diff --git a/.changeset/healthy-cobras-whisper.md b/.changeset/healthy-cobras-whisper.md
new file mode 100644
index 0000000000..245439d124
--- /dev/null
+++ b/.changeset/healthy-cobras-whisper.md
@@ -0,0 +1,6 @@
+---
+"@twilio-paste/combobox": minor
+"@twilio-paste/core": minor
+---
+
+[Combobox] Add new prop `usePortal` which defaults to `true`. The prop was introduced to address a bug when Comboboxes are placed in Popovers. usePortal should be set to false when using a Combobox inside a Popover in order to retain full functionality.
diff --git a/packages/paste-core/components/combobox/src/ListboxPositioner.tsx b/packages/paste-core/components/combobox/src/ListboxPositioner.tsx
index 2600af38ea..7d7c486f28 100644
--- a/packages/paste-core/components/combobox/src/ListboxPositioner.tsx
+++ b/packages/paste-core/components/combobox/src/ListboxPositioner.tsx
@@ -57,7 +57,6 @@ export const ListBoxPositioner: React.FC<ListBoxPositionerProps> = ({ inputBoxRe
         };
       }
     }
-
     return {
       position: "fixed",
       top: inputBoxDimensions?.bottom,
diff --git a/packages/paste-core/components/combobox/src/ListboxWrapper.tsx b/packages/paste-core/components/combobox/src/ListboxWrapper.tsx
new file mode 100644
index 0000000000..52feb5d964
--- /dev/null
+++ b/packages/paste-core/components/combobox/src/ListboxWrapper.tsx
@@ -0,0 +1,35 @@
+import { Box } from "@twilio-paste/box";
+import { Portal } from "@twilio-paste/reakit-library";
+import * as React from "react";
+
+import { ListBoxPositioner } from "./ListboxPositioner";
+
+/*
+ * This component renders the listbox in an absolutely positioned Box when `usePortal={false}`.
+ * Portal and ListBoxPositioner shouldn't be used when the Combobox is placed in a Popover.
+ * Using Combobox in a Popover was previously causing interaction issues because of the Portal that Popover uses.
+ * Because ListBoxPositioner isn't used when `usePortal={false}`, the listbox won't change position based on the window
+ * (e.g. moving above the input box when the Combobox is at the bottom of the window).
+ */
+
+export const ListboxWrapper: React.FC<{
+  inputBoxRef: React.RefObject<HTMLElement>;
+  parentRef: React.RefObject<HTMLElement>;
+  usePortal: boolean;
+  children: React.ReactNode;
+}> = ({ inputBoxRef, parentRef, usePortal, children }) => {
+  if (!usePortal)
+    return (
+      <Box position="absolute" top="100%" width="100%">
+        {children}
+      </Box>
+    );
+  return (
+    <Portal>
+      <ListBoxPositioner inputBoxRef={inputBoxRef} dropdownBoxRef={parentRef}>
+        {children}
+      </ListBoxPositioner>
+    </Portal>
+  );
+};
+ListboxWrapper.displayName = "ListboxWrapper";
diff --git a/packages/paste-core/components/combobox/src/multiselect/MultiselectCombobox.tsx b/packages/paste-core/components/combobox/src/multiselect/MultiselectCombobox.tsx
index 911324b43c..60e8900920 100644
--- a/packages/paste-core/components/combobox/src/multiselect/MultiselectCombobox.tsx
+++ b/packages/paste-core/components/combobox/src/multiselect/MultiselectCombobox.tsx
@@ -5,7 +5,6 @@ import { HelpText } from "@twilio-paste/help-text";
 import { ChevronDownIcon } from "@twilio-paste/icons/esm/ChevronDownIcon";
 import { InputBox, InputChevronWrapper, getInputChevronIconColor } from "@twilio-paste/input-box";
 import { Label } from "@twilio-paste/label";
-import { Portal } from "@twilio-paste/reakit-library";
 import { ScreenReaderOnly } from "@twilio-paste/screen-reader-only";
 import { useUID } from "@twilio-paste/uid-library";
 import { useWindowSize } from "@twilio-paste/utils";
@@ -14,7 +13,7 @@ import * as React from "react";
