				__unstableSlotName="block-toolbar"
-			>
-				<div className="block-editor-rich-text__inline-format-toolbar-group">
-					<ToolbarGroup>
-						<FormatToolbar />
-					</ToolbarGroup>
-				</div>
-			</Popover>
+				value={ value }
+				activeFormats={ activeFormats }
+			/>
 		);
 	}
+
 	// Render regular toolbar.
 	return (
 		<BlockControls group="inline">
diff --git a/packages/block-editor/src/components/rich-text/index.js b/packages/block-editor/src/components/rich-text/index.js
index ef3e4d2d3a318d..abf9068a356a7f 100644
--- a/packages/block-editor/src/components/rich-text/index.js
+++ b/packages/block-editor/src/components/rich-text/index.js
@@ -344,6 +344,7 @@ function RichTextWrapper(
 				<FormatToolbarContainer
 					inline={ inlineToolbar }
 					anchorRef={ anchorRef }
+					value={ value }
 				/>
 			) }
 			<TagName
diff --git a/packages/edit-post/src/editor.js b/packages/edit-post/src/editor.js
index 057ca18363795b..29ce105cf08992 100644
--- a/packages/edit-post/src/editor.js
+++ b/packages/edit-post/src/editor.js
@@ -39,6 +39,7 @@ function Editor( {
 		hasFixedToolbar,
 		focusMode,
 		hasReducedUI,
+		hasInlineToolbar,
 		hasThemeStyles,
 		post,
 		preferredStyleVariations,
@@ -84,6 +85,7 @@ function Editor( {
 					__experimentalGetPreviewDeviceType() !== 'Desktop',
 				focusMode: isFeatureActive( 'focusMode' ),
 				hasReducedUI: isFeatureActive( 'reducedUI' ),
+				hasInlineToolbar: isFeatureActive( 'inlineToolbar' ),
 				hasThemeStyles: isFeatureActive( 'themeStyles' ),
 				preferredStyleVariations: select( preferencesStore ).get(
 					'core/edit-post',
@@ -116,6 +118,7 @@ function Editor( {
 			hasFixedToolbar,
 			focusMode,
 			hasReducedUI,
+			hasInlineToolbar,
 
 			// This is marked as experimental to give time for the quick inserter to mature.
 			__experimentalSetIsInserterOpened: setIsInserterOpened,
diff --git a/packages/editor/src/components/provider/use-block-editor-settings.js b/packages/editor/src/components/provider/use-block-editor-settings.js
index 67cce96cde058f..1b9fe758cb1bcf 100644
--- a/packages/editor/src/components/provider/use-block-editor-settings.js
+++ b/packages/editor/src/components/provider/use-block-editor-settings.js
@@ -136,6 +136,7 @@ function useBlockEditorSettings( settings, hasTemplate ) {
 				'generateAnchors',
 				'hasFixedToolbar',
 				'hasReducedUI',
+				'hasInlineToolbar',
 				'imageDefaultSize',
 				'imageDimensions',
 				'imageEditing',
diff --git a/packages/rich-text/README.md b/packages/rich-text/README.md
index 98c5efdadc50bf..006f0b8b095cd5 100644
--- a/packages/rich-text/README.md
+++ b/packages/rich-text/README.md
@@ -213,6 +213,19 @@ _Returns_
 
 -   `RichTextFormat|undefined`: Active format object of the specified type, or undefined.
 
+### getActiveFormats
+
+Gets the all format objects at the start of the selection.
+
+_Parameters_
+
+-   _value_ `RichTextValue`: Value to inspect.
+-   _EMPTY_ACTIVE_FORMATS_ `Array`: Array to return if there are no active formats.
+
+_Returns_
+
+-   `RichTextFormatList`: Active format objects.
+
 ### getActiveObject
 
 Gets the active object, if there is any.
diff --git a/packages/rich-text/src/index.js b/packages/rich-text/src/index.js
index 9be5c09ff8b0c0..36c8904c19dab1 100644
--- a/packages/rich-text/src/index.js
+++ b/packages/rich-text/src/index.js
@@ -3,6 +3,7 @@ export { applyFormat } from './apply-format';
 export { concat } from './concat';
 export { create } from './create';
 export { getActiveFormat } from './get-active-format';
+export { getActiveFormats } from './get-active-formats';
 export { getActiveObject } from './get-active-object';
 export { getTextContent } from './get-text-content';
 export { isListRootSelected as __unstableIsListRootSelected } from './is-list-root-selected';