diff --git a/frontend/src/AppBuilder/WidgetManager/widgets/dropdownV2.js b/frontend/src/AppBuilder/WidgetManager/widgets/dropdownV2.js
index cb90554e6b..d7534b25a8 100644
--- a/frontend/src/AppBuilder/WidgetManager/widgets/dropdownV2.js
+++ b/frontend/src/AppBuilder/WidgetManager/widgets/dropdownV2.js
@@ -75,6 +75,18 @@ export const dropdownV2Config = {
       accordian: 'Options',
       isFxNotRequired: true,
     },
+    showClearBtn: {
+      type: 'toggle',
+      displayName: 'Show clear selection button',
+      validation: { schema: { type: 'boolean' }, defaultValue: true },
+      section: 'additionalActions',
+    },
+    showSearchInput: {
+      type: 'toggle',
+      displayName: 'Show search in options',
+      validation: { schema: { type: 'boolean' }, defaultValue: true },
+      section: 'additionalActions',
+    },
     loadingState: {
       type: 'toggle',
       displayName: 'Loading state',
@@ -314,6 +326,8 @@ export const dropdownV2Config = {
       optionsLoadingState: { value: '{{false}}' },
       sort: { value: 'asc' },
       placeholder: { value: 'Select an option' },
+      showClearBtn: { value: '{{true}}' },
+      showSearchInput: { value: '{{true}}' },
       visibility: { value: '{{true}}' },
       disabledState: { value: '{{false}}' },
       loadingState: { value: '{{false}}' },
diff --git a/frontend/src/AppBuilder/WidgetManager/widgets/multiselectV2.js b/frontend/src/AppBuilder/WidgetManager/widgets/multiselectV2.js
index 4ab4af57ce..294423abac 100644
--- a/frontend/src/AppBuilder/WidgetManager/widgets/multiselectV2.js
+++ b/frontend/src/AppBuilder/WidgetManager/widgets/multiselectV2.js
@@ -142,6 +142,18 @@ export const multiselectV2Config = {
       accordian: 'Options',
       isFxNotRequired: true,
     },
+    showClearBtn: {
+      type: 'toggle',
+      displayName: 'Show clear selection button',
+      validation: { schema: { type: 'boolean' }, defaultValue: true },
+      section: 'additionalActions',
+    },
+    showSearchInput: {
+      type: 'toggle',
+      displayName: 'Show search in options',
+      validation: { schema: { type: 'boolean' }, defaultValue: true },
+      section: 'additionalActions',
+    },
     loadingState: {
       type: 'toggle',
       displayName: 'Loading state',
@@ -327,6 +339,8 @@ export const multiselectV2Config = {
       optionsLoadingState: { value: '{{false}}' },
       sort: { value: 'asc' },
       placeholder: { value: 'Select the options' },
+      showClearBtn: { value: '{{true}}' },
+      showSearchInput: { value: '{{true}}' },
       visibility: { value: '{{true}}' },
       disabledState: { value: '{{false}}' },
       loadingState: { value: '{{false}}' },
diff --git a/frontend/src/Editor/Components/DropdownV2/CustomMenuList.jsx b/frontend/src/Editor/Components/DropdownV2/CustomMenuList.jsx
index 848de076ae..6be9d65bc7 100644
--- a/frontend/src/Editor/Components/DropdownV2/CustomMenuList.jsx
+++ b/frontend/src/Editor/Components/DropdownV2/CustomMenuList.jsx
@@ -1,87 +1,118 @@
-import React from 'react';
+import React, { useEffect, useRef } from 'react';
 import { components } from 'react-select';
 import SolidIcon from '@/_ui/Icon/SolidIcons';
 import Loader from '@/ToolJetUI/Loader/Loader';
 import './dropdownV2.scss';
-import { FormCheck } from 'react-bootstrap';
+// eslint-disable-next-line import/no-unresolved
+import { useVirtualizer } from '@tanstack/react-virtual';
 import cx from 'classnames';
 
 const { MenuList } = components;
 
 // This Menulist also used in MultiselectV2
 const CustomMenuList = ({ selectProps, ...props }) => {
-  const {
-    onInputChange,
-    onMenuInputFocus,
-    showAllOption,
-    isSelectAllSelected,
-    optionsLoadingState,
-    darkMode,
-    setSelected,
-    setIsSelectAllSelected,
-    fireEvent,
-    inputValue,
-    menuId,
-  } = selectProps;
+  const { onInputChange, onMenuInputFocus, optionsLoadingState, darkMode, inputValue, menuId, showSearchInput } =
+    selectProps;
 
