diff --git a/cypress/e2e/16-webhook-node.cy.ts b/cypress/e2e/16-webhook-node.cy.ts
index 3d6c1049a2b61..193ada0bcc6d5 100644
--- a/cypress/e2e/16-webhook-node.cy.ts
+++ b/cypress/e2e/16-webhook-node.cy.ts
@@ -250,7 +250,7 @@ describe('Webhook Trigger node', () => {
 		});
 		// add credentials
 		workflowPage.getters.nodeCredentialsSelect().click();
-		getVisibleSelect().find('li').last().click();
+		workflowPage.getters.nodeCredentialsCreateOption().click();
 		credentialsModal.getters.credentialsEditModal().should('be.visible');
 		credentialsModal.actions.fillCredentialsForm();
 
@@ -293,7 +293,7 @@ describe('Webhook Trigger node', () => {
 		});
 		// add credentials
 		workflowPage.getters.nodeCredentialsSelect().click();
-		getVisibleSelect().find('li').last().click();
+		workflowPage.getters.nodeCredentialsCreateOption().click();
 		credentialsModal.getters.credentialsEditModal().should('be.visible');
 		credentialsModal.actions.fillCredentialsForm();
 
diff --git a/cypress/e2e/17-sharing.cy.ts b/cypress/e2e/17-sharing.cy.ts
index 30a990fb28b4a..60eb474b07f7e 100644
--- a/cypress/e2e/17-sharing.cy.ts
+++ b/cypress/e2e/17-sharing.cy.ts
@@ -297,10 +297,9 @@ describe('Credential Usage in Cross Shared Workflows', () => {
 		workflowsPage.actions.createWorkflowFromCard();
 		workflowPage.actions.addNodeToCanvas(NOTION_NODE_NAME, true, true);
 
-		// Only the credential in this project (+ the 'Create new' option) should
-		// be in the dropdown
+		// Only the credential in this project should be in the dropdown
 		workflowPage.getters.nodeCredentialsSelect().click();
-		getVisibleSelect().find('li').should('have.length', 2);
+		getVisibleSelect().find('li').should('have.length', 1);
 	});
 
 	it('should only show credentials in their personal project for members', () => {
@@ -325,10 +324,9 @@ describe('Credential Usage in Cross Shared Workflows', () => {
 		workflowsPage.actions.createWorkflowFromCard();
 		workflowPage.actions.addNodeToCanvas(NOTION_NODE_NAME, true, true);
 
-		// Only the own credential the shared one (+ the 'Create new' option)
-		// should be in the dropdown
+		// Only the own credential the shared one should be in the dropdown
 		workflowPage.getters.nodeCredentialsSelect().click();
-		getVisibleSelect().find('li').should('have.length', 3);
+		getVisibleSelect().find('li').should('have.length', 2);
 	});
 
 	it('should only show credentials in their personal project for members if the workflow was shared with them', () => {
@@ -355,10 +353,9 @@ describe('Credential Usage in Cross Shared Workflows', () => {
 		workflowsPage.getters.workflowCardContent(workflowName).click();
 		workflowPage.actions.addNodeToCanvas(NOTION_NODE_NAME, true, true);
 
-		// Only the own credential the shared one (+ the 'Create new' option)
-		// should be in the dropdown
+		// Only the own credential the shared one should be in the dropdown
 		workflowPage.getters.nodeCredentialsSelect().click();
-		getVisibleSelect().find('li').should('have.length', 2);
+		getVisibleSelect().find('li').should('have.length', 1);
 	});
 
 	it("should show all credentials from all personal projects the workflow's been shared into for the global owner", () => {
@@ -400,10 +397,9 @@ describe('Credential Usage in Cross Shared Workflows', () => {
 		workflowsPage.getters.workflowCardContent(workflowName).click();
 		workflowPage.actions.addNodeToCanvas(NOTION_NODE_NAME, true, true);
 
-		// Only the personal credentials of the workflow owner and the global owner
-		// should show up.
+		// Only the personal credentials of the workflow owner and the global owner should show up.
 		workflowPage.getters.nodeCredentialsSelect().click();
-		getVisibleSelect().find('li').should('have.length', 4);
+		getVisibleSelect().find('li').should('have.length', 3);
 	});
 
 	it('should show all personal credentials if the global owner owns the workflow', () => {
@@ -421,6 +417,6 @@ describe('Credential Usage in Cross Shared Workflows', () => {
 
