diff --git a/crates/file_finder/src/file_finder.rs b/crates/file_finder/src/file_finder.rs
index 9d23844c9e..ff3158f22c 100644
--- a/crates/file_finder/src/file_finder.rs
+++ b/crates/file_finder/src/file_finder.rs
@@ -1847,6 +1847,11 @@ impl PickerDelegate for FileFinderDelegate {
         self.selected_index
     }
 
+    fn set_hovered_index(&mut self, ix: usize, _: &mut Window, cx: &mut Context<Picker<Self>>) {
+        self.selected_index = ix;
+        cx.notify();
+    }
+
     fn set_selected_index(&mut self, ix: usize, _: &mut Window, cx: &mut Context<Picker<Self>>) {
         self.has_changed_selected_index = true;
         self.selected_index = ix;
diff --git a/crates/file_finder/src/file_finder_tests.rs b/crates/file_finder/src/file_finder_tests.rs
index 7a31da1374..6d0184325d 100644
--- a/crates/file_finder/src/file_finder_tests.rs
+++ b/crates/file_finder/src/file_finder_tests.rs
@@ -5186,3 +5186,64 @@ async fn test_exact_filename_with_directory_token(cx: &mut TestAppContext) {
         );
     });
 }
+
+#[gpui::test]
+async fn test_hover_does_not_set_has_changed_selected_index(cx: &mut TestAppContext) {
+    let app_state = init_test(cx);
+
+    app_state
+        .fs
+        .as_fake()
+        .insert_tree(
+            path!("/root"),
+            json!({
+                "a.rs": "",
+                "b.rs": "",
+            }),
+        )
+        .await;
+
+    let project = Project::test(app_state.fs.clone(), [path!("/root").as_ref()], cx).await;
+    let (multi_workspace, cx) =
+        cx.add_window_view(|window, cx| MultiWorkspace::test_new(project, window, cx));
+    let workspace = multi_workspace.read_with(cx, |mw, _| mw.workspace().clone());
+
+    open_close_queried_buffer("a", 1, "a.rs", &workspace, cx).await;
+    open_close_queried_buffer("b", 1, "b.rs", &workspace, cx).await;
+
+    let picker = open_file_picker(&workspace, cx);
+
+    picker.update(cx, |picker, _| {
+        assert!(
+            picker.delegate.matches.len() >= 2,
+            "need at least 2 matches"
+        );
+    });
+
+    picker.update_in(cx, |picker, window, cx| {
+        picker.set_hovered_index(1, window, cx);
+    });
+
+    picker.update(cx, |picker, _| {
+        assert!(
+            !picker.delegate.has_changed_selected_index,
+            "hover should not set `has_changed_selected_index`"
+        );
+        assert_eq!(
+            picker.delegate.selected_index(),
+            1,
+            "hover should change `selected_index`"
+        );
+    });
+
+    picker.update_in(cx, |picker, window, cx| {
+        picker.cycle_selection(window, cx);
+    });
+
+    picker.update(cx, |picker, _| {
+        assert!(
+            picker.delegate.has_changed_selected_index,
+            "keyboard should set `has_changed_selected_index`"
+        );
+    });
+}
diff --git a/crates/picker/src/picker.rs b/crates/picker/src/picker.rs
index c1c95fba6d..3a93c7cd75 100644
--- a/crates/picker/src/picker.rs
+++ b/crates/picker/src/picker.rs
@@ -172,6 +172,14 @@ pub trait PickerDelegate: Sized + 'static {
     fn separators_after_indices(&self) -> Vec<usize> {
         Vec::new()
     }
+    fn set_hovered_index(
+        &mut self,
+        ix: usize,
+        window: &mut Window,
+        cx: &mut Context<Picker<Self>>,
+    ) {
+        self.set_selected_index(ix, window, cx);
+    }
     fn set_selected_index(
         &mut self,
         ix: usize,
@@ -797,6 +805,32 @@ impl<D: PickerDelegate> Picker<D> {
         self.focus_handle(cx).focus(window, cx);
     }
 
+    pub fn set_hovered_index(&mut self, ix: usize, window: &mut Window, cx: &mut Context<Self>) {
+        let match_count = self.delegate.match_count();
+        if match_count == 0 {
+            return;
+        }
+
+        if !self.delegate.can_select(ix, window, cx) {
+            return;
+        }
+
+        let previous_index = self.delegate.selected_index();
+        self.delegate.set_hovered_index(ix, window, cx);
+        let current_index = self.delegate.selected_index();
+
+        if previous_index != current_index {
+            if let Some(action) = self.delegate.selected_index_changed(ix, window, cx) {
+                action(window, cx);
+            }
+            if let Some(preview) = &mut self.preview
+                && let Some(update) = self.delegate.try_get_preview_data_for_match(cx)
+            {
+                preview.update(update, window, cx);
+            }
+        }
+    }
+
     /// Handles the selecting an index, and passing the change to the delegate.
     /// If `fallback_direction` is set to `None`, the index will not be selected
     /// if the element at that index cannot be selected.
@@ -1414,7 +1448,7 @@ impl<D: PickerDelegate> Picker<D> {
             .when(self.delegate.select_on_hover(), |this| {
                 this.on_hover(cx.listener(move |this, hovered: &bool, window, cx| {
                     if *hovered {
-                        this.set_selected_index(ix, None, false, window, cx);
+                        this.set_hovered_index(ix, window, cx);
                         cx.notify();
                     }
                 }))