React Hook recipe from https://usehooks.com. Demo: https://codesandbox.io/s/23jk7wlw4y

use-onclick-outside-example.jsx

import { useState, useEffect, useRef } from 'react';

// Usage
function App() {
  // Create a ref that we add to the element for which we want to detect outside clicks
  const ref = useRef();
  // State for our modal
  const [isModalOpen, setModalOpen] = useState(false);
  // Call hook passing in the ref and a function to call on outside click
  useOnClickOutside(ref, () => setModalOpen(false));

  return (
    <div>
      {isModalOpen ? (
        <div ref={ref}>
          👋 Hey, I'm a modal. Click anywhere outside of me to close.
        </div>
      ) : (
        <button onClick={() => setModalOpen(true)}>Open Modal</button>
      )}
    </div>
  );
}

// Hook
function useOnClickOutside(ref, handler) {
  useEffect(
    () => {
      const listener = event => {
        // Do nothing if clicking ref's element or descendent elements
        if (!ref.current || ref.current.contains(event.target)) {
          return;
        }

        handler(event);
      };

      document.addEventListener('mousedown', listener);
      document.addEventListener('touchstart', listener);

      return () => {
        document.removeEventListener('mousedown', listener);
        document.removeEventListener('touchstart', listener);
      };
    },
    // Add ref and handler to effect dependencies
    // It's worth noting that because passed in handler is a new ...
    // ... function on every render that will cause this effect ...
    // ... callback/cleanup to run every render. It's not a big deal ...
    // ... but to optimize you can wrap handler in useCallback before ...
    // ... passing it into this hook.
    [ref, handler]
  );
}

Why not call useRef inside of useOnClickOutside? https://gist.github.com/Aulos/5ad4d9f5d030ac857f57125e7a407d99

@Aulos The only problem with that is if you need to have multiple hooks access the same ref. You'd want to be able to pass the ref in as an argument. That said, if I know I never need to do that in my codebase I'd probably do it your way.

You may want to pass handler on line 44, otherwise it will be calling the old version if the function ever changes (like if it depends on other state, for example). Then you will also have to make sure it is memoized going into useOnClickOutside: https://gist.github.com/ianobermiller/653cee488fb05a06343cd8a2b5d2b176

@ianobermiller that's the risk, but IMHO it's better choice to use "first handler" only rather than dispose previous effect and setup it again on each render as people most commonly will be using inline handlers with this and won't memoize them.

the implementation doesn't account for passive events, you could also link somewhere to existing libraries doing the same thing (I actually have created this one some days ago https://github.com/Andarist/use-onclickoutside

@ianobermiller @Andarist: Good feedback! Any reason why I can't just memoize the handler within useOnClickOutside so that it doesn't matter whether they memoize?

@Andarist: I updated the post to link to your library with a mention that your's accounts for passive events (posts now have an "also check out" section at the bottom): https://usehooks.com/#useOnClickOutside

Why not return the ref from useOnClickOutside?

@j-f1 The problem with that is if you need to have multiple hooks access the same ref. You'd want to be able to pass the ref in as an argument.

I had to remove the [] observer to make sure the handler can use local state from component when called.

useEffect should have ref and handler as dependencies. @MatxBerg wouldn't have had an issue.

EDIT: Actually that would be the same as removing the dependencies. Maybe leave ref inside and add an optional dependencies argument for handler dependencies?

EDIT: Or we actually do put handler inside the dependencies, and leave a note to the user of the hook the they should use useCallback.

@MatxBerg @dimitarnestorov I like the idea of making an optional dependencies argument, and if none is provided, stick with the empty array. I ran into a similar situation using this hook today, where I needed to access some local state inside the handler, and based upon it, decide whether I wanted to do anything further or not, and because of the empty deps array, I was getting the original bound values. So allowing the passing in of an optional deps array would alleviate that.

@ianobermiller @dimitarnestorov @epzilla @MatxBerg Thanks, I've added ref and handler to the effect deps. I think that makes sense. Running callback/cleanup on every render is not a big deal and like you say, user can always wrap handler in useCallback to optimize.