 		// Show all personal credentials
 		workflowPage.getters.nodeCredentialsSelect().click();
-		getVisibleSelect().find('li').should('have.have.length', 2);
+		getVisibleSelect().find('li').should('have.have.length', 1);
 	});
 });
diff --git a/cypress/e2e/2-credentials.cy.ts b/cypress/e2e/2-credentials.cy.ts
index cda01c71a36a7..260d5f63a07ec 100644
--- a/cypress/e2e/2-credentials.cy.ts
+++ b/cypress/e2e/2-credentials.cy.ts
@@ -31,7 +31,7 @@ function createNotionCredential() {
 	workflowPage.actions.addNodeToCanvas(NOTION_NODE_NAME);
 	workflowPage.actions.openNode(NOTION_NODE_NAME);
 	workflowPage.getters.nodeCredentialsSelect().click();
-	getVisibleSelect().find('li').last().click();
+	workflowPage.getters.nodeCredentialsCreateOption().click();
 	credentialsModal.actions.fillCredentialsForm();
 	cy.get('body').type('{esc}');
 	workflowPage.actions.deleteNode(NOTION_NODE_NAME);
@@ -79,7 +79,7 @@ describe('Credentials', () => {
 		workflowPage.getters.canvasNodes().last().click();
 		cy.get('body').type('{enter}');
 		workflowPage.getters.nodeCredentialsSelect().click();
-		getVisibleSelect().find('li').last().click();
+		workflowPage.getters.nodeCredentialsCreateOption().click();
 		credentialsModal.getters.credentialsEditModal().should('be.visible');
 		credentialsModal.getters.credentialAuthTypeRadioButtons().should('have.length', 2);
 		credentialsModal.getters.credentialAuthTypeRadioButtons().first().click();
@@ -99,7 +99,7 @@ describe('Credentials', () => {
 		cy.get('body').type('{enter}');
 		workflowPage.getters.nodeCredentialsSelect().click();
 		// Add oAuth credentials
-		getVisibleSelect().find('li').last().click();
+		workflowPage.getters.nodeCredentialsCreateOption().click();
 		credentialsModal.getters.credentialsEditModal().should('be.visible');
 		credentialsModal.getters.credentialAuthTypeRadioButtons().should('have.length', 2);
 		credentialsModal.getters.credentialAuthTypeRadioButtons().first().click();
@@ -107,14 +107,13 @@ describe('Credentials', () => {
 		cy.get('.el-message-box').find('button').contains('Close').click();
 		workflowPage.getters.nodeCredentialsSelect().click();
 		// Add Service account credentials
-		getVisibleSelect().find('li').last().click();
+		workflowPage.getters.nodeCredentialsCreateOption().click();
 		credentialsModal.getters.credentialsEditModal().should('be.visible');
 		credentialsModal.getters.credentialAuthTypeRadioButtons().should('have.length', 2);
 		credentialsModal.getters.credentialAuthTypeRadioButtons().last().click();
 		credentialsModal.actions.fillCredentialsForm();
-		// Both (+ the 'Create new' option) should be in the dropdown
 		workflowPage.getters.nodeCredentialsSelect().click();
-		getVisibleSelect().find('li').should('have.length.greaterThan', 2);
+		getVisibleSelect().find('li').should('have.length', 3);
 	});
 
 	it('should correctly render required and optional credentials', () => {
@@ -130,13 +129,13 @@ describe('Credentials', () => {
 		workflowPage.getters.nodeCredentialsSelect().should('have.length', 2);
 
 		workflowPage.getters.nodeCredentialsSelect().first().click();
-		getVisibleSelect().find('li').contains('Create New Credential').click();
+		workflowPage.getters.nodeCredentialsCreateOption().first().click();
 		// This one should show auth type selector
 		credentialsModal.getters.credentialAuthTypeRadioButtons().should('have.length', 2);
 		cy.get('body').type('{esc}');
 
