diff --git a/packages/legacy-events/ReactGenericBatching.js b/packages/legacy-events/ReactGenericBatching.js
index d3cf009c4571..3d1acebde612 100644
--- a/packages/legacy-events/ReactGenericBatching.js
+++ b/packages/legacy-events/ReactGenericBatching.js
@@ -11,8 +11,6 @@ import {
 } from './ReactControlledComponent';
 import {enableFlareAPI} from 'shared/ReactFeatureFlags';
 
-import {invokeGuardedCallbackAndCatchFirstError} from 'shared/ReactErrorUtils';
-
 // Used as a way to call batchedUpdates when we don't have a reference to
 // the renderer. Such as when we're dispatching events or if third party
 // libraries need to call batchedUpdates. Eventually, this API will go away when
@@ -77,12 +75,12 @@ export function batchedEventUpdates(fn, a, b) {
   }
 }
 
-export function executeUserEventHandler(fn: any => void, value: any) {
+// This is for the React Flare event system
+export function executeUserEventHandler(fn: any => void, value: any): any {
   const previouslyInEventHandler = isInsideEventHandler;
   try {
     isInsideEventHandler = true;
-    const type = typeof value === 'object' && value !== null ? value.type : '';
-    invokeGuardedCallbackAndCatchFirstError(type, fn, undefined, value);
+    return fn(value);
   } finally {
     isInsideEventHandler = previouslyInEventHandler;
   }
diff --git a/packages/react-dom/src/events/DOMEventResponderSystem.js b/packages/react-dom/src/events/DOMEventResponderSystem.js
index ec2d977d97ef..01cb120709b2 100644
--- a/packages/react-dom/src/events/DOMEventResponderSystem.js
+++ b/packages/react-dom/src/events/DOMEventResponderSystem.js
@@ -76,11 +76,17 @@ const rootEventTypesToEventResponderInstances: Map<
   Set<ReactDOMEventResponderInstance>,
 > = new Map();
 
+type PropagationBehavior = 0 | 1;
+
+const DoNotPropagateToNextResponder = 0;
+const PropagateToNextResponder = 1;
+
 let currentTimeStamp = 0;
 let currentTimers = new Map();
 let currentInstance: null | ReactDOMEventResponderInstance = null;
 let currentTimerIDCounter = 0;
 let currentDocument: null | Document = null;
+let currentPropagationBehavior: PropagationBehavior = DoNotPropagateToNextResponder;
 let currentTargetFiber: null | Fiber = null;
 
 const eventResponderContext: ReactDOMResponderContext = {
@@ -88,30 +94,27 @@ const eventResponderContext: ReactDOMResponderContext = {
     eventValue: any,
     eventListener: any => void,
     eventPriority: EventPriority,
-  ): void {
+  ): any {
     validateResponderContext();
     validateEventValue(eventValue);
     switch (eventPriority) {
       case DiscreteEvent: {
         flushDiscreteUpdatesIfNeeded(currentTimeStamp);
-        discreteUpdates(() =>
+        return discreteUpdates(() =>
           executeUserEventHandler(eventListener, eventValue),
         );
-        break;
       }
       case UserBlockingEvent: {
         if (enableUserBlockingEvents) {
-          runWithPriority(UserBlockingPriority, () =>
+          return runWithPriority(UserBlockingPriority, () =>
             executeUserEventHandler(eventListener, eventValue),
           );
         } else {
-          executeUserEventHandler(eventListener, eventValue);
+          return executeUserEventHandler(eventListener, eventValue);
         }
-        break;
       }
       case ContinuousEvent: {
-        executeUserEventHandler(eventListener, eventValue);
-        break;
+        return executeUserEventHandler(eventListener, eventValue);
       }
     }
   },
@@ -266,6 +269,9 @@ const eventResponderContext: ReactDOMResponderContext = {
     }
     return false;
   },
+  continuePropagation() {
+    currentPropagationBehavior = PropagateToNextResponder;
+  },
   enqueueStateRestore,
   getCurrentTarget(): Element | null {
     validateResponderContext();
@@ -489,6 +495,10 @@ function traverseAndHandleEventResponderInstances(
             if (onEvent !== null) {
               currentInstance = responderInstance;
               onEvent(responderEvent, eventResponderContext, props, state);
+              if (currentPropagationBehavior === PropagateToNextResponder) {
+                visitedResponders.delete(responder);
+                currentPropagationBehavior = DoNotPropagateToNextResponder;
+              }
             }
           }
         }
@@ -588,7 +598,9 @@ export function dispatchEventForResponderEventSystem(
     const previousTimers = currentTimers;
     const previousTimeStamp = currentTimeStamp;
     const previousDocument = currentDocument;
+    const previousPropagationBehavior = currentPropagationBehavior;
     const previousTargetFiber = currentTargetFiber;
+    currentPropagationBehavior = DoNotPropagateToNextResponder;
     currentTimers = null;
     currentTargetFiber = targetFiber;
     // nodeType 9 is DOCUMENT_NODE
@@ -613,6 +625,7 @@ export function dispatchEventForResponderEventSystem(
       currentInstance = previousInstance;
       currentTimeStamp = previousTimeStamp;
       currentDocument = previousDocument;
+      currentPropagationBehavior = previousPropagationBehavior;
       currentTargetFiber = previousTargetFiber;
     }
   }
diff --git a/packages/react-events/src/dom/Keyboard.js b/packages/react-events/src/dom/Keyboard.js
index c636f97fb1f2..68f05e49f590 100644
--- a/packages/react-events/src/dom/Keyboard.js
+++ b/packages/react-events/src/dom/Keyboard.js
@@ -174,7 +174,14 @@ function dispatchKeyboardEvent(
     type,
     defaultPrevented,
   );
-  context.dispatchEvent(syntheticEvent, listener, DiscreteEvent);
+  const shouldPropagate = context.dispatchEvent(
+    syntheticEvent,
+    listener,
+    DiscreteEvent,
+  );
+  if (shouldPropagate) {
+    context.continuePropagation();
+  }
 }
 
