diff --git a/.changeset/tidy-tigers-care.md b/.changeset/tidy-tigers-care.md
new file mode 100644
index 00000000000..abb2ed58e13
--- /dev/null
+++ b/.changeset/tidy-tigers-care.md
@@ -0,0 +1,5 @@
+---
+"@hashicorp/design-system-components": patch
+---
+
+`Modal` - Reverted changes introduced in [#2846](https://github.com/hashicorp/design-system/pull/2846) and [#2902](https://github.com/hashicorp/design-system/pull/2902) related to the click behaviour outside the modal when dismissing is disabled
diff --git a/packages/components/src/components/hds/modal/index.hbs b/packages/components/src/components/hds/modal/index.hbs
index 7ddc96915d0..ea32f64eb5b 100644
--- a/packages/components/src/components/hds/modal/index.hbs
+++ b/packages/components/src/components/hds/modal/index.hbs
@@ -9,7 +9,7 @@
   {{did-insert this.didInsert}}
   {{will-destroy this.willDestroyNode}}
   {{! @glint-expect-error - https://github.com/josemarluedke/ember-focus-trap/issues/86 }}
-  {{focus-trap isActive=this._isOpen focusTrapOptions=(hash onDeactivate=this.onDismiss)}}
+  {{focus-trap isActive=this._isOpen focusTrapOptions=(hash onDeactivate=this.onDismiss clickOutsideDeactivates=true)}}
 >
   <:header>
     {{yield
diff --git a/packages/components/src/components/hds/modal/index.ts b/packages/components/src/components/hds/modal/index.ts
index 9a2c8acb194..9374808c118 100644
--- a/packages/components/src/components/hds/modal/index.ts
+++ b/packages/components/src/components/hds/modal/index.ts
@@ -9,10 +9,8 @@ import { action } from '@ember/object';
 import { assert } from '@ember/debug';
 import { getElementId } from '../../../utils/hds-get-element-id.ts';
 import { buildWaiter } from '@ember/test-waiters';
-import { registerDestructor } from '@ember/destroyable';
 
 import type { WithBoundArgs } from '@glint/template';
-import type Owner from '@ember/owner';
 import type { HdsModalSizes, HdsModalColors } from './types.ts';
 
 import HdsDialogPrimitiveHeaderComponent from '../dialog-primitive/header.ts';
@@ -63,15 +61,6 @@ export default class HdsModal extends Component<HdsModalSignature> {
   private _element!: HTMLDialogElement;
   private _body!: HTMLElement;
   private _bodyInitialOverflowValue = '';
-  private _clickHandler!: (event: MouseEvent) => void;
-
-  constructor(owner: Owner, args: HdsModalSignature['Args']) {
-    super(owner, args);
-
-    registerDestructor(this, (): void => {
-      document.removeEventListener('click', this._clickHandler, true);
-    });
-  }
 
   get isDismissDisabled(): boolean {
     return this.args.isDismissDisabled ?? false;
@@ -139,29 +128,6 @@ export default class HdsModal extends Component<HdsModalSignature> {
       }
     } else {
       this._isOpen = false;
-
-      // Reset page `overflow` property
-      if (this._body) {
-        this._body.style.removeProperty('overflow');
-        if (this._bodyInitialOverflowValue === '') {
-          if (this._body.style.length === 0) {
-            this._body.removeAttribute('style');
-          }
-        } else {
-          this._body.style.setProperty(
-            'overflow',
-            this._bodyInitialOverflowValue
-          );
-        }
-      }
-
-      // Return focus to a specific element (if provided)
-      if (this.args.returnFocusTo) {
-        const initiator = document.getElementById(this.args.returnFocusTo);
-        if (initiator) {
-          initiator.focus();
-        }
-      }
     }
   }
 
@@ -185,20 +151,6 @@ export default class HdsModal extends Component<HdsModalSignature> {
     if (!this._element.open) {
       this.open();
     }
-
-    this._clickHandler = (event: MouseEvent) => {
-      // check if the click is outside the modal and the modal is open
-      if (!this._element.contains(event.target as Node) && this._isOpen) {
-        if (!this.isDismissDisabled) {
-          void this.onDismiss();
-        }
-      }
-    };
-
-    document.addEventListener('click', this._clickHandler, {
-      capture: true,
-      passive: false,
-    });
   }
 
   @action
@@ -233,6 +185,7 @@ export default class HdsModal extends Component<HdsModalSignature> {
   async onDismiss(): Promise<void> {
     // allow ember test helpers to be aware of when the `close` event fires
     // when using `click` or other helpers from '@ember/test-helpers'
+    // Notice: this code will get stripped out in production builds (DEBUG evaluates to `true` in dev/test builds, but `false` in prod builds)
     if (this._element.open) {
       const token = waiter.beginAsync();
       const listener = () => {
@@ -244,5 +197,28 @@ export default class HdsModal extends Component<HdsModalSignature> {
 
     // Make modal dialog invisible using the native `close` method
     this._element.close();
+
+    // Reset page `overflow` property
+    if (this._body) {
+      this._body.style.removeProperty('overflow');
+      if (this._bodyInitialOverflowValue === '') {
+        if (this._body.style.length === 0) {
+          this._body.removeAttribute('style');
+        }
+      } else {
+        this._body.style.setProperty(
+          'overflow',
+          this._bodyInitialOverflowValue
+        );
+      }
+    }
+
+    // Return focus to a specific element (if provided)
+    if (this.args.returnFocusTo) {
+      const initiator = document.getElementById(this.args.returnFocusTo);
+      if (initiator) {
+        initiator.focus();
+      }
+    }
   }
 }
diff --git a/showcase/tests/integration/components/hds/modal/index-test.js b/showcase/tests/integration/components/hds/modal/index-test.js
index 91d5886a49b..3f4067bdc7a 100644
--- a/showcase/tests/integration/components/hds/modal/index-test.js
+++ b/showcase/tests/integration/components/hds/modal/index-test.js
@@ -169,27 +169,6 @@ module('Integration | Component | hds/modal/index', function (hooks) {
     assert.dom('#test-modal').isNotVisible();
   });
 
-  test('it should appropriately dismiss the modal when clicking outside the modal', async function (assert) {
-    this.set('isDismissDisabled', true);
-    await render(
-      hbs`<Hds::Modal @isDismissDisabled={{this.isDismissDisabled}} id="test-modal" as |M|>
-            <M.Header>Title</M.Header>
-            <M.Footer as |F|>
-              <Hds::Button id="cancel-button" type="button" @text="Cancel" @color="secondary" {{on "click" F.close}} />
-            </M.Footer>
-          </Hds::Modal>`,
-    );
-
-    await click('.hds-modal__overlay');
-    assert.dom('#test-modal').isVisible();
-
-    // now let's check that the state is reset and it can be closed
-    this.set('isDismissDisabled', false);
-    await rerender();
-    await click('.hds-modal__overlay');
-    assert.dom('#test-modal').isNotVisible();
-  });
-
   // ACCESSIBILITY
 
   test('it uses the title as name for the dialog', async function (assert) {