 import { useVirtual } from "react-virtual";
 
 import { ComboboxItems } from "../ComboboxItems";
-import { ListBoxPositioner } from "../ListboxPositioner";
+import { ListboxWrapper } from "../ListboxWrapper";
 import { getHelpTextVariant } from "../helpers";
 import { ComboboxListbox } from "../styles/ComboboxListbox";
 import type { MultiselectComboboxProps } from "../types";
@@ -24,6 +23,7 @@ import { extractPropsFromState } from "./extractPropsFromState";
 export const MultiselectCombobox = React.forwardRef<HTMLInputElement, MultiselectComboboxProps>(
   (
     {
+      usePortal = true,
       element = "MULTISELECT_COMBOBOX",
       disabled,
       hasError,
@@ -365,32 +365,30 @@ export const MultiselectCombobox = React.forwardRef<HTMLInputElement, Multiselec
             </InputChevronWrapper>
           </Box>
         </InputBox>
-        <Portal>
-          <ListBoxPositioner inputBoxRef={inputBoxRef} dropdownBoxRef={parentRef}>
-            <ComboboxListbox
-              {...getMenuProps({ ref: parentRef })}
-              element={`${element}_LISTBOX`}
-              hidden={!isOpen}
-              aria-multiselectable="true"
-            >
-              <ComboboxItems
-                ref={scrollToIndexRef}
-                items={items}
-                element={element}
-                getItemProps={getItemProps}
-                highlightedIndex={highlightedIndex}
-                selectedItems={selectedItems}
-                disabledItems={disabledItems}
-                totalSize={rowVirtualizer.totalSize}
-                virtualItems={rowVirtualizer.virtualItems}
-                optionTemplate={optionTemplate}
-                groupItemsBy={groupItemsBy}
-                groupLabelTemplate={groupLabelTemplate}
-                emptyState={emptyState}
-              />
-            </ComboboxListbox>
-          </ListBoxPositioner>
-        </Portal>
+        <ListboxWrapper inputBoxRef={inputBoxRef} parentRef={parentRef} usePortal={usePortal}>
+          <ComboboxListbox
+            {...getMenuProps({ ref: parentRef })}
+            element={`${element}_LISTBOX`}
+            hidden={!isOpen}
+            aria-multiselectable="true"
+          >
+            <ComboboxItems
+              ref={scrollToIndexRef}
+              items={items}
+              element={element}
+              getItemProps={getItemProps}
+              highlightedIndex={highlightedIndex}
+              selectedItems={selectedItems}
+              disabledItems={disabledItems}
+              totalSize={rowVirtualizer.totalSize}
+              virtualItems={rowVirtualizer.virtualItems}
+              optionTemplate={optionTemplate}
+              groupItemsBy={groupItemsBy}
+              groupLabelTemplate={groupLabelTemplate}
+              emptyState={emptyState}
+            />
+          </ComboboxListbox>
+        </ListboxWrapper>
         {helpText && (
           <HelpText id={helpTextId} variant={getHelpTextVariant(variant, hasError)} element={`${element}_HELP_TEXT`}>
             {helpText}
diff --git a/packages/paste-core/components/combobox/src/singleselect/Combobox.tsx b/packages/paste-core/components/combobox/src/singleselect/Combobox.tsx
index a79a355c7d..7c26b25738 100644
--- a/packages/paste-core/components/combobox/src/singleselect/Combobox.tsx
+++ b/packages/paste-core/components/combobox/src/singleselect/Combobox.tsx
@@ -5,14 +5,13 @@ import { ChevronDownIcon } from "@twilio-paste/icons/esm/ChevronDownIcon";
 import type { InputVariants } from "@twilio-paste/input";
 import { InputBox, InputChevronWrapper, getInputChevronIconColor } from "@twilio-paste/input-box";
