diff --git a/packages/SystemUI/src/com/android/systemui/dreams/touch/BouncerSwipeTouchHandler.java b/packages/SystemUI/src/com/android/systemui/dreams/touch/BouncerSwipeTouchHandler.java
index aa28c54933565..517fce1b16a69 100644
--- a/packages/SystemUI/src/com/android/systemui/dreams/touch/BouncerSwipeTouchHandler.java
+++ b/packages/SystemUI/src/com/android/systemui/dreams/touch/BouncerSwipeTouchHandler.java
@@ -144,9 +144,8 @@ public class BouncerSwipeTouchHandler implements DreamTouchHandler {
 
     private void setPanelExpansion(float expansion) {
         mCurrentExpansion = expansion;
-
-        mCentralSurfaces.setBouncerShowing(expansion != KeyguardBouncer.EXPANSION_HIDDEN);
-
+        mCentralSurfaces.setBouncerShowingOverDream(
+                mCurrentExpansion != KeyguardBouncer.EXPANSION_HIDDEN);
         mStatusBarKeyguardViewManager.onPanelExpansionChanged(mCurrentExpansion, false, true);
     }
 
diff --git a/packages/SystemUI/src/com/android/systemui/statusbar/phone/CentralSurfaces.java b/packages/SystemUI/src/com/android/systemui/statusbar/phone/CentralSurfaces.java
index eefa10bf495af..2d3bef6319267 100644
--- a/packages/SystemUI/src/com/android/systemui/statusbar/phone/CentralSurfaces.java
+++ b/packages/SystemUI/src/com/android/systemui/statusbar/phone/CentralSurfaces.java
@@ -468,6 +468,7 @@ public class CentralSurfaces extends CoreStartable implements
      */
     protected int mState; // TODO: remove this. Just use StatusBarStateController
     protected boolean mBouncerShowing;
+    private boolean mBouncerShowingOverDream;
 
     private final PhoneStatusBarPolicy mIconPolicy;
 
@@ -3467,7 +3468,19 @@ public class CentralSurfaces extends CoreStartable implements
         mStatusBarHideIconsForBouncerManager.setBouncerShowingAndTriggerUpdate(bouncerShowing);
         mCommandQueue.recomputeDisableFlags(mDisplayId, true /* animate */);
         updateScrimController();
-        updateNotificationPanelTouchState();
+        if (!mBouncerShowing) {
+            updatePanelExpansionForKeyguard();
+        }
+    }
+
+    /**
+     * Sets whether the bouncer over dream is showing. Note that the bouncer over dream is handled
+     * independently of the rest of the notification panel. As a result, setting this state via
+     * {@link #setBouncerShowing(boolean)} leads to unintended side effects from states modified
+     * behind the dream.
+     */
+    public void setBouncerShowingOverDream(boolean bouncerShowingOverDream) {
+        mBouncerShowingOverDream = bouncerShowingOverDream;
     }
 
     /**
@@ -3612,13 +3625,10 @@ public class CentralSurfaces extends CoreStartable implements
      * collapse the panel after we expanded it, and thus we would end up with a blank
      * Keyguard.
      */
-    public void updateNotificationPanelTouchState() {
+    void updateNotificationPanelTouchState() {
         boolean goingToSleepWithoutAnimation = isGoingToSleep()
                 && !mDozeParameters.shouldControlScreenOff();
-        boolean bouncerShowingOverDream = isBouncerShowing()
-                && mDreamOverlayStateController.isOverlayActive();
-        boolean disabled = bouncerShowingOverDream
-                || (!mDeviceInteractive && !mDozeServiceHost.isPulsing())
+        boolean disabled = (!mDeviceInteractive && !mDozeServiceHost.isPulsing())
                 || goingToSleepWithoutAnimation;
         mNotificationPanelViewController.setTouchAndAnimationDisabled(disabled);
         mNotificationIconAreaController.setAnimationsEnabled(!disabled);
@@ -4146,7 +4156,7 @@ public class CentralSurfaces extends CoreStartable implements
     }
 
     public boolean isBouncerShowingOverDream() {
-        return isBouncerShowing() && mDreamOverlayStateController.isOverlayActive();
+        return mBouncerShowingOverDream;
     }
 