 		workflowPage.getters.nodeCredentialsSelect().last().click();
-		getVisibleSelect().find('li').contains('Create New Credential').click();
+		workflowPage.getters.nodeCredentialsCreateOption().last().click();
 		// This one should not show auth type selector
 		credentialsModal.getters.credentialsAuthTypeSelector().should('not.exist');
 	});
@@ -148,7 +147,7 @@ describe('Credentials', () => {
 		workflowPage.getters.canvasNodes().last().click();
 		cy.get('body').type('{enter}');
 		workflowPage.getters.nodeCredentialsSelect().click();
-		getVisibleSelect().find('li').last().click();
+		workflowPage.getters.nodeCredentialsCreateOption().click();
 		credentialsModal.getters.credentialsAuthTypeSelector().should('not.exist');
 		credentialsModal.actions.fillCredentialsForm();
 		workflowPage.getters
@@ -164,7 +163,7 @@ describe('Credentials', () => {
 		workflowPage.getters.canvasNodes().last().click();
 		cy.get('body').type('{enter}');
 		workflowPage.getters.nodeCredentialsSelect().click();
-		getVisibleSelect().find('li').last().click();
+		workflowPage.getters.nodeCredentialsCreateOption().click();
 		credentialsModal.actions.fillCredentialsForm();
 		workflowPage.getters
 			.nodeCredentialsSelect()
@@ -189,7 +188,7 @@ describe('Credentials', () => {
 		workflowPage.getters.canvasNodes().last().click();
 		cy.get('body').type('{enter}');
 		workflowPage.getters.nodeCredentialsSelect().click();
-		getVisibleSelect().find('li').last().click();
+		workflowPage.getters.nodeCredentialsCreateOption().click();
 		credentialsModal.actions.fillCredentialsForm();
 		workflowPage.getters.nodeCredentialsEditButton().click();
 		credentialsModal.getters.credentialsEditModal().should('be.visible');
@@ -232,7 +231,7 @@ describe('Credentials', () => {
 		cy.getByTestId('credential-select').click();
 		cy.contains('Adalo API').click();
 		workflowPage.getters.nodeCredentialsSelect().click();
-		getVisibleSelect().find('li').last().click();
+		workflowPage.getters.nodeCredentialsCreateOption().click();
 		credentialsModal.actions.fillCredentialsForm();
 		workflowPage.getters.nodeCredentialsEditButton().click();
 		credentialsModal.getters.credentialsEditModal().should('be.visible');
@@ -296,7 +295,7 @@ describe('Credentials', () => {
 