 import { Label } from "@twilio-paste/label";
-import { Portal } from "@twilio-paste/reakit-library";
 import { useUID } from "@twilio-paste/uid-library";
 import { useWindowSize } from "@twilio-paste/utils";
 import * as React from "react";
 import { useVirtual } from "react-virtual";
 
 import { ComboboxItems } from "../ComboboxItems";
-import { ListBoxPositioner } from "../ListboxPositioner";
+import { ListboxWrapper } from "../ListboxWrapper";
 import { visuallyHiddenStyles } from "../helpers";
 import { ComboboxInputSelect } from "../styles/ComboboxInputSelect";
 import { ComboboxInputWrapper } from "../styles/ComboboxInputWrapper";
@@ -36,6 +35,7 @@ const getHelpTextVariant = (variant: InputVariants, hasError: boolean | undefine
 const Combobox = React.forwardRef<HTMLInputElement, ComboboxProps>(
   (
     {
+      usePortal = true,
       autocomplete,
       disabled,
       element = "COMBOBOX",
@@ -180,26 +180,24 @@ const Combobox = React.forwardRef<HTMLInputElement, ComboboxProps>(
             )}
           </ComboboxInputWrapper>
         </InputBox>
-        <Portal>
-          <ListBoxPositioner inputBoxRef={inputBoxRef} dropdownBoxRef={parentRef}>
-            <ComboboxListbox hidden={!isOpen} element={`${element}_LISTBOX`} {...getMenuProps({ ref: parentRef })}>
-              <ComboboxItems
-                ref={scrollToIndexRef}
-                items={items}
-                element={element}
-                getItemProps={getItemProps}
-                highlightedIndex={highlightedIndex}
-                disabledItems={disabledItems}
-                optionTemplate={optionTemplate}
-                groupItemsBy={groupItemsBy}
-                groupLabelTemplate={groupLabelTemplate}
-                totalSize={rowVirtualizer.totalSize}
-                virtualItems={rowVirtualizer.virtualItems}
-                emptyState={emptyState}
-              />
-            </ComboboxListbox>
-          </ListBoxPositioner>
-        </Portal>
+        <ListboxWrapper inputBoxRef={inputBoxRef} parentRef={parentRef} usePortal={usePortal}>
+          <ComboboxListbox hidden={!isOpen} element={`${element}_LISTBOX`} {...getMenuProps({ ref: parentRef })}>
+            <ComboboxItems
+              ref={scrollToIndexRef}
+              items={items}
+              element={element}
+              getItemProps={getItemProps}
+              highlightedIndex={highlightedIndex}
+              disabledItems={disabledItems}
+              optionTemplate={optionTemplate}
+              groupItemsBy={groupItemsBy}
+              groupLabelTemplate={groupLabelTemplate}
+              totalSize={rowVirtualizer.totalSize}
+              virtualItems={rowVirtualizer.virtualItems}
+              emptyState={emptyState}
+            />
+          </ComboboxListbox>
+        </ListboxWrapper>
         {helpText && (
           <HelpText id={helpTextId} variant={getHelpTextVariant(variant, hasError)}>
             {helpText}
diff --git a/packages/paste-core/components/combobox/src/types.ts b/packages/paste-core/components/combobox/src/types.ts
index feba49dd0f..d062223a8e 100644
--- a/packages/paste-core/components/combobox/src/types.ts
+++ b/packages/paste-core/components/combobox/src/types.ts
@@ -42,6 +42,14 @@ export type HighlightedIndexChanges = {
 };
 
 export interface ComboboxProps extends Omit<InputProps, "id" | "type" | "value" | "autoComplete"> {
+  /**
+   * Determines whether the Combobox Listbox (options list) is rendered inside a Portal. Defaults to `true`. Use `false` if you are using Combobox inside a Paste Popover to prevent interaction bugs.
