diff --git a/src/widgets/Dialogs.js b/src/widgets/Dialogs.js
index cfeececc72c..4c3bf7e9b76 100644
--- a/src/widgets/Dialogs.js
+++ b/src/widgets/Dialogs.js
@@ -51,6 +51,14 @@ define(function (require, exports, module) {
         DIALOG_ID_EXT_CHANGED = "ext-changed-dialog",
         DIALOG_ID_EXT_DELETED = "ext-deleted-dialog",
         DIALOG_ID_LIVE_DEVELOPMENT = "live-development-error-dialog";
+    
+    /** 
+     * A stack of keydown event handler functions that corresponds to the
+     * current stack of modal dialogs.
+     * 
+     * @type {Array.<Function>} 
+     */
+    var _keydownListeners = [];
 
     function _dismissDialog(dlg, buttonId) {
         dlg.data("buttonId", buttonId);
@@ -71,7 +79,9 @@ define(function (require, exports, module) {
         var inFormField = ($(e.target).filter(":input").length > 0),
             inTextArea = (e.target.tagName === "TEXTAREA");
         
-        if (e.which === KeyEvent.DOM_VK_RETURN && !inTextArea) {  // enter key in single-line text input still dismisses
+        if (e.which === KeyEvent.DOM_VK_ESCAPE) {
+            buttonId = DIALOG_BTN_CANCEL;
+        } else if (e.which === KeyEvent.DOM_VK_RETURN && !inTextArea) {  // enter key in single-line text input still dismisses
             // Click primary button
             primaryBtn.click();
         } else if (e.which === KeyEvent.DOM_VK_SPACE) {
@@ -177,7 +187,22 @@ define(function (require, exports, module) {
 
             // Remove keydown event handler
             window.document.body.removeEventListener("keydown", handleKeyDown, true);
-            KeyBindingManager.setEnabled(true);
+            
+            // Remove this dialog's listener from the stack of listeners. (It 
+            // might not be on the top of the stack if the dialogs are somehow
+            // dismissed out of order.)
+            _keydownListeners = _keydownListeners.filter(function (listener) {
+                return listener !== handleKeyDown;
+            });
+            
+            // Restore the previous listener if there was one; otherwise return
+            // control to the KeyBindingManager.
+            if (_keydownListeners.length > 0) {
+                var previousListener = _keydownListeners[_keydownListeners.length - 1];
+                window.document.body.addEventListener("keydown", previousListener, true);
+            } else {
+                KeyBindingManager.setEnabled(true);
+            }
         }).one("shown", function () {
             // Set focus to the default button
             var primaryBtn = $dlg.find(".primary");
@@ -186,9 +211,18 @@ define(function (require, exports, module) {
                 primaryBtn.focus();
             }
 
-            // Listen for dialog keyboard shortcuts
+            // If this is the only dialog then also disable the KeyBindingManager;
+            // otherwise, remove and the previous dialog's listener before installing the new one.
+            if (_keydownListeners.length > 0) {
+                var previousListener = _keydownListeners[_keydownListeners.length - 1];
+                window.document.body.removeEventListener("keydown", previousListener, true);
+            } else {
+                KeyBindingManager.setEnabled(false);
+            }
+            _keydownListeners.push(handleKeyDown);
+            
+            // Handle this dialog's keyboard events with the current listener
             window.document.body.addEventListener("keydown", handleKeyDown, true);
-            KeyBindingManager.setEnabled(false);
         });
         
         // Click handler for buttons
@@ -202,7 +236,7 @@ define(function (require, exports, module) {
         $dlg.modal({
             backdrop: "static",
             show: true,
-            keyboard: autoDismiss
+            keyboard: false // handle the ESC key ourselves so we can deal with nested dialogs
         });
 
         return promise;