diff --git a/packages/grafana-ui/src/components/ColorPicker/ColorInput.tsx b/packages/grafana-ui/src/components/ColorPicker/ColorInput.tsx
index 354ee19bf9b..2a3554701c0 100644
--- a/packages/grafana-ui/src/components/ColorPicker/ColorInput.tsx
+++ b/packages/grafana-ui/src/components/ColorPicker/ColorInput.tsx
@@ -10,51 +10,60 @@ import { Input, Props as InputProps } from '../Input/Input';
 
 import { ColorPickerProps } from './ColorPickerPopover';
 
-interface ColorInputProps extends ColorPickerProps, Omit<InputProps, 'color' | 'onChange'> {}
+interface ColorInputProps extends ColorPickerProps, Omit<InputProps, 'color' | 'onChange'> {
+  isClearable?: boolean;
+}
 
-const ColorInput = forwardRef<HTMLInputElement, ColorInputProps>(({ color, onChange, ...inputProps }, ref) => {
-  const [value, setValue] = useState(color);
-  const [previousColor, setPreviousColor] = useState(color);
-  // eslint-disable-next-line react-hooks/exhaustive-deps
-  const updateColor = useMemo(() => debounce(onChange, 100), []);
+const ColorInput = forwardRef<HTMLInputElement, ColorInputProps>(
+  ({ color, onChange, isClearable = false, ...inputProps }, ref) => {
+    const [value, setValue] = useState(color);
+    const [previousColor, setPreviousColor] = useState(color);
+    // eslint-disable-next-line react-hooks/exhaustive-deps
+    const updateColor = useMemo(() => debounce(onChange, 100), []);
 
-  useEffect(() => {
-    const newColor = tinycolor(color);
-    if (newColor.isValid() && color !== previousColor) {
-      setValue(newColor.toString());
-      setPreviousColor(color);
-    }
-  }, [color, previousColor]);
+    useEffect(() => {
+      const newColor = tinycolor(color);
+      if (newColor.isValid() && color !== previousColor) {
+        setValue(newColor.toString());
+        setPreviousColor(color);
+      }
+    }, [color, previousColor]);
 
-  const onChangeColor = (event: React.SyntheticEvent<HTMLInputElement>) => {
-    const newColor = tinycolor(event.currentTarget.value);
+    const onChangeColor = (event: React.SyntheticEvent<HTMLInputElement>) => {
+      const { value: colorValue } = event.currentTarget;
 
-    setValue(event.currentTarget.value);
+      setValue(colorValue);
+      if (colorValue === '' && isClearable) {
+        updateColor(colorValue);
+        return;
+      }
+      const newColor = tinycolor(colorValue);
 
-    if (newColor.isValid()) {
-      updateColor(newColor.toString());
-    }
-  };
+      if (newColor.isValid()) {
+        updateColor(newColor.toString());
+      }
+    };
 
-  const onBlur = () => {
-    const newColor = tinycolor(value);
+    const onBlur = () => {
+      const newColor = tinycolor(value);
 
-    if (!newColor.isValid()) {
-      setValue(color);
-    }
-  };
+      if (!newColor.isValid()) {
+        setValue(color);
+      }
+    };
 
-  return (
-    <Input
-      {...inputProps}
-      value={value}
-      onChange={onChangeColor}
-      onBlur={onBlur}
-      addonBefore={<ColorPreview color={color} />}
-      ref={ref}
-    />
-  );
-});
+    return (
+      <Input
+        {...inputProps}
+        value={value}
+        onChange={onChangeColor}
+        onBlur={onBlur}
+        addonBefore={<ColorPreview color={color} />}
+        ref={ref}
+      />
+    );
+  }
+);
 
 ColorInput.displayName = 'ColorInput';
 
diff --git a/packages/grafana-ui/src/components/ColorPicker/ColorPickerInput.test.tsx b/packages/grafana-ui/src/components/ColorPicker/ColorPickerInput.test.tsx
new file mode 100644
index 00000000000..eeab0e71112
--- /dev/null
+++ b/packages/grafana-ui/src/components/ColorPicker/ColorPickerInput.test.tsx
@@ -0,0 +1,41 @@
+import { render, screen, waitFor } from '@testing-library/react';
+import userEvent from '@testing-library/user-event';
+import React from 'react';
+
+import { ColorPickerInput } from './ColorPickerInput';
+
+const noop = () => {};
+describe('ColorPickerInput', () => {
+  it('should show color popover on focus', async () => {
+    render(<ColorPickerInput onChange={noop} />);
+    expect(screen.queryByTestId('color-popover')).not.toBeInTheDocument();
+    await userEvent.click(screen.getByRole('textbox'));
+    expect(screen.getByTestId('color-popover')).toBeInTheDocument();
+  });
+
+  it('should pass correct color to onChange callback', async () => {
+    const mockOnChange = jest.fn();
+    render(<ColorPickerInput onChange={mockOnChange} />);
+    await userEvent.type(screen.getByRole('textbox'), 'rgb(255,255,255)');
+    await waitFor(() => expect(mockOnChange).toHaveBeenCalledWith('rgb(255, 255, 255)'));
+  });
+
+  it('should not pass invalid color value to onChange callback', async () => {
+    const mockOnChange = jest.fn();
+    render(<ColorPickerInput onChange={mockOnChange} />);
+    await userEvent.type(screen.getByRole('textbox'), 'some text');
+    screen.getByRole('textbox').blur();
+    await waitFor(() => expect(mockOnChange).not.toHaveBeenCalled());
+    expect(screen.getByRole('textbox')).toHaveValue('');
+  });
+
+  it('should be able to reset selected value', async () => {
+    const mockOnChange = jest.fn();
+    render(<ColorPickerInput onChange={mockOnChange} value={'rgb(0,0,0)'} />);
+    // Should show the value in the input
+    expect(screen.getByDisplayValue('rgb(0,0,0)')).toBeInTheDocument();
+    await userEvent.clear(screen.getByRole('textbox'));
+    await waitFor(() => expect(mockOnChange).toHaveBeenCalledWith(''));
+    expect(screen.getByRole('textbox')).toHaveValue('');
+  });
+});
diff --git a/packages/grafana-ui/src/components/ColorPicker/ColorPickerInput.tsx b/packages/grafana-ui/src/components/ColorPicker/ColorPickerInput.tsx
index 437d7d03982..6e87286251c 100644
--- a/packages/grafana-ui/src/components/ColorPicker/ColorPickerInput.tsx
+++ b/packages/grafana-ui/src/components/ColorPicker/ColorPickerInput.tsx
@@ -53,13 +53,14 @@ export const ColorPickerInput = forwardRef<HTMLInputElement, ColorPickerInputPro
         <div className={styles.wrapper}>
           {isOpen && (
             <RgbaStringColorPicker
+              data-testid={'color-popover'}
               color={currentColor}
               onChange={setColor}
               className={cx(paletteStyles.root, styles.picker)}
             />
           )}
           <div onClick={() => setIsOpen(true)}>
-            <ColorInput {...inputProps} theme={theme} color={currentColor} onChange={setColor} ref={ref} />
+            <ColorInput {...inputProps} theme={theme} color={currentColor} onChange={setColor} ref={ref} isClearable />
           </div>
         </div>
       </ClickOutsideWrapper>