+   *
+   * @type {boolean}
+   * @memberof ComboboxProps
+   * @default true
+   */
+  usePortal?: boolean;
   /**
    * Activates the autocomplete/typeahead feature
    *
diff --git a/packages/paste-core/components/combobox/stories/Combobox.stories.tsx b/packages/paste-core/components/combobox/stories/Combobox.stories.tsx
index 5ec77fac05..2f95af2ed4 100644
--- a/packages/paste-core/components/combobox/stories/Combobox.stories.tsx
+++ b/packages/paste-core/components/combobox/stories/Combobox.stories.tsx
@@ -9,6 +9,7 @@ import { SearchIcon } from "@twilio-paste/icons/esm/SearchIcon";
 import { Label } from "@twilio-paste/label";
 import { MediaBody, MediaFigure, MediaObject } from "@twilio-paste/media-object";
 import { Modal, ModalBody, ModalHeader, ModalHeading } from "@twilio-paste/modal";
+import { Popover, PopoverButton, PopoverContainer } from "@twilio-paste/popover";
 import { Option, Select } from "@twilio-paste/select";
 import { Text } from "@twilio-paste/text";
 import { useUID } from "@twilio-paste/uid-library";
@@ -885,3 +886,14 @@ ComboboxInModal.parameters = {
     disable: true,
   },
 };
+
+export const ComboboxInPopover: StoryFn = () => {
+  return (
+    <PopoverContainer baseId="popover-example">
+      <PopoverButton variant="primary">Open</PopoverButton>
+      <Popover aria-label="Popover">
+        <Combobox items={items} labelText="Select an item" usePortal={false} />
+      </Popover>
+    </PopoverContainer>
+  );
+};
diff --git a/packages/paste-core/components/combobox/stories/MultiselectCombobox.stories.tsx b/packages/paste-core/components/combobox/stories/MultiselectCombobox.stories.tsx
index face3ee2e9..6a515a2a9e 100644
--- a/packages/paste-core/components/combobox/stories/MultiselectCombobox.stories.tsx
+++ b/packages/paste-core/components/combobox/stories/MultiselectCombobox.stories.tsx
@@ -7,6 +7,7 @@ import { AttachIcon } from "@twilio-paste/icons/esm/AttachIcon";
 import { InformationIcon } from "@twilio-paste/icons/esm/InformationIcon";
 import { MediaBody, MediaFigure, MediaObject } from "@twilio-paste/media-object";
 import { Modal, ModalBody, ModalHeader, ModalHeading } from "@twilio-paste/modal";
+import { Popover, PopoverButton, PopoverContainer } from "@twilio-paste/popover";
 import { Text } from "@twilio-paste/text";
 import { useUID } from "@twilio-paste/uid-library";
 import filter from "lodash/filter";
@@ -676,6 +677,30 @@ MultiselectComboboxInModal.parameters = {
   },
 };
 
+export const MultiselectComboboxInPopover: StoryFn = () => {
+  const [inputValue, setInputValue] = React.useState("");
+  const filteredItems = React.useMemo(() => getFilteredItems(inputValue), [inputValue]);
+
+  return (
+    <PopoverContainer baseId="popover-example">
+      <PopoverButton variant="primary">Open</PopoverButton>
+      <Popover aria-label="Popover">
+        <Box width="size30">
+          <MultiselectCombobox
+            usePortal={false}
+            selectedItemsLabelText="items:"
+            items={filteredItems}
+            labelText="Select an item"
+            onInputValueChange={({ inputValue: newInputValue = "" }) => {
+              setInputValue(newInputValue);
+            }}
+          />
+        </Box>
+      </Popover>
+    </PopoverContainer>
+  );
+};
+
 // eslint-disable-next-line import/no-default-export
 export default {
   title: "Components/Combobox/MultiselectCombobox",
diff --git a/packages/paste-core/components/combobox/type-docs.json b/packages/paste-core/components/combobox/type-docs.json
index 4f8721a60c..374acaa69d 100644
--- a/packages/paste-core/components/combobox/type-docs.json
+++ b/packages/paste-core/components/combobox/type-docs.json
@@ -6740,6 +6740,13 @@
       "required": false,
       "externalProp": true
     },
+    "usePortal": {
+      "type": "boolean",
+      "defaultValue": true,
+      "required": false,
+      "externalProp": false,
+      "description": "Determines whether the Combobox Listbox (options list) is rendered inside a Portal. Defaults to `true`. Use `false` if you are using Combobox inside a Paste Popover to prevent interaction bugs."
