diff --git a/src/cdk/overlay/keyboard/overlay-keyboard-dispatcher.spec.ts b/src/cdk/overlay/keyboard/overlay-keyboard-dispatcher.spec.ts
index 0f89c8c1b545..3f8ddd4dca8b 100644
--- a/src/cdk/overlay/keyboard/overlay-keyboard-dispatcher.spec.ts
+++ b/src/cdk/overlay/keyboard/overlay-keyboard-dispatcher.spec.ts
@@ -53,7 +53,7 @@ describe('OverlayKeyboardDispatcher', () => {
     const overlayOne = overlay.create();
     const overlayTwo = overlay.create();
     const overlayOneSpy = jasmine.createSpy('overlayOne keyboard event spy');
-    const overlayTwoSpy = jasmine.createSpy('overlayOne keyboard event spy');
+    const overlayTwoSpy = jasmine.createSpy('overlayTwo keyboard event spy');
 
     overlayOne.keydownEvents().subscribe(overlayOneSpy);
     overlayTwo.keydownEvents().subscribe(overlayTwoSpy);
@@ -143,6 +143,20 @@ describe('OverlayKeyboardDispatcher', () => {
     expect(body.removeEventListener).toHaveBeenCalledWith('keydown', jasmine.any(Function), true);
   });
 
+  it('should skip overlays that do not have keydown event subscriptions', () => {
+    const overlayOne = overlay.create();
+    const overlayTwo = overlay.create();
+    const overlayOneSpy = jasmine.createSpy('overlayOne keyboard event spy');
+
+    overlayOne.keydownEvents().subscribe(overlayOneSpy);
+    keyboardDispatcher.add(overlayOne);
+    keyboardDispatcher.add(overlayTwo);
+
+    dispatchKeyboardEvent(document.body, 'keydown', ESCAPE);
+
+    expect(overlayOneSpy).toHaveBeenCalled();
+  });
+
 });
 
 
diff --git a/src/cdk/overlay/keyboard/overlay-keyboard-dispatcher.ts b/src/cdk/overlay/keyboard/overlay-keyboard-dispatcher.ts
index 89d5ab345d93..a0886b218a88 100644
--- a/src/cdk/overlay/keyboard/overlay-keyboard-dispatcher.ts
+++ b/src/cdk/overlay/keyboard/overlay-keyboard-dispatcher.ts
@@ -75,11 +75,19 @@ export class OverlayKeyboardDispatcher implements OnDestroy {
 
   /** Keyboard event listener that will be attached to the body. */
   private _keydownListener = (event: KeyboardEvent) => {
-    if (this._attachedOverlays.length) {
-      // Dispatch the keydown event to the top overlay. We want to target the most recent overlay,
-      // rather than trying to match where the event came from, because some components might open
-      // an overlay, but keep focus on a trigger element (e.g. for select and autocomplete).
-      this._attachedOverlays[this._attachedOverlays.length - 1]._keydownEvents.next(event);
+    const overlays = this._attachedOverlays;
+
+    for (let i = overlays.length - 1; i > -1; i--) {
+      // Dispatch the keydown event to the top overlay which has subscribers to its keydown events.
+      // We want to target the most recent overlay, rather than trying to match where the event came
+      // from, because some components might open an overlay, but keep focus on a trigger element
+      // (e.g. for select and autocomplete). We skip overlays without keydown event subscriptions,
+      // because we don't want overlays that don't handle keyboard events to block the ones below
+      // them that do.
+      if (overlays[i]._keydownEventSubscriptions > 0) {
+        overlays[i]._keydownEvents.next(event);
+        break;
+      }
     }
   }
 }
diff --git a/src/cdk/overlay/overlay-ref.ts b/src/cdk/overlay/overlay-ref.ts
index 6db556d858b7..27ff70f27455 100644
--- a/src/cdk/overlay/overlay-ref.ts
+++ b/src/cdk/overlay/overlay-ref.ts
@@ -30,10 +30,22 @@ export class OverlayRef implements PortalOutlet {
   private _backdropClick: Subject<MouseEvent> = new Subject();
   private _attachments = new Subject<void>();
   private _detachments = new Subject<void>();
+  private _keydownEventsObservable: Observable<KeyboardEvent> = Observable.create(observer => {
+    const subscription = this._keydownEvents.subscribe(observer);
+    this._keydownEventSubscriptions++;
+
+    return () => {
+      subscription.unsubscribe();
+      this._keydownEventSubscriptions--;
+    };
+  });
 
   /** Stream of keydown events dispatched to this overlay. */
   _keydownEvents = new Subject<KeyboardEvent>();
 
+  /** Amount of subscriptions to the keydown events. */
+  _keydownEventSubscriptions = 0;
+
   constructor(
       private _portalOutlet: PortalOutlet,
       private _host: HTMLElement,
@@ -217,7 +229,7 @@ export class OverlayRef implements PortalOutlet {
 
   /** Gets an observable of keydown events targeted to this overlay. */
   keydownEvents(): Observable<KeyboardEvent> {
-    return this._keydownEvents.asObservable();
+    return this._keydownEventsObservable;
   }
 
   /** Gets the the current overlay configuration, which is immutable. */
diff --git a/src/lib/bottom-sheet/bottom-sheet-ref.ts b/src/lib/bottom-sheet/bottom-sheet-ref.ts
index 3c964abe9df4..9b7765884a31 100644
--- a/src/lib/bottom-sheet/bottom-sheet-ref.ts
+++ b/src/lib/bottom-sheet/bottom-sheet-ref.ts
@@ -62,7 +62,7 @@ export class MatBottomSheetRef<T = any, R = any> {
     if (!containerInstance.bottomSheetConfig.disableClose) {
       merge(
         _overlayRef.backdropClick(),
-        _overlayRef._keydownEvents.pipe(filter(event => event.keyCode === ESCAPE))
+        _overlayRef.keydownEvents().pipe(filter(event => event.keyCode === ESCAPE))
       ).subscribe(() => this.dismiss());
     }
   }