diff --git a/public/app/features/variables/pickers/OptionsPicker/reducer.test.ts b/public/app/features/variables/pickers/OptionsPicker/reducer.test.ts
index e5d1fc4678d..9a2dfe161af 100644
--- a/public/app/features/variables/pickers/OptionsPicker/reducer.test.ts
+++ b/public/app/features/variables/pickers/OptionsPicker/reducer.test.ts
@@ -569,8 +569,11 @@ describe('optionsPickerReducer', () => {
           .whenActionIsDispatched(updateOptionsAndFilter(options))
           .thenStateShouldEqual({
             ...initialState,
-            options: [{ text: 'All', value: '$__all', selected: true }],
-            selectedValues: [{ text: 'All', value: '$__all', selected: true }],
+            options: [
+              { text: '> A', value: 'A', selected: false },
+              { text: 'All', value: '$__all', selected: false },
+            ],
+            selectedValues: [],
             queryValue: 'A',
             highlightIndex: 0,
           });
@@ -815,6 +818,45 @@ describe('optionsPickerReducer', () => {
           highlightIndex: 0,
         });
     });
+
+    it('should offer as-typed option even when matches exist', () => {
+      const searchQuery = 'a.*';
+
+      const options: VariableOption[] = 'A AA AB C'.split(' ').map((v) => ({
+        selected: false,
+        text: v,
+        value: v,
+      }));
+
+      const expect: VariableOption[] = [
+        {
+          selected: false,
+          text: '> ' + searchQuery,
+          value: searchQuery,
+        },
+      ].concat(
+        'A AA AB'.split(' ').map((v) => ({
+          selected: false,
+          text: v,
+          value: v,
+        }))
+      );
+
+      const { initialState } = getVariableTestContext({
+        queryValue: searchQuery,
+      });
+
+      reducerTester<OptionsPickerState>()
+        .givenReducer(optionsPickerReducer, cloneDeep(initialState))
+        .whenActionIsDispatched(updateOptionsAndFilter(options))
+        .thenStateShouldEqual({
+          ...cloneDeep(initialState),
+          options: expect,
+          selectedValues: [],
+          queryValue: searchQuery,
+          highlightIndex: 1,
+        });
+    });
   });
 
   describe('when large data for updateOptionsFromSearch is dispatched and variable has searchFilter', () => {
diff --git a/public/app/features/variables/pickers/OptionsPicker/reducer.ts b/public/app/features/variables/pickers/OptionsPicker/reducer.ts
index c9d53cf89bd..57342c9010e 100644
--- a/public/app/features/variables/pickers/OptionsPicker/reducer.ts
+++ b/public/app/features/variables/pickers/OptionsPicker/reducer.ts
@@ -267,12 +267,30 @@ const optionsPickerSlice = createSlice({
           }
 
           // always sort $__all to the top, even if exact match exists?
-          opts.sort((a, b) => (a.value === '$__all' ? -1 : 0) - (b.value === '$__all' ? -1 : 0));
+          opts.sort((a, b) => (a.value === ALL_VARIABLE_VALUE ? -1 : 0) - (b.value === ALL_VARIABLE_VALUE ? -1 : 0));
+        }
+      }
+
+      state.highlightIndex = 0;
+
+      if (needle !== '') {
+        // top ranked match index
+        let firstMatchIdx = opts.findIndex((o) => o.value !== ALL_VARIABLE_VALUE);
+
+        // if there's no match or no exact match, prepend as-typed option
+        if (firstMatchIdx === -1 || opts[firstMatchIdx].value !== needle) {
+          opts.unshift({
+            selected: false,
+            text: '> ' + needle,
+            value: needle,
+          });
+
+          // if no match at all, select as-typed, else select best match
+          state.highlightIndex = firstMatchIdx === -1 ? 0 : firstMatchIdx + 1;
         }
       }
 
       state.options = opts;
-      state.highlightIndex = 0;
 
       return applyStateChanges(state, updateDefaultSelection, updateOptions);
     },