diff --git a/shell/platform/darwin/macos/framework/Source/FlutterCompositor.h b/shell/platform/darwin/macos/framework/Source/FlutterCompositor.h
index 8d2e5c6b33ed8..ef9773ce6a635 100644
--- a/shell/platform/darwin/macos/framework/Source/FlutterCompositor.h
+++ b/shell/platform/darwin/macos/framework/Source/FlutterCompositor.h
@@ -8,20 +8,25 @@
 #include <functional>
 #include <list>
 #include <unordered_map>
+#include <variant>
 
 #include "flutter/fml/macros.h"
+#import "flutter/shell/platform/darwin/macos/framework/Source/FlutterMutatorView.h"
 #import "flutter/shell/platform/darwin/macos/framework/Source/FlutterPlatformViewController.h"
 #import "flutter/shell/platform/darwin/macos/framework/Source/FlutterTimeConverter.h"
 #import "flutter/shell/platform/darwin/macos/framework/Source/FlutterViewProvider.h"
 #include "flutter/shell/platform/embedder/embedder.h"
 
 @class FlutterMutatorView;
+@class FlutterCursorCoordinator;
 
 namespace flutter {
 
-class PlatformViewLayer;
+struct BackingStoreLayer {
+  std::vector<FlutterRect> paint_region;
+};
 
-typedef std::pair<PlatformViewLayer, size_t> PlatformViewLayerWithIndex;
+using LayerVariant = std::variant<PlatformViewLayer, BackingStoreLayer>;
 
 // FlutterCompositor creates and manages the backing stores used for
 // rendering Flutter content and presents Flutter content and Platform views.
@@ -67,13 +72,16 @@ class FlutterCompositor {
     ViewPresenter();
 
     void PresentPlatformViews(FlutterView* default_base_view,
-                              const std::vector<PlatformViewLayerWithIndex>& platform_views,
+                              const std::vector<LayerVariant>& layers,
                               const FlutterPlatformViewController* platform_views_controller);
 
    private:
     // Platform view to FlutterMutatorView that contains it.
     NSMapTable<NSView*, FlutterMutatorView*>* mutator_views_;
 
+    // Coordinates mouse cursor changes between platform views and overlays.
+    FlutterCursorCoordinator* cursor_coordinator_;
+
     // Presents the platform view layer represented by `layer`. `layer_index` is
     // used to position the layer in the z-axis. If the layer does not have a
     // superview, it will become subview of `default_base_view`.
diff --git a/shell/platform/darwin/macos/framework/Source/FlutterCompositor.mm b/shell/platform/darwin/macos/framework/Source/FlutterCompositor.mm
index 4c1630356a863..3af34ff386d02 100644
--- a/shell/platform/darwin/macos/framework/Source/FlutterCompositor.mm
+++ b/shell/platform/darwin/macos/framework/Source/FlutterCompositor.mm
@@ -3,22 +3,31 @@
 // found in the LICENSE file.
 
 #import "flutter/shell/platform/darwin/macos/framework/Source/FlutterCompositor.h"
-#import "flutter/shell/platform/darwin/macos/framework/Source/FlutterMutatorView.h"
 
 #include "flutter/fml/logging.h"
 
 namespace flutter {
 
 namespace {
-std::vector<PlatformViewLayerWithIndex> CopyPlatformViewLayers(const FlutterLayer** layers,
-                                                               size_t layer_count) {
-  std::vector<PlatformViewLayerWithIndex> platform_views;
+std::vector<LayerVariant> CopyLayers(const FlutterLayer** layers, size_t layer_count) {
+  std::vector<LayerVariant> layers_copy;
   for (size_t i = 0; i < layer_count; i++) {
-    if (layers[i]->type == kFlutterLayerContentTypePlatformView) {
-      platform_views.push_back(std::make_pair(PlatformViewLayer(layers[i]), i));
+    const auto& layer = layers[i];
+    if (layer->type == kFlutterLayerContentTypePlatformView) {
+      layers_copy.push_back(PlatformViewLayer(layer));
+    } else if (layer->type == kFlutterLayerContentTypeBackingStore) {
+      std::vector<FlutterRect> rects;
+      auto present_info = layer->backing_store_present_info;
+      if (present_info != nullptr && present_info->paint_region != nullptr) {
+        rects.reserve(present_info->paint_region->rects_count);
+        std::copy(present_info->paint_region->rects,
+                  present_info->paint_region->rects + present_info->paint_region->rects_count,
+                  std::back_inserter(rects));
+      }
+      layers_copy.push_back(BackingStoreLayer{rects});
     }
   }
-  return platform_views;
+  return layers_copy;
 }
 }  // namespace
 
@@ -91,17 +100,16 @@
 
   // Notify block below may be called asynchronously, hence the need to copy
   // the layer information instead of passing the original pointers from embedder.
-  auto platform_views_layers = std::make_shared<std::vector<PlatformViewLayerWithIndex>>(
-      CopyPlatformViewLayers(layers, layers_count));
-
-  [view.surfaceManager presentSurfaces:surfaces
-                                atTime:presentation_time
-                                notify:^{
-                                  // Gets a presenter or create a new one for the view.
-                                  ViewPresenter& presenter = presenters_[view_id];
-                                  presenter.PresentPlatformViews(view, *platform_views_layers,
-                                                                 platform_view_controller_);
-                                }];
+  auto layers_copy = std::make_shared<std::vector<LayerVariant>>(CopyLayers(layers, layers_count));
+
+  [view.surfaceManager
+      presentSurfaces:surfaces
+               atTime:presentation_time
+               notify:^{
+                 // Gets a presenter or create a new one for the view.
+                 ViewPresenter& presenter = presenters_[view_id];
+                 presenter.PresentPlatformViews(view, *layers_copy, platform_view_controller_);
+               }];
 
