diff --git a/packages/grafana-ui/src/components/Combobox/Combobox.internal.story.tsx b/packages/grafana-ui/src/components/Combobox/Combobox.internal.story.tsx
index 329362149ae..05a331b7606 100644
--- a/packages/grafana-ui/src/components/Combobox/Combobox.internal.story.tsx
+++ b/packages/grafana-ui/src/components/Combobox/Combobox.internal.story.tsx
@@ -1,7 +1,7 @@
 import { action } from '@storybook/addon-actions';
 import { Meta, StoryFn, StoryObj } from '@storybook/react';
 import { Chance } from 'chance';
-import { ComponentProps, useMemo, useState } from 'react';
+import { ComponentProps, useEffect, useState } from 'react';
 
 import { Combobox, Option, Value } from './Combobox';
 
@@ -44,10 +44,7 @@ const BasicWithState: StoryFn<typeof Combobox> = (args) => {
       {...args}
       value={value}
       onChange={(val) => {
-        if (!val) {
-          return;
-        }
-        setValue(val.value);
+        setValue(val?.value || null);
         action('onChange')(val);
       }}
     />
@@ -58,7 +55,7 @@ type Story = StoryObj<typeof Combobox>;
 
 export const Basic: Story = {};
 
-function generateOptions(amount: number): Option[] {
+async function generateOptions(amount: number): Promise<Option[]> {
   return Array.from({ length: amount }, () => ({
     label: chance.name(),
     value: chance.guid(),
@@ -66,21 +63,30 @@ function generateOptions(amount: number): Option[] {
   }));
 }
 
-const manyOptions = generateOptions(1e5);
-manyOptions.push({ label: 'Banana', value: 'banana', description: 'A yellow fruit' });
+const ManyOptionsStory: StoryFn<PropsAndCustomArgs> = ({ numberOfOptions, ...args }) => {
+  const [value, setValue] = useState<Value | null>(null);
+  const [options, setOptions] = useState<Option[]>([]);
+  const [isLoading, setIsLoading] = useState(true);
+
+  useEffect(() => {
+    setTimeout(() => {
+      generateOptions(numberOfOptions).then((options) => {
+        setIsLoading(false);
+        setOptions(options);
+        setValue(options[5].value);
+        console.log("I've set stuff");
+      });
+    }, 1000);
+  }, [numberOfOptions]);
 
-const ManyOptionsStory: StoryFn<PropsAndCustomArgs> = ({ numberOfOptions }) => {
-  const [value, setValue] = useState<Value>(manyOptions[5].value);
-  const options = useMemo(() => generateOptions(numberOfOptions), [numberOfOptions]);
   return (
     <Combobox
+      {...args}
+      loading={isLoading}
       options={options}
       value={value}
       onChange={(val) => {
-        if (!val) {
-          return;
-        }
-        setValue(val.value);
+        setValue(val?.value || null);
         action('onChange')(val);
       }}
     />
diff --git a/packages/grafana-ui/src/components/Combobox/Combobox.tsx b/packages/grafana-ui/src/components/Combobox/Combobox.tsx
index a045d938ade..6951d0dc98c 100644
--- a/packages/grafana-ui/src/components/Combobox/Combobox.tsx
+++ b/packages/grafana-ui/src/components/Combobox/Combobox.tsx
@@ -2,9 +2,10 @@ import { cx } from '@emotion/css';
 import { autoUpdate, flip, useFloating } from '@floating-ui/react';
 import { useVirtualizer } from '@tanstack/react-virtual';
 import { useCombobox } from 'downshift';
-import { useMemo, useRef, useState } from 'react';
+import { useCallback, useMemo, useRef, useState } from 'react';
 
 import { useStyles2 } from '../../themes';
+import { t } from '../../utils/i18n';
 import { Icon } from '../Icon/Icon';
 import { Input, Props as InputProps } from '../Input/Input';
 
@@ -20,12 +21,12 @@ export type Option = {
 interface ComboboxProps
   extends Omit<InputProps, 'width' | 'prefix' | 'suffix' | 'value' | 'addonBefore' | 'addonAfter' | 'onChange'> {
   onChange: (val: Option | null) => void;
-  value: Value;
+  value: Value | null;
   options: Option[];
 }
 
 function itemToString(item: Option | null) {
-  return item?.label || '';
+  return item?.label ?? '';
 }
 
 function itemFilter(inputValue: string) {
@@ -48,6 +49,7 @@ export const Combobox = ({ options, onChange, value, ...restProps }: ComboboxPro
   const MIN_WIDTH = 400;
   const [items, setItems] = useState(options);
   const selectedItem = useMemo(() => options.find((option) => option.value === value) || null, [options, value]);
+
   const inputRef = useRef<HTMLInputElement>(null);
   const floatingRef = useRef(null);
   const styles = useStyles2(getComboboxStyles);
@@ -59,21 +61,35 @@ export const Combobox = ({ options, onChange, value, ...restProps }: ComboboxPro
     overscan: 2,
   });
 
