diff --git a/awx/ui_next/src/screens/Inventory/shared/InventorySourceSubForms/SCMSubForm.jsx b/awx/ui_next/src/screens/Inventory/shared/InventorySourceSubForms/SCMSubForm.jsx
index fdc1ea0cb4..8adbe3489b 100644
--- a/awx/ui_next/src/screens/Inventory/shared/InventorySourceSubForms/SCMSubForm.jsx
+++ b/awx/ui_next/src/screens/Inventory/shared/InventorySourceSubForms/SCMSubForm.jsx
@@ -26,6 +26,7 @@ import {
 
 const SCMSubForm = ({ autoPopulateProject, i18n }) => {
   const [isOpen, setIsOpen] = useState(false);
+  const [sourcePath, setSourcePath] = useState([]);
   const { setFieldValue, setFieldTouched } = useFormikContext();
   const [credentialField] = useField('credential');
   const [projectField, projectMeta, projectHelpers] = useField({
@@ -37,14 +38,10 @@ const SCMSubForm = ({ autoPopulateProject, i18n }) => {
     validate: required(i18n._(t`Select a value for this field`), i18n),
   });
 
-  const {
-    error: sourcePathError,
-    request: fetchSourcePath,
-    result: sourcePath,
-  } = useRequest(
+  const { error: sourcePathError, request: fetchSourcePath } = useRequest(
     useCallback(async projectId => {
       const { data } = await ProjectsAPI.readInventories(projectId);
-      return [...data, '/ (project root)'];
+      setSourcePath([...data, '/ (project root)']);
     }, []),
     []
   );
@@ -122,12 +119,27 @@ const SCMSubForm = ({ autoPopulateProject, i18n }) => {
             !sourcePathError?.message
           }
           onSelect={(event, value) => {
+            setIsOpen(false);
+            value = value.trim();
+            if (!value.endsWith('/')) {
+              value += '/';
+            }
             sourcePathHelpers.setValue(value);
           }}
-          isCreateable={false}
+          aria-label={i18n._(t`Select source path`)}
+          placeholder={i18n._(t`Select source path`)}
+          isCreatable
+          onCreateOption={value => {
+            value.trim();
+
+            if (!value.endsWith('/')) {
+              value += '/';
+            }
+            setSourcePath([...sourcePath, value]);
+          }}
         >
           {sourcePath.map(path => (
-            <SelectOption key={path} value={path} />
+            <SelectOption key={path} id={path} value={path} />
           ))}
         </Select>
       </FormGroup>
diff --git a/awx/ui_next/src/screens/Inventory/shared/InventorySourceSubForms/SCMSubForm.test.jsx b/awx/ui_next/src/screens/Inventory/shared/InventorySourceSubForms/SCMSubForm.test.jsx
index a394f76b52..9edd61b7e4 100644
--- a/awx/ui_next/src/screens/Inventory/shared/InventorySourceSubForms/SCMSubForm.test.jsx
+++ b/awx/ui_next/src/screens/Inventory/shared/InventorySourceSubForms/SCMSubForm.test.jsx
@@ -99,7 +99,7 @@ describe('<SCMSubForm />', () => {
     });
     wrapper.update();
     expect(wrapper.find('Select#source_path').prop('selections')).toEqual(
-      'bar'
+      'bar/'
     );
 
     await act(async () => {
@@ -111,4 +111,35 @@ describe('<SCMSubForm />', () => {
     wrapper.update();
     expect(wrapper.find('Select#source_path').prop('selections')).toEqual('');
   });
+
+  test('should be able to create custom source path', async () => {
+    const customInitialValues = {
+      credential: { id: 1, name: 'Credential' },
+      custom_virtualenv: '',
+      overwrite: false,
+      overwrite_vars: false,
+      source_path: '/path',
+      source_project: { id: 1, name: 'Source project' },
+      source_script: null,
+      source_vars: '---\n',
+      update_cache_timeout: 0,
+      update_on_launch: true,
+      update_on_project_update: false,
+      verbosity: 1,
+    };
+    let customWrapper;
+    await act(async () => {
+      customWrapper = mountWithContexts(
+        <Formik initialValues={customInitialValues}>
+          <SCMSubForm />
+        </Formik>
+      );
+    });
+
+    await act(async () => {
+      customWrapper.find('Select').invoke('onSelect')({}, 'newPath');
+    });
+    customWrapper.update();
+    expect(customWrapper.find('Select').prop('selections')).toBe('newPath/');
+  });
 });