diff --git a/menu/internal/controllers/menuItemController.ts b/menu/internal/controllers/menuItemController.ts
index 2587166e03..28f3cb2507 100644
--- a/menu/internal/controllers/menuItemController.ts
+++ b/menu/internal/controllers/menuItemController.ts
@@ -223,10 +223,15 @@ export class MenuItemController implements ReactiveController {
       }
     }
 
-    if (this.host.keepOpen || event.defaultPrevented) return;
+    if (event.defaultPrevented) return;
+
+    // If the host has keepOpen = true we should ignore clicks & Space/Enter,
+    // however we always maintain the ability to close a menu with a explicit
+    // `escape` keypress.
     const keyCode = event.code;
+    if (this.host.keepOpen && keyCode !== 'Escape') return;
 
-    if (!event.defaultPrevented && isClosableKey(keyCode)) {
+    if (isClosableKey(keyCode)) {
       event.preventDefault();
       this.host.dispatchEvent(
         createDefaultCloseMenuEvent(this.host, {
diff --git a/menu/menu_test.ts b/menu/menu_test.ts
index 0b01c73e16..1d0a4c2f41 100644
--- a/menu/menu_test.ts
+++ b/menu/menu_test.ts
@@ -6,11 +6,13 @@
 
 // import 'jasmine'; (google3-only)
 import './menu.js';
+import './sub-menu.js';
 
 import {html, render} from 'lit';
 
 import {createTokenTests} from '../testing/tokens.js';
 
+import {MenuItemHarness} from './harness.js';
 import {MdMenu} from './menu.js';
 import {MdMenuItem} from './menu-item.js';
 
@@ -60,6 +62,53 @@ describe('<md-menu>', () => {
     expect(menu.open).toBeFalse();
     expect(escapeKeydownEvent.defaultPrevented).toBeTrue();
   });
+
+  // Regression test for b/314706578.
+  it('escape on submenu items closes menu', async () => {
+    render(
+      html`
+        <button>OpenMenu</button>
+        <md-menu quick>
+          <md-sub-menu hover-open-delay="0" hover-close-delay="0">
+            <md-menu-item id="submenu-item" slot="item">
+              <div slot="headline">Link Item 1</div>
+            </md-menu-item>
+            <md-menu quick slot="menu">
+              <md-menu-item slot="item">
+                <div slot="headline">Submenu Item 1</div>
+              </md-menu-item>
+            </md-menu>
+          </md-sub-menu>
+        </md-menu>
+      `,
+      root,
+    );
+
+    const button = root.querySelector('button')!;
+    const menu = root.querySelector('md-menu')!;
+    const submenuItemHarness = new MenuItemHarness(
+      menu.querySelector('#submenu-item')!,
+    );
+    menu.anchorElement = button;
+    menu.show();
+
+    expect(menu.open).toBeTrue();
+
+    const escapeKeydownEvent = new KeyboardEvent('keydown', {
+      key: 'Escape',
+      code: 'Escape',
+      bubbles: true,
+      composed: true,
+      cancelable: true,
+    });
+    const interactiveElement = await submenuItemHarness.getInteractiveElement();
+    interactiveElement.dispatchEvent(escapeKeydownEvent);
+
+    await menu.updateComplete;
+
+    expect(menu.open).toBeFalse();
+    expect(escapeKeydownEvent.defaultPrevented).toBeTrue();
+  });
 });
 
 describe('<md-menu-item>', () => {