   return true;
 }
@@ -111,7 +119,7 @@
 
 void FlutterCompositor::ViewPresenter::PresentPlatformViews(
     FlutterView* default_base_view,
-    const std::vector<PlatformViewLayerWithIndex>& platform_views,
+    const std::vector<LayerVariant>& layers,
     const FlutterPlatformViewController* platform_view_controller) {
   FML_DCHECK([[NSThread currentThread] isMainThread])
       << "Must be on the main thread to present platform views";
@@ -119,10 +127,37 @@
   // Active mutator views for this frame.
   NSMutableArray<FlutterMutatorView*>* present_mutators = [NSMutableArray array];
 
-  for (const auto& platform_view : platform_views) {
-    FlutterMutatorView* container = PresentPlatformView(
-        default_base_view, platform_view.first, platform_view.second, platform_view_controller);
-    [present_mutators addObject:container];
+  for (size_t i = 0; i < layers.size(); i++) {
+    const auto& layer = layers[i];
+    if (!std::holds_alternative<PlatformViewLayer>(layer)) {
+      continue;
+    }
+    const auto& platform_view = std::get<PlatformViewLayer>(layer);
+    FlutterMutatorView* mutator_view =
+        PresentPlatformView(default_base_view, platform_view, i, platform_view_controller);
+    [present_mutators addObject:mutator_view];
+
+    // Gather all overlay regions above this mutator view.
+    [mutator_view resetHitTestRegion];
+    for (size_t j = i + 1; j < layers.size(); j++) {
+      const auto& overlay_layer = layers[j];
+      if (!std::holds_alternative<BackingStoreLayer>(overlay_layer)) {
+        continue;
+      }
+      const auto& backing_store_layer = std::get<BackingStoreLayer>(overlay_layer);
+      for (const auto& flutter_rect : backing_store_layer.paint_region) {
+        double scale = default_base_view.layer.contentsScale;
+        CGRect rect = CGRectMake(flutter_rect.left / scale, flutter_rect.top / scale,
+                                 (flutter_rect.right - flutter_rect.left) / scale,
+                                 (flutter_rect.bottom - flutter_rect.top) / scale);
+        CGRect intersection = CGRectIntersection(rect, mutator_view.frame);
+        if (!CGRectIsNull(intersection)) {
+          intersection.origin.x -= mutator_view.frame.origin.x;
+          intersection.origin.y -= mutator_view.frame.origin.y;
+          [mutator_view addHitTestIgnoreRegion:intersection];
+        }
+      }
+    }
   }
 
   NSMutableArray<FlutterMutatorView*>* obsolete_mutators =
@@ -150,10 +185,15 @@
 
   FML_DCHECK(platform_view) << "Platform view not found for id: " << platform_view_id;
 
+  if (cursor_coordinator_ == nil) {
+    cursor_coordinator_ = [[FlutterCursorCoordinator alloc] initWithFlutterView:default_base_view];
+  }
+
   FlutterMutatorView* container = [mutator_views_ objectForKey:platform_view];
 
   if (!container) {
-    container = [[FlutterMutatorView alloc] initWithPlatformView:platform_view];
+    container = [[FlutterMutatorView alloc] initWithPlatformView:platform_view
+                                                cursorCoordiator:cursor_coordinator_];
     [mutator_views_ setObject:container forKey:platform_view];
     [default_base_view addSubview:container];
   }
diff --git a/shell/platform/darwin/macos/framework/Source/FlutterEngine.mm b/shell/platform/darwin/macos/framework/Source/FlutterEngine.mm
index f354a23675952..47d71718ef590 100644
--- a/shell/platform/darwin/macos/framework/Source/FlutterEngine.mm
+++ b/shell/platform/darwin/macos/framework/Source/FlutterEngine.mm
@@ -86,7 +86,7 @@ - (instancetype)initWithConnection:(NSNumber*)connection
 /**
  * Private interface declaration for FlutterEngine.
  */
-@interface FlutterEngine () <FlutterBinaryMessenger>
+@interface FlutterEngine () <FlutterBinaryMessenger, FlutterMouseCursorPluginDelegate>
 
 /**
  * A mutable array that holds one bool value that determines if responses to platform messages are
@@ -466,6 +466,10 @@ @implementation FlutterEngine {
   // Map from ViewId to vsync waiter. Note that this is modified on main thread
   // but accessed on UI thread, so access must be @synchronized.
   NSMapTable<NSNumber*, FlutterVSyncWaiter*>* _vsyncWaiters;
+
+  // Weak reference to last view that received a pointer event. This is used to
+  // pair cursor change with a view.
+  __weak FlutterView* _lastViewWithPointerEvent;
 }
 
 - (instancetype)initWithName:(NSString*)labelPrefix project:(FlutterDartProject*)project {
@@ -981,6 +985,7 @@ - (void)updateWindowMetricsForViewController:(FlutterViewController*)viewControl
 
 - (void)sendPointerEvent:(const FlutterPointerEvent&)event {
   _embedderAPI.SendPointerEvent(_engine, &event, 1);
+  _lastViewWithPointerEvent = [self viewControllerForId:kFlutterImplicitViewId].flutterView;
 }
 
