diff --git a/services/core/java/com/android/server/wm/InsetsPolicy.java b/services/core/java/com/android/server/wm/InsetsPolicy.java
index a2b9cf9c5b3c3..73641f4d76ac8 100644
--- a/services/core/java/com/android/server/wm/InsetsPolicy.java
+++ b/services/core/java/com/android/server/wm/InsetsPolicy.java
@@ -287,7 +287,8 @@ class InsetsPolicy {
         if (mShowingTransientTypes.indexOf(ITYPE_STATUS_BAR) != -1) {
             return mDummyControlTarget;
         }
-        if (focusedWin == mPolicy.getNotificationShade()) {
+        final WindowState notificationShade = mPolicy.getNotificationShade();
+        if (focusedWin == notificationShade) {
             // Notification shade has control anyways, no reason to force anything.
             return focusedWin;
         }
@@ -308,9 +309,10 @@ class InsetsPolicy {
             // fake control to the client, so that it can re-show the bar during this scenario.
             return mDummyControlTarget;
         }
-        if (!canBeTopFullscreenOpaqueWindow(focusedWin) && mPolicy.topAppHidesStatusBar()) {
+        if (!canBeTopFullscreenOpaqueWindow(focusedWin) && mPolicy.topAppHidesStatusBar()
+                && (notificationShade == null || !notificationShade.canReceiveKeys())) {
             // Non-fullscreen focused window should not break the state that the top-fullscreen-app
-            // window hides status bar.
+            // window hides status bar, unless the notification shade can receive keys.
             return mPolicy.getTopFullscreenOpaqueWindow();
         }
         return focusedWin;
diff --git a/services/tests/wmtests/src/com/android/server/wm/InsetsPolicyTest.java b/services/tests/wmtests/src/com/android/server/wm/InsetsPolicyTest.java
index 02d9c42517670..bbe811d152589 100644
--- a/services/tests/wmtests/src/com/android/server/wm/InsetsPolicyTest.java
+++ b/services/tests/wmtests/src/com/android/server/wm/InsetsPolicyTest.java
@@ -29,6 +29,7 @@ import static android.view.WindowManager.LayoutParams.TYPE_APPLICATION;
 import static android.view.WindowManager.LayoutParams.TYPE_NAVIGATION_BAR;
 import static android.view.WindowManager.LayoutParams.TYPE_NOTIFICATION_SHADE;
 import static android.view.WindowManager.LayoutParams.TYPE_STATUS_BAR;
+import static android.view.WindowManager.LayoutParams.TYPE_STATUS_BAR_SUB_PANEL;
 
 import static org.junit.Assert.assertEquals;
 import static org.junit.Assert.assertFalse;
@@ -226,6 +227,40 @@ public class InsetsPolicyTest extends WindowTestsBase {
         // mTopFullscreenOpaqueWindowState is still fullscreenApp.
         verify(sbmi).setWindowState(mDisplayContent.mDisplayId, StatusBarManager.WINDOW_STATUS_BAR,
                 StatusBarManager.WINDOW_STATE_SHOWING);
+
+        // Add a system window: panel.
+        final WindowState panel = addWindow(TYPE_STATUS_BAR_SUB_PANEL, "panel");
+        mDisplayContent.getInsetsPolicy().updateBarControlTarget(panel);
+
+        // panel is the focused window, but it can only control navigation bar.
+        // Because fullscreenApp is hiding status bar.
+        InsetsSourceControl[] panelControls =
+                mDisplayContent.getInsetsStateController().getControlsForDispatch(panel);
+        assertNotNull(panelControls);
+        assertEquals(1, panelControls.length);
+        assertEquals(ITYPE_NAVIGATION_BAR, panelControls[0].getType());
+
+        // Add notificationShade and make it can receive keys.
+        final WindowState shade = addWindow(TYPE_NOTIFICATION_SHADE, "notificationShade");
+        shade.setHasSurface(true);
+        assertTrue(shade.canReceiveKeys());
+        mDisplayContent.getInsetsPolicy().updateBarControlTarget(panel);
+
+        // panel can control both system bars now.
+        panelControls = mDisplayContent.getInsetsStateController().getControlsForDispatch(panel);
+        assertNotNull(panelControls);
+        assertEquals(2, panelControls.length);
+
+        // Make notificationShade cannot receive keys.
+        shade.mAttrs.flags |= FLAG_NOT_FOCUSABLE;
+        assertFalse(shade.canReceiveKeys());
+        mDisplayContent.getInsetsPolicy().updateBarControlTarget(panel);
+
+        // panel can only control navigation bar now.
+        panelControls = mDisplayContent.getInsetsStateController().getControlsForDispatch(panel);
+        assertNotNull(panelControls);
+        assertEquals(1, panelControls.length);
+        assertEquals(ITYPE_NAVIGATION_BAR, panelControls[0].getType());
     }
 
     @UseTestDisplay(addWindows = W_ACTIVITY)