+    },
     "variant": {
       "type": "InputVariants",
       "defaultValue": "default",
@@ -8715,6 +8722,13 @@
       "required": false,
       "externalProp": true
     },
+    "usePortal": {
+      "type": "boolean",
+      "defaultValue": true,
+      "required": false,
+      "externalProp": false,
+      "description": "Determines whether the Combobox Listbox (options list) is rendered inside a Portal. Defaults to `true`. Use `false` if you are using Combobox inside a Paste Popover to prevent interaction bugs."
+    },
     "variant": {
       "type": "InputVariants",
       "defaultValue": "default",
diff --git a/packages/paste-website/src/component-examples/ComboboxExamples.ts b/packages/paste-website/src/component-examples/ComboboxExamples.ts
index 92b5017910..0833f12961 100644
--- a/packages/paste-website/src/component-examples/ComboboxExamples.ts
+++ b/packages/paste-website/src/component-examples/ComboboxExamples.ts
@@ -502,3 +502,28 @@ render(
   <EmptyStateCombobox />
 )
 `.trim();
+
+export const popoverExample = `
+
+const items = [
+  "Alert",
+  "Heading",
+  "List",
+  "Paragraph",
+];
+
+const PopoverCombobox = () => {
+  return (
+    <PopoverContainer baseId="popover-example">
+      <PopoverButton variant="primary">Open</PopoverButton>
+      <Popover aria-label="Popover">
+        <Combobox items={items} labelText="Select an item" usePortal={false} />
+      </Popover>
+    </PopoverContainer>  
+  );
+};
+
+render(
+  <PopoverCombobox />
+)
+`.trim();
diff --git a/packages/paste-website/src/component-examples/MultiselectComboboxExamples.ts b/packages/paste-website/src/component-examples/MultiselectComboboxExamples.ts
index 63a53c372b..fba8818a6a 100644
--- a/packages/paste-website/src/component-examples/MultiselectComboboxExamples.ts
+++ b/packages/paste-website/src/component-examples/MultiselectComboboxExamples.ts
@@ -624,3 +624,48 @@ render(
   <MultiselectComboboxExample />
 )
 `.trim();
+
+export const popoverExample = `
+
+const items = [
+  "Alert",
+  "Heading",
+  "List",
+  "Paragraph",
+];
+
+function getFilteredItems(inputValue) {
+  const lowerCasedInputValue = inputValue.toLowerCase();
+
+  return items.filter(function filterItems(item) {
+    return item.toLowerCase().includes(lowerCasedInputValue);
+  });
+}
+
+const PopoverCombobox = () => {
+  const [inputValue, setInputValue] = React.useState("");
+  const filteredItems = React.useMemo(() => getFilteredItems(inputValue), [inputValue]);
+  return (
+    <PopoverContainer baseId="popover-example">
+      <PopoverButton variant="primary">Open</PopoverButton>
+      <Popover aria-label="Popover">
+        <Box width="size30">
+          <MultiselectCombobox
+            usePortal={false}
+            selectedItemsLabelText="items:"
+            items={filteredItems}
+            labelText="Select an item"
+            onInputValueChange={({ inputValue: newInputValue = "" }) => {
+              setInputValue(newInputValue);
+            }}
+          />
+        </Box>
+      </Popover>
+    </PopoverContainer>
+  );
+};
+
+render(
+  <PopoverCombobox />
+)
+`.trim();
diff --git a/packages/paste-website/src/pages/components/combobox/index.mdx b/packages/paste-website/src/pages/components/combobox/index.mdx
index 159211ee97..e3dd9ecbe5 100644
--- a/packages/paste-website/src/pages/components/combobox/index.mdx
+++ b/packages/paste-website/src/pages/components/combobox/index.mdx
@@ -22,6 +22,8 @@ import {CloseIcon} from '@twilio-paste/icons/esm/CloseIcon';
 import {Text} from '@twilio-paste/text';
 import {UnorderedList, ListItem} from '@twilio-paste/list';
 import {Callout, CalloutHeading, CalloutText} from '@twilio-paste/callout';
+import {InlineCode} from '@twilio-paste/inline-code'
+import { Popover, PopoverButton, PopoverContainer } from "@twilio-paste/popover";
 import Changelog from '@twilio-paste/combobox/CHANGELOG.md';
 import {SidebarCategoryRoutes} from '../../../constants';
 import {
@@ -37,6 +39,7 @@ import {
   groupedComboboxExample,
   groupedLabelComboboxExample,
   stateHookCombobox,
+  popoverExample
 } from '../../../component-examples/ComboboxExamples';
 import packageJson from '@twilio-paste/combobox/package.json';
 import ComponentPageLayout from '../../../layouts/ComponentPageLayout';
@@ -286,6 +289,22 @@ Use an empty state to indicate to a user that their input does not match any val
 
 A Combobox consists of a label, an input and a listbox.