-  const handleSelectAll = (e) => {
-    e.target.checked && fireEvent();
-    if (e.target.checked) {
-      setSelected(props.options);
-    } else {
-      setSelected([]);
+  const parentRef = useRef(null);
+  const virtualizer = useVirtualizer({
+    count: props?.children?.length || 0,
+    getScrollElement: () => parentRef.current,
+    estimateSize: () => 40,
+    overscan: 15,
+  });
+
+  useEffect(() => {
+    const searchInput = document.querySelector('.dropdown-multiselect-widget-search-box');
+    if (searchInput) {
+      searchInput.focus();
     }
-    setIsSelectAllSelected(e.target.checked);
-  };
+  }, []);
+
   return (
     <div
       id={`dropdown-multiselect-widget-custom-menu-list-${menuId}`}
       className={cx('dropdown-multiselect-widget-custom-menu-list', { 'theme-dark dark-theme': darkMode })}
       onClick={(e) => e.stopPropagation()}
+      onTouchEnd={(e) => e.stopPropagation()}
     >
-      <div className="dropdown-multiselect-widget-search-box-wrapper">
-        <span>
-          <SolidIcon name="search01" width="14" />
-        </span>
-        <input
-          autoCorrect="off"
-          autoComplete="off"
-          spellCheck="false"
-          type="text"
-          value={inputValue}
-          onChange={(e) =>
-            onInputChange(e.currentTarget.value, {
-              action: 'input-change',
-            })
-          }
-          onMouseDown={(e) => {
-            e.stopPropagation();
-            e.target.focus();
-          }}
-          onTouchEnd={(e) => {
-            e.stopPropagation();
-            e.target.focus();
-          }}
-          onFocus={onMenuInputFocus}
-          placeholder="Search"
-          className="dropdown-multiselect-widget-search-box"
-        />
-      </div>
-      {showAllOption && !optionsLoadingState && (
-        <label htmlFor="select-all-checkbox" className="multiselect-custom-menulist-select-all">
-          <FormCheck id="select-all-checkbox" checked={isSelectAllSelected} onChange={handleSelectAll} />
-          <span style={{ marginLeft: '4px' }}>Select all</span>
-        </label>
+      {showSearchInput && (
+        <div className="dropdown-multiselect-widget-search-box-wrapper">
+          <span>
+            <SolidIcon name="search01" width="14" />
+          </span>
+          <input
+            autoCorrect="off"
+            autoComplete="off"
+            spellCheck="false"
+            type="text"
+            value={inputValue}
+            onChange={(e) =>
+              onInputChange(e.currentTarget.value, {
+                action: 'input-change',
+              })
+            }
+            onMouseDown={(e) => {
+              e.stopPropagation();
+              e.target.focus();
+            }}
+            onTouchEnd={(e) => {
+              e.stopPropagation();
+              e.target.focus();
+            }}
+            onFocus={onMenuInputFocus}
+            placeholder="Search"
+            className="dropdown-multiselect-widget-search-box"
+          />
+        </div>
       )}
-      <MenuList {...props} selectProps={selectProps}>
-        {optionsLoadingState ? (
-          <div class="text-center py-4" style={{ minHeight: '188px' }}>
-            <Loader style={{ zIndex: 3, position: 'absolute' }} width="36" />
+      {!optionsLoadingState && (
+        <div
+          ref={parentRef}
+          className="dropdown-multiselect-widget-custom-menu-list-body"
+          style={{
+            maxHeight: selectProps.maxMenuHeight || 300,
+          }}
+        >
+          <div
+            style={{
+              height: `${virtualizer.getTotalSize() || 38}px`,
+              position: 'relative',
+              marginTop: '5px',
+            }}
+          >
+            {!virtualizer.getTotalSize() && props.children}
+            {virtualizer.getVirtualItems().map((virtualItem) => {
+              const option = props.options[virtualItem.index];
+              const child = props.children[virtualItem.index];
+              const isSelectAll = option?.value === 'multiselect-custom-menulist-select-all';
+              return (
+                <div
+                  key={option.value}
+                  style={{
+                    position: isSelectAll ? 'sticky' : 'absolute',
+                    width: '100%',
+                    top: 0,
+                    zIndex: isSelectAll && 10,
+                    transform: `translateY(${virtualItem.start}px)`,
+                  }}
+                  data-index={virtualItem.index}
+                  ref={virtualizer.measureElement}
+                >
+                  <MenuList {...props} selectProps={selectProps}>
+                    <div>{child}</div>
+                  </MenuList>
+                </div>
+              );
+            })}
           </div>
-        ) : (
-          props.children
-        )}
-      </MenuList>
+        </div>
+      )}
+      {optionsLoadingState && (
+        <div className="text-center py-4" style={{ minHeight: '188px' }}>
+          <Loader style={{ zIndex: 3, position: 'absolute' }} width="36" />
+        </div>
+      )}
     </div>
   );
 };
diff --git a/frontend/src/Editor/Components/DropdownV2/CustomOption.jsx b/frontend/src/Editor/Components/DropdownV2/CustomOption.jsx
index 73986ba274..d3e85030d6 100644
--- a/frontend/src/Editor/Components/DropdownV2/CustomOption.jsx
+++ b/frontend/src/Editor/Components/DropdownV2/CustomOption.jsx
@@ -6,7 +6,17 @@ import { highlightText } from './utils';
 
