diff --git a/.changeset/enhance-data-source-select.md b/.changeset/enhance-data-source-select.md
new file mode 100644
index 00000000..0d8d25b7
--- /dev/null
+++ b/.changeset/enhance-data-source-select.md
@@ -0,0 +1,5 @@
+---
+"@hyperdx/app": patch
+---
+
+feat: Enhance data source select with context-aware icons and inline actions
diff --git a/packages/app/package.json b/packages/app/package.json
index 18ae7c83..a768126d 100644
--- a/packages/app/package.json
+++ b/packages/app/package.json
@@ -42,7 +42,7 @@
     "@mantine/notifications": "^7.17.8",
     "@mantine/spotlight": "^7.17.8",
     "@microsoft/fetch-event-source": "^2.0.1",
-    "@tabler/icons-react": "^3.5.0",
+    "@tabler/icons-react": "^3.39.0",
     "@tanstack/react-query": "^5.56.2",
     "@tanstack/react-query-devtools": "^5.56.2",
     "@tanstack/react-table": "^8.7.9",
diff --git a/packages/app/src/DBSearchPage.tsx b/packages/app/src/DBSearchPage.tsx
index cfa5079a..454a9bde 100644
--- a/packages/app/src/DBSearchPage.tsx
+++ b/packages/app/src/DBSearchPage.tsx
@@ -11,7 +11,6 @@ import {
 } from 'react';
 import dynamic from 'next/dynamic';
 import Head from 'next/head';
-import Link from 'next/link';
 import router from 'next/router';
 import {
   parseAsBoolean,
@@ -51,7 +50,6 @@ import {
   Flex,
   Grid,
   Group,
-  Menu,
   Modal,
   Paper,
   Select,
@@ -67,10 +65,8 @@ import {
 import { notifications } from '@mantine/notifications';
 import {
   IconBolt,
-  IconCirclePlus,
   IconPlayerPlay,
   IconPlus,
-  IconSettings,
   IconTags,
   IconX,
 } from '@tabler/icons-react';
@@ -191,59 +187,6 @@ export function getDefaultSourceId(
   return sources[0].id;
 }
 
-function SourceEditMenu({
-  setModalOpen,
-  setModelFormExpanded,
-}: {
-  setModalOpen: (val: SetStateAction<boolean>) => void;
-  setModelFormExpanded: (val: SetStateAction<boolean>) => void;
-}) {
-  return (
-    <Menu withArrow position="bottom-start">
-      <Menu.Target>
-        <ActionIcon
-          data-testid="source-settings-menu"
-          variant="subtle"
-          size="sm"
-          title="Edit Source"
-        >
-          <Text size="xs">
-            <IconSettings size={14} />
-          </Text>
-        </ActionIcon>
-      </Menu.Target>
-      <Menu.Dropdown>
-        <Menu.Label>Sources</Menu.Label>
-        <Menu.Item
-          data-testid="create-new-source-menu-item"
-          leftSection={<IconCirclePlus size={14} />}
-          onClick={() => setModalOpen(true)}
-        >
-          Create New Source
-        </Menu.Item>
-        {IS_LOCAL_MODE ? (
-          <Menu.Item
-            data-testid="edit-sources-menu-item"
-            leftSection={<IconSettings size={14} />}
-            onClick={() => setModelFormExpanded(v => !v)}
-          >
-            Edit Source
-          </Menu.Item>
-        ) : (
-          <Menu.Item
-            data-testid="edit-sources-menu-item"
-            leftSection={<IconSettings size={14} />}
-            component={Link}
-            href="/team"
-          >
-            Edit Sources
-          </Menu.Item>
-        )}
-      </Menu.Dropdown>
-    </Menu>
-  );
-}
-
 function SourceEditModal({
   opened,
   onClose,
@@ -1568,6 +1511,14 @@ function DBSearchPage() {
     setModelFormExpanded(false);
   }, [setModelFormExpanded]);
 