 		workflowPage.getters.nodeCredentialsSelect().should('exist');
 		workflowPage.getters.nodeCredentialsSelect().click();
-		getVisibleSelect().find('li').last().click();
+		workflowPage.getters.nodeCredentialsCreateOption().click();
 		credentialsModal.actions.fillCredentialsForm();
 		workflowPage.getters
 			.nodeCredentialsSelect()
@@ -325,7 +324,7 @@ describe('Credentials', () => {
 		workflowPage.actions.addNodeToCanvas('Slack', true, true, 'Get a channel');
 		workflowPage.getters.nodeCredentialsSelect().should('exist');
 		workflowPage.getters.nodeCredentialsSelect().click();
-		getVisibleSelect().find('li').last().click();
+		workflowPage.getters.nodeCredentialsCreateOption().click();
 		credentialsModal.getters.credentialAuthTypeRadioButtons().first().click();
 		nodeDetailsView.getters.copyInput().should('not.exist');
 	});
diff --git a/cypress/e2e/21-community-nodes.cy.ts b/cypress/e2e/21-community-nodes.cy.ts
index 17f82ec573ec9..283c08d557522 100644
--- a/cypress/e2e/21-community-nodes.cy.ts
+++ b/cypress/e2e/21-community-nodes.cy.ts
@@ -89,7 +89,7 @@ describe('Community and custom nodes in canvas', () => {
 		workflowPage.actions.addNodeToCanvas('Manual');
 		workflowPage.actions.addNodeToCanvas('E2E Node with native n8n credential', true, true);
 		workflowPage.getters.nodeCredentialsLabel().click();
-		cy.contains('Create New Credential').click();
+		workflowPage.getters.nodeCredentialsCreateOption().click();
 		credentialsModal.getters.editCredentialModal().should('be.visible');
 		credentialsModal.getters.editCredentialModal().should('contain.text', 'Notion API');
 	});
@@ -98,7 +98,7 @@ describe('Community and custom nodes in canvas', () => {
 		workflowPage.actions.addNodeToCanvas('Manual');
 		workflowPage.actions.addNodeToCanvas('E2E Node with custom credential', true, true);
 		workflowPage.getters.nodeCredentialsLabel().click();
-		cy.contains('Create New Credential').click();
+		workflowPage.getters.nodeCredentialsCreateOption().click();
 		credentialsModal.getters.editCredentialModal().should('be.visible');
 		credentialsModal.getters.editCredentialModal().should('contain.text', 'Custom E2E Credential');
 	});
diff --git a/cypress/e2e/39-projects.cy.ts b/cypress/e2e/39-projects.cy.ts
index efd18bca74bcb..197d5852566df 100644
--- a/cypress/e2e/39-projects.cy.ts
+++ b/cypress/e2e/39-projects.cy.ts
@@ -367,7 +367,7 @@ describe('Projects', { disableAutoLogin: true }, () => {
 			workflowPage.getters.nodeCredentialsSelect().first().click();
 			getVisibleSelect()
 				.find('li')
-				.should('have.length', 2)
+				.should('have.length', 1)
 				.first()
 				.should('contain.text', 'Notion account project 1');
 			ndv.getters.backToCanvas().click();
@@ -382,7 +382,7 @@ describe('Projects', { disableAutoLogin: true }, () => {
 			workflowPage.getters.nodeCredentialsSelect().first().click();
 			getVisibleSelect()
 				.find('li')
-				.should('have.length', 2)
+				.should('have.length', 1)
 				.first()
 				.should('contain.text', 'Notion account project 1');
 			ndv.getters.backToCanvas().click();
@@ -396,7 +396,7 @@ describe('Projects', { disableAutoLogin: true }, () => {
 			workflowPage.getters.nodeCredentialsSelect().first().click();
 			getVisibleSelect()
 				.find('li')
-				.should('have.length', 2)
+				.should('have.length', 1)
 				.first()
 				.should('contain.text', 'Notion account project 2');
 			ndv.getters.backToCanvas().click();
@@ -407,7 +407,7 @@ describe('Projects', { disableAutoLogin: true }, () => {
 			workflowPage.getters.nodeCredentialsSelect().first().click();
 			getVisibleSelect()
 				.find('li')
-				.should('have.length', 2)
+				.should('have.length', 1)
 				.first()
 				.should('contain.text', 'Notion account project 2');
 			ndv.getters.backToCanvas().click();
@@ -425,7 +425,7 @@ describe('Projects', { disableAutoLogin: true }, () => {
 			workflowPage.getters.nodeCredentialsSelect().first().click();
 			getVisibleSelect()
 				.find('li')
-				.should('have.length', 2)
+				.should('have.length', 1)
 				.first()
 				.should('contain.text', 'Notion account personal project');
 			ndv.getters.backToCanvas().click();
@@ -436,7 +436,7 @@ describe('Projects', { disableAutoLogin: true }, () => {
 			workflowPage.getters.nodeCredentialsSelect().first().click();
 			getVisibleSelect()
 				.find('li')
-				.should('have.length', 2)
+				.should('have.length', 1)
 				.first()
 				.should('contain.text', 'Notion account personal project');
 		});
diff --git a/cypress/e2e/45-ai-assistant.cy.ts b/cypress/e2e/45-ai-assistant.cy.ts
index 9d3381136327b..157c656b46705 100644
--- a/cypress/e2e/45-ai-assistant.cy.ts
+++ b/cypress/e2e/45-ai-assistant.cy.ts
@@ -5,7 +5,6 @@ import { GMAIL_NODE_NAME, SCHEDULE_TRIGGER_NODE_NAME } from '../constants';
 import { CredentialsModal, CredentialsPage, NDV, WorkflowPage } from '../pages';
 import { AIAssistant } from '../pages/features/ai-assistant';
 import { NodeCreator } from '../pages/features/node-creator';
-import { getVisibleSelect } from '../utils';
 