 const CustomOption = (props) => {
   return (
-    <components.Option {...props}>
+    <components.Option
+      {...props}
+      innerProps={{
+        ...props.innerProps,
+        onTouchEnd: (e) => {
+          e.preventDefault();
+          e.stopPropagation();
+          props.selectOption(props.data);
+        },
+      }}
+    >
       <div className="cursor-pointer">
         {props.isSelected && (
           <span style={{ maxHeight: '20px', marginRight: '8px', marginLeft: '-28px' }}>
diff --git a/frontend/src/Editor/Components/DropdownV2/DropdownV2.jsx b/frontend/src/Editor/Components/DropdownV2/DropdownV2.jsx
index 382ba010ed..4e766f89bd 100644
--- a/frontend/src/Editor/Components/DropdownV2/DropdownV2.jsx
+++ b/frontend/src/Editor/Components/DropdownV2/DropdownV2.jsx
@@ -15,7 +15,6 @@ import Label from '@/_ui/Label';
 import cx from 'classnames';
 import { getInputBackgroundColor, getInputBorderColor, getInputFocusedColor, sortArray } from './utils';
 import { isMobileDevice } from '@/_helpers/appUtils';
-import useStore from '@/AppBuilder/_stores/store';
 
 const { DropdownIndicator, ClearIndicator } = components;
 const INDICATOR_CONTAINER_WIDTH = 60;
@@ -69,6 +68,8 @@ export const DropdownV2 = ({
     disabledState,
     optionsLoadingState,
     sort,
+    showClearBtn,
+    showSearchInput,
   } = properties;
   const {
     selectedTextColor,
@@ -104,8 +105,6 @@ export const DropdownV2 = ({
   const [isDropdownDisabled, setIsDropdownDisabled] = useState(disabledState);
   const [searchInputValue, setSearchInputValue] = useState('');
   const [userInteracted, setUserInteracted] = useState(false);
-  const currentMode = useStore((state) => state.currentMode);
-  const isEditor = currentMode === 'edit';
 
   const _height = padding === 'default' ? `${height}px` : `${height + 4}px`;
   const labelRef = useRef();
@@ -173,12 +172,43 @@ export const DropdownV2 = ({
     setExposedVariable('isValid', validationStatus?.isValid);
   };
 
-  const handleClickInEditor = (e) => {
-    if (e.target.className.includes('clear-indicator') || isMenuOpen) return;
-    e.stopPropagation();
-    selectRef.current?.onControlMouseDown(e);
+  const handleClickInsideSelect = () => {
+    if (isDropdownDisabled || isDropdownLoading) return;
+    if (isMenuOpen) {
+      setIsMenuOpen(false);
+      fireEvent('onBlur');
+      setSearchInputValue('');
+    } else {
+      setIsMenuOpen(true);
+      fireEvent('onFocus');
+      if (!showSearchInput) {
+        selectRef.current.focus();
+      }
+    }
   };
 