     /**
diff --git a/packages/SystemUI/src/com/android/systemui/statusbar/phone/PanelViewController.java b/packages/SystemUI/src/com/android/systemui/statusbar/phone/PanelViewController.java
index c850755d7f8ed..ad304c54eee05 100644
--- a/packages/SystemUI/src/com/android/systemui/statusbar/phone/PanelViewController.java
+++ b/packages/SystemUI/src/com/android/systemui/statusbar/phone/PanelViewController.java
@@ -418,14 +418,14 @@ public abstract class PanelViewController {
                     expand = false;
                 } else if (onKeyguard) {
                     expand = true;
-                } else if (mCentralSurfaces.isBouncerShowingOverDream()) {
-                    expand = false;
                 } else if (mKeyguardStateController.isKeyguardFadingAway()) {
                     // If we're in the middle of dismissing the keyguard, don't expand due to the
                     // cancelled gesture. Gesture cancellation during an unlock is expected in some
                     // situations, such keeping your finger down while swiping to unlock to an app
                     // that is locked in landscape (the rotation will cancel the touch event).
                     expand = false;
+                } else if (mCentralSurfaces.isBouncerShowingOverDream()) {
+                    expand = false;
                 } else {
                     // If we get a cancel, put the shade back to the state it was in when the
                     // gesture started
diff --git a/packages/SystemUI/tests/src/com/android/systemui/dreams/touch/BouncerSwipeTouchHandlerTest.java b/packages/SystemUI/tests/src/com/android/systemui/dreams/touch/BouncerSwipeTouchHandlerTest.java
index 33fb5a225f418..535023fa08c54 100644
--- a/packages/SystemUI/tests/src/com/android/systemui/dreams/touch/BouncerSwipeTouchHandlerTest.java
+++ b/packages/SystemUI/tests/src/com/android/systemui/dreams/touch/BouncerSwipeTouchHandlerTest.java
@@ -160,28 +160,6 @@ public class BouncerSwipeTouchHandlerTest extends SysuiTestCase {
                         2)).isTrue();
     }
 
-    /**
-     * Ensures {@link CentralSurfaces}
-     */
-    @Test
-    public void testInformBouncerShowingOnExpand() {
-        swipeToPosition(1f, Direction.UP, 0);
-        verify(mCentralSurfaces).setBouncerShowing(true);
-    }
-
-    /**
-     * Ensures {@link CentralSurfaces}
-     */
-    @Test
-    public void testInformBouncerHidingOnCollapse() {
-        // Must swipe up to set initial state.
-        swipeToPosition(1f, Direction.UP, 0);
-        Mockito.clearInvocations(mCentralSurfaces);
-
-        swipeToPosition(0f, Direction.DOWN, 0);
-        verify(mCentralSurfaces).setBouncerShowing(false);
-    }
-
     private enum Direction {
         DOWN,
         UP,
@@ -442,6 +420,29 @@ public class BouncerSwipeTouchHandlerTest extends SysuiTestCase {
         verify(mUiEventLogger).log(BouncerSwipeTouchHandler.DreamEvent.DREAM_BOUNCER_FULLY_VISIBLE);
     }
 
+    /**
+     * Ensures {@link CentralSurfaces}
+     */
+    @Test
+    public void testInformBouncerShowingOnExpand() {
+        swipeToPosition(1f, Direction.UP, 0);
+        verify(mCentralSurfaces).setBouncerShowingOverDream(true);
+    }
+
+    /**
+     * Ensures {@link CentralSurfaces}
+     */
+    @Test
+    public void testInformBouncerHidingOnCollapse() {
+        // Must swipe up to set initial state.
+        swipeToPosition(1f, Direction.UP, 0);
+        Mockito.clearInvocations(mCentralSurfaces);
+
+        swipeToPosition(0f, Direction.DOWN, 0);
+        verify(mCentralSurfaces).setBouncerShowingOverDream(false);
+    }
+
+
     private void swipeToPosition(float percent, Direction direction, float velocityY) {
         Mockito.clearInvocations(mTouchSession);
         mTouchHandler.onSessionStart(mTouchSession);