 - (void)sendKeyEvent:(const FlutterKeyEvent&)event
@@ -1167,7 +1172,8 @@ - (void)setUpNotificationCenterListeners {
 
 - (void)addInternalPlugins {
   __weak FlutterEngine* weakSelf = self;
-  [FlutterMouseCursorPlugin registerWithRegistrar:[self registrarForPlugin:@"mousecursor"]];
+  [FlutterMouseCursorPlugin registerWithRegistrar:[self registrarForPlugin:@"mousecursor"]
+                                         delegate:self];
   [FlutterMenuPlugin registerWithRegistrar:[self registrarForPlugin:@"menu"]];
   _settingsChannel =
       [FlutterBasicMessageChannel messageChannelWithName:kFlutterSettingsChannel
@@ -1182,6 +1188,13 @@ - (void)addInternalPlugins {
   }];
 }
 
+- (void)didUpdateMouseCursor:(NSCursor*)cursor {
+  // Mouse cursor plugin does not specify which view is responsible for changing the cursor,
+  // so the reasonable assumption here is that cursor change is a result of a mouse movement
+  // and thus the cursor will be paired with last Flutter view that reveived mouse event.
+  [_lastViewWithPointerEvent didUpdateMouseCursor:cursor];
+}
+
 - (void)applicationWillTerminate:(NSNotification*)notification {
   [self shutDownEngine];
 }
diff --git a/shell/platform/darwin/macos/framework/Source/FlutterMouseCursorPlugin.h b/shell/platform/darwin/macos/framework/Source/FlutterMouseCursorPlugin.h
index ac986d6fb81c4..4cc4790a1e0a7 100644
--- a/shell/platform/darwin/macos/framework/Source/FlutterMouseCursorPlugin.h
+++ b/shell/platform/darwin/macos/framework/Source/FlutterMouseCursorPlugin.h
@@ -10,6 +10,10 @@
 #import "flutter/shell/platform/darwin/common/framework/Headers/FlutterBinaryMessenger.h"
 #import "flutter/shell/platform/darwin/macos/framework/Headers/FlutterViewController.h"
 
+@protocol FlutterMouseCursorPluginDelegate <NSObject>
+- (void)didUpdateMouseCursor:(nonnull NSCursor*)cursor;
+@end
+
 /**
  * A plugin to handle mouse cursor.
  *
@@ -18,6 +22,9 @@
  */
 @interface FlutterMouseCursorPlugin : NSObject <FlutterPlugin>
 
++ (void)registerWithRegistrar:(nonnull id<FlutterPluginRegistrar>)registrar
+                     delegate:(nullable id<FlutterMouseCursorPluginDelegate>)delegate;
+
 @end
 
 #endif  // FLUTTER_SHELL_PLATFORM_DARWIN_MACOS_FRAMEWORK_SOURCE_FLUTTERMOUSECURSORPLUGIN_H_
diff --git a/shell/platform/darwin/macos/framework/Source/FlutterMouseCursorPlugin.mm b/shell/platform/darwin/macos/framework/Source/FlutterMouseCursorPlugin.mm
index 273f4c3533270..a108b7078a493 100644
--- a/shell/platform/darwin/macos/framework/Source/FlutterMouseCursorPlugin.mm
+++ b/shell/platform/darwin/macos/framework/Source/FlutterMouseCursorPlugin.mm
@@ -25,6 +25,11 @@
   // The following mapping must be kept in sync with Flutter framework's
   // mouse_cursor.dart
 
+  if ([kind isEqualToString:kKindValueNone]) {
+    NSImage* image = [[NSImage alloc] initWithSize:NSMakeSize(1, 1)];
+    return [[NSCursor alloc] initWithImage:image hotSpot:NSMakePoint(0, 0)];
+  }
+
   if (systemCursors == nil) {
     systemCursors = @{
       @"alias" : [NSCursor dragLinkCursor],
@@ -58,10 +63,8 @@
 }
 
 @interface FlutterMouseCursorPlugin ()
-/**
- * Whether the cursor is currently hidden.
- */
-@property(nonatomic) BOOL hidden;
+
+@property(nonatomic, weak) id<FlutterMouseCursorPluginDelegate> delegate;
 
 /**
  * Handles the method call that activates a system cursor.
@@ -79,11 +82,6 @@ - (FlutterError*)activateSystemCursor:(nonnull NSDictionary*)arguments;
  */
 - (void)displayCursorObject:(nonnull NSCursor*)cursorObject;
 
-/**
- * Hides the cursor.
- */
-- (void)hide;
-
 /**
  * Handles all method calls from Flutter.
  */
@@ -105,12 +103,6 @@ - (instancetype)init {
   return self;
 }
 
-- (void)dealloc {
-  if (_hidden) {
-    [NSCursor unhide];
-  }
-}
-
 - (FlutterError*)activateSystemCursor:(nonnull NSDictionary*)arguments {
   NSString* kindArg = arguments[kKindKey];
   if (!kindArg) {
@@ -118,10 +110,7 @@ - (FlutterError*)activateSystemCursor:(nonnull NSDictionary*)arguments {
                                message:@"Missing argument"
                                details:@"Missing argument while trying to activate system cursor"];
   }
-  if ([kindArg isEqualToString:kKindValueNone]) {
-    [self hide];
-    return nil;
-  }
+
   NSCursor* cursorObject = [FlutterMouseCursorPlugin cursorFromKind:kindArg];
   [self displayCursorObject:cursorObject];
   return nil;
@@ -129,17 +118,7 @@ - (FlutterError*)activateSystemCursor:(nonnull NSDictionary*)arguments {
 
