diff --git a/osu.Game.Tests/Visual/UserInterface/TestSceneModPresetPanel.cs b/osu.Game.Tests/Visual/UserInterface/TestSceneModPresetPanel.cs
index 92d1cba2c2..bcd5579f03 100644
--- a/osu.Game.Tests/Visual/UserInterface/TestSceneModPresetPanel.cs
+++ b/osu.Game.Tests/Visual/UserInterface/TestSceneModPresetPanel.cs
@@ -1,12 +1,15 @@
 // Copyright (c) ppy Pty Ltd <contact@ppy.sh>. Licensed under the MIT Licence.
 // See the LICENCE file in the repository root for full licence text.
 
+using System;
 using System.Collections.Generic;
 using System.Linq;
 using NUnit.Framework;
 using osu.Framework.Allocation;
+using osu.Framework.Extensions.ObjectExtensions;
 using osu.Framework.Graphics;
 using osu.Framework.Graphics.Containers;
+using osu.Framework.Testing;
 using osu.Game.Database;
 using osu.Game.Overlays;
 using osu.Game.Overlays.Mods;
@@ -23,6 +26,12 @@ namespace osu.Game.Tests.Visual.UserInterface
         [Cached]
         private OverlayColourProvider colourProvider = new OverlayColourProvider(OverlayColourScheme.Green);
 
+        [SetUpSteps]
+        public void SetUpSteps()
+        {
+            AddStep("reset selected mods", () => SelectedMods.SetDefault());
+        }
+
         [Test]
         public void TestVariousModPresets()
         {
@@ -37,6 +46,78 @@ namespace osu.Game.Tests.Visual.UserInterface
             });
         }
 
+        [Test]
+        public void TestPresetSelectionStateAfterExternalModChanges()
+        {
+            ModPresetPanel? panel = null;
+
+            AddStep("create panel", () => Child = panel = new ModPresetPanel(createTestPresets().First().ToLiveUnmanaged())
+            {
+                Anchor = Anchor.Centre,
+                Origin = Anchor.Centre,
+                Width = 0.5f
+            });
+            AddAssert("panel is not active", () => !panel.AsNonNull().Active.Value);
+
+            AddStep("set mods to HR", () => SelectedMods.Value = new[] { new OsuModHardRock() });
+            AddAssert("panel is not active", () => !panel.AsNonNull().Active.Value);
+
+            AddStep("set mods to DT", () => SelectedMods.Value = new[] { new OsuModDoubleTime() });
+            AddAssert("panel is not active", () => !panel.AsNonNull().Active.Value);
+
+            AddStep("set mods to HR+DT", () => SelectedMods.Value = new Mod[] { new OsuModHardRock(), new OsuModDoubleTime() });
+            AddAssert("panel is active", () => panel.AsNonNull().Active.Value);
+
+            AddStep("set mods to HR+customised DT", () => SelectedMods.Value = new Mod[]
+            {
+                new OsuModHardRock(),
+                new OsuModDoubleTime
+                {
+                    SpeedChange = { Value = 1.25 }
+                }
+            });
+            AddAssert("panel is not active", () => !panel.AsNonNull().Active.Value);
+
+            AddStep("set mods to HR+DT", () => SelectedMods.Value = new Mod[] { new OsuModHardRock(), new OsuModDoubleTime() });
+            AddAssert("panel is active", () => panel.AsNonNull().Active.Value);
+
+            AddStep("customise mod in place", () => SelectedMods.Value.OfType<OsuModDoubleTime>().Single().SpeedChange.Value = 1.33);
+            AddAssert("panel is not active", () => !panel.AsNonNull().Active.Value);
+
+            AddStep("set mods to HD+HR+DT", () => SelectedMods.Value = new Mod[] { new OsuModHidden(), new OsuModHardRock(), new OsuModDoubleTime() });
+            AddAssert("panel is not active", () => !panel.AsNonNull().Active.Value);
+        }
+
+        [Test]
+        public void TestActivatingPresetTogglesIncludedMods()
+        {
+            ModPresetPanel? panel = null;
+
+            AddStep("create panel", () => Child = panel = new ModPresetPanel(createTestPresets().First().ToLiveUnmanaged())
+            {
+                Anchor = Anchor.Centre,
+                Origin = Anchor.Centre,
+                Width = 0.5f
+            });
+
+            AddStep("activate panel", () => panel.AsNonNull().TriggerClick());
+            assertSelectedModsEquivalentTo(new Mod[] { new OsuModHardRock(), new OsuModDoubleTime() });
+
+            AddStep("deactivate panel", () => panel.AsNonNull().TriggerClick());
+            assertSelectedModsEquivalentTo(Array.Empty<Mod>());
+
+            AddStep("set different mod", () => SelectedMods.Value = new[] { new OsuModHidden() });
+            AddStep("activate panel", () => panel.AsNonNull().TriggerClick());
+            assertSelectedModsEquivalentTo(new Mod[] { new OsuModHardRock(), new OsuModDoubleTime() });
+
+            AddStep("set customised mod", () => SelectedMods.Value = new[] { new OsuModDoubleTime { SpeedChange = { Value = 1.25 } } });
+            AddStep("activate panel", () => panel.AsNonNull().TriggerClick());
+            assertSelectedModsEquivalentTo(new Mod[] { new OsuModHardRock(), new OsuModDoubleTime { SpeedChange = { Value = 1.5 } } });
+        }
+
+        private void assertSelectedModsEquivalentTo(IEnumerable<Mod> mods)
+            => AddAssert("selected mods changed correctly", () => new HashSet<Mod>(SelectedMods.Value).SetEquals(mods));
+
         private static IEnumerable<ModPreset> createTestPresets() => new[]
         {
             new ModPreset
diff --git a/osu.Game/Overlays/Mods/ModPresetPanel.cs b/osu.Game/Overlays/Mods/ModPresetPanel.cs
index 49e7d55bca..a259645479 100644
--- a/osu.Game/Overlays/Mods/ModPresetPanel.cs
+++ b/osu.Game/Overlays/Mods/ModPresetPanel.cs
@@ -1,10 +1,14 @@
 // Copyright (c) ppy Pty Ltd <contact@ppy.sh>. Licensed under the MIT Licence.
 // See the LICENCE file in the repository root for full licence text.
 
