diff --git a/packages/ai/cypress/specs/TextArea.cy.tsx b/packages/ai/cypress/specs/TextArea.cy.tsx
index 4c2bb7915a44..44a0eb7e4c68 100644
--- a/packages/ai/cypress/specs/TextArea.cy.tsx
+++ b/packages/ai/cypress/specs/TextArea.cy.tsx
@@ -540,7 +540,7 @@ describe("Basic", () => {
 				.find("[ui5-ai-versioning]")
 				.shadow()
 				.find('[data-ui5-versioning-button="previous"]')
-				.should("have.attr", "tooltip", "Previous Version");
+				.should("have.attr", "tooltip", "Previous Version (Ctrl + Shift + Z)");
 
 			cy.get("[ui5-ai-textarea]")
 				.shadow()
@@ -549,7 +549,83 @@ describe("Basic", () => {
 				.find("[ui5-ai-versioning]")
 				.shadow()
 				.find('[data-ui5-versioning-button="next"]')
-				.should("have.attr", "tooltip", "Next Version");
+				.should("have.attr", "tooltip", "Next Version (Ctrl + Shift + Y)");
+		});
+	});
+
+	describe("AI Button Focus Visibility", () => {
+		it("should show AI button only when textarea, button, or menu has focus", () => {
+			cy.mount(
+				<TextArea>
+					<Menu slot="menu" id="test-menu">
+						<MenuItem text="Generate text" />
+						<MenuItem text="Summarize" />
+					</Menu>
+				</TextArea>
+			);
+
+			cy.get("[ui5-ai-textarea]")
+				.shadow()
+				.find("[ui5-ai-writing-assistant]")
+				.shadow()
+				.find("#ai-menu-btn")
+				.should("not.exist");
+
+			cy.get("[ui5-ai-textarea]")
+				.shadow()
+				.find("textarea")
+				.focus();
+
+			cy.get("[ui5-ai-textarea]")
+				.shadow()
+				.find("[ui5-ai-writing-assistant]")
+				.shadow()
+				.find("#ai-menu-btn")
+				.should("exist")
+				.should("be.visible");
+
+			cy.get("[ui5-ai-textarea]")
+				.shadow()
+				.find("[ui5-ai-writing-assistant]")
+				.shadow()
+				.find("#ai-menu-btn")
+				.focus();
+
+			cy.get("[ui5-ai-textarea]")
+				.shadow()
+				.find("[ui5-ai-writing-assistant]")
+				.shadow()
+				.find("#ai-menu-btn")
+				.should("exist")
+				.should("be.visible");
+
+			cy.get("[ui5-ai-textarea]")
+				.shadow()
+				.find("[ui5-ai-writing-assistant]")
+				.shadow()
+				.find("#ai-menu-btn")
+				.realClick();
+
+			cy.get("[ui5-ai-textarea]")
+				.find("ui5-menu")
+				.should("have.prop", "open", true);
+
+			cy.get("[ui5-ai-textarea]")
+				.shadow()
+				.find("[ui5-ai-writing-assistant]")
+				.shadow()
+				.find("#ai-menu-btn")
+				.should("exist")
+				.should("be.visible");
+
+			cy.get("body").click();
+
+			cy.get("[ui5-ai-textarea]")
+				.shadow()
+				.find("[ui5-ai-writing-assistant]")
+				.shadow()
+				.find("#ai-menu-btn")
+				.should("not.exist");
 		});
 	});
 
@@ -602,4 +678,4 @@ describe("Basic", () => {
 				.should("not.exist");
 		});
 	});
-});
\ No newline at end of file
+});
diff --git a/packages/ai/src/TextArea.ts b/packages/ai/src/TextArea.ts
index fac2be1b0129..8c1f13118ab2 100644
--- a/packages/ai/src/TextArea.ts
+++ b/packages/ai/src/TextArea.ts
@@ -83,6 +83,8 @@ class TextArea extends BaseTextArea {
 
 	// Store bound handler for proper cleanup
 	private _keydownHandler?: (event: KeyboardEvent) => void;
+	private _menuFocusinHandler?: () => void;
+	private _menuFocusoutHandler?: (event: Event) => void;
 
 	/**
 	 * Defines whether the `ui5-ai-textarea` is currently in a loading(processing) state.
@@ -124,6 +126,9 @@ class TextArea extends BaseTextArea {
 	@property({ type: Number })
 	totalVersions = 0;
 
+	@property({ type: Boolean })
+	focused = false;
+
 	@slot({ type: HTMLElement })
 	menu!: Array<HTMLElement>;
 
@@ -199,12 +204,53 @@ class TextArea extends BaseTextArea {
 	onAfterRendering() {
 		super.onAfterRendering();
 