 - (void)displayCursorObject:(nonnull NSCursor*)cursorObject {
   [cursorObject set];
-  if (_hidden) {
-    [NSCursor unhide];
-  }
-  _hidden = NO;
-}
-
-- (void)hide {
-  if (!_hidden) {
-    [NSCursor hide];
-  }
-  _hidden = YES;
+  [self.delegate didUpdateMouseCursor:cursorObject];
 }
 
 + (NSCursor*)cursorFromKind:(NSString*)kind {
@@ -154,9 +133,15 @@ + (NSCursor*)cursorFromKind:(NSString*)kind {
 #pragma mark - FlutterPlugin implementation
 
 + (void)registerWithRegistrar:(id<FlutterPluginRegistrar>)registrar {
+  [self registerWithRegistrar:registrar delegate:nil];
+}
+
++ (void)registerWithRegistrar:(id<FlutterPluginRegistrar>)registrar
+                     delegate:(id<FlutterMouseCursorPluginDelegate>)delegate {
   FlutterMethodChannel* channel = [FlutterMethodChannel methodChannelWithName:kMouseCursorChannel
                                                               binaryMessenger:registrar.messenger];
   FlutterMouseCursorPlugin* instance = [[FlutterMouseCursorPlugin alloc] init];
+  instance.delegate = delegate;
   [registrar addMethodCallDelegate:instance channel:channel];
 }
 
diff --git a/shell/platform/darwin/macos/framework/Source/FlutterMutatorView.h b/shell/platform/darwin/macos/framework/Source/FlutterMutatorView.h
index d970a66e055b3..390da0e5830ba 100644
--- a/shell/platform/darwin/macos/framework/Source/FlutterMutatorView.h
+++ b/shell/platform/darwin/macos/framework/Source/FlutterMutatorView.h
@@ -37,11 +37,35 @@ class PlatformViewLayer {
 };
 }  // namespace flutter
 
+@class FlutterView;
+@class FlutterMutatorView;
+
+/// FlutterCursorCoordinator is responsible for coordinating cursor changes between
+/// platform views and overlays of single FlutterView.
+@interface FlutterCursorCoordinator : NSObject
+
+- (nonnull FlutterCursorCoordinator*)initWithFlutterView:(nonnull FlutterView*)flutterView;
+
+@end
+
+/// Exposed methods for testing.
+@interface FlutterCursorCoordinator (Private)
+
+@property(readonly, nonatomic) BOOL cleanupScheduled;
+
+- (void)processMouseMoveEvent:(nonnull NSEvent*)event
+               forMutatorView:(nonnull FlutterMutatorView*)view
+                overlayRegion:(const std::vector<CGRect>&)region;
+@end
+
 /// FlutterMutatorView contains platform view and is responsible for applying
 /// FlutterLayer mutations to it.
 @interface FlutterMutatorView : NSView
 
 /// Designated initializer.
+- (nonnull instancetype)initWithPlatformView:(nonnull NSView*)platformView
+                            cursorCoordiator:(nullable FlutterCursorCoordinator*)coordinator;
+
 - (nonnull instancetype)initWithPlatformView:(nonnull NSView*)platformView;
 
 /// Returns wrapped platform view.
@@ -52,6 +76,13 @@ class PlatformViewLayer {
 /// requested mutations.
 - (void)applyFlutterLayer:(nonnull const flutter::PlatformViewLayer*)layer;
 
+/// Resets hit hit testing region for this mutator view.
+- (void)resetHitTestRegion;
+
+/// Adds rectangle (in local vie coordinates) to hit test ignore region
+/// (part of view obscured by Flutter contents).
+- (void)addHitTestIgnoreRegion:(CGRect)region;
+
 @end
 
 #endif  // FLUTTER_SHELL_PLATFORM_DARWIN_MACOS_FRAMEWORK_SOURCE_FLUTTERMUTATORVIEW_H_
diff --git a/shell/platform/darwin/macos/framework/Source/FlutterMutatorView.mm b/shell/platform/darwin/macos/framework/Source/FlutterMutatorView.mm
index 9e5a3e5fe084e..e5bfd3ad707a6 100644
--- a/shell/platform/darwin/macos/framework/Source/FlutterMutatorView.mm
+++ b/shell/platform/darwin/macos/framework/Source/FlutterMutatorView.mm
@@ -3,9 +3,9 @@
 // found in the LICENSE file.
 
 #import "flutter/shell/platform/darwin/macos/framework/Source/FlutterMutatorView.h"
+#import "flutter/shell/platform/darwin/macos/framework/Source/FlutterView.h"
 
 #include <QuartzCore/QuartzCore.h>
-#include <vector>
 
 #include "flutter/fml/logging.h"
 #include "flutter/shell/platform/embedder/embedder.h"
@@ -30,6 +30,65 @@
     : identifier_(identifier), mutations_(mutations), offset_(offset), size_(size) {}
 }  // namespace flutter
 