 const wf = new WorkflowPage();
 const ndv = new NDV();
@@ -434,7 +433,7 @@ describe('AI Assistant Credential Help', () => {
 		wf.actions.addNodeToCanvas('Slack', true, true, 'Get a channel');
 		wf.getters.nodeCredentialsSelect().should('exist');
 		wf.getters.nodeCredentialsSelect().click();
-		getVisibleSelect().find('li').last().click();
+		wf.getters.nodeCredentialsCreateOption().click();
 		credentialsModal.getters.credentialAuthTypeRadioButtons().first().click();
 		ndv.getters.copyInput().should('not.exist');
 		credentialsModal.getters.oauthConnectButton().should('have.length', 1);
@@ -467,7 +466,7 @@ describe('AI Assistant Credential Help', () => {
 		wf.actions.addNodeToCanvas('Microsoft Outlook', true, true, 'Get a calendar');
 		wf.getters.nodeCredentialsSelect().should('exist');
 		wf.getters.nodeCredentialsSelect().click();
-		getVisibleSelect().find('li').last().click();
+		wf.getters.nodeCredentialsCreateOption().click();
 		ndv.getters.copyInput().should('not.exist');
 		credentialsModal.getters.oauthConnectButton().should('have.length', 1);
 		credentialsModal.getters.credentialInputs().should('have.length', 1);
diff --git a/packages/design-system/src/components/N8nSelect/Select.vue b/packages/design-system/src/components/N8nSelect/Select.vue
index 80a065d429947..28c1fc049a87e 100644
--- a/packages/design-system/src/components/N8nSelect/Select.vue
+++ b/packages/design-system/src/components/N8nSelect/Select.vue
@@ -136,6 +136,12 @@ defineExpose({
 			<template v-if="$slots.suffix" #suffix>
 				<slot name="suffix" />
 			</template>
+			<template v-if="$slots.footer" #footer>
+				<slot name="footer" />
+			</template>
+			<template v-if="$slots.empty" #empty>
+				<slot name="empty" />
+			</template>
 			<slot></slot>
 		</ElSelect>
 	</div>
diff --git a/packages/design-system/src/css/_tokens.scss b/packages/design-system/src/css/_tokens.scss
index 3b6b7451be84c..66ad82a4d7e08 100644
--- a/packages/design-system/src/css/_tokens.scss
+++ b/packages/design-system/src/css/_tokens.scss
@@ -37,6 +37,8 @@
 	// Danger
 	--color-danger-shade-1: var(--prim-color-alt-c-shade-100);
 	--color-danger: var(--prim-color-alt-c);
+	--color-danger-light: var(--prim-color-alt-c-tint-150);
+	--color-danger-light-2: var(--prim-color-alt-c-tint-250);
 	--color-danger-tint-1: var(--prim-color-alt-c-tint-400);
 	--color-danger-tint-2: var(--prim-color-alt-c-tint-450);
 
diff --git a/packages/editor-ui/src/components/NodeCredentials.test.ts b/packages/editor-ui/src/components/NodeCredentials.test.ts
index 2839a75c031c3..e9a461ebe29e5 100644
--- a/packages/editor-ui/src/components/NodeCredentials.test.ts
+++ b/packages/editor-ui/src/components/NodeCredentials.test.ts
@@ -1,5 +1,6 @@
 import { describe, it } from 'vitest';
-import { fireEvent, screen } from '@testing-library/vue';
+import { screen } from '@testing-library/vue';
+import userEvent from '@testing-library/user-event';
 import { createTestingPinia } from '@pinia/testing';
 import NodeCredentials from './NodeCredentials.vue';
 import type { RenderOptions } from '@/__tests__/render';
@@ -8,6 +9,7 @@ import { useCredentialsStore } from '@/stores/credentials.store';
 import { mockedStore } from '@/__tests__/utils';
 import type { INodeUi } from '@/Interface';
 import { useNDVStore } from '@/stores/ndv.store';
+import { useUIStore } from '../stores/ui.store';
 
 const httpNode: INodeUi = {
 	parameters: {
@@ -67,6 +69,7 @@ describe('NodeCredentials', () => {
 
 	const credentialsStore = mockedStore(useCredentialsStore);
 	const ndvStore = mockedStore(useNDVStore);
+	const uiStore = mockedStore(useUIStore);
 
 	beforeAll(() => {
 		credentialsStore.state.credentialTypes = {
@@ -120,7 +123,7 @@ describe('NodeCredentials', () => {
 
 		const credentialsSelect = screen.getByTestId('node-credentials-select');
 
-		await fireEvent.click(credentialsSelect);
+		await userEvent.click(credentialsSelect);
 
 		expect(screen.queryByText('OpenAi account')).toBeInTheDocument();
 	});
@@ -150,7 +153,7 @@ describe('NodeCredentials', () => {
 
 		const credentialsSelect = screen.getByTestId('node-credentials-select');
 
-		await fireEvent.click(credentialsSelect);
+		await userEvent.click(credentialsSelect);
 
 		expect(screen.queryByText('OpenAi account')).toBeInTheDocument();
 		expect(screen.queryByText('OpenAi account 2')).not.toBeInTheDocument();
@@ -188,9 +191,69 @@ describe('NodeCredentials', () => {
 
 		const credentialsSelect = screen.getByTestId('node-credentials-select');
 
