diff --git a/src/vs/workbench/parts/terminal/common/terminal.ts b/src/vs/workbench/parts/terminal/common/terminal.ts
index 34cf3aaac1dee6f2b4255e15e96444b8791bcf56..449cf29d2fc4ef83b054200d8d7cbaf30e0d0f96 100644
--- a/src/vs/workbench/parts/terminal/common/terminal.ts
+++ b/src/vs/workbench/parts/terminal/common/terminal.ts
@@ -252,6 +252,11 @@ export interface ITerminalInstance {
 	 */
 	findPrevious(term: string): boolean;
 
+	/**
+	 * Notifies the terminal that the find widget's focus state has been changed.
+	 */
+	notifyFindWidgetFocusChanged(isFocused: boolean): void;
+
 	/**
 	 * Focuses the terminal instance.
 	 *
diff --git a/src/vs/workbench/parts/terminal/electron-browser/terminal.contribution.ts b/src/vs/workbench/parts/terminal/electron-browser/terminal.contribution.ts
index 06bc9b95a8f8f417c4ede279d84886371aee10a0..b5938b23eb3c6126d7e438dc622aa609c84e6469 100644
--- a/src/vs/workbench/parts/terminal/electron-browser/terminal.contribution.ts
+++ b/src/vs/workbench/parts/terminal/electron-browser/terminal.contribution.ts
@@ -288,6 +288,7 @@ actionRegistry.registerWorkbenchAction(new SyncActionDescriptor(FocusTerminalFin
 	primary: KeyMod.CtrlCmd | KeyCode.KEY_F
 }, KEYBINDING_CONTEXT_TERMINAL_FOCUS), 'Terminal: Focus Find Widget', category);
 actionRegistry.registerWorkbenchAction(new SyncActionDescriptor(HideTerminalFindWidgetAction, HideTerminalFindWidgetAction.ID, HideTerminalFindWidgetAction.LABEL, {
-	primary: KeyCode.Escape
-}, KEYBINDING_CONTEXT_TERMINAL_FIND_WIDGET_VISIBLE), 'Terminal: Focus Find Widget', category);
+	primary: KeyCode.Escape,
+	secondary: [KeyCode.Shift | KeyCode.Escape]
+}, ContextKeyExpr.and(KEYBINDING_CONTEXT_TERMINAL_FOCUS, KEYBINDING_CONTEXT_TERMINAL_FIND_WIDGET_VISIBLE)), 'Terminal: Focus Find Widget', category);
 registerColors();
diff --git a/src/vs/workbench/parts/terminal/electron-browser/terminalFindWidget.ts b/src/vs/workbench/parts/terminal/electron-browser/terminalFindWidget.ts
index 8e8493811b879662f0d209ef19afa683a9b5e18c..40d6f4a31927441dba8f2100c7f3e4365a7ac55f 100644
--- a/src/vs/workbench/parts/terminal/electron-browser/terminalFindWidget.ts
+++ b/src/vs/workbench/parts/terminal/electron-browser/terminalFindWidget.ts
@@ -84,6 +84,7 @@ export class TerminalFindWidget extends Widget {
 	private _findInput: FindInput;
 	private _domNode: HTMLElement;
 	private _isVisible: boolean;
+	private _focusTracker: dom.IFocusTracker;
 
 	constructor(
 		@IContextViewService private _contextViewService: IContextViewService,
@@ -95,6 +96,9 @@ export class TerminalFindWidget extends Widget {
 			label: NLS_FIND_INPUT_LABEL,
 			placeholder: NLS_FIND_INPUT_PLACEHOLDER,
 		}));
+		this._focusTracker = this._register(dom.trackFocus(this._findInput.inputBox.inputElement));
+		this._register(this._focusTracker.addFocusListener(() => this._terminalService.getActiveInstance().notifyFindWidgetFocusChanged(true)));
+		this._register(this._focusTracker.addBlurListener(() => this._terminalService.getActiveInstance().notifyFindWidgetFocusChanged(false)));
 
 		let find = (previous) => {
 			let val = this._findInput.getValue();
diff --git a/src/vs/workbench/parts/terminal/electron-browser/terminalInstance.ts b/src/vs/workbench/parts/terminal/electron-browser/terminalInstance.ts
index c8a60018d1cdf23748382f6b923dde7d3f43401b..b07b464ae67ab5b576460fdd5bef240c0c22d441 100644
--- a/src/vs/workbench/parts/terminal/electron-browser/terminalInstance.ts
+++ b/src/vs/workbench/parts/terminal/electron-browser/terminalInstance.ts
@@ -357,6 +357,13 @@ export class TerminalInstance implements ITerminalInstance {
 		return this._xterm.findPrevious(term);
 	}
 
+	public notifyFindWidgetFocusChanged(isFocused: boolean): void {
+		// In order to support escape to close the find widget when the terminal
+		// is focused terminalFocus needs to be true when either the terminal or
+		// the find widget are focused.
+		this._terminalFocusContextKey.set(isFocused || document.activeElement === this._xterm.textarea);
+	}
+
 	public dispose(): void {
 		if (this._linkHandler) {
 			this._linkHandler.dispose();