+@implementation FlutterCursorCoordinator {
+  __weak FlutterView* _flutterView;
+  BOOL _cleanupScheduled;
+  BOOL _mouseMoveHandled;
+}
+
+- (FlutterCursorCoordinator*)initWithFlutterView:(FlutterView*)flutterView {
+  if (self = [super init]) {
+    _flutterView = flutterView;
+  }
+  return self;
+}
+
+- (void)frameCleanup {
+  _cleanupScheduled = NO;
+  _mouseMoveHandled = NO;
+}
+
+- (BOOL)cleanupScheduled {
+  return _cleanupScheduled;
+}
+
+// Processes the mouse event from given mutator view. This is called for each mutator view, in
+// z-order, from the top most down.
+- (void)processMouseMoveEvent:(NSEvent*)event
+               forMutatorView:(FlutterMutatorView*)view
+                overlayRegion:(const std::vector<CGRect>&)region {
+  // [self frameCleanup] will be called once after current run loop turn.
+  if (!_cleanupScheduled) {
+    [[NSRunLoop mainRunLoop] performBlock:^{
+      [self frameCleanup];
+    }];
+    _cleanupScheduled = YES;
+  }
+
+  // Mouse move was already handled by a mutator view above.
+  if (_mouseMoveHandled) {
+    return;
+  }
+
+  NSPoint point = [view convertPoint:event.locationInWindow fromView:nil];
+
+  // If the mouse is above overlay region restore current Flutter cursor.
+  for (const auto& r : region) {
+    if (CGRectContainsPoint(r, point)) {
+      [_flutterView cursorUpdate:event];
+      _mouseMoveHandled = YES;
+      return;
+    }
+  }
+  NSView* platformView = view.platformView;
+  // It is possible that Flutter changed mouse cursor while the mouse was inside
+  // cursor rect. Unfocused NSTextField uses legacy cursor rects for changing
+  // its cursor.
+  [platformView.window invalidateCursorRectsForView:platformView];
+  _mouseMoveHandled = YES;
+}
+@end
+
 @interface FlutterMutatorView () {
   // Each of these views clips to a CGPathRef. These views, if present,
   // are nested (first is child of FlutterMutatorView and last is parent of
@@ -41,6 +100,18 @@ @interface FlutterMutatorView () {
   NSView* _platformViewContainer;
 
   NSView* _platformView;
+
+  FlutterCursorCoordinator* _cursorCoordinator;
+
+  // Container view that hosts the tracking area. Must be above platform view
+  // so that it gets the mouseMove event first.
+  NSView* _trackingAreaContainer;
+
+  // Tracking area used to update cursor when moving over overlay region.
+  NSTrackingArea* _trackingArea;
+
+  // Region of the overlay that should be ignored for hit testing.
+  std::vector<CGRect> _hitTestIgnoreRegion;
 }
 
 @end
@@ -51,6 +122,11 @@ @interface FlutterPlatformViewContainer : NSView
 
 @implementation FlutterPlatformViewContainer
 
+- (NSView*)hitTest:(NSPoint)point {
+  NSView* res = [super hitTest:point];
+  return res != self ? res : nil;
+}
+
 - (BOOL)isFlipped {
   // Flutter transforms assume a coordinate system with an upper-left corner origin, with y
   // coordinate values increasing downwards. This affects the view, view transforms, and
@@ -83,6 +159,11 @@ - (BOOL)isFlipped {
   return YES;
 }
 
+- (NSView*)hitTest:(NSPoint)point {
+  NSView* res = [super hitTest:point];
+  return res != self ? res : nil;
+}
+
 /// Clip the view to the given path. Offset top left corner of platform view
 /// in global logical coordinates.
 - (void)maskToPath:(CGPathRef)path withOrigin:(CGPoint)origin {
@@ -392,6 +473,15 @@ CGRect MasterClipFromMutations(CGRect bounds, const MutationVector& mutations) {
 }
 }  // namespace
 
+@interface FlutterTrackingAreaContainer : NSView
+@end
+
+@implementation FlutterTrackingAreaContainer
+- (NSView*)hitTest:(NSPoint)point {
+  return nil;
+}
+@end
+
 @implementation FlutterMutatorView
 
 - (NSView*)platformView {
@@ -407,17 +497,56 @@ - (NSView*)platformViewContainer {
 }
 
 - (instancetype)initWithPlatformView:(NSView*)platformView {
+  return [self initWithPlatformView:platformView cursorCoordiator:nil];
+}
+
+- (instancetype)initWithPlatformView:(NSView*)platformView
+                    cursorCoordiator:(FlutterCursorCoordinator*)coordinator {
   if (self = [super initWithFrame:NSZeroRect]) {
     _platformView = platformView;
     _pathClipViews = [NSMutableArray array];
+    _cursorCoordinator = coordinator;
     self.wantsLayer = YES;
     self.clipsToBounds = YES;
+
+    _trackingAreaContainer = [[FlutterTrackingAreaContainer alloc] initWithFrame:NSZeroRect];
+    [self addSubview:_trackingAreaContainer];
+
+    NSTrackingAreaOptions options = NSTrackingMouseMoved | NSTrackingInVisibleRect |
+                                    NSTrackingEnabledDuringMouseDrag | NSTrackingActiveAlways;
+    _trackingArea = [[NSTrackingArea alloc] initWithRect:NSZeroRect
+                                                 options:options
+                                                   owner:self
+                                                userInfo:nil];
+    [_trackingAreaContainer addTrackingArea:_trackingArea];
   }
   return self;
 }
 