+  const handleClickOutsideSelect = (event) => {
+    const menu = document.querySelector(`._tooljet-${componentName}`);
+    if (
+      isMenuOpen &&
+      menu &&
+      dropdownRef.current &&
+      !dropdownRef.current.contains(event.target) &&
+      !menu.contains(event.target)
+    ) {
+      setIsMenuOpen(false);
+      fireEvent('onBlur');
+      setSearchInputValue('');
+    }
+  };
+
+  useEffect(() => {
+    document.addEventListener('mousedown', handleClickOutsideSelect);
+    return () => {
+      document.removeEventListener('mousedown', handleClickOutsideSelect);
+    };
+  }, [isMenuOpen, componentName]);
+
   useEffect(() => {
     setInputValue(findDefaultItem(advanced ? schema : options));
     // eslint-disable-next-line react-hooks/exhaustive-deps
@@ -386,7 +416,7 @@ export const DropdownV2 = ({
     }),
     menuList: (provided) => ({
       ...provided,
-      padding: '8px',
+      padding: '0 8px',
       borderRadius: '8px',
       // this is needed otherwise :active state doesn't look nice, gap is required
       display: 'flex',
@@ -446,7 +476,8 @@ export const DropdownV2 = ({
         <div
           className="w-100 px-0 h-100 dropdownV2-widget"
           ref={ref}
-          onMouseDownCapture={isEditor && handleClickInEditor}
+          onClick={handleClickInsideSelect}
+          onTouchEnd={handleClickInsideSelect}
         >
           <Select
             ref={selectRef}
@@ -456,17 +487,21 @@ export const DropdownV2 = ({
             onChange={(selectedOption, actionProps) => {
               if (actionProps.action === 'clear') {
                 setInputValue(null);
-                fireEvent('onSelect');
               }
               if (actionProps.action === 'select-option') {
-                setInputValue(selectedOption.value);
-                fireEvent('onSelect');
+                if (currentValue === selectedOption.value) {
+                  setInputValue(null);
+                } else setInputValue(selectedOption.value);
               }
+              fireEvent('onSelect');
+              setSearchInputValue('');
+              setIsMenuOpen(false);
               setUserInteracted(true);
             }}
             options={selectOptions}
             styles={customStyles}
             isLoading={isDropdownLoading}
+            showSearchInput={showSearchInput}
             onInputChange={onSearchTextChange}
             inputValue={searchInputValue}
             placeholder={placeholder}
@@ -477,7 +512,7 @@ export const DropdownV2 = ({
               Option: CustomOption,
               LoadingIndicator: () => <Loader style={{ right: '11px', zIndex: 3, position: 'absolute' }} width="16" />,
               DropdownIndicator: isDropdownLoading ? () => null : CustomDropdownIndicator,
-              ClearIndicator: CustomClearIndicator,
+              ClearIndicator: showClearBtn ? CustomClearIndicator : () => null,
             }}
             isClearable
             tabSelectsValue={false}
@@ -488,21 +523,15 @@ export const DropdownV2 = ({
             darkMode={darkMode}
             optionsLoadingState={optionsLoadingState && advanced}
             menuPlacement="auto"
-            onMenuOpen={() => {
-              setIsMenuOpen(true);
-              fireEvent('onFocus');
-            }}
-            onMenuClose={() => {
-              setIsMenuOpen(false);
-              fireEvent('onBlur');
-            }}
             onKeyDown={(e) => {
-              if (e.key === 'Enter' && !isMenuOpen) {
+              if (e.key === 'Enter' && !isMenuOpen && !isDropdownLoading) {
                 setIsMenuOpen(true);
+                fireEvent('onFocus');
                 e.preventDefault();
               }
               if (e.key === 'Escape' && isMenuOpen) {
                 setIsMenuOpen(false);
+                fireEvent('onBlur');
                 e.preventDefault();
               }
             }}
diff --git a/frontend/src/Editor/Components/DropdownV2/dropdownV2.scss b/frontend/src/Editor/Components/DropdownV2/dropdownV2.scss
index e69de29bb2..779f2c2420 100644
--- a/frontend/src/Editor/Components/DropdownV2/dropdownV2.scss
+++ b/frontend/src/Editor/Components/DropdownV2/dropdownV2.scss
@@ -0,0 +1,7 @@
+.dropdown-multiselect-widget-custom-menu-list-body {
+    overflow-y: auto;
+    position: relative;
+    padding: 0 0 5px;
+    background-color: var(--surfaces-surface-01) !important;
+    border-radius: 0 0 8px 8px;
+}
\ No newline at end of file
diff --git a/frontend/src/Editor/Components/MultiselectV2/CustomOption.jsx b/frontend/src/Editor/Components/MultiselectV2/CustomOption.jsx
index 56b38b2edb..e187cf1292 100644
--- a/frontend/src/Editor/Components/MultiselectV2/CustomOption.jsx
+++ b/frontend/src/Editor/Components/MultiselectV2/CustomOption.jsx
@@ -7,11 +7,23 @@ import { highlightText } from '../DropdownV2/utils';
 
