diff --git a/lib/KDropdownMenu.vue b/lib/KDropdownMenu.vue
index 6d4f3d354..e00a6fbb2 100644
--- a/lib/KDropdownMenu.vue
+++ b/lib/KDropdownMenu.vue
@@ -18,6 +18,7 @@
       @open="handleOpen"
     >
       <UiMenu
+        ref="menu"
         :options="options"
         @select="handleSelection"
       />
@@ -97,11 +98,15 @@
       },
     },
     beforeDestroy() {
-      window.removeEventListener('keyup', this.handleKeyUp, true);
+      window.removeEventListener('keydown', this.handleOpenMenuNavigation, true);
     },
     methods: {
       handleOpen() {
-        window.addEventListener('keyup', this.handleKeyUp, true);
+        this.$nextTick(() => this.setFocus());
+        window.addEventListener('keydown', this.handleOpenMenuNavigation, true);
+      },
+      setFocus() {
+        this.$refs.menu.$el.querySelector('li').focus();
       },
       handleClose() {
         const focusedElement = document.activeElement;
@@ -116,14 +121,34 @@
         }
         window.removeEventListener('keyup', this.handleKeyUp, true);
       },
-      handleKeyUp(event) {
-        if (event.shiftKey && event.keyCode == 9) {
-          const popover = this.$refs.popover.$el;
-          const popoverIsOpen = popover.clientWidth > 0 && popover.clientHeight > 0;
-          if (popoverIsOpen && !popover.contains(document.activeElement)) {
-            this.closePopover();
-            this.focusOnButton();
-          }
+      handleOpenMenuNavigation(event) {
+        // identify the menu state and length
+        if (!this.$refs.popover && !this.$refs.popover.$el) {
+          return;
+        }
+        const popover = this.$refs.popover.$el;
+        const menuElements = this.$refs.menu.$el.querySelector('div').children;
+        const lastChild = menuElements[menuElements.length - 1];
+        const popoverIsOpen = popover.clientWidth > 0 && popover.clientHeight > 0;
+        // set current element and its siblings
+        let focusedElement = document.activeElement;
+        let sibling = focusedElement.nextElementSibling;
+        let prevSibling = focusedElement.previousElementSibling;
+
+        // manage rotating through the options using arrow keys
+        // UP arrow: .keyCode is depricated and should used only as a fallback
+        if ((event.key == 'ArrowUp' || event.keyCode == 38) && popoverIsOpen) {
+          event.preventDefault();
+          prevSibling
+            ? this.$nextTick(() => prevSibling.focus())
+            : this.$nextTick(() => lastChild.focus());
+          // DOWN arrow
+        } else if ((event.key == 'ArrowDown' || event.keyCode == 40) && popoverIsOpen) {
+          event.preventDefault();
+          sibling ? this.$nextTick(() => sibling.focus()) : this.$nextTick(() => this.setFocus());
+          // if a TAB key, not an arrow key, close the popover and advance to next item in the tab index
+        } else if ((event.key == 'Tab' || event.keyCode == 9) && popoverIsOpen) {
+          this.closePopover();
         }
       },
       handleSelection(selection) {
diff --git a/lib/keen/UiMenu.vue b/lib/keen/UiMenu.vue
index c2779e8ba..6221d95b5 100644
--- a/lib/keen/UiMenu.vue
+++ b/lib/keen/UiMenu.vue
@@ -8,7 +8,6 @@
     lazy
 
     :class="classes"
-    :contain-focus="containFocus"
   >
     <UiMenuOption
       v-for="(option, index) in options"
@@ -27,6 +26,7 @@
       @keydown.enter.native="selectOption(option)"
 
       @keydown.esc.native.esc="closeMenu"
+      :style="[ activeOutline ]"
     >
       <slot name="option" :option="option"></slot>
     </UiMenuOption>
@@ -101,6 +101,9 @@
           'has-secondary-text': this.hasSecondaryText,
         };
       },
+      activeOutline() {
+        return this.isActive ? this.$coreOutline : {};
+      },
     },
 
     methods: {
@@ -112,7 +115,6 @@
         this.$emit('select', option);
         this.closeMenu();
       },
-
       closeMenu() {
         this.$emit('close');
       },
diff --git a/lib/keen/UiMenuOption.vue b/lib/keen/UiMenuOption.vue
index 278ce90ad..4f6cb6cf6 100644
--- a/lib/keen/UiMenuOption.vue
+++ b/lib/keen/UiMenuOption.vue
@@ -3,9 +3,12 @@
   <component
     :is="isAnchor ? 'a' : 'li'"
     class="ui-menu-option"
-
+    supports-modality=keyboard
+    @focus="isActive = true"
+    @blur="isActive = false"
     role="menu-item"
     :class="classes"
+    :style="activeStyle"
     :href="isAnchor ? (disabled ? null : href) : null"
     :tabindex="(isDivider || isAnchor || disabled) ? null : '0'"
     :target="isAnchor ? (disabled ? null : target) : null"
@@ -41,6 +44,8 @@
 <script>
 
   import UiIcon from './UiIcon.vue';
+  import globalThemeState from '../styles/globalThemeState';
+
 
   export default {
     name: 'UiMenuOption',
@@ -49,6 +54,10 @@
       UiIcon,
     },
 
+    data:() => ({
+      isActive: false,
+    }),
+
     props: {
       type: String,
       label: String,
@@ -77,6 +86,9 @@
         };
       },
 