+- (void)resetHitTestRegion {
+  self->_hitTestIgnoreRegion.clear();
+}
+
+- (void)addHitTestIgnoreRegion:(CGRect)region {
+  self->_hitTestIgnoreRegion.push_back(region);
+}
+
+- (void)mouseMoved:(NSEvent*)event {
+  [_cursorCoordinator processMouseMoveEvent:event
+                             forMutatorView:self
+                              overlayRegion:_hitTestIgnoreRegion];
+}
+
 - (NSView*)hitTest:(NSPoint)point {
-  return nil;
+  CGPoint localPoint = point;
+  localPoint.x -= self.frame.origin.x;
+  localPoint.y -= self.frame.origin.y;
+  for (const auto& region : _hitTestIgnoreRegion) {
+    if (CGRectContainsPoint(region, localPoint)) {
+      return nil;
+    }
+  }
+  return [super hitTest:point];
 }
 
 - (BOOL)isFlipped {
@@ -486,8 +615,10 @@ - (void)updatePlatformViewWithBounds:(CGRect)untransformedBounds
   // By default NSView clips children to frame. If masterClip is tighter than mutator view frame,
   // the frame is set to masterClip and child offset adjusted to compensate for the difference.
   if (!CGRectEqualToRect(clipRect, transformedBounds)) {
-    FML_DCHECK(self.subviews.count == 1);
-    auto subview = self.subviews.firstObject;
+    NSMutableArray<NSView*>* subviews = [NSMutableArray arrayWithArray:self.subviews];
+    [subviews removeObject:_trackingAreaContainer];
+    FML_DCHECK(subviews.count == 1);
+    auto subview = subviews.firstObject;
     FML_DCHECK(subview.frame.origin.x == 0 && subview.frame.origin.y == 0);
     subview.frame = CGRectMake(transformedBounds.origin.x - clipRect.origin.x,
                                transformedBounds.origin.y - clipRect.origin.y,
@@ -535,6 +666,9 @@ - (void)applyFlutterLayer:(const flutter::PlatformViewLayer*)layer {
                    transformedBounds:finalBoundingRect
                            transform:finalTransform
                             clipRect:masterClip];
+
+  [self addSubview:_trackingAreaContainer positioned:(NSWindowAbove)relativeTo:nil];
+  _trackingAreaContainer.frame = self.bounds;
 }
 
 @end
diff --git a/shell/platform/darwin/macos/framework/Source/FlutterMutatorViewTest.mm b/shell/platform/darwin/macos/framework/Source/FlutterMutatorViewTest.mm
index 6d6b6b21c4024..576ab9b3d4de3 100644
--- a/shell/platform/darwin/macos/framework/Source/FlutterMutatorViewTest.mm
+++ b/shell/platform/darwin/macos/framework/Source/FlutterMutatorViewTest.mm
@@ -2,7 +2,9 @@
 // Use of this source code is governed by a BSD-style license that can be
 // found in the LICENSE file.
 
+#import <OCMock/OCMock.h>
 #import "flutter/shell/platform/darwin/macos/framework/Source/FlutterMutatorView.h"
+#import "flutter/shell/platform/darwin/macos/framework/Source/FlutterView.h"
 
 #include "third_party/googletest/googletest/include/gtest/gtest.h"
 
