ABSTRACT Possible interaction between dark energy and dark matter has previously shown promise in alleviating the clustering tension, without exacerbating the Hubble tension, when Baryon Acoustic Oscillations (BAO) data from the Sloan Digital Sky Survey (SDSS) DR16 is combined with Cosmic Microwave Background (CMB) and Type-Ia Supernovae (SNIa) data sets. With the recent Dark Energy Spectroscopic Instrument (DESI) BAO DR2, there is now a compelling need to re-evaluate this scenario. We combine DESI DR2 with Planck 2018 and Pantheon + SNIa data sets to constrain interacting dark matter dark energy models, accounting for interaction effects in both the background and perturbation sectors. Our results exhibit similar trends to those observed with SDSS, albeit with improved precision, reinforcing the consistency between the two BAO data sets. In addition to offering a resolution to the $S_8$ tension, in the phantom-limit, the dark energy equation of state exhibits an early-phantom behaviour, aligning with DESI DR2 findings, before transitioning to $w\sim -1$ at lower redshifts, regardless of the DE parametrization. However, the statistical significance of excluding $w=-1$ is reduced compared to their non-interacting counterparts.