+      activeStyle() {
+        return this.isActive ? {...this.$coreOutline, outlineOffset: '-2px' } : {}
+      },
       isDivider() {
         return this.type === 'divider';
       },
@@ -125,6 +137,11 @@
         background-color: $ui-menu-item-hover-color;
       }
 
+      &:focus:not(.is-disabled),
+      body[modality='keyboard'] &:focus {
+        background-color: $ui-menu-item-hover-color;
+      }
+
       &.is-disabled {
         color: $secondary-text-color;
         cursor: default;
diff --git a/lib/styles/trackInputModality.js b/lib/styles/trackInputModality.js
index 2e91577e9..fc3fb7862 100644
--- a/lib/styles/trackInputModality.js
+++ b/lib/styles/trackInputModality.js
@@ -7,13 +7,68 @@
 
 import globalThemeState from './globalThemeState';
 
-// only keys listed here will change modality to keyboard
-const KEYS_WHITELIST = ['Tab'];
-
 function setUpEventHandlers(disableFocusRingByDefault) {
-  let recentKeyboardEvent = null;
+  let hadKeyboardEvent = false;
+  let hadClickEvent = false;
+  const keyboardModalityDefaultElements = [
+    'input:not([type])',
+    'input[type=text]',
+    'input[type=radio]',
+    'input[type=checkbox]',
+    'input[type=number]',
+    'input[type=date]',
+    'input[type=time]',
+    'input[type=datetime]',
+    'textarea',
+    '[role=textbox]',
+    'a',
+    'button',
+  ].join(',');
+
+  // add this to any element to allow keyboard navigation, regardless of focus event
+  const keyboardModalityOverride = ['[supports-modality=keyboard]'];
+
   let isHandlingKeyboardThrottle;
 
+  const matcher = (() => {
+    const el = document.body;
+
+    if (el.matchesSelector) {
+      return el.matchesSelector;
+    }
+
+    if (el.webkitMatchesSelector) {
+      return el.webkitMatchesSelector;
+    }
+
+    if (el.mozMatchesSelector) {
+      return el.mozMatchesSelector;
+    }
+
+    if (el.msMatchesSelector) {
+      return el.msMatchesSelector;
+    }
+  })();
+
+  const focusTriggersKeyboardModality = function(el) {
+    let triggers = false;
+
+    if (matcher) {
+      triggers =
+        matcher.call(el, keyboardModalityDefaultElements) && matcher.call(el, ':not([readonly])');
+    }
+    return triggers;
+  };
+
+  const focusSetExplicitly = function(el) {
+    let triggers = false;
+
+    if (matcher) {
+      triggers = matcher.call(el, keyboardModalityOverride) && matcher.call(el, ':not([readonly])');
+    }
+    return triggers;
+  };
+
   if (disableFocusRingByDefault) {
     const css = 'body:not([modality=keyboard]) :focus { outline: none; }';
     const head = document.head || document.getElementsByTagName('head')[0];
@@ -33,25 +88,39 @@ function setUpEventHandlers(disableFocusRingByDefault) {
 
   document.body.addEventListener(
     'keydown',
-    event => {
-      recentKeyboardEvent = event;
+    () => {
+      hadKeyboardEvent = true;
+      hadClickEvent = false;
 
       if (isHandlingKeyboardThrottle) {
         clearTimeout(isHandlingKeyboardThrottle);
       }
 
       isHandlingKeyboardThrottle = setTimeout(() => {
-        recentKeyboardEvent = null;
+        hadKeyboardEvent = false;
       }, 100);
     },
     true
   );
 
+  document.body.addEventListener('mousedown', () => {
+    hadClickEvent = true;
+    hadKeyboardEvent = false;
+  });
+
   document.body.addEventListener(
     'focus',
-    () => {
-      if (recentKeyboardEvent && KEYS_WHITELIST.includes(recentKeyboardEvent.key)) {
+    e => {
+      if (
+        (hadKeyboardEvent && focusTriggersKeyboardModality(e.target)) ||
+        (focusSetExplicitly(e.target) && !hadClickEvent)
+      ) {
+        // both the JS state and the body attribute for keyboard modality
         globalThemeState.inputModality = 'keyboard';
+        document.body.setAttribute('modality', 'keyboard');
+      } else {
+        globalThemeState.inputModality = null;
+        document.body.setAttribute('modality', '');
       }
     },
     true
@@ -61,6 +130,7 @@ function setUpEventHandlers(disableFocusRingByDefault) {
     'blur',
     () => {
       globalThemeState.inputModality = null;
+      document.body.setAttribute('modality', '');
     },
     true
   );
diff --git a/yarn.lock b/yarn.lock
index 72f208600..fd34fe893 100644
--- a/yarn.lock
+++ b/yarn.lock
@@ -9060,7 +9060,7 @@ knuth-shuffle-seeded@^1.0.6:
 
 "kolibri-design-system@git://github.com/learningequality/kolibri-design-system#65ee3a69a2ab072ea92e034d95118687678b4f5f":
   version "0.2.2-beta-2"
-  resolved "git://github.com/learningequality/kolibri-design-system#65ee3a69a2ab072ea92e034d95118687678b4f5f"
+  resolved "https://github.com/learningequality/kolibri-design-system#65ee3a69a2ab072ea92e034d95118687678b4f5f"
   dependencies:
     aphrodite "https://github.com/learningequality/aphrodite/"
     autosize "^3.0.21"