@@ -532,3 +534,178 @@ void ExpectTransform3DEqual(const CATransform3D& t, const CATransform3D& u) {
   EXPECT_TRUE(CGRectEqualToRect(mutatorView.frame, CGRectMake(100, 50, 30, 20)));
   EXPECT_EQ(mutatorView.pathClipViews.count, 0ull);
 }
+
+TEST(FlutterMutatorViewTest, HitTestIgnoreRegion) {
+  NSView* platformView = [[NSView alloc] init];
+  FlutterMutatorView* mutatorView = [[FlutterMutatorView alloc] initWithPlatformView:platformView];
+  ApplyFlutterLayer(mutatorView, FlutterSize{100, 100}, {});
+  EXPECT_EQ([mutatorView hitTest:NSMakePoint(10, 10)], platformView);
+  EXPECT_EQ([mutatorView hitTest:NSMakePoint(50, 10)], platformView);
+
+  [mutatorView resetHitTestRegion];
+  [mutatorView addHitTestIgnoreRegion:CGRectMake(0, 0, 50, 50)];
+  [mutatorView addHitTestIgnoreRegion:CGRectMake(50, 50, 50, 50)];
+
+  EXPECT_EQ([mutatorView hitTest:NSMakePoint(10, 10)], nil);
+  EXPECT_EQ([mutatorView hitTest:NSMakePoint(49, 10)], nil);
+  EXPECT_EQ([mutatorView hitTest:NSMakePoint(10, 49)], nil);
+  EXPECT_EQ([mutatorView hitTest:NSMakePoint(50, 50)], nil);
+  EXPECT_EQ([mutatorView hitTest:NSMakePoint(50, 10)], platformView);
+  EXPECT_EQ([mutatorView hitTest:NSMakePoint(10, 50)], platformView);
+
+  [mutatorView resetHitTestRegion];
+  EXPECT_EQ([mutatorView hitTest:NSMakePoint(10, 10)], platformView);
+  EXPECT_EQ([mutatorView hitTest:NSMakePoint(49, 10)], platformView);
+  EXPECT_EQ([mutatorView hitTest:NSMakePoint(10, 49)], platformView);
+  EXPECT_EQ([mutatorView hitTest:NSMakePoint(50, 50)], platformView);
+  EXPECT_EQ([mutatorView hitTest:NSMakePoint(50, 10)], platformView);
+  EXPECT_EQ([mutatorView hitTest:NSMakePoint(10, 50)], platformView);
+}
+
+@interface FlutterCursorCoordinatorTest : NSObject
+
+@end
+
+@implementation FlutterCursorCoordinatorTest
+- (void)testCoordinatorEventWithinFlutterContent {
+  id flutterView = OCMClassMock([FlutterView class]);
+  FlutterCursorCoordinator* coordinator =
+      [[FlutterCursorCoordinator alloc] initWithFlutterView:flutterView];
+  {
+    id platformView = OCMClassMock([NSView class]);
+    OCMStub([flutterView cursorUpdate:[OCMArg any]]);
+    id mutatorView = OCMStrictClassMock([FlutterMutatorView class]);
+    OCMStub([mutatorView platformView]).andReturn(platformView);
+    CGPoint location = NSMakePoint(50, 50);
+    OCMStub([mutatorView convertPoint:location fromView:[OCMArg any]]).andReturn(location);
+    NSEvent* event = [NSEvent mouseEventWithType:NSEventTypeMouseMoved
+                                        location:location
+                                   modifierFlags:0
+                                       timestamp:0
+                                    windowNumber:0
+                                         context:nil
+                                     eventNumber:0
+                                      clickCount:0
+                                        pressure:0];
+    [coordinator processMouseMoveEvent:event
+                        forMutatorView:mutatorView
+                         overlayRegion:{CGRectMake(0, 0, 100, 100)}];
+    OCMVerify([flutterView cursorUpdate:event]);
+  }
+  {
+    id platformView = OCMClassMock([NSView class]);
+    // Make sure once event is handled the coordinator will not send cursorUpdate again.
+    OCMReject([flutterView cursorUpdate:[OCMArg any]]);
+    id mutatorView = OCMStrictClassMock([FlutterMutatorView class]);
+    OCMStub([mutatorView platformView]).andReturn(platformView);
+    CGPoint location = NSMakePoint(50, 50);
+    OCMStub([mutatorView convertPoint:location fromView:[OCMArg any]]).andReturn(location);
+    NSEvent* event = [NSEvent mouseEventWithType:NSEventTypeMouseMoved
+                                        location:location
+                                   modifierFlags:0
+                                       timestamp:0
+                                    windowNumber:0
+                                         context:nil
+                                     eventNumber:0
+                                      clickCount:0
+                                        pressure:0];
+    [coordinator processMouseMoveEvent:event
+                        forMutatorView:mutatorView
+                         overlayRegion:{CGRectMake(0, 0, 100, 100)}];
+  }
+  EXPECT_TRUE(coordinator.cleanupScheduled);
+  [[NSRunLoop mainRunLoop] runUntilDate:[NSDate dateWithTimeIntervalSinceNow:0.1]];
+  EXPECT_FALSE(coordinator.cleanupScheduled);
+}
+
+- (void)testCoordinatorEventOutsideFlutterContent {
+  id flutterView = OCMClassMock([FlutterView class]);
+  OCMReject([flutterView cursorUpdate:[OCMArg any]]);
+  FlutterCursorCoordinator* coordinator =
+      [[FlutterCursorCoordinator alloc] initWithFlutterView:flutterView];
+  id platformViewWindow = OCMClassMock([NSWindow class]);
+  {
+    id platformView = OCMClassMock([NSView class]);
+    OCMStub([platformViewWindow invalidateCursorRectsForView:platformView]);
+    OCMStub([platformView window]).andReturn(platformViewWindow);
+    OCMStub([flutterView cursorUpdate:[OCMArg any]]);
+    id mutatorView = OCMStrictClassMock([FlutterMutatorView class]);
+    OCMStub([mutatorView platformView]).andReturn(platformView);
+    CGPoint location = NSMakePoint(150, 150);
+    OCMStub([mutatorView convertPoint:location fromView:[OCMArg any]]).andReturn(location);
+    NSEvent* event = [NSEvent mouseEventWithType:NSEventTypeMouseMoved
+                                        location:location
+                                   modifierFlags:0
+                                       timestamp:0
+                                    windowNumber:0
+                                         context:nil
+                                     eventNumber:0
+                                      clickCount:0
+                                        pressure:0];
+    [coordinator processMouseMoveEvent:event
+                        forMutatorView:mutatorView
+                         overlayRegion:{CGRectMake(0, 0, 100, 100)}];
+    OCMVerify([platformViewWindow invalidateCursorRectsForView:platformView]);
+  }
+  {
+    // Make sure this is not called again for subsequent invocation during same run loop turn.
+    OCMReject([platformViewWindow invalidateCursorRectsForView:[OCMArg any]]);
+
+    id platformView = OCMClassMock([NSView class]);
+    OCMStub([platformViewWindow invalidateCursorRectsForView:platformView]);
+    OCMStub([platformView window]).andReturn(platformViewWindow);
+    OCMStub([flutterView cursorUpdate:[OCMArg any]]);
+    id mutatorView = OCMStrictClassMock([FlutterMutatorView class]);
+    OCMStub([mutatorView platformView]).andReturn(platformView);
+    CGPoint location = NSMakePoint(150, 150);
+    OCMStub([mutatorView convertPoint:location fromView:[OCMArg any]]).andReturn(location);
+    NSEvent* event = [NSEvent mouseEventWithType:NSEventTypeMouseMoved
+                                        location:location
+                                   modifierFlags:0
+                                       timestamp:0
+                                    windowNumber:0
+                                         context:nil
+                                     eventNumber:0
+                                      clickCount:0
+                                        pressure:0];
+    [coordinator processMouseMoveEvent:event
+                        forMutatorView:mutatorView
+                         overlayRegion:{CGRectMake(0, 0, 100, 100)}];
+  }
+  EXPECT_TRUE(coordinator.cleanupScheduled);
+  [[NSRunLoop mainRunLoop] runUntilDate:[NSDate dateWithTimeIntervalSinceNow:0.1]];
+  EXPECT_FALSE(coordinator.cleanupScheduled);
+
+  // Check that invalidateCursorRectsForView is called again
+  platformViewWindow = OCMClassMock([NSWindow class]);
+  {
+    id platformView = OCMClassMock([NSView class]);
+    OCMStub([platformViewWindow invalidateCursorRectsForView:platformView]);
+    OCMStub([platformView window]).andReturn(platformViewWindow);
+    OCMStub([flutterView cursorUpdate:[OCMArg any]]);
+    id mutatorView = OCMStrictClassMock([FlutterMutatorView class]);
+    OCMStub([mutatorView platformView]).andReturn(platformView);
+    CGPoint location = NSMakePoint(150, 150);
+    OCMStub([mutatorView convertPoint:location fromView:[OCMArg any]]).andReturn(location);
+    NSEvent* event = [NSEvent mouseEventWithType:NSEventTypeMouseMoved
+                                        location:location
+                                   modifierFlags:0
+                                       timestamp:0
+                                    windowNumber:0
+                                         context:nil
+                                     eventNumber:0
+                                      clickCount:0
+                                        pressure:0];
+    [coordinator processMouseMoveEvent:event
+                        forMutatorView:mutatorView
+                         overlayRegion:{CGRectMake(0, 0, 100, 100)}];
+    OCMVerify([platformViewWindow invalidateCursorRectsForView:platformView]);
+  }
+  [[NSRunLoop mainRunLoop] runUntilDate:[NSDate dateWithTimeIntervalSinceNow:0.1]];
+}
+@end
+
+TEST(FlutterMutatorViewTest, CursorCoordinator) {
+  [[[FlutterCursorCoordinatorTest alloc] init] testCoordinatorEventWithinFlutterContent];
+  [[[FlutterCursorCoordinatorTest alloc] init] testCoordinatorEventOutsideFlutterContent];
+}
\ No newline at end of file
diff --git a/shell/platform/darwin/macos/framework/Source/FlutterView.h b/shell/platform/darwin/macos/framework/Source/FlutterView.h
index add6131930795..a143890329372 100644
--- a/shell/platform/darwin/macos/framework/Source/FlutterView.h
+++ b/shell/platform/darwin/macos/framework/Source/FlutterView.h
@@ -77,6 +77,13 @@ constexpr FlutterViewId kFlutterImplicitViewId = 0ll;
  */
 - (void)setBackgroundColor:(nonnull NSColor*)color;
 