-		// Add keydown event listener to the textarea
 		const textarea = this.shadowRoot?.querySelector("textarea");
 		if (textarea && !this._keydownHandler) {
 			this._keydownHandler = this._handleKeydown.bind(this);
 			textarea.addEventListener("keydown", this._keydownHandler);
 		}
+
+		const menuNodes = this.getSlottedNodes("menu");
+		if (menuNodes.length > 0) {
+			const menu = menuNodes[0];
+			if (!this._menuFocusinHandler) {
+				this._menuFocusinHandler = () => {
+					this.focused = true;
+				};
+				menu.addEventListener("focusin", this._menuFocusinHandler);
+			}
+			if (!this._menuFocusoutHandler) {
+				this._menuFocusoutHandler = (evt: Event) => {
+					const e = evt as FocusEvent;
+					const relatedTarget = e.relatedTarget as HTMLElement;
+					const focusMovingWithinComponent = relatedTarget && this.shadowRoot?.contains(relatedTarget);
+					const focusStayingInMenu = relatedTarget && menu.contains(relatedTarget);
+					if (!focusMovingWithinComponent && !focusStayingInMenu) {
+						this.focused = false;
+					}
+				};
+				menu.addEventListener("focusout", this._menuFocusoutHandler);
+			}
+		}
+	}
+
+	_onfocusin() {
+		super._onfocusin();
+		this.focused = true;
+	}
+
+	_onfocusout(e: FocusEvent) {
+		super._onfocusout(e);
+		const relatedTarget = e.relatedTarget as HTMLElement;
+		const focusMovingWithinShadowDOM = relatedTarget && this.shadowRoot?.contains(relatedTarget);
+		const menuNodes = this.getSlottedNodes("menu");
+		const focusMovingToMenu = menuNodes.length > 0 && relatedTarget && (
+			menuNodes[0].contains(relatedTarget)
+			|| relatedTarget === menuNodes[0]
+		);
+		if (!focusMovingWithinShadowDOM && !focusMovingToMenu) {
+			this.focused = false;
+		}
 	}
 
 	/**
diff --git a/packages/ai/src/TextAreaTemplate.tsx b/packages/ai/src/TextAreaTemplate.tsx
index 53764e6dc14d..017bc1470fbd 100644
--- a/packages/ai/src/TextAreaTemplate.tsx
+++ b/packages/ai/src/TextAreaTemplate.tsx
@@ -58,6 +58,7 @@ export default function TextAreaTemplate(this: TextArea) {
 								currentVersion={this.currentVersion}
 								totalVersions={this.totalVersions}
 								promptDescription={this.promptDescription}
+								focused={this.focused}
 								onButtonClick={this._handleAIButtonClick}
 								onStopGeneration={this.handleStopGeneration}
 								onVersionChange={this._handleVersionChange}
diff --git a/packages/ai/src/WritingAssistant.ts b/packages/ai/src/WritingAssistant.ts
index 816238fabab6..400d350ce04b 100644
--- a/packages/ai/src/WritingAssistant.ts
+++ b/packages/ai/src/WritingAssistant.ts
@@ -152,6 +152,9 @@ class WritingAssistant extends UI5Element {
 	@property({ type: Number })
 	totalVersions = 0;
 
+	@property({ type: Boolean })
+	focused = false;
+
 	@i18n("@ui5/webcomponents-ai")
 	static i18nBundleAi: I18nBundle;
 
diff --git a/packages/ai/src/WritingAssistantTemplate.tsx b/packages/ai/src/WritingAssistantTemplate.tsx
index 32710141222d..94c39c4718fa 100644
--- a/packages/ai/src/WritingAssistantTemplate.tsx
+++ b/packages/ai/src/WritingAssistantTemplate.tsx
@@ -33,17 +33,19 @@ export default function WritingAssistantTemplate(this: WritingAssistant) {
 
 			<ToolbarSpacer />
 
-			<ToolbarButton
-				id="ai-menu-btn"
-				design="Transparent"
-				icon={this.loading ? "stop" : "ai"}
-				data-state={this.loading ? "generating" : "generate"}
-				onClick={this.handleButtonClick}
-				tooltip={this.loading ? this._stopTooltip : this._buttonTooltip}
-				accessibilityAttributes={{ hasPopup: this.loading ? "false" : "menu" }}
-				accessibleName={this._buttonAccessibleName}
-				overflowPriority="NeverOverflow"
-			/>
+			{this.focused && (
+				<ToolbarButton
+					id="ai-menu-btn"
+					design="Transparent"
+					icon={this.loading ? "stop" : "ai"}
+					data-state={this.loading ? "generating" : "generate"}
+					onClick={this.handleButtonClick}
+					tooltip={this.loading ? this._stopTooltip : this._buttonTooltip}
+					accessibilityAttributes={{ hasPopup: this.loading ? "false" : "menu" }}
+					accessibleName={this._buttonAccessibleName}
+					overflowPriority="NeverOverflow"
+				/>
+			)}
 		</Toolbar>
 	);
 }
diff --git a/packages/ai/src/i18n/messagebundle.properties b/packages/ai/src/i18n/messagebundle.properties
index e1b974982bc4..ae28c8e0db39 100644
--- a/packages/ai/src/i18n/messagebundle.properties
+++ b/packages/ai/src/i18n/messagebundle.properties
@@ -44,7 +44,7 @@ WRITING_ASSISTANT_BUTTON_TOOLTIP=Writing Assistant (Shift + F4)
 WRITING_ASSISTANT_STOP_TOOLTIP=Stop Generating (Esc)
 
