diff --git a/crates/gpui/src/app.rs b/crates/gpui/src/app.rs
index 076a3fdde3..03625c80e7 100644
--- a/crates/gpui/src/app.rs
+++ b/crates/gpui/src/app.rs
@@ -3299,15 +3299,15 @@ impl<'a, 'b, V: 'static> ViewContext<'a, 'b, V> {
         let region_id = MouseRegionId::new(tag, self.view_id, region_id);
         MouseState {
             hovered: self.window.hovered_region_ids.contains(&region_id),
-            clicked: if let Some((clicked_region_id, button)) = self.window.clicked_region {
-                if region_id == clicked_region_id {
-                    Some(button)
-                } else {
-                    None
-                }
-            } else {
-                None
-            },
+            mouse_down: !self.window.clicked_region_ids.is_empty(),
+            clicked: self
+                .window
+                .clicked_region_ids
+                .iter()
+                .find(|click_region_id| **click_region_id == region_id)
+                // If we've gotten here, there should always be a clicked region.
+                // But let's be defensive and return None if there isn't.
+                .and_then(|_| self.window.clicked_region.map(|(_, button)| button)),
             accessed_hovered: false,
             accessed_clicked: false,
         }
@@ -3823,14 +3823,20 @@ impl<'a, T> DerefMut for Reference<'a, T> {
 pub struct MouseState {
     pub(crate) hovered: bool,
     pub(crate) clicked: Option<MouseButton>,
+    pub(crate) mouse_down: bool,
     pub(crate) accessed_hovered: bool,
     pub(crate) accessed_clicked: bool,
 }
 
 impl MouseState {
+    pub fn dragging(&mut self) -> bool {
+        self.accessed_hovered = true;
+        self.hovered && self.mouse_down
+    }
+
     pub fn hovered(&mut self) -> bool {
         self.accessed_hovered = true;
-        self.hovered
+        self.hovered && (!self.mouse_down || self.clicked.is_some())
     }
 
     pub fn clicked(&mut self) -> Option<MouseButton> {
diff --git a/crates/gpui/src/app/window.rs b/crates/gpui/src/app/window.rs
index 5638699565..4b8b0534d5 100644
--- a/crates/gpui/src/app/window.rs
+++ b/crates/gpui/src/app/window.rs
@@ -617,10 +617,11 @@ impl<'a> WindowContext<'a> {
                     }
                 }
 
-                if self
-                    .window
-                    .platform_window
-                    .is_topmost_for_position(*position)
+                if pressed_button.is_none()
+                    && self
+                        .window
+                        .platform_window
+                        .is_topmost_for_position(*position)
                 {
                     self.platform().set_cursor_style(style_to_assign);
                 }
@@ -787,6 +788,11 @@ impl<'a> WindowContext<'a> {
                                     .contains_point(self.window.mouse_position)
                                 {
                                     valid_regions.push(mouse_region.clone());
+                                } else {
+                                    // Let the view know that it hasn't been clicked anymore
+                                    if mouse_region.notify_on_click {
+                                        notified_views.insert(mouse_region.id().view_id());
+                                    }
                                 }
                             }
                         }
diff --git a/crates/workspace/src/pane/dragged_item_receiver.rs b/crates/workspace/src/pane/dragged_item_receiver.rs
index 5e487b49b4..bbe391b5b5 100644
--- a/crates/workspace/src/pane/dragged_item_receiver.rs
+++ b/crates/workspace/src/pane/dragged_item_receiver.rs
@@ -42,7 +42,11 @@ where
     let mut handler = MouseEventHandler::above::<Tag, _>(region_id, cx, |state, cx| {
         // Observing hovered will cause a render when the mouse enters regardless
         // of if mouse position was accessed before
-        let drag_position = if state.hovered() { drag_position } else { None };
+        let drag_position = if state.dragging() {
+            drag_position
+        } else {
+            None
+        };
         Stack::new()
             .with_child(render_child(state, cx))
             .with_children(drag_position.map(|drag_position| {