diff --git a/packages/grafana-runtime/src/utils/useFavoriteDatasources.test.ts b/packages/grafana-runtime/src/utils/useFavoriteDatasources.test.ts
index 9f589cf8846..ffe37ddbb2e 100644
--- a/packages/grafana-runtime/src/utils/useFavoriteDatasources.test.ts
+++ b/packages/grafana-runtime/src/utils/useFavoriteDatasources.test.ts
@@ -11,8 +11,8 @@ const mockSetItem = jest.fn();
 jest.mock('./userStorage', () => {
   return {
     UserStorage: jest.fn().mockImplementation(() => ({
-      getItem: mockGetItem,
-      setItem: mockSetItem,
+      getItem: (key: string) => mockGetItem(key),
+      setItem: (key: string, value: string) => mockSetItem(key, value),
     })),
   };
 });
diff --git a/packages/grafana-runtime/src/utils/useFavoriteDatasources.ts b/packages/grafana-runtime/src/utils/useFavoriteDatasources.ts
index bbb47da67e7..20233bbf1c7 100644
--- a/packages/grafana-runtime/src/utils/useFavoriteDatasources.ts
+++ b/packages/grafana-runtime/src/utils/useFavoriteDatasources.ts
@@ -18,6 +18,9 @@ export type FavoriteDatasources = {
   isFavoriteDatasource: (dsUid: string) => boolean;
 };
 
+// Initialize user storage as a singleton
+const userStorage = new UserStorage('grafana-runtime');
+
 /**
  * A hook for managing favorite data sources using user storage.
  * This hook provides functionality to store and retrieve a list of favorite data source UIDs
@@ -45,7 +48,6 @@ export function useFavoriteDatasources(): FavoriteDatasources {
     };
   }
 
-  const [userStorage] = useState(() => new UserStorage('grafana-runtime'));
   const [favoriteDatasources, setFavoriteDatasources] = useState<string[]>([]);
   const [initialFavoriteDataSources, setInitialFavoriteDataSources] = useState<string[]>([]);
   const [isLoading, setIsLoading] = useState(false);
@@ -64,18 +66,15 @@ export function useFavoriteDatasources(): FavoriteDatasources {
     };
 
     loadFavorites();
-  }, [userStorage]);
+  }, []);
 
   // Helper function to save favorites to storage
-  const saveFavorites = useCallback(
-    async (newFavorites: string[]) => {
-      setIsLoading(true);
-      await userStorage.setItem(FAVORITE_DATASOURCES_KEY, JSON.stringify(newFavorites));
-      setFavoriteDatasources(newFavorites);
-      setIsLoading(false);
-    },
-    [userStorage]
-  );
+  const saveFavorites = useCallback(async (newFavorites: string[]) => {
+    setIsLoading(true);
+    await userStorage.setItem(FAVORITE_DATASOURCES_KEY, JSON.stringify(newFavorites));
+    setFavoriteDatasources(newFavorites);
+    setIsLoading(false);
+  }, []);
 
   const addFavoriteDatasource = useCallback(
     (ds: DataSourceInstanceSettings) => {
diff --git a/public/app/features/datasources/components/picker/DataSourceList.tsx b/public/app/features/datasources/components/picker/DataSourceList.tsx
index 139cff29df4..77e332dbc5f 100644
--- a/public/app/features/datasources/components/picker/DataSourceList.tsx
+++ b/public/app/features/datasources/components/picker/DataSourceList.tsx
@@ -6,13 +6,14 @@ import { Observable } from 'rxjs';
 import { DataSourceInstanceSettings, DataSourceJsonData, DataSourceRef, GrafanaTheme2 } from '@grafana/data';
 import { selectors } from '@grafana/e2e-selectors';
 import { Trans } from '@grafana/i18n';
-import { getTemplateSrv, useFavoriteDatasources } from '@grafana/runtime';
+import { getTemplateSrv, reportInteraction, useFavoriteDatasources } from '@grafana/runtime';
 import { useStyles2, useTheme2 } from '@grafana/ui';
 
 import { useDatasources, useKeyboardNavigatableList, useRecentlyUsedDataSources } from '../../hooks';
 
 import { AddNewDataSourceButton } from './AddNewDataSourceButton';
 import { DataSourceCard } from './DataSourceCard';
+import { INTERACTION_EVENT_NAME, INTERACTION_ITEM } from './DataSourcePicker';
 import { getDataSourceCompareFn, isDataSourceMatch } from './utils';
 