 #XFLD: Tooltip for the Previous Version button
-VERSIONING_PREVIOUS_BUTTON_TOOLTIP=Previous Version
+VERSIONING_PREVIOUS_BUTTON_TOOLTIP=Previous Version (Ctrl + Shift + Z)
 
 #XFLD: Tooltip for the Next Version button
-VERSIONING_NEXT_BUTTON_TOOLTIP=Next Version
+VERSIONING_NEXT_BUTTON_TOOLTIP=Next Version (Ctrl + Shift + Y)
diff --git a/packages/ai/src/themes/WritingAssistant.css b/packages/ai/src/themes/WritingAssistant.css
index 776c82717d5f..85db0b7a353e 100644
--- a/packages/ai/src/themes/WritingAssistant.css
+++ b/packages/ai/src/themes/WritingAssistant.css
@@ -27,7 +27,6 @@
 	border-bottom: none;
 	border-top: none;
 	padding: 0.5rem;
-	min-height: 2.75rem;
 	display: flex;
 	align-items: center;
 	justify-content: flex-start;
diff --git a/packages/ai/test/pages/TextArea.html b/packages/ai/test/pages/TextArea.html
index b573e67fe99e..0a28f1047900 100644
--- a/packages/ai/test/pages/TextArea.html
+++ b/packages/ai/test/pages/TextArea.html
@@ -58,7 +58,7 @@
 	</style>
 </head>
 
-<body>
+<body class="sapUiSizeCompact">
 	<div class="demo-container">
 		<h1 class="demo-title">AI TextArea Component</h1>
 
@@ -125,7 +125,7 @@ <h1 class="demo-title">AI TextArea Component</h1>
 			{
 				text: "Regenerate",
 				action: "regenerate",
-				processingLabel: "Regenerating text...",
+				processingLabel: "Regenerating ...",
 				completedLabel: "Regenerated text",
 				textKey: "en",
 				replaces: "generate"
@@ -237,7 +237,7 @@ <h1 class="demo-title">AI TextArea Component</h1>
 			
 			if (!hasHistory) {
 				const generateItem = document.createElement('ui5-menu-item');
-				generateItem.setAttribute('text', 'Generate text');
+				generateItem.setAttribute('text', 'Generate');
 				generateItem.dataset.action = 'generate';
 				generateItem.dataset.processingLabel = 'Generating...';
 				generateItem.dataset.completedLabel = 'Generated text';
diff --git a/packages/website/docs/_samples/ai/TextArea/Basic/sample.html b/packages/website/docs/_samples/ai/TextArea/Basic/sample.html
index 691bf3969bab..43fd669d17c7 100644
--- a/packages/website/docs/_samples/ai/TextArea/Basic/sample.html
+++ b/packages/website/docs/_samples/ai/TextArea/Basic/sample.html
@@ -14,7 +14,7 @@
 		rows="8" placeholder="Write your content here...">
 
 		<ui5-menu slot="menu" id="ai-menu" data-completed-label="Generation complete">
-			<ui5-menu-item text="Generate text" data-action="generate"></ui5-menu-item>
+			<ui5-menu-item text="Generate" data-action="generate"></ui5-menu-item>
 		</ui5-menu>
 	</ui5-ai-textarea>
 	<!-- playground-fold -->
diff --git a/packages/website/docs/_samples/ai/TextArea/Extended/main.js b/packages/website/docs/_samples/ai/TextArea/Extended/main.js
index f85217ce2480..fe56b5c3fd33 100644
--- a/packages/website/docs/_samples/ai/TextArea/Extended/main.js
+++ b/packages/website/docs/_samples/ai/TextArea/Extended/main.js
@@ -28,7 +28,7 @@ const MENU_CONFIG = [
 	{
 		text: "Regenerate",
 		action: "regenerate",
-		processingLabel: "Regenerating text...",
+		processingLabel: "Regenerating ...",
 		completedLabel: "Regenerated text",
 		textKey: "en",
 		replaces: "generate"
@@ -141,9 +141,9 @@ function buildMenuFromConfig() {
 	// Add initial "Generate text" option if no history
 	if (!hasHistory) {
 		const generateItem = document.createElement('ui5-menu-item');
-		generateItem.setAttribute('text', 'Generate text');
+		generateItem.setAttribute('text', 'Generate');
 		generateItem.dataset.action = 'generate';
-		generateItem.dataset.processingLabel = 'Generating text...';
+		generateItem.dataset.processingLabel = 'Generating ...';
 		generateItem.dataset.completedLabel = 'Generated text';
 		generateItem.dataset.textKey = 'en';
 		menu.appendChild(generateItem);