+using System;
+using System.Collections.Generic;
+using System.Linq;
 using osu.Framework.Allocation;
 using osu.Framework.Bindables;
 using osu.Framework.Graphics.Cursor;
 using osu.Framework.Graphics.UserInterface;
+using osu.Game.Configuration;
 using osu.Game.Database;
 using osu.Game.Graphics;
 using osu.Game.Graphics.UserInterface;
@@ -22,12 +26,19 @@ namespace osu.Game.Overlays.Mods
         [Resolved]
         private IDialogOverlay? dialogOverlay { get; set; }
 
+        [Resolved]
+        private Bindable<IReadOnlyList<Mod>> selectedMods { get; set; } = null!;
+
+        private ModSettingChangeTracker? settingChangeTracker;
+
         public ModPresetPanel(Live<ModPreset> preset)
         {
             Preset = preset;
 
             Title = preset.Value.Name;
             Description = preset.Value.Description;
+
+            Action = toggleRequestedByUser;
         }
 
         [BackgroundDependencyLoader]
@@ -36,6 +47,37 @@ namespace osu.Game.Overlays.Mods
             AccentColour = colours.Orange1;
         }
 
+        protected override void LoadComplete()
+        {
+            base.LoadComplete();
+
+            selectedMods.BindValueChanged(_ => selectedModsChanged(), true);
+        }
+
+        private void toggleRequestedByUser()
+        {
+            // if the preset is not active at the point of the user click, then set the mods using the preset directly, discarding any previous selections.
+            // if the preset is active when the user has clicked it, then it means that the set of active mods is exactly equal to the set of mods in the preset
+            // (there are no other active mods than what the preset specifies, and the mod settings match exactly).
+            // therefore it's safe to just clear selected mods, since it will have the effect of toggling the preset off.
+            selectedMods.Value = !Active.Value
+                ? Preset.Value.Mods.ToArray()
+                : Array.Empty<Mod>();
+        }
+
+        private void selectedModsChanged()
+        {
+            settingChangeTracker?.Dispose();
+            settingChangeTracker = new ModSettingChangeTracker(selectedMods.Value);
+            settingChangeTracker.SettingChanged = _ => updateActiveState();
+            updateActiveState();
+        }
+
+        private void updateActiveState()
+        {
+            Active.Value = new HashSet<Mod>(Preset.Value.Mods).SetEquals(selectedMods.Value);
+        }
+
         #region IHasCustomTooltip
 
         public ModPreset TooltipContent => Preset.Value;
@@ -51,5 +93,12 @@ namespace osu.Game.Overlays.Mods
         };
 
         #endregion
+
+        protected override void Dispose(bool isDisposing)
+        {
+            base.Dispose(isDisposing);
+
+            settingChangeTracker?.Dispose();
+        }
     }
 }