diff --git a/src/components/modal/modal.tsx b/src/components/modal/modal.tsx
index f28150b48..270841005 100644
--- a/src/components/modal/modal.tsx
+++ b/src/components/modal/modal.tsx
@@ -72,13 +72,7 @@ export const Modal: React.FC<ModalProps> = ({
     <div
       className={`${className} bg-white w-80 shadow-4 sans-serif relative`}
       data-testid="ipfs-modal"
-      style={{
-        maxWidth: '34em',
-        position: 'fixed',
-        top: '50%',
-        left: '50%',
-        transform: 'translate(-50%, -50%)'
-      }}
+      style={{ maxWidth: '34em' }}
       {...props}
     >
       {onCancel && (
diff --git a/src/components/overlay/overlay.tsx b/src/components/overlay/overlay.tsx
index ac2f15f55..752b0c2f2 100644
--- a/src/components/overlay/overlay.tsx
+++ b/src/components/overlay/overlay.tsx
@@ -1,30 +1,37 @@
 import React from 'react'
 import { Modal } from 'react-overlays'
 
-type ModalProps = React.ComponentProps<typeof Modal>
-
-export interface OverlayProps extends Omit<ModalProps, 'renderBackdrop' | 'onHide'> {
+export interface OverlayProps {
   show: boolean
   onLeave: () => void
-  hidden: boolean
+  hidden?: boolean
+  className?: string
+  children?: React.ReactNode
 }
 
-const Overlay: React.FC<OverlayProps> = ({ children, show, onLeave, className = '', hidden, ...props }) => {
-  const renderBackdrop: React.FC<React.HTMLAttributes<HTMLDivElement>> = (props) => (
-    <div className='fixed top-0 left-0 right-0 bottom-0 bg-black o-50' hidden={hidden} {...props} />
-  )
-
+const Overlay: React.FC<OverlayProps> = ({ children, show, onLeave, hidden }) => {
   return (
-    // Note: react-overlays Modal manages its own portal and positioning.
-    // The Modal child component uses fixed positioning to center itself.
-    // onHide handles both backdrop clicks and escape key presses.
     <Modal
-      {...props}
       show={show}
       backdrop={true}
-      className={`${className} z-max`}
-      renderBackdrop={renderBackdrop}
-      onHide={onLeave}>
+      onHide={onLeave}
+      renderBackdrop={(props) => (
+        <div className='fixed top-0 left-0 right-0 bottom-0 bg-black o-50 z-max' hidden={hidden} {...props} />
+      )}
+      renderDialog={(dialogProps) => (
+        // eslint-disable-next-line jsx-a11y/no-noninteractive-element-interactions, jsx-a11y/click-events-have-key-events
+        <div
+          {...dialogProps}
+          role='dialog'
+          className={`${dialogProps.className || ''} fixed top-0 left-0 right-0 bottom-0 flex justify-center items-center z-max`}
+          style={{ outline: 'none' }}
+          onClick={(e: React.MouseEvent) => {
+            if (e.target === e.currentTarget) onLeave()
+          }}
+        >
+          {children}
+        </div>
+      )}>
       {children}
     </Modal>
   )
diff --git a/src/diagnostics/logs-screen/buffer-config-modal.tsx b/src/diagnostics/logs-screen/buffer-config-modal.tsx
index 34466e746..50b2435b0 100644
--- a/src/diagnostics/logs-screen/buffer-config-modal.tsx
+++ b/src/diagnostics/logs-screen/buffer-config-modal.tsx
@@ -63,7 +63,6 @@ export const BufferConfigModal: React.FC<BufferConfigModalProps> = ({
   }
 
   return (
-    // @ts-expect-error - Overlay is not typed
     <Overlay show={isOpen} onLeave={handleCancel}>
       <Modal onCancel={handleCancel} className="outline-0">
         <div className='pa4'>
diff --git a/src/diagnostics/logs-screen/log-warning-modal.tsx b/src/diagnostics/logs-screen/log-warning-modal.tsx
index 99bf93e48..fd6bc1a3c 100644
--- a/src/diagnostics/logs-screen/log-warning-modal.tsx
+++ b/src/diagnostics/logs-screen/log-warning-modal.tsx
@@ -83,7 +83,6 @@ const LogWarningModal: React.FC<LogWarningModalProps> = ({
   if (warningType == null) return null
 
   return (
-    // @ts-expect-error - Overlay is not typed
     <Overlay show={isOpen} onLeave={onClose}>
       <Modal onCancel={onClose} className="outline-0">
         <ModalBody>
diff --git a/test/e2e/ipns.test.js b/test/e2e/ipns.test.js
index b4df09f8a..9f454f83e 100644
--- a/test/e2e/ipns.test.js
+++ b/test/e2e/ipns.test.js
@@ -114,6 +114,10 @@ test.describe('IPNS publishing', () => {
       const fileRow = page.getByTestId('file-row').filter({ hasText: testFilename })
       await expect(fileRow).toBeVisible()
 
+      // dismiss import notification before opening the publish modal
+      // (modal overlay blocks interaction with content behind it)
+      await dismissImportNotification(page)
+
       // click on the context menu
       await page.locator(`.File:has-text('${testFilename}') .file-context-menu`).click()
 
@@ -135,9 +139,6 @@ test.describe('IPNS publishing', () => {
       // (ipns will fail to publish without peers)
       await ipfs.swarm.connect(peerAddr)
 
-      // dismiss import notification created earlier in this test
-      await dismissImportNotification(page)
-
       await publishButton.click()
 
       // IPNS publishing can take time depending on network/DHT conditions