diff --git a/app/src/main/java/com/saulhdev/feeder/manager/service/OverlayView.kt b/app/src/main/java/com/saulhdev/feeder/manager/service/OverlayView.kt
index 6e0fed51..aa396db5 100644
--- a/app/src/main/java/com/saulhdev/feeder/manager/service/OverlayView.kt
+++ b/app/src/main/java/com/saulhdev/feeder/manager/service/OverlayView.kt
@@ -76,6 +76,11 @@ class OverlayView(val context: Context) :
 
         themeHolder = OverlayThemeHolder(this)
 
+        // Start fully transparent so the overlay never covers the launcher/folders
+        // while it is closed (for example, before the first onScroll callback arrives).
+        val bgColor = themeHolder.currentTheme.get(CardTheme.Colors.OVERLAY_BG.ordinal)
+        getWindow().setBackgroundDrawable(ColorDrawable((bgColor and 0x00ffffff)))
+
         initRecyclerView()
         initHeader()
         refreshNotifications()
@@ -329,8 +334,10 @@ class OverlayView(val context: Context) :
         super.onScroll(f)
 
         val bgColor = themeHolder.currentTheme.get(CardTheme.Colors.OVERLAY_BG.ordinal)
-        val color =
-            (prefs.overlayTransparency.getValue() * 255.0f).toInt() shl 24 or (bgColor and 0x00ffffff)
+        // When the panel is closed (progress 0) the overlay must be fully transparent
+        // so it does not cover the launcher/folders.
+        val alpha = if (f <= 0f) 0f else prefs.overlayTransparency.getValue()
+        val color = (alpha * 255.0f).toInt() shl 24 or (bgColor and 0x00ffffff)
         getWindow().setBackgroundDrawable(ColorDrawable(color))
     }
 
diff --git a/google-gsa/src/main/java/com/google/android/libraries/gsa/d/a/OverlayController.java b/google-gsa/src/main/java/com/google/android/libraries/gsa/d/a/OverlayController.java
index f5c25ffa..aa4d0065 100644
--- a/google-gsa/src/main/java/com/google/android/libraries/gsa/d/a/OverlayController.java
+++ b/google-gsa/src/main/java/com/google/android/libraries/gsa/d/a/OverlayController.java
@@ -147,9 +147,12 @@ public boolean isOpen() {
 
     public void setVisible(boolean visible) {
         if (visible) {
-            window.clearFlags(24); // FLAG_NOT_TOUCHABLE | FLAG_NOT_FOCUSABLE
+            // Make the overlay touchable so the feed can be interacted with,
+            // but keep it non-focusable so the launcher/IME target never moves
+            // away from the launcher window.
+            window.clearFlags(16); // FLAG_NOT_TOUCHABLE
         } else {
-            window.addFlags(24);
+            window.addFlags(16); // FLAG_NOT_TOUCHABLE
         }
     }
 
diff --git a/google-gsa/src/main/java/com/google/android/libraries/gsa/d/a/OverlayControllerCallback.java b/google-gsa/src/main/java/com/google/android/libraries/gsa/d/a/OverlayControllerCallback.java
index 741203dd..c0158951 100644
--- a/google-gsa/src/main/java/com/google/android/libraries/gsa/d/a/OverlayControllerCallback.java
+++ b/google-gsa/src/main/java/com/google/android/libraries/gsa/d/a/OverlayControllerCallback.java
@@ -163,11 +163,18 @@ private void setupOverlayController(OverlayController controller, Bundle args, L
 
         layoutParams.width = LayoutParams.MATCH_PARENT;
         layoutParams.height = LayoutParams.MATCH_PARENT;
-        layoutParams.flags |= 8650752;
+        // Start fully transparent, non-focusable and non-touchable so the overlay
+        // never briefly covers the launcher while it is being attached.
+        layoutParams.flags |= 8650752
+                | LayoutParams.FLAG_NOT_FOCUSABLE
+                | LayoutParams.FLAG_NOT_TOUCHABLE;
+        layoutParams.alpha = 0f;
         layoutParams.dimAmount = 0f;
         layoutParams.gravity = 3;
         layoutParams.type = 4;
-        layoutParams.softInputMode = LayoutParams.SOFT_INPUT_STATE_VISIBLE;
+        // Don't override the launcher window's soft-input behaviour; otherwise
+        // the app-drawer search box can't show its own keyboard.
+        layoutParams.softInputMode = LayoutParams.SOFT_INPUT_STATE_UNSPECIFIED;
 
         controller.window.setAttributes(layoutParams);
         controller.window.clearFlags(1048576);