-		await fireEvent.click(credentialsSelect);
+		await userEvent.click(credentialsSelect);
 
 		expect(screen.queryByText('OpenAi account')).toBeInTheDocument();
 		expect(screen.queryByText('OpenAi account 2')).toBeInTheDocument();
 	});
+
+	it('should filter available credentials in the dropdown', async () => {
+		ndvStore.activeNode = httpNode;
+		credentialsStore.state.credentials = {
+			c8vqdPpPClh4TgIO: {
+				id: 'c8vqdPpPClh4TgIO',
+				name: 'OpenAi account',
+				type: 'openAiApi',
+				isManaged: false,
+				createdAt: '',
+				updatedAt: '',
+			},
+			test: {
+				id: 'test',
+				name: 'Test OpenAi account',
+				type: 'openAiApi',
+				isManaged: false,
+				createdAt: '',
+				updatedAt: '',
+			},
+		};
+
+		renderComponent();
+
+		const credentialsSelect = screen.getByTestId('node-credentials-select');
+
+		await userEvent.click(credentialsSelect);
+
+		expect(screen.queryByText('OpenAi account')).toBeInTheDocument();
+		expect(screen.queryByText('Test OpenAi account')).toBeInTheDocument();
+
+		const credentialSearch = credentialsSelect.querySelector('input') as HTMLElement;
+		await userEvent.type(credentialSearch, 'test');
+
+		expect(screen.queryByText('OpenAi account')).not.toBeInTheDocument();
+		expect(screen.queryByText('Test OpenAi account')).toBeInTheDocument();
+	});
+
+	it('should open the new credential modal when clicked', async () => {
+		ndvStore.activeNode = httpNode;
+		credentialsStore.state.credentials = {
+			c8vqdPpPClh4TgIO: {
+				id: 'c8vqdPpPClh4TgIO',
+				name: 'OpenAi account',
+				type: 'openAiApi',
+				isManaged: false,
+				createdAt: '',
+				updatedAt: '',
+			},
+		};
+
+		renderComponent();
+
+		const credentialsSelect = screen.getByTestId('node-credentials-select');
+
+		await userEvent.click(credentialsSelect);
+		await userEvent.click(screen.getByTestId('node-credentials-select-item-new'));
+
+		expect(uiStore.openNewCredential).toHaveBeenCalledWith('openAiApi', true);
+	});
 });
diff --git a/packages/editor-ui/src/components/NodeCredentials.vue b/packages/editor-ui/src/components/NodeCredentials.vue
index 8fe4b1515315e..22e4c908afc47 100644
--- a/packages/editor-ui/src/components/NodeCredentials.vue
+++ b/packages/editor-ui/src/components/NodeCredentials.vue
@@ -2,11 +2,12 @@
 import type { ICredentialsResponse, INodeUi, INodeUpdatePropertiesInformation } from '@/Interface';
 import {
 	HTTP_REQUEST_NODE_TYPE,
+	type ICredentialType,
 	type INodeCredentialDescription,
 	type INodeCredentialsDetails,
 	type NodeParameterValueType,
 } from 'n8n-workflow';
-import { computed, onBeforeUnmount, onMounted, ref, watch } from 'vue';
+import { computed, nextTick, onBeforeUnmount, onMounted, ref, watch } from 'vue';
 
 import { useNodeHelpers } from '@/composables/useNodeHelpers';
 import { useToast } from '@/composables/useToast';
@@ -31,6 +32,7 @@ import {
 	updateNodeAuthType,
 } from '@/utils/nodeTypesUtils';
 import {
+	N8nIcon,
 	N8nInput,
 	N8nInputLabel,
 	N8nOption,
@@ -67,7 +69,7 @@ const emit = defineEmits<{
 
 const telemetry = useTelemetry();
 const i18n = useI18n();
-const NEW_CREDENTIALS_TEXT = `- ${i18n.baseText('nodeCredentials.createNew')} -`;
+const NEW_CREDENTIALS_TEXT = i18n.baseText('nodeCredentials.createNew');
 
 const credentialsStore = useCredentialsStore();
 const nodeTypesStore = useNodeTypesStore();
@@ -79,7 +81,9 @@ const nodeHelpers = useNodeHelpers();
 const toast = useToast();
 
 const subscribedToCredentialType = ref('');
+const filter = ref('');
 const listeningForAuthChange = ref(false);
+const selectRefs = ref<Array<InstanceType<typeof N8nSelect>>>([]);
 
 const credentialTypesNode = computed(() =>
 	credentialTypesNodeDescription.value.map(
@@ -344,9 +348,8 @@ function onCredentialSelected(
 	credentialId: string | null | undefined,
 	showAuthOptions = false,
 ) {
-	const newCredentialOptionSelected = credentialId === NEW_CREDENTIALS_TEXT;
-	if (!credentialId || newCredentialOptionSelected) {
-		createNewCredential(credentialType, newCredentialOptionSelected, showAuthOptions);
+	if (!credentialId) {
+		createNewCredential(credentialType, false, showAuthOptions);
 		return;
 	}
 