 
+<Callout variant="warning" marginY="space70">
+  <CalloutHeading as="h5">Combobox and Popover</CalloutHeading>
+  <CalloutText>
+    The Combobox listbox is rendered in a <Anchor href="https://reakit.io/docs/portal/" showExternal>Reakit Portal</Anchor> to control positioning and maintain accessibility. When Combobox is placed in a <Anchor href="/components/popover">Popover</Anchor> (which is also a Reakit Portal under the hood), add <InlineCode>usePortal=false</InlineCode> to your Combobox to prevent interaction bugs caused by nested portals.
+  </CalloutText>
+</Callout>
+
+<LivePreview
+  scope={{PopoverButton, PopoverContainer, Popover, Combobox}}
+  noInline
+  language="jsx"
+  showOverflow
+>
+  {popoverExample}
+</LivePreview>
+
 ### Positioning form fields
 
 Stack form fields vertically with `$space-80` spacing between each field. Avoid placing multiple form fields on the
diff --git a/packages/paste-website/src/pages/components/multiselect-combobox/index.mdx b/packages/paste-website/src/pages/components/multiselect-combobox/index.mdx
index f46d37fb30..c6ffd17228 100644
--- a/packages/paste-website/src/pages/components/multiselect-combobox/index.mdx
+++ b/packages/paste-website/src/pages/components/multiselect-combobox/index.mdx
@@ -22,6 +22,8 @@ import {CloseIcon} from '@twilio-paste/icons/esm/CloseIcon';
 import {AttachIcon} from '@twilio-paste/icons/esm/AttachIcon';
 import {UnorderedList, ListItem} from '@twilio-paste/list';
 import {Callout, CalloutHeading, CalloutText} from '@twilio-paste/callout';
+import { Popover, PopoverButton, PopoverContainer } from "@twilio-paste/popover";
+import {InlineCode} from '@twilio-paste/inline-code'
 import {DoDont, Do, Dont} from '../../../components/DoDont';
 import filter from 'lodash/filter';
 import {SidebarCategoryRoutes} from '../../../constants';
@@ -38,6 +40,7 @@ import {
   emptyStateExample,
   maxHeightExample,
   stateHookExample,
+  popoverExample
 } from '../../../component-examples/MultiselectComboboxExamples';
 import packageJson from '@twilio-paste/combobox/package.json';
 import ComponentPageLayout from '../../../layouts/ComponentPageLayout';
@@ -281,6 +284,22 @@ Use an empty state to indicate to a user that their input does not match any val
 
 A Multiselect Combobox is comprised of a label, an input and a listbox.
 
+<Callout variant="warning" marginY="space70">
+  <CalloutHeading as="h5">Combobox and Popover</CalloutHeading>
+  <CalloutText>
+    The Multiselect Combobox listbox is rendered in a <Anchor href="https://reakit.io/docs/portal/" showExternal>Reakit Portal</Anchor> to control positioning and maintain accessibility. When Multiselect Combobox is placed in a <Anchor href="/components/popover">Popover</Anchor> (which is also a Reakit Portal under the hood), add <InlineCode>usePortal=false</InlineCode> to your Multiselect Combobox to prevent interaction bugs caused by nested portals.
+  </CalloutText>
+</Callout>
+
+<LivePreview
+  scope={{Box, PopoverButton, PopoverContainer, Popover, MultiselectCombobox}}
+  noInline
+  language="jsx"
+  showOverflow
+>
+  {popoverExample}
+</LivePreview>
+
 ### Positioning form fields
 
 Stack form fields vertically with `$space-80` spacing between each field. Avoid placing multiple form fields on the