diff --git a/addon/components/dialog.hbs b/addon/components/dialog.hbs
index bbf4d2e..fa670ca 100644
--- a/addon/components/dialog.hbs
+++ b/addon/components/dialog.hbs
@@ -7,9 +7,12 @@
         aria-modal='true'
         ...attributes
         {{headlessui-focus-trap
-          focusTrapOptions=(hash initialFocus=@initialFocus)
+          focusTrapOptions=(hash
+            initialFocus=@initialFocus
+            allowOutsideClick=this.allowOutsideClick
+            setReturnFocus=this.setReturnFocus
+          )
         }}
-        {{click-outside this.onClose event='mouseup'}}
         {{this.handleEscapeKey @isOpen this.onClose}}
         {{did-insert (fn this.dialogStackProvider.push this)}}
         {{will-destroy (fn this.dialogStackProvider.remove this)}}
@@ -17,13 +20,13 @@
         {{yield
           (hash
             isOpen=@isOpen
-            onClose=@onClose
+            onClose=this.onClose
             Overlay=(component
               'dialog/-overlay'
               guid=this.overlayGuid
               dialogGuid=this.guid
               isOpen=@isOpen
-              onClose=@onClose
+              onClose=this.onClose
             )
             Title=(component
               'dialog/-title'
diff --git a/addon/components/dialog.ts b/addon/components/dialog.ts
index bc7baf4..56be143 100644
--- a/addon/components/dialog.ts
+++ b/addon/components/dialog.ts
@@ -30,6 +30,7 @@ export default class DialogComponent extends Component<Args> {
 
   guid = `${guidFor(this)}-headlessui-dialog`;
   $portalRoot = getPortalRoot();
+  outsideClickedElement: HTMLElement | null = null;
 
   handleEscapeKey = modifier(
     (_element, [isOpen, onClose]: [boolean, () => void]) => {
@@ -103,6 +104,24 @@ export default class DialogComponent extends Component<Args> {
     return `${this.guid}-description`;
   }
 
+  @action
+  setReturnFocus(trigger: HTMLElement) {
+    return this.outsideClickedElement ? this.outsideClickedElement : trigger;
+  }
+
+  @action
+  allowOutsideClick(e: MouseEvent) {
+    let target = e.target as HTMLElement;
+
+    if (target && target.tagName !== 'BODY') {
+      this.outsideClickedElement = target;
+    }
+
+    this.onClose();
+
+    return true;
+  }
+
   @action
   onClose() {
     if (this.dialogStackProvider.hasOpenChild(this)) return;
diff --git a/package.json b/package.json
index 277df09..dfe0efb 100644
--- a/package.json
+++ b/package.json
@@ -41,7 +41,6 @@
     "ember-cli-babel": "^7.26.3",
     "ember-cli-htmlbars": "^5.7.1",
     "ember-cli-typescript": "^4.2.1",
-    "ember-click-outside-modifier": "^2.0.0",
     "ember-concurrency": "^2.1.2",
     "ember-element-helper": "^0.5.5",
     "ember-set-helper": "^2.0.1",
diff --git a/tests/integration/components/dialog-test.js b/tests/integration/components/dialog-test.js
index 62d581f..aabe51f 100644
--- a/tests/integration/components/dialog-test.js
+++ b/tests/integration/components/dialog-test.js
@@ -429,13 +429,33 @@ module('Integration | Component | <Dialog>', function (hooks) {
 
       assertDialog({ state: DialogState.InvisibleUnmounted });
 
-      assertActiveElement(getByText('Trigger'));
+      await assertActiveElement(getByText('Trigger'));
     });
 
-    todo(
-      'it should be possible to close the dialog, and keep focus on the focusable element',
-      async function () {}
-    );
+    test('it should be possible to close the dialog, and keep focus on the focusable element', async function () {
+      this.set('isOpen', false);
+
+      await render(hbs`
+        <button>Hello</button>
+        <button type="button" {{on "click" (set this "isOpen" true)}}>
+          Trigger
+        </button>
+        <Dialog @isOpen={{this.isOpen}} @onClose={{set this "isOpen" false}}>
+          Contents
+          <div tabindex="0"></div>
+        </Dialog>
+      `);
+
+      await click(getByText('Trigger'));
+
+      assertDialog({ state: DialogState.Visible });
+
+      await click(getByText('Hello'));
+
+      assertDialog({ state: DialogState.InvisibleUnmounted });
+
+      await assertActiveElement(getByText('Hello'));
+    });
 
     test('it should stop propagating click events when clicking on the Dialog.Overlay', async function (assert) {
       this.set('isOpen', true);
@@ -792,11 +812,15 @@ module('Integration | Component | <Dialog>', function (hooks) {
         //close the top most dialog with ${strategy}
         await action();
 
-        assert.equal(getDialogs(), 0, 'Verify that we have 0 open dialogs');
+        assert.equal(
+          getDialogs().length,
+          0,
+          'Verify that we have 0 open dialogs'
+        );
 
         await assertActiveElement(
           getByText('Open 1'),
-          'Verify that we have 1 open dialog'
+          'Verify that the `Open 1` got focused again'
         );
       }
     );
diff --git a/yarn.lock b/yarn.lock
index 2a6f3c6..b2adc19 100644
--- a/yarn.lock
+++ b/yarn.lock
@@ -6218,15 +6218,6 @@ ember-cli@~3.27.0:
     workerpool "^6.0.3"
     yam "^1.0.0"
 
-ember-click-outside-modifier@^2.0.0:
-  version "2.0.0"
-  resolved "https://registry.yarnpkg.com/ember-click-outside-modifier/-/ember-click-outside-modifier-2.0.0.tgz#8417a44db8bafef87e08f3614ad809ad1a6020e1"
-  integrity sha512-5FkTsSiSoDh4wL0mqJ2niOZH3ykevcRdLxA2pgZ9JqCMpvMqAQon5valAA4mvW6HiP9lnwm+GR/WijtL0dsdcg==
-  dependencies:
-    ember-cli-babel "^7.26.6"
-    ember-cli-htmlbars "^5.7.1"
-    ember-modifier "^2.1.2"
-
 ember-compatibility-helpers@^1.1.2, ember-compatibility-helpers@^1.2.0, ember-compatibility-helpers@^1.2.1, ember-compatibility-helpers@^1.2.4:
   version "1.2.4"
   resolved "https://registry.yarnpkg.com/ember-compatibility-helpers/-/ember-compatibility-helpers-1.2.4.tgz#70e0fef7048969141626eed6006f3880df612cd1"