diff --git a/scripts/system/controllers/controllerDispatcher.js b/scripts/system/controllers/controllerDispatcher.js
index 22987245a4..13789a4a8e 100644
--- a/scripts/system/controllers/controllerDispatcher.js
+++ b/scripts/system/controllers/controllerDispatcher.js
@@ -236,6 +236,7 @@ Script.include("/~/system/libraries/controllerDispatcherUtils.js");
                 RayPick.getPrevRayPickResult(_this.leftControllerHudRayPick),
                 RayPick.getPrevRayPickResult(_this.rightControllerHudRayPick)
             ];
+            var mouseRayPick = RayPick.getPrevRayPickResult(_this.mouseRayPick);
             // if the pickray hit something very nearby, put it into the nearby entities list
             for (h = LEFT_HAND; h <= RIGHT_HAND; h++) {
 
@@ -274,7 +275,8 @@ Script.include("/~/system/libraries/controllerDispatcherUtils.js");
                 nearbyEntityPropertiesByID: nearbyEntityPropertiesByID,
                 nearbyOverlayIDs: nearbyOverlayIDs,
                 rayPicks: rayPicks,
-                hudRayPicks: hudRayPicks
+                hudRayPicks: hudRayPicks,
+                mouseRayPick: mouseRayPick
             };
             if (PROFILE) {
                 Script.endProfileRange("dispatch.gather");
@@ -390,6 +392,11 @@ Script.include("/~/system/libraries/controllerDispatcherUtils.js");
             maxDistance: DEFAULT_SEARCH_SPHERE_DISTANCE,
             posOffset: getGrabPointSphereOffset(Controller.Standard.RightHand, true)
         });
+        this.mouseRayPick = RayPick.createRayPick({
+            joint: "Mouse",
+            filter: RayPick.PICK_ENTITIES | RayPick.PICK_OVERLAYS,
+            enabled: true
+        });
 
         this.handleHandMessage = function(channel, message, sender) {
             var data;
diff --git a/scripts/system/controllers/controllerModules/mouseHMD.js b/scripts/system/controllers/controllerModules/mouseHMD.js
index 10fe714348..f60136ed4e 100644
--- a/scripts/system/controllers/controllerModules/mouseHMD.js
+++ b/scripts/system/controllers/controllerModules/mouseHMD.js
@@ -58,6 +58,16 @@
             }
         };
 
+        this.adjustReticleDepth = function(controllerData) {
+            if (Reticle.isPointingAtSystemOverlay(Reticle.position)) {
+                var reticlePositionOnHUD = HMD.worldPointFromOverlay(Reticle.position);
+                Reticle.depth = Vec3.distance(reticlePositionOnHUD, HMD.position);
+            } else {
+                var APPARENT_MAXIMUM_DEPTH = 100.0;
+                var result = controllerData.mouseRayPick;
+                Reticle.depth = result.intersects ? result.distance : APPARENT_MAXIMUM_DEPTH;
+            }
+        }
         this.ignoreMouseActivity = function() {
             if (!Reticle.allowMouseCapture) {
                 return true;
@@ -98,7 +108,7 @@
                 return ControllerDispatcherUtils.makeRunningValues(true, [], []);
             }
             if (HMD.active) {
-                Reticle.visble = false;
+                Reticle.visible = false;
             }
 
             return ControllerDispatcherUtils.makeRunningValues(false, [], []);
@@ -110,6 +120,7 @@
                 Reticle.visible = false;
                 return ControllerDispatcherUtils.makeRunningValues(false, [], []);
             }
+            this.adjustReticleDepth(controllerData);
             return ControllerDispatcherUtils.makeRunningValues(true, [], []);
         };
     }