 const CustomOption = (props) => {
   return (
-    <Option {...props}>
+    <Option
+      {...props}
+      innerProps={{
+        ...props.innerProps,
+        onTouchEnd: (e) => {
+          e.preventDefault();
+          e.stopPropagation();
+          props.selectOption(props.data);
+        },
+      }}
+    >
       <div className="d-flex multiselct-widget-option">
         <FormCheck checked={props.isSelected} disabled={props?.isDisabled} />
         <span style={{ marginLeft: '5px' }}>
-          {highlightText(props.label?.toString(), props.selectProps.inputValue)}
+          {props.label?.includes('Select all')
+            ? 'Select all'
+            : highlightText(props.label?.toString(), props.selectProps.inputValue)}
         </span>
       </div>
     </Option>
diff --git a/frontend/src/Editor/Components/MultiselectV2/CustomValueContainer.jsx b/frontend/src/Editor/Components/MultiselectV2/CustomValueContainer.jsx
index 2901abc106..9eb11ea4c6 100644
--- a/frontend/src/Editor/Components/MultiselectV2/CustomValueContainer.jsx
+++ b/frontend/src/Editor/Components/MultiselectV2/CustomValueContainer.jsx
@@ -42,7 +42,7 @@ const CustomValueContainer = ({ children, ...props }) => {
           {/* Rendering children except Placeholder component to preserve the default behavior of react-select like focus
           handling */}
           {React.Children.map(children, (child) => {
-            if (child.type !== Placeholder) {
+            if (child?.type !== Placeholder) {
               return child;
             }
           })}
diff --git a/frontend/src/Editor/Components/MultiselectV2/MultiselectV2.jsx b/frontend/src/Editor/Components/MultiselectV2/MultiselectV2.jsx
index 7d5109edee..c44fecb1ae 100644
--- a/frontend/src/Editor/Components/MultiselectV2/MultiselectV2.jsx
+++ b/frontend/src/Editor/Components/MultiselectV2/MultiselectV2.jsx
@@ -12,7 +12,6 @@ import Label from '@/_ui/Label';
 const tinycolor = require('tinycolor2');
 import { CustomDropdownIndicator, CustomClearIndicator } from '../DropdownV2/DropdownV2';
 import { getInputBackgroundColor, getInputBorderColor, getInputFocusedColor, sortArray } from '../DropdownV2/utils';
-import useStore from '@/AppBuilder/_stores/store';
 
 export const MultiselectV2 = ({
   id,
@@ -38,6 +37,8 @@ export const MultiselectV2 = ({
     loadingState: multiSelectLoadingState,
     optionsLoadingState,
     sort,
+    showClearBtn,
+    showSearchInput,
   } = properties;
   const {
     selectedTextColor,
@@ -73,12 +74,9 @@ export const MultiselectV2 = ({
   const [visibility, setVisibility] = useState(properties.visibility);
   const [isMultiSelectLoading, setIsMultiSelectLoading] = useState(multiSelectLoadingState);
   const [isMultiSelectDisabled, setIsMultiSelectDisabled] = useState(disabledState);
-  const [isSelectAllSelected, setIsSelectAllSelected] = useState(false);
   const [searchInputValue, setSearchInputValue] = useState('');
   const _height = padding === 'default' ? `${height}px` : `${height + 4}px`;
   const [userInteracted, setUserInteracted] = useState(false);
-  const currentMode = useStore((state) => state.currentMode);
-  const isEditor = currentMode === 'edit';
 
   const [isMultiselectOpen, setIsMultiselectOpen] = useState(false);
   useEffect(() => {
@@ -93,18 +91,29 @@ export const MultiselectV2 = ({
     const _options = advanced ? schema : options;
     let _selectOptions = Array.isArray(_options)
       ? _options
-        .filter((data) => data?.visible ?? true)
-        .map((data) => ({
-          ...data,
-          label: data?.label,
-          value: data?.value,
-          isDisabled: data?.disable ?? false,
-        }))
+          .filter((data) => data?.visible ?? true)
+          .map((data) => ({
+            ...data,
+            label: data?.label,
+            value: data?.value,
+            isDisabled: data?.disable ?? false,
+          }))
       : [];
     return sortArray(_selectOptions, sort);
     // eslint-disable-next-line react-hooks/exhaustive-deps
   }, [advanced, JSON.stringify(schema), JSON.stringify(options), sort]);
 
