diff --git a/pcsx2-qt/DisplayWidget.cpp b/pcsx2-qt/DisplayWidget.cpp
index 5adc9407a5..0a6523212c 100644
--- a/pcsx2-qt/DisplayWidget.cpp
+++ b/pcsx2-qt/DisplayWidget.cpp
@@ -397,22 +397,6 @@ bool DisplayWidget::event(QEvent* event)
 			return true;
 		}
 
-		case QEvent::FocusIn:
-		{
-			QWidget::event(event);
-			emit windowFocusEvent();
-			return true;
-		}
-
-		case QEvent::ActivationChange:
-		{
-			QWidget::event(event);
-			if (isActiveWindow())
-				emit windowFocusEvent();
-
-			return true;
-		}
-
 		default:
 			return QWidget::event(event);
 	}
@@ -477,19 +461,6 @@ bool DisplayContainer::event(QEvent* event)
 		}
 		break;
 
-		case QEvent::FocusIn:
-		{
-			emit m_display_widget->windowFocusEvent();
-		}
-		break;
-
-		case QEvent::ActivationChange:
-		{
-			if (isActiveWindow())
-				emit m_display_widget->windowFocusEvent();
-		}
-		break;
-
 		default:
 			break;
 	}
diff --git a/pcsx2-qt/DisplayWidget.h b/pcsx2-qt/DisplayWidget.h
index 69ee0ecfcc..45d7f2c008 100644
--- a/pcsx2-qt/DisplayWidget.h
+++ b/pcsx2-qt/DisplayWidget.h
@@ -42,7 +42,6 @@ public:
 	void updateCursor(bool master_enable);
 
 Q_SIGNALS:
-	void windowFocusEvent();
 	void windowResizedEvent(int width, int height, float scale);
 	void windowRestoredEvent();
 
diff --git a/pcsx2-qt/EmuThread.cpp b/pcsx2-qt/EmuThread.cpp
index 43247b6e4b..ad52de4717 100644
--- a/pcsx2-qt/EmuThread.cpp
+++ b/pcsx2-qt/EmuThread.cpp
@@ -247,6 +247,7 @@ void EmuThread::run()
 	reloadInputSources();
 	createBackgroundControllerPollTimer();
 	startBackgroundControllerPollTimer();
+	connectSignals();
 
 	while (!m_shutdown_flag.load())
 	{
@@ -277,6 +278,7 @@ void EmuThread::destroyVM()
 	m_last_video_fps = 0.0f;
 	m_last_internal_width = 0;
 	m_last_internal_height = 0;
+	m_was_paused_by_focus_loss = false;
 	VMManager::Shutdown(m_save_state_on_shutdown);
 }
 
@@ -436,6 +438,12 @@ void EmuThread::updateEmuFolders()
 void EmuThread::loadOurSettings()
 {
 	m_verbose_status = Host::GetBaseBoolSettingValue("UI", "VerboseStatusBar", false);
+	m_pause_on_focus_loss = Host::GetBaseBoolSettingValue("UI", "PauseOnFocusLoss", false);
+}
+
+void EmuThread::connectSignals()
+{
+	connect(qApp, &QGuiApplication::applicationStateChanged, this, &EmuThread::onApplicationStateChanged);
 }
 
 void EmuThread::checkForSettingChanges()
@@ -605,9 +613,8 @@ void EmuThread::connectDisplaySignals(DisplayWidget* widget)
 {
 	widget->disconnect(this);
 
-	connect(widget, &DisplayWidget::windowFocusEvent, this, &EmuThread::onDisplayWindowFocused);
 	connect(widget, &DisplayWidget::windowResizedEvent, this, &EmuThread::onDisplayWindowResized);
-	// connect(widget, &DisplayWidget::windowRestoredEvent, this, &EmuThread::redrawDisplayWindow);
+	connect(widget, &DisplayWidget::windowRestoredEvent, this, &EmuThread::redrawDisplayWindow);
 }
 
 void EmuThread::onDisplayWindowResized(int width, int height, float scale)
@@ -618,7 +625,31 @@ void EmuThread::onDisplayWindowResized(int width, int height, float scale)
 	GetMTGS().ResizeDisplayWindow(width, height, scale);
 }
 
-void EmuThread::onDisplayWindowFocused() {}
+void EmuThread::onApplicationStateChanged(Qt::ApplicationState state)
+{
+	// NOTE: This is executed on the emu thread, not UI thread.
+	if (!m_pause_on_focus_loss || !VMManager::HasValidVM())
+		return;
+
+	const bool focus_loss = (state != Qt::ApplicationActive);
+	if (focus_loss)
+	{
+		if (!m_was_paused_by_focus_loss && VMManager::GetState() == VMState::Running)
+		{
+			m_was_paused_by_focus_loss = true;
+			VMManager::SetPaused(true);
+		}
+	}
+	else
+	{
+		if (m_was_paused_by_focus_loss)
+		{
+			m_was_paused_by_focus_loss = false;
+			if (VMManager::GetState() == VMState::Paused)
+				VMManager::SetPaused(false);
+		}
+	}
+}
 
 void EmuThread::redrawDisplayWindow()
 {
diff --git a/pcsx2-qt/EmuThread.h b/pcsx2-qt/EmuThread.h
index bd0ee0dcd1..602000ac92 100644
--- a/pcsx2-qt/EmuThread.h
+++ b/pcsx2-qt/EmuThread.h
@@ -140,12 +140,13 @@ private:
 	void createBackgroundControllerPollTimer();
 	void destroyBackgroundControllerPollTimer();
 	void loadOurSettings();
+	void connectSignals();
 
 private Q_SLOTS:
 	void stopInThread();
 	void doBackgroundControllerPoll();
 	void onDisplayWindowResized(int width, int height, float scale);
-	void onDisplayWindowFocused();
+	void onApplicationStateChanged(Qt::ApplicationState state);
 	void redrawDisplayWindow();
 
 private:
@@ -161,6 +162,9 @@ private:
 	bool m_is_fullscreen = false;
 	bool m_is_surfaceless = false;
 	bool m_save_state_on_shutdown = false;
+	bool m_pause_on_focus_loss = false;
+
+	bool m_was_paused_by_focus_loss = false;
 
 	float m_last_speed = 0.0f;
 	float m_last_game_fps = 0.0f;
diff --git a/pcsx2-qt/Settings/InterfaceSettingsWidget.cpp b/pcsx2-qt/Settings/InterfaceSettingsWidget.cpp
index b78b14c5d2..478b66c562 100644
--- a/pcsx2-qt/Settings/InterfaceSettingsWidget.cpp
+++ b/pcsx2-qt/Settings/InterfaceSettingsWidget.cpp
@@ -117,7 +117,6 @@ InterfaceSettingsWidget::InterfaceSettingsWidget(SettingsDialog* dialog, QWidget
 		tr("Hides the main window (with the game list) when a game is running, requires Render To Separate Window to be enabled."));
 
 	// Not yet used, disable the options
-	m_ui.pauseOnFocusLoss->setDisabled(true);
 	m_ui.language->setDisabled(true);
 
 	onRenderToSeparateWindowChanged();