@@ -501,6 +504,20 @@ function getCredentialsFieldLabel(credentialType: INodeCredentialDescription): s
 	}
 	return i18n.baseText('nodeCredentials.credentialsLabel');
 }
+
+function setFilter(newFilter = '') {
+	filter.value = newFilter;
+}
+
+function matches(needle: string, haystack: string) {
+	return haystack.toLocaleLowerCase().includes(needle);
+}
+
+async function onClickCreateCredential(type: ICredentialType | INodeCredentialDescription) {
+	selectRefs.value.forEach((select) => select.blur());
+	await nextTick();
+	createNewCredential(type.name, true, showMixedCredentials(type));
+}
 </script>
 
 <template>
@@ -530,16 +547,20 @@ function getCredentialsFieldLabel(credentialType: INodeCredentialDescription): s
 					data-test-id="node-credentials-select"
 				>
 					<N8nSelect
+						ref="selectRefs"
 						:model-value="getSelectedId(type.name)"
 						:placeholder="getSelectPlaceholder(type.name, getIssues(type.name))"
 						size="small"
+						filterable
+						:filter-method="setFilter"
+						:popper-class="$style.selectPopper"
 						@update:model-value="
 							(value: string) => onCredentialSelected(type.name, value, showMixedCredentials(type))
 						"
 						@blur="emit('blur', 'credentials')"
 					>
 						<N8nOption
-							v-for="item in options"
+							v-for="item in options.filter((o) => matches(filter, o.name))"
 							:key="item.id"
 							:data-test-id="`node-credentials-select-item-${item.id}`"
 							:label="item.name"
@@ -550,13 +571,17 @@ function getCredentialsFieldLabel(credentialType: INodeCredentialDescription): s
 								<N8nText size="small">{{ item.typeDisplayName }}</N8nText>
 							</div>
 						</N8nOption>
-						<N8nOption
-							:key="NEW_CREDENTIALS_TEXT"
-							data-test-id="node-credentials-select-item-new"
-							:value="NEW_CREDENTIALS_TEXT"
-							:label="NEW_CREDENTIALS_TEXT"
-						>
-						</N8nOption>
+						<template #empty> </template>
+						<template #footer>
+							<div
+								data-test-id="node-credentials-select-item-new"
+								:class="['clickable', $style.newCredential]"
+								@click="onClickCreateCredential(type)"
+							>
+								<N8nIcon size="xsmall" icon="plus" />
+								<N8nText bold>{{ NEW_CREDENTIALS_TEXT }}</N8nText>
+							</div>
+						</template>
 					</N8nSelect>
 
 					<div v-if="getIssues(type.name).length && !hideIssues" :class="$style.warning">
@@ -567,7 +592,7 @@ function getCredentialsFieldLabel(credentialType: INodeCredentialDescription): s
 									:items="getIssues(type.name)"
 								/>
 							</template>
-							<font-awesome-icon icon="exclamation-triangle" />
+							<N8nIcon icon="exclamation-triangle" />
 						</N8nTooltip>
 					</div>
 
@@ -576,7 +601,7 @@ function getCredentialsFieldLabel(credentialType: INodeCredentialDescription): s
 						:class="$style.edit"
 						data-test-id="credential-edit-button"
 					>
-						<font-awesome-icon
+						<N8nIcon
 							icon="pen"
 							class="clickable"
 							:title="i18n.baseText('nodeCredentials.updateCredential')"
@@ -598,10 +623,25 @@ function getCredentialsFieldLabel(credentialType: INodeCredentialDescription): s
 	}
 }
 
+.selectPopper {
+	:global(.el-select-dropdown__list) {
+		padding: 0;
+	}
+
+	:has(.newCredential:hover) :global(.hover) {
+		background-color: transparent;
+	}
+
+	&:not(:has(li)) .newCredential {
+		border-top: none;
+		box-shadow: none;
+		border-radius: var(--border-radius-base);
+	}
+}
+
 .warning {
-	min-width: 20px;
-	margin-left: 5px;
-	color: #ff8080;
+	margin-left: var(--spacing-4xs);
+	color: var(--color-danger-light);
 	font-size: var(--font-size-s);
 }
 