-  const { getInputProps, getMenuProps, getItemProps, isOpen, highlightedIndex } = useCombobox({
-    items,
-    itemToString,
-    selectedItem,
-    scrollIntoView: () => {},
-    onInputValueChange: ({ inputValue }) => {
-      setItems(options.filter(itemFilter(inputValue)));
-    },
-    onSelectedItemChange: ({ selectedItem }) => onChange(selectedItem),
-    onHighlightedIndexChange: ({ highlightedIndex, type }) => {
-      if (type !== useCombobox.stateChangeTypes.MenuMouseLeave) {
-        rowVirtualizer.scrollToIndex(highlightedIndex);
-      }
-    },
-  });
+  const { getInputProps, getMenuProps, getItemProps, isOpen, highlightedIndex, setInputValue, selectItem } =
+    useCombobox({
+      items,
+      itemToString,
+      selectedItem,
+      scrollIntoView: () => {},
+      onInputValueChange: ({ inputValue }) => {
+        setItems(options.filter(itemFilter(inputValue)));
+      },
+      onIsOpenChange: ({ isOpen }) => {
+        // Default to displaying all values when opening
+        if (isOpen) {
+          setItems(options);
+          return;
+        }
+      },
+      onSelectedItemChange: ({ selectedItem }) => {
+        onChange(selectedItem);
+      },
+      onHighlightedIndexChange: ({ highlightedIndex, type }) => {
+        if (type !== useCombobox.stateChangeTypes.MenuMouseLeave) {
+          rowVirtualizer.scrollToIndex(highlightedIndex);
+        }
+      },
+    });
+
+  const onBlur = useCallback(() => {
+    setInputValue(selectedItem?.label ?? '');
+  }, [selectedItem, setInputValue]);
 
   // the order of middleware is important!
   const middleware = [
@@ -98,7 +114,27 @@ export const Combobox = ({ options, onChange, value, ...restProps }: ComboboxPro
   return (
     <div>
       <Input
-        suffix={<Icon name={isOpen ? 'search' : 'angle-down'} />}
+        suffix={
+          <>
+            {!!value && value === selectedItem?.value && (
+              <Icon
+                name="times"
+                className={styles.clear}
+                title={t('combobox.clear.title', 'Clear value')}
+                tabIndex={0}
+                onClick={() => {
+                  selectItem(null);
+                }}
+                onKeyDown={(e) => {
+                  if (e.key === 'Enter' || e.key === ' ') {
+                    selectItem(null);
+                  }
+                }}
+              />
+            )}
+            <Icon name={isOpen ? 'search' : 'angle-down'} />
+          </>
+        }
         {...restProps}
         {...getInputProps({
           ref: inputRef,
@@ -107,6 +143,7 @@ export const Combobox = ({ options, onChange, value, ...restProps }: ComboboxPro
            *  Downshift repo: https://github.com/downshift-js/downshift/tree/master
            */
           onChange: () => {},
+          onBlur,
         })}
       />
       <div
diff --git a/packages/grafana-ui/src/components/Combobox/getComboboxStyles.ts b/packages/grafana-ui/src/components/Combobox/getComboboxStyles.ts
index 2deec9dde09..c46df1a87ee 100644
--- a/packages/grafana-ui/src/components/Combobox/getComboboxStyles.ts
+++ b/packages/grafana-ui/src/components/Combobox/getComboboxStyles.ts
@@ -77,5 +77,12 @@ export const getComboboxStyles = (theme: GrafanaTheme2) => {
         top: 0,
       },
     }),
+    clear: css({
+      label: 'grafana-select-clear',
+      cursor: 'pointer',
+      '&:hover': {
+        color: theme.colors.text.primary,
+      },
+    }),
   };
 };
diff --git a/public/locales/en-US/grafana.json b/public/locales/en-US/grafana.json
index 48ac04b212b..d38e110f275 100644
--- a/public/locales/en-US/grafana.json
+++ b/public/locales/en-US/grafana.json
@@ -272,6 +272,11 @@
       "success": "Copied"
     }
   },
+  "combobox": {
+    "clear": {
+      "title": "Clear value"
+    }
+  },
   "command-palette": {
     "action": {
       "change-theme": "Change theme...",
diff --git a/public/locales/pseudo-LOCALE/grafana.json b/public/locales/pseudo-LOCALE/grafana.json
index cc0649df82d..176c116f3ed 100644
--- a/public/locales/pseudo-LOCALE/grafana.json
+++ b/public/locales/pseudo-LOCALE/grafana.json
@@ -272,6 +272,11 @@
       "success": "Cőpįęđ"
     }
   },
+  "combobox": {
+    "clear": {
+      "title": "Cľęäř väľūę"
+    }
+  },
   "command-palette": {
     "action": {
       "change-theme": "Cĥäʼnģę ŧĥęmę...",