+/**
+ * Called from the engine to notify the view that mouse cursor was updated while
+ * the mouse is over the view. The view is responsible from restoring the cursor
+ * when the mouse enters the view from another subview.
+ */
+- (void)didUpdateMouseCursor:(nonnull NSCursor*)cursor;
+
 @end
 
 #endif  // FLUTTER_SHELL_PLATFORM_DARWIN_MACOS_FRAMEWORK_SOURCE_FLUTTERVIEW_H_
diff --git a/shell/platform/darwin/macos/framework/Source/FlutterView.mm b/shell/platform/darwin/macos/framework/Source/FlutterView.mm
index 79607d0f759e8..29eec7364d457 100644
--- a/shell/platform/darwin/macos/framework/Source/FlutterView.mm
+++ b/shell/platform/darwin/macos/framework/Source/FlutterView.mm
@@ -14,6 +14,7 @@ @interface FlutterView () <FlutterSurfaceManagerDelegate> {
   __weak id<FlutterViewDelegate> _viewDelegate;
   FlutterThreadSynchronizer* _threadSynchronizer;
   FlutterSurfaceManager* _surfaceManager;
+  NSCursor* _lastCursor;
 }
 
 @end
@@ -94,13 +95,25 @@ - (BOOL)acceptsFirstResponder {
   return [_viewDelegate viewShouldAcceptFirstResponder:self];
 }
 
+- (void)didUpdateMouseCursor:(NSCursor*)cursor {
+  _lastCursor = cursor;
+}
+
+// Restores mouse cursor. There are few cases when this is needed and framework will not handle this
+// automatically:
+// - When mouse cursor leaves subview of FlutterView (technically still within bound of FlutterView
+// tracking area so the framework won't be notified)
+// - When context menu above FlutterView is closed. Context menu will change current cursor to arrow
+// and will not restore it back.
 - (void)cursorUpdate:(NSEvent*)event {
-  // When adding/removing views AppKit will schedule call to current hit-test view
-  // cursorUpdate: at the end of frame to determine possible cursor change. If
-  // the view doesn't implement cursorUpdate: AppKit will set the default (arrow) cursor
-  // instead. This would replace the cursor set by FlutterMouseCursorPlugin.
-  // Empty cursorUpdate: implementation prevents this behavior.
-  // https://github.com/flutter/flutter/issues/111425
+  [_lastCursor set];
+  // It is possible that there is a platform view with NSTrackingArea below flutter content.
+  // This could override the mouse cursor as a result of mouse move event. There is no good way
+  // to prevent that short of swizzling [NSCursor set], so as a workaround force flutter cursor
+  // in next runloop turn. This is not ideal, as it may cause the cursor flicker a bit.
+  [[NSRunLoop currentRunLoop] performBlock:^{
+    [_lastCursor set];
+  }];
 }
 
 - (void)viewDidChangeBackingProperties {