@@ -610,8 +650,7 @@ function getCredentialsFieldLabel(credentialType: INodeCredentialDescription): s
 	justify-content: center;
 	align-items: center;
 	color: var(--color-text-base);
-	min-width: 20px;
-	margin-left: 5px;
+	margin-left: var(--spacing-3xs);
 	font-size: var(--font-size-s);
 }
 
@@ -629,4 +668,21 @@ function getCredentialsFieldLabel(credentialType: INodeCredentialDescription): s
 	display: flex;
 	flex-direction: column;
 }
+
+.newCredential {
+	display: flex;
+	gap: var(--spacing-3xs);
+	align-items: center;
+	font-weight: var(--font-weight-bold);
+	padding: var(--spacing-xs) var(--spacing-m);
+	background-color: var(--color-background-light);
+
+	border-top: var(--border-base);
+	box-shadow: var(--box-shadow-light);
+	clip-path: inset(-12px 0 0 0); // Only show box shadow on top
+
+	&:hover {
+		color: var(--color-primary);
+	}
+}
 </style>
diff --git a/packages/editor-ui/src/components/ParameterIssues.vue b/packages/editor-ui/src/components/ParameterIssues.vue
index 34821c70a69e1..6c023727d46de 100644
--- a/packages/editor-ui/src/components/ParameterIssues.vue
+++ b/packages/editor-ui/src/components/ParameterIssues.vue
@@ -1,6 +1,7 @@
 <script setup lang="ts">
 import TitledList from '@/components/TitledList.vue';
 import { useI18n } from '@/composables/useI18n';
+import { N8nTooltip, N8nIcon } from 'n8n-design-system';
 
 defineProps<{
 	issues: string[];
@@ -11,22 +12,21 @@ const i18n = useI18n();
 
 <template>
 	<div v-if="issues.length" :class="$style['parameter-issues']" data-test-id="parameter-issues">
-		<n8n-tooltip placement="top">
+		<N8nTooltip placement="top">
 			<template #content>
 				<TitledList :title="`${i18n.baseText('parameterInput.issues')}:`" :items="issues" />
 			</template>
-			<font-awesome-icon icon="exclamation-triangle" />
-		</n8n-tooltip>
+			<N8nIcon icon="exclamation-triangle" />
+		</N8nTooltip>
 	</div>
 </template>
 
 <style module lang="scss">
 .parameter-issues {
-	width: 20px;
 	text-align: right;
 	float: right;
-	color: #ff8080;
+	color: var(--color-danger-light);
 	font-size: var(--font-size-s);
-	padding-left: var(--spacing-4xs);
+	padding-left: var(--spacing-3xs);
 }
 </style>
diff --git a/packages/editor-ui/src/plugins/i18n/locales/en.json b/packages/editor-ui/src/plugins/i18n/locales/en.json
index 2f4cc0b7ef10b..a42f2de61a526 100644
--- a/packages/editor-ui/src/plugins/i18n/locales/en.json
+++ b/packages/editor-ui/src/plugins/i18n/locales/en.json
@@ -597,7 +597,6 @@
 	"credentialsList.confirmMessage.confirmButtonText": "Yes, delete",
 	"credentialsList.confirmMessage.headline": "Delete Credential?",
 	"credentialsList.confirmMessage.message": "Are you sure you want to delete {credentialName}?",
-	"credentialsList.createNewCredential": "Create New Credential",
 	"credentialsList.created": "Created",
 	"credentialsList.credentials": "Credentials",
 	"credentialsList.deleteCredential": "Delete Credential",
@@ -1187,7 +1186,7 @@
 	"nodeCreator.aiPanel.workflowTriggerDescription": "Runs the flow when called by the Execute Workflow node from a different workflow",
 	"nodeCreator.nodeItem.triggerIconTitle": "Trigger Node",
 	"nodeCreator.nodeItem.aiIconTitle": "LangChain AI Node",
-	"nodeCredentials.createNew": "Create New Credential",
+	"nodeCredentials.createNew": "Create new credential",
 	"nodeCredentials.credentialFor": "Credential for {credentialType}",
 	"nodeCredentials.credentialsLabel": "Credential to connect with",
 	"nodeCredentials.issues": "Issues",