+  const modifiedSelectOptions = useMemo(() => {
+    // Adding select all option dynamically to the options
+    if (showAllOption && !optionsLoadingState) {
+      return [
+        // Appended search input value so that it is always visible
+        { label: `Select all ${searchInputValue}`, value: 'multiselect-custom-menulist-select-all' },
+        ...selectOptions,
+      ];
+    } else return selectOptions;
+  }, [showAllOption, JSON.stringify(selectOptions), optionsLoadingState, searchInputValue]);
+
   function findDefaultItem(value, isAdvanced, isDefault) {
     if (isAdvanced) {
       const foundItem = Array.isArray(schema) ? schema.filter((item) => item?.visible && item?.default) : [];
@@ -129,8 +138,28 @@ export const MultiselectV2 = ({
     }
     return false;
   }
+
   const onChangeHandler = (items, action) => {
-    setInputValue(items);
+    const SELECT_ALL = 'multiselect-custom-menulist-select-all';
+
+    if (action.option?.value === SELECT_ALL) {
+      // Case 1 - If select all is selected
+      if (action.action === 'select-option') {
+        setInputValue(modifiedSelectOptions);
+      } else {
+        setInputValue([]);
+      }
+    } else if (items?.some((item) => item.value === SELECT_ALL)) {
+      // Case 2 - If select all is not selected but selected options include select all
+      setInputValue(items.filter((item) => item.value !== SELECT_ALL));
+    } else if (selectOptions?.length === items?.length) {
+      // Case 3 - If all options are selected except select all
+      setInputValue(modifiedSelectOptions);
+    } else {
+      // Case 4 - Normal selection
+      setInputValue(items);
+    }
+
     fireEvent('onSelect');
     setUserInteracted(true);
   };
@@ -270,26 +299,34 @@ export const MultiselectV2 = ({
       fireEvent('onSearchTextChanged');
     }
   };
-  const handleClickOutside = (event) => {
+  const handleClickOutsideSelect = (event) => {
     let menu = document.getElementById(`dropdown-multiselect-widget-custom-menu-list-${id}`);
     if (
+      isMultiselectOpen &&
       multiselectRef.current &&
       !multiselectRef.current.contains(event.target) &&
       menu &&
       !menu.contains(event.target)
     ) {
-      if (isMultiselectOpen) {
-        fireEvent('onBlur');
-        setIsMultiselectOpen(false);
-        setSearchInputValue('');
-      }
+      setIsMultiselectOpen(false);
+      fireEvent('onBlur');
+      setSearchInputValue('');
     }
   };
 
-  const handleClickInEditor = (e) => {
-    if (e.target.className.includes('clear-indicator') || isMultiselectOpen) return;
-    e.stopPropagation();
-    selectRef.current?.onControlMouseDown(e);
+  const handleClickInsideSelect = () => {
+    if (isMultiSelectDisabled || isMultiSelectLoading) return;
+    if (isMultiselectOpen) {
+      setIsMultiselectOpen(false);
+      fireEvent('onBlur');
+      setSearchInputValue('');
+    } else {
+      setIsMultiselectOpen(true);
+      fireEvent('onFocus');
+      if (!showSearchInput) {
+        selectRef.current.focus();
+      }
+    }
   };
 
   const setInputValue = (values) => {
@@ -304,20 +341,11 @@ export const MultiselectV2 = ({
   };
 
   useEffect(() => {
-    document.addEventListener('mousedown', handleClickOutside, { capture: true });
+    document.addEventListener('mousedown', handleClickOutsideSelect, { capture: true });
     return () => {
-      document.removeEventListener('mousedown', handleClickOutside, { capture: true });
+      document.removeEventListener('mousedown', handleClickOutsideSelect, { capture: true });
     };
-  }, [isMultiselectOpen]);
-
-  // Handle Select all logic
-  useEffect(() => {
-    if (selectOptions?.length === selected?.length) {
-      setIsSelectAllSelected(true);
-    } else {
-      setIsSelectAllSelected(false);
-    }
-  }, [selectOptions, selected]);
+  }, [isMultiselectOpen, componentName]);
 
   const customStyles = {
     container: (base) => ({
@@ -365,8 +393,8 @@ export const MultiselectV2 = ({
         selectedTextColor !== '#1B1F24'
           ? selectedTextColor
           : isMultiSelectLoading || isMultiSelectDisabled
-            ? 'var(--text-disabled)'
-            : 'var(--text-primary)',
+          ? 'var(--text-disabled)'
+          : 'var(--text-primary)',
     }),
 
