--- a/browser/components/downloads/content/downloads.js
+++ b/browser/components/downloads/content/downloads.js
@@ -718,16 +718,21 @@ const DownloadsView = {
   //// Functions handling download items in the list
 
   /**
    * Maximum number of items shown by the list at any given time.
    */
   kItemCountLimit: 5,
 
   /**
+   * Indicates whether there is an open contextMenu for a download item.
+   */
+  contextMenuOpen: false,
+
+  /**
    * Indicates whether we are still loading downloads data asynchronously.
    */
   loading: false,
 
   /**
    * Ordered array of all Download objects.  We need to keep this array because
    * only a limited number of items are shown at once, and if an item that is
    * currently visible is removed from the list, we might need to take another
@@ -995,30 +1000,56 @@ const DownloadsView = {
     }
 
     if (aEvent.keyCode == KeyEvent.DOM_VK_RETURN) {
       goDoCommand("downloadsCmd_doDefault");
     }
   },
 
   /**
+   * Event handlers to keep track of context menu state (open/closed) for
+   * download items.
+   */
+  onContextPopupShown(aEvent) {
+    // Ignore events raised by nested popups.
+    if (aEvent.target != aEvent.currentTarget) {
+      return;
+    }
+
+    DownloadsCommon.log("Context menu has shown.");
+    this.contextMenuOpen = true;
+  },
+
+  onContextPopupHidden(aEvent) {
+    // Ignore events raised by nested popups.
+    if (aEvent.target != aEvent.currentTarget) {
+      return;
+    }
+
+    DownloadsCommon.log("Context menu has hidden.");
+    this.contextMenuOpen = false;
+  },
+
+  /**
    * Mouse listeners to handle selection on hover.
    */
   onDownloadMouseOver(aEvent) {
-    if (aEvent.originalTarget.parentNode == this.richListBox) {
-      this.richListBox.selectedItem = aEvent.originalTarget;
+    if (!this.contextMenuOpen &&
+        aEvent.target.parentNode == this.richListBox) {
+      this.richListBox.selectedItem = aEvent.target;
     }
   },
 
   onDownloadMouseOut(aEvent) {
-    if (aEvent.originalTarget.parentNode == this.richListBox) {
+    if (!this.contextMenuOpen &&
+        aEvent.target.parentNode == this.richListBox) {
       // If the destination element is outside of the richlistitem, clear the
       // selection.
       let element = aEvent.relatedTarget;
-      while (element && element != aEvent.originalTarget) {
+      while (element && element != aEvent.target) {
         element = element.parentNode;
       }
       if (!element) {
         this.richListBox.selectedIndex = -1;
       }
     }
   },
 

--- a/browser/components/downloads/content/downloadsOverlay.xul
+++ b/browser/components/downloads/content/downloadsOverlay.xul
@@ -55,16 +55,18 @@
            orient="vertical"
            level="top"
            onpopupshown="DownloadsPanel.onPopupShown(event);"
            onpopuphidden="DownloadsPanel.onPopupHidden(event);">
       <!-- The following popup menu should be a child of the panel element,
            otherwise flickering may occur when the cursor is moved over the area
            of a disabled menu item that overlaps the panel.  See bug 492960. -->
       <menupopup id="downloadsContextMenu"
+                 onpopupshown="DownloadsView.onContextPopupShown(event);"
+                 onpopuphidden="DownloadsView.onContextPopupHidden(event);"
                  class="download-state">
         <menuitem command="downloadsCmd_pauseResume"
                   class="downloadPauseMenuItem"
                   label="&cmd.pause.label;"
                   accesskey="&cmd.pause.accesskey;"/>
         <menuitem command="downloadsCmd_pauseResume"
                   class="downloadResumeMenuItem"
                   label="&cmd.resume.label;"