 const keyboardResponderImpl = {
diff --git a/packages/react-events/src/dom/__tests__/Keyboard-test.internal.js b/packages/react-events/src/dom/__tests__/Keyboard-test.internal.js
index 412aaa84b98d..fdfc9b40dc99 100644
--- a/packages/react-events/src/dom/__tests__/Keyboard-test.internal.js
+++ b/packages/react-events/src/dom/__tests__/Keyboard-test.internal.js
@@ -251,4 +251,88 @@ describe('Keyboard event responder', () => {
       );
     });
   });
+
+  describe('correctly handles responder propagation', () => {
+    describe('onKeyDown', () => {
+      let onKeyDownInner, onKeyDownOuter, ref;
+
+      function renderPropagationTest(propagates) {
+        onKeyDownInner = jest.fn(() => propagates);
+        onKeyDownOuter = jest.fn();
+        ref = React.createRef();
+        const Component = () => {
+          const listenerInner = useKeyboard({
+            onKeyDown: onKeyDownInner,
+          });
+          const listenerOuter = useKeyboard({
+            onKeyDown: onKeyDownOuter,
+          });
+          return (
+            <div listeners={listenerOuter}>
+              <div ref={ref} listeners={listenerInner} />
+            </div>
+          );
+        };
+        ReactDOM.render(<Component />, container);
+      }
+
+      it('propagates when cb returns true', () => {
+        renderPropagationTest(true);
+        const target = createEventTarget(ref.current);
+        target.keydown();
+        expect(onKeyDownInner).toBeCalled();
+        expect(onKeyDownOuter).toBeCalled();
+      });
+
+      it('does not propagate when cb returns false', () => {
+        renderPropagationTest(false);
+        const target = createEventTarget(ref.current);
+        target.keydown();
+        expect(onKeyDownInner).toBeCalled();
+        expect(onKeyDownOuter).not.toBeCalled();
+      });
+    });
+
+    describe('onKeyUp', () => {
+      let onKeyUpInner, onKeyUpOuter, ref;
+
+      function renderPropagationTest(propagates) {
+        onKeyUpInner = jest.fn(() => propagates);
+        onKeyUpOuter = jest.fn();
+        ref = React.createRef();
+        const Component = () => {
+          const listenerInner = useKeyboard({
+            onKeyUp: onKeyUpInner,
+          });
+          const listenerOuter = useKeyboard({
+            onKeyUp: onKeyUpOuter,
+          });
+          return (
+            <div listeners={listenerOuter}>
+              <div ref={ref} listeners={listenerInner} />
+            </div>
+          );
+        };
+        ReactDOM.render(<Component />, container);
+      }
+
+      it('propagates when cb returns true', () => {
+        renderPropagationTest(true);
+        const target = createEventTarget(ref.current);
+        target.keydown();
+        target.keyup();
+        expect(onKeyUpInner).toBeCalled();
+        expect(onKeyUpOuter).toBeCalled();
+      });
+
+      it('does not propagate when cb returns false', () => {
+        renderPropagationTest(false);
+        const target = createEventTarget(ref.current);
+        target.keydown();
+        target.keyup();
+        expect(onKeyUpInner).toBeCalled();
+        expect(onKeyUpOuter).not.toBeCalled();
+      });
+    });
+  });
 });
diff --git a/packages/shared/ReactDOMTypes.js b/packages/shared/ReactDOMTypes.js
index bbaabb9e6032..9adc678ae804 100644
--- a/packages/shared/ReactDOMTypes.js
+++ b/packages/shared/ReactDOMTypes.js
@@ -72,6 +72,7 @@ export type ReactDOMResponderContext = {
     target: Element | Document,
     elementType: string,
   ) => boolean,
+  continuePropagation(): void,
   // Used for controller components
   enqueueStateRestore(Element | Document): void,
   getCurrentTarget(): Element | null,