     input: (provided, _state) => ({
@@ -401,10 +429,10 @@ export const MultiselectV2 = ({
       color: _state.isDisabled
         ? 'var(_--text-disbled)'
         : selectedTextColor !== '#1B1F24'
-          ? selectedTextColor
-          : isMultiSelectDisabled || isMultiSelectLoading
-            ? 'var(--text-disabled)'
-            : 'var(--text-primary)',
+        ? selectedTextColor
+        : isMultiSelectDisabled || isMultiSelectLoading
+        ? 'var(--text-disabled)'
+        : 'var(--text-primary)',
       borderRadius: _state.isFocused && '8px',
       padding: '8px 6px 8px 12px',
       '&:hover': {
@@ -415,7 +443,7 @@ export const MultiselectV2 = ({
     }),
     menuList: (provided) => ({
       ...provided,
-      padding: '4px',
+      padding: '0 4px',
       // this is needed otherwise :active state doesn't look nice, gap is required
       display: 'flex',
       flexDirection: 'column',
@@ -426,6 +454,7 @@ export const MultiselectV2 = ({
     menu: (provided) => ({
       ...provided,
       marginTop: '5px',
+      borderRadius: '8px',
     }),
   };
   const _width = (labelWidth / 100) * 70; // Max width which label can go is 70% for better UX calculate width based on this value
@@ -436,7 +465,7 @@ export const MultiselectV2 = ({
         data-cy={`label-${String(componentName).toLowerCase()} `}
         className={cx('multiselect-widget', 'd-flex', {
           [alignment === 'top' &&
-            ((labelWidth != 0 && label?.length != 0) || (auto && labelWidth == 0 && label && label?.length != 0))
+          ((labelWidth != 0 && label?.length != 0) || (auto && labelWidth == 0 && label && label?.length != 0))
             ? 'flex-column'
             : 'align-items-center']: true,
           'flex-row-reverse': direction === 'right' && alignment === 'side',
@@ -468,17 +497,18 @@ export const MultiselectV2 = ({
           _width={_width}
           top={'1px'}
         />
-        <div className="w-100 px-0 h-100" onMouseDownCapture={isEditor && handleClickInEditor}>
+        <div className="w-100 px-0 h-100" onClick={handleClickInsideSelect} onTouchEnd={handleClickInsideSelect}>
           <Select
             ref={selectRef}
             menuId={id}
             isDisabled={isMultiSelectDisabled}
             value={selected}
             onChange={onChangeHandler}
-            options={selectOptions}
+            options={modifiedSelectOptions}
             styles={customStyles}
             // Only show loading when dynamic options are enabled
             isLoading={isMultiSelectLoading}
+            showSearchInput={showSearchInput}
             onInputChange={onSearchTextChange}
             inputValue={searchInputValue}
             menuIsOpen={isMultiselectOpen}
@@ -488,7 +518,7 @@ export const MultiselectV2 = ({
               ValueContainer: CustomValueContainer,
               Option: CustomOption,
               LoadingIndicator: () => <Loader style={{ right: '11px', zIndex: 3, position: 'absolute' }} width="16" />,
-              ClearIndicator: CustomClearIndicator,
+              ClearIndicator: showClearBtn ? CustomClearIndicator : () => null,
               DropdownIndicator: isMultiSelectLoading ? () => null : CustomDropdownIndicator,
             }}
             isClearable
@@ -498,21 +528,15 @@ export const MultiselectV2 = ({
             tabSelectsValue={false}
             controlShouldRenderValue={false}
             isSearchable={false}
-            onMenuOpen={() => {
-              setIsMultiselectOpen(true);
-              fireEvent('onFocus');
-            }}
-            onMenuClose={() => {
-              setIsMultiselectOpen(false);
-              fireEvent('onBlur');
-            }}
             onKeyDown={(e) => {
-              if (e.key === 'Enter' && !isMultiselectOpen) {
+              if (e.key === 'Enter' && !isMultiselectOpen && !isMultiSelectLoading) {
                 setIsMultiselectOpen(true);
+                fireEvent('onFocus');
                 e.preventDefault();
               }
               if (e.key === 'Escape' && isMultiselectOpen) {
                 setIsMultiselectOpen(false);
+                fireEvent('onBlur');
                 e.preventDefault();
               }
             }}
@@ -520,19 +544,9 @@ export const MultiselectV2 = ({
             icon={icon}
             doShowIcon={iconVisibility}
             containerRef={valueContainerRef}
-            showAllOption={showAllOption}
-            isSelectAllSelected={isSelectAllSelected}
-            setIsSelectAllSelected={(value) => {
-              setIsSelectAllSelected(value);
-              if (!value) {
-                fireEvent('onSelect');
-              }
-            }}
-            setSelected={setInputValue}
             iconColor={iconColor}
             optionsLoadingState={optionsLoadingState && advanced}
             darkMode={darkMode}
-            fireEvent={() => fireEvent('onSelect')}
             menuPlacement="auto"
             menuPortalTarget={document.body}
           />
diff --git a/frontend/src/Editor/WidgetManager/configs/dropdownV2.js b/frontend/src/Editor/WidgetManager/configs/dropdownV2.js
index 308aff1f36..6b011fd082 100644