 /**
@@ -107,10 +108,15 @@ export function DataSourceList(props: DataSourceListProps) {
               onChange(ds);
             }}
             selected={isDataSourceMatch(ds, current)}
-            isFavorite={favoriteDataSources.isFavoriteDatasource(ds.uid)}
+            isFavorite={favoriteDataSources.enabled ? favoriteDataSources.isFavoriteDatasource(ds.uid) : undefined}
             onToggleFavorite={
               favoriteDataSources.enabled
                 ? () => {
+                    reportInteraction(INTERACTION_EVENT_NAME, {
+                      item: INTERACTION_ITEM.TOGGLE_FAVORITE,
+                      ds_type: ds.type,
+                      is_favorite: !favoriteDataSources.isFavoriteDatasource(ds.uid),
+                    });
                     favoriteDataSources.isFavoriteDatasource(ds.uid)
                       ? favoriteDataSources.removeFavoriteDatasource(ds)
                       : favoriteDataSources.addFavoriteDatasource(ds);
diff --git a/public/app/features/datasources/components/picker/DataSourcePicker.tsx b/public/app/features/datasources/components/picker/DataSourcePicker.tsx
index 37bdc3079ef..9961af98afc 100644
--- a/public/app/features/datasources/components/picker/DataSourcePicker.tsx
+++ b/public/app/features/datasources/components/picker/DataSourcePicker.tsx
@@ -11,7 +11,7 @@ import { Observable } from 'rxjs';
 import { DataSourceInstanceSettings, GrafanaTheme2 } from '@grafana/data';
 import { selectors } from '@grafana/e2e-selectors';
 import { Trans, t } from '@grafana/i18n';
-import { reportInteraction } from '@grafana/runtime';
+import { reportInteraction, useFavoriteDatasources } from '@grafana/runtime';
 import { DataQuery, DataSourceJsonData, DataSourceRef } from '@grafana/schema';
 import { Button, Icon, Input, ModalsController, Portal, ScrollContainer, useStyles2 } from '@grafana/ui';
 import config from 'app/core/config';
@@ -25,14 +25,15 @@ import { DataSourceLogo, DataSourceLogoPlaceHolder } from './DataSourceLogo';
 import { DataSourceModal } from './DataSourceModal';
 import { dataSourceLabel, matchDataSourceWithSearch } from './utils';
 
-const INTERACTION_EVENT_NAME = 'dashboards_dspicker_clicked';
-const INTERACTION_ITEM = {
+export const INTERACTION_EVENT_NAME = 'dashboards_dspicker_clicked';
+export const INTERACTION_ITEM = {
   SEARCH: 'search',
   OPEN_DROPDOWN: 'open_dspicker',
   SELECT_DS: 'select_ds',
   ADD_FILE: 'add_file',
   OPEN_ADVANCED_DS_PICKER: 'open_advanced_ds_picker',
   CONFIG_NEW_DS_EMPTY_STATE: 'config_new_ds_empty_state',
+  TOGGLE_FAVORITE: 'toggle_favorite',
 };
 
 export interface DataSourcePickerProps {
@@ -114,6 +115,7 @@ export function DataSourcePicker(props: DataSourcePickerProps) {
     type: props.type,
     variables: props.variables,
   });
+  const favoriteDataSources = useFavoriteDatasources();
 
   // the order of middleware is important!
   const middleware = [
@@ -298,6 +300,9 @@ export function DataSourcePicker(props: DataSourcePickerProps) {
                   reportInteraction(INTERACTION_EVENT_NAME, {
                     item: INTERACTION_ITEM.SELECT_DS,
                     ds_type: ds.type,
+                    is_favorite: favoriteDataSources.enabled
+                      ? favoriteDataSources.isFavoriteDatasource(ds.uid)
+                      : undefined,
                   });
                 }
               }}