diff --git a/packages/block-editor/src/components/inner-blocks/use-inner-block-template-sync.js b/packages/block-editor/src/components/inner-blocks/use-inner-block-template-sync.js
index 5eff89609f6d8c..1b81069c44f3dc 100644
--- a/packages/block-editor/src/components/inner-blocks/use-inner-block-template-sync.js
+++ b/packages/block-editor/src/components/inner-blocks/use-inner-block-template-sync.js
@@ -40,7 +40,7 @@ export default function useInnerBlockTemplateSync(
 	templateLock,
 	templateInsertUpdatesSelection
 ) {
-	const { getSelectedBlocksInitialCaretPosition } =
+	const { getSelectedBlocksInitialCaretPosition, isBlockSelected } =
 		useSelect( blockEditorStore );
 	const { replaceInnerBlocks } = useDispatch( blockEditorStore );
 	const innerBlocks = useSelect(
@@ -86,7 +86,8 @@ export default function useInnerBlockTemplateSync(
 					nextBlocks,
 					currentInnerBlocks.length === 0 &&
 						templateInsertUpdatesSelection &&
-						nextBlocks.length !== 0,
+						nextBlocks.length !== 0 &&
+						isBlockSelected( clientId ),
 					// This ensures the "initialPosition" doesn't change when applying the template
 					// If we're supposed to focus the block, we'll focus the first inner block
 					// otherwise, we won't apply any auto-focus.
diff --git a/test/e2e/specs/editor/blocks/__snapshots__/List-can-be-exited-to-selected-paragraph-1-chromium.txt b/test/e2e/specs/editor/blocks/__snapshots__/List-can-be-exited-to-selected-paragraph-1-chromium.txt
new file mode 100644
index 00000000000000..468d73c8514442
--- /dev/null
+++ b/test/e2e/specs/editor/blocks/__snapshots__/List-can-be-exited-to-selected-paragraph-1-chromium.txt
@@ -0,0 +1,9 @@
+<!-- wp:list -->
+<ul><!-- wp:list-item -->
+<li></li>
+<!-- /wp:list-item --></ul>
+<!-- /wp:list -->
+
+<!-- wp:paragraph -->
+<p>1</p>
+<!-- /wp:paragraph -->
\ No newline at end of file
diff --git a/test/e2e/specs/editor/blocks/list.spec.js b/test/e2e/specs/editor/blocks/list.spec.js
index c0133cc73629ac..ad63edc6fbaf0d 100644
--- a/test/e2e/specs/editor/blocks/list.spec.js
+++ b/test/e2e/specs/editor/blocks/list.spec.js
@@ -1225,4 +1225,13 @@ test.describe( 'List', () => {
 <!-- /wp:list-item --></ul>
 <!-- /wp:list -->` );
 	} );
+
+	test( 'can be exited to selected paragraph', async ( { editor, page } ) => {
+		await page.click( 'role=button[name="Add default block"i]' );
+		await page.keyboard.type( '* ' );
+		await page.keyboard.press( 'Enter' );
+		await page.keyboard.type( '1' );
+
+		expect( await editor.getEditedPostContent() ).toMatchSnapshot();
+	} );
 } );