--- a/frontend/src/Editor/WidgetManager/configs/dropdownV2.js
+++ b/frontend/src/Editor/WidgetManager/configs/dropdownV2.js
@@ -75,6 +75,18 @@ export const dropdownV2Config = {
       accordian: 'Options',
       isFxNotRequired: true,
     },
+    showClearBtn: {
+      type: 'toggle',
+      displayName: 'Show clear selection button',
+      validation: { schema: { type: 'boolean' }, defaultValue: true },
+      section: 'additionalActions',
+    },
+    showSearchInput: {
+      type: 'toggle',
+      displayName: 'Show search in options',
+      validation: { schema: { type: 'boolean' }, defaultValue: true },
+      section: 'additionalActions',
+    },
     loadingState: {
       type: 'toggle',
       displayName: 'Loading state',
@@ -314,6 +326,8 @@ export const dropdownV2Config = {
       optionsLoadingState: { value: '{{false}}' },
       sort: { value: 'asc' },
       placeholder: { value: 'Select an option' },
+      showClearBtn: { value: '{{true}}' },
+      showSearchInput: { value: '{{true}}' },
       visibility: { value: '{{true}}' },
       disabledState: { value: '{{false}}' },
       loadingState: { value: '{{false}}' },
diff --git a/frontend/src/Editor/WidgetManager/configs/multiselectV2.js b/frontend/src/Editor/WidgetManager/configs/multiselectV2.js
index b603db9c4a..0985f23d08 100644
--- a/frontend/src/Editor/WidgetManager/configs/multiselectV2.js
+++ b/frontend/src/Editor/WidgetManager/configs/multiselectV2.js
@@ -142,6 +142,18 @@ export const multiselectV2Config = {
       accordian: 'Options',
       isFxNotRequired: true,
     },
+    showClearBtn: {
+      type: 'toggle',
+      displayName: 'Show clear selection button',
+      validation: { schema: { type: 'boolean' }, defaultValue: true },
+      section: 'additionalActions',
+    },
+    showSearchInput: {
+      type: 'toggle',
+      displayName: 'Show search in options',
+      validation: { schema: { type: 'boolean' }, defaultValue: true },
+      section: 'additionalActions',
+    },
     loadingState: {
       type: 'toggle',
       displayName: 'Loading state',
@@ -327,6 +339,8 @@ export const multiselectV2Config = {
       optionsLoadingState: { value: '{{false}}' },
       sort: { value: 'asc' },
       placeholder: { value: 'Select the options' },
+      showClearBtn: { value: '{{true}}' },
+      showSearchInput: { value: '{{true}}' },
       visibility: { value: '{{true}}' },
       disabledState: { value: '{{false}}' },
       loadingState: { value: '{{false}}' },
diff --git a/server/src/modules/apps/services/widget-config/dropdownV2.js b/server/src/modules/apps/services/widget-config/dropdownV2.js
index cb90554e6b..d7534b25a8 100644
--- a/server/src/modules/apps/services/widget-config/dropdownV2.js
+++ b/server/src/modules/apps/services/widget-config/dropdownV2.js
@@ -75,6 +75,18 @@ export const dropdownV2Config = {
       accordian: 'Options',
       isFxNotRequired: true,
     },
+    showClearBtn: {
+      type: 'toggle',
+      displayName: 'Show clear selection button',
+      validation: { schema: { type: 'boolean' }, defaultValue: true },
+      section: 'additionalActions',
+    },
+    showSearchInput: {
+      type: 'toggle',
+      displayName: 'Show search in options',
+      validation: { schema: { type: 'boolean' }, defaultValue: true },
+      section: 'additionalActions',
+    },
     loadingState: {
       type: 'toggle',
       displayName: 'Loading state',
@@ -314,6 +326,8 @@ export const dropdownV2Config = {
       optionsLoadingState: { value: '{{false}}' },
       sort: { value: 'asc' },
       placeholder: { value: 'Select an option' },
+      showClearBtn: { value: '{{true}}' },
+      showSearchInput: { value: '{{true}}' },
       visibility: { value: '{{true}}' },
       disabledState: { value: '{{false}}' },
       loadingState: { value: '{{false}}' },
diff --git a/server/src/modules/apps/services/widget-config/multiselectV2.js b/server/src/modules/apps/services/widget-config/multiselectV2.js
index 4ab4af57ce..294423abac 100644
--- a/server/src/modules/apps/services/widget-config/multiselectV2.js
+++ b/server/src/modules/apps/services/widget-config/multiselectV2.js
@@ -142,6 +142,18 @@ export const multiselectV2Config = {
       accordian: 'Options',
       isFxNotRequired: true,
     },
+    showClearBtn: {
+      type: 'toggle',
+      displayName: 'Show clear selection button',
+      validation: { schema: { type: 'boolean' }, defaultValue: true },
+      section: 'additionalActions',
+    },
+    showSearchInput: {
+      type: 'toggle',
+      displayName: 'Show search in options',
+      validation: { schema: { type: 'boolean' }, defaultValue: true },
+      section: 'additionalActions',
+    },
     loadingState: {
       type: 'toggle',
       displayName: 'Loading state',
@@ -327,6 +339,8 @@ export const multiselectV2Config = {
       optionsLoadingState: { value: '{{false}}' },
       sort: { value: 'asc' },
       placeholder: { value: 'Select the options' },
+      showClearBtn: { value: '{{true}}' },
+      showSearchInput: { value: '{{true}}' },
       visibility: { value: '{{true}}' },
       disabledState: { value: '{{false}}' },
       loadingState: { value: '{{false}}' },