diff --git a/awx/ui_next/src/components/CodeEditor/CodeEditor.jsx b/awx/ui_next/src/components/CodeEditor/CodeEditor.jsx
index fac99894f4..c112ccc651 100644
--- a/awx/ui_next/src/components/CodeEditor/CodeEditor.jsx
+++ b/awx/ui_next/src/components/CodeEditor/CodeEditor.jsx
@@ -11,7 +11,6 @@ import 'ace-builds/src-noconflict/theme-github';
 import { withI18n } from '@lingui/react';
 import { t } from '@lingui/macro';
 import styled from 'styled-components';
-import debounce from '../../util/debounce';
 
 config.set('loadWorkerFromBlob', false);
 
@@ -140,7 +139,8 @@ function CodeEditor({
           mode={aceModes[mode] || 'text'}
           className={`pf-c-form-control ${className}`}
           theme="github"
-          onChange={debounce(onChange, 250)}
+          onChange={onChange}
+          debounceChangePeriod={250}
           value={value}
           onFocus={onFocus}
           onBlur={onBlur}
diff --git a/awx/ui_next/src/components/CodeEditor/VariablesField.jsx b/awx/ui_next/src/components/CodeEditor/VariablesField.jsx
index 89260a6ea2..3b1b1e528f 100644
--- a/awx/ui_next/src/components/CodeEditor/VariablesField.jsx
+++ b/awx/ui_next/src/components/CodeEditor/VariablesField.jsx
@@ -73,13 +73,15 @@ function VariablesField({
     },
     [shouldValidate, validate] // eslint-disable-line react-hooks/exhaustive-deps
   );
-  const [initialYamlValue] = useState(mode === YAML_MODE ? field.value : null);
-  const [isEdited, setIsEdited] = useState(false);
+  const [lastYamlValue, setLastYamlValue] = useState(
+    mode === YAML_MODE ? field.value : null
+  );
+  const [isJsonEdited, setIsJsonEdited] = useState(false);
   const [isExpanded, setIsExpanded] = useState(false);
 
   const handleModeChange = newMode => {
-    if (newMode === YAML_MODE && !isEdited && initialYamlValue) {
-      helpers.setValue(initialYamlValue);
+    if (newMode === YAML_MODE && !isJsonEdited && lastYamlValue !== null) {
+      helpers.setValue(lastYamlValue);
       setMode(newMode);
       return;
     }
@@ -96,6 +98,16 @@ function VariablesField({
     }
   };
 
+  const handleChange = newVal => {
+    helpers.setValue(newVal);
+    if (mode === JSON_MODE) {
+      setIsJsonEdited(true);
+    } else {
+      setLastYamlValue(newVal);
+      setIsJsonEdited(false);
+    }
+  };
+
   return (
     <>
       <VariablesFieldInternals
@@ -109,8 +121,8 @@ function VariablesField({
         onExpand={() => setIsExpanded(true)}
         mode={mode}
         setMode={handleModeChange}
-        setIsEdited={setIsEdited}
         setShouldValidate={setShouldValidate}
+        handleChange={handleChange}
       />
       <Modal
         variant="xlarge"
@@ -141,8 +153,8 @@ function VariablesField({
             fullHeight
             mode={mode}
             setMode={handleModeChange}
-            setIsEdited={setIsEdited}
             setShouldValidate={setShouldValidate}
+            handleChange={handleChange}
           />
         </div>
       </Modal>
@@ -178,10 +190,10 @@ function VariablesFieldInternals({
   mode,
   setMode,
   onExpand,
-  setIsEdited,
   setShouldValidate,
+  handleChange,
 }) {
-  const [field, meta, helpers] = useField(name);
+  const [field, meta] = useField(name);
 
   return (
     <div className="pf-c-form__group">
@@ -226,10 +238,7 @@ function VariablesFieldInternals({
         mode={mode}
         readOnly={readOnly}
         {...field}
-        onChange={newVal => {
-          setIsEdited(true);
-          helpers.setValue(newVal);
-        }}
+        onChange={handleChange}
         fullHeight={fullHeight}
         onFocus={() => setShouldValidate(false)}
         onBlur={() => setShouldValidate(true)}
diff --git a/awx/ui_next/src/components/CodeEditor/VariablesField.test.jsx b/awx/ui_next/src/components/CodeEditor/VariablesField.test.jsx
index 20efb1a2a6..72326f06cf 100644
--- a/awx/ui_next/src/components/CodeEditor/VariablesField.test.jsx
+++ b/awx/ui_next/src/components/CodeEditor/VariablesField.test.jsx
@@ -56,7 +56,7 @@ describe('VariablesField', () => {
     );
   });
 
-  it('should retain non-expanded yaml if value not edited', async () => {
+  it('should retain non-expanded yaml if JSON value not edited', async () => {
     const value = '---\na: &aa [a,b,c]\nb: *aa';
     const wrapper = mountWithContexts(
       <Formik initialValues={{ variables: value }}>
@@ -80,7 +80,7 @@ describe('VariablesField', () => {
     expect(wrapper.find('CodeEditor').prop('value')).toEqual(value);
   });
 
-  it('should retain expanded yaml if value is edited', async () => {
+  it('should retain expanded yaml if JSON value is edited', async () => {
     const value = '---\na: &aa [a,b,c]\nb: *aa';
     const wrapper = mountWithContexts(
       <Formik initialValues={{ variables: value }}>
@@ -109,6 +109,34 @@ describe('VariablesField', () => {
     );
   });
 
+  it('should retain non-expanded yaml if YAML value is edited', async () => {
+    const value = '---\na: &aa [a,b,c]\nb: *aa';
+    const wrapper = mountWithContexts(
+      <Formik initialValues={{ variables: value }}>
+        {() => (
+          <VariablesField id="the-field" name="variables" label="Variables" />
+        )}
+      </Formik>
+    );
+    wrapper.find('CodeEditor').invoke('onChange')(
+      '---\na: &aa [a,b,c]\nb: *aa\n'
+    );
+    const buttons = wrapper.find('Button');
+    await act(async () => {
+      buttons.at(1).simulate('click');
+    });
+    wrapper.update();
+    const buttons2 = wrapper.find('Button');
+    await act(async () => {
+      buttons2.at(0).simulate('click');
+    });
+    wrapper.update();
+    expect(wrapper.find('CodeEditor').prop('mode')).toEqual('yaml');
+    expect(wrapper.find('CodeEditor').prop('value')).toEqual(
+      '---\na: &aa [a,b,c]\nb: *aa\n'
+    );
+  });
+
   it('should set Formik error if yaml is invalid', async () => {
     const value = '---\nfoo bar\n';
     const wrapper = mountWithContexts(