+  const onEditSources = useCallback(() => {
+    if (IS_LOCAL_MODE) {
+      setModelFormExpanded(v => !v);
+    } else {
+      router.push('/team');
+    }
+  }, [setModelFormExpanded]);
+
   const setNewSourceModalClosed = useCallback(
     () => setNewSourceModalOpened(false),
     [setNewSourceModalOpened],
@@ -1609,22 +1560,18 @@ function DBSearchPage() {
       >
         {/* <DevTool control={control} /> */}
         <Flex gap="sm" px="sm" pt="sm" wrap="nowrap">
-          <Group gap="4px" wrap="nowrap" style={{ minWidth: 150 }}>
-            <SourceSelectControlled
-              key={`${savedSearchId}`}
-              size="xs"
-              control={control}
-              name="source"
-              onCreate={openNewSourceModal}
-              allowedSourceKinds={ALLOWED_SOURCE_KINDS}
-              data-testid="source-selector"
-              sourceSchemaPreview={sourceSchemaPreview}
-            />
-            <SourceEditMenu
-              setModalOpen={setNewSourceModalOpened}
-              setModelFormExpanded={setModelFormExpanded}
-            />
-          </Group>
+          <SourceSelectControlled
+            key={`${savedSearchId}`}
+            size="xs"
+            control={control}
+            name="source"
+            onCreate={openNewSourceModal}
+            onEdit={onEditSources}
+            allowedSourceKinds={ALLOWED_SOURCE_KINDS}
+            data-testid="source-selector"
+            sourceSchemaPreview={sourceSchemaPreview}
+            style={{ minWidth: 150 }}
+          />
           <Box style={{ flex: '1 1 0%', minWidth: 100 }}>
             <SQLInlineEditorControlled
               tableConnection={inputSourceTableConnection}
diff --git a/packages/app/src/components/SelectControlled.tsx b/packages/app/src/components/SelectControlled.tsx
index 866a5f51..b4653198 100644
--- a/packages/app/src/components/SelectControlled.tsx
+++ b/packages/app/src/components/SelectControlled.tsx
@@ -2,9 +2,15 @@ import { useCallback } from 'react';
 import { useController, UseControllerProps } from 'react-hook-form';
 import { Select, SelectProps } from '@mantine/core';
 
+export enum SelectControlledSpecialValues {
+  CreateNewValue = '_create_new_value',
+  EditValue = '_edit_value',
+}
+
 export type SelectControlledProps = SelectProps &
   UseControllerProps<any> & {
     onCreate?: () => void;
+    onEdit?: () => void;
     allowDeselect?: boolean;
   };
 
@@ -19,35 +25,47 @@ export default function SelectControlled(props: SelectControlledProps) {
     },
     fieldState,
   } = useController(props);
-  const { onCreate, allowDeselect = true, ...restProps } = props;
+  const { onCreate, onEdit, allowDeselect = true, ...restProps } = props;
 
-  // This is needed as mantine does not clear the select
-  // if the value is not in the data after
-  // if it was previously in the data (ex. data was deleted)
-  const selected = props.data?.find(d =>
-    typeof d === 'string'
-      ? d === fieldValue
-      : 'value' in d
-        ? d.value === fieldValue
-        : true,
-  );
+  // Mantine does not clear the select if the value is removed from data
+  // after it was previously present (ex. data was deleted)
+  const selected = props.data?.some(d => {
+    if (typeof d === 'string') return d === fieldValue;
+    if ('value' in d) return d.value === fieldValue;
+    if ('items' in d) {
+      return d.items.some(item =>
+        typeof item === 'string'
+          ? item === fieldValue
+          : item.value === fieldValue,
+      );
+    }
+    return false;
+  });
 
   const onChange = useCallback(
     (value: string | null) => {
-      if (value === '_create_new_value' && onCreate != null) {
+      if (
+        value === SelectControlledSpecialValues.CreateNewValue &&
+        onCreate != null
+      ) {
         onCreate();
+      } else if (
+        value === SelectControlledSpecialValues.EditValue &&
+        onEdit != null
+      ) {
+        onEdit();
       } else if (value !== null || allowDeselect) {
         fieldOnChange(value);
       }
     },
-    [fieldOnChange, onCreate, allowDeselect],
+    [fieldOnChange, onCreate, onEdit, allowDeselect],
   );
 
   return (
     <Select
       {...restProps}
       error={fieldState.error?.message}
-      value={selected == null ? null : fieldValue}
+      value={selected ? fieldValue : null}
       onChange={onChange}
       onBlur={fieldOnBlur}
       name={fieldName}
diff --git a/packages/app/src/components/SourceSelect.tsx b/packages/app/src/components/SourceSelect.tsx
index 01b6105e..9b28cb10 100644
--- a/packages/app/src/components/SourceSelect.tsx
+++ b/packages/app/src/components/SourceSelect.tsx
@@ -1,12 +1,26 @@
-import { memo, useMemo } from 'react';
-import { UseControllerProps } from 'react-hook-form';
+import { memo, useCallback, useMemo } from 'react';
+import { UseControllerProps, useWatch } from 'react-hook-form';
 import { SourceKind } from '@hyperdx/common-utils/dist/types';
-import { SelectProps, UnstyledButton } from '@mantine/core';
-import { ComboboxChevron } from '@mantine/core';
-import { IconStack } from '@tabler/icons-react';
+import {
+  ComboboxChevron,
+  ComboboxItem,
+  Group,
+  SelectProps,
+  UnstyledButton,
+} from '@mantine/core';
+import {
+  IconChartLine,
+  IconConnection,
+  IconDeviceLaptop,
+  IconLogs,
+  IconPlus,
+  IconSettings,
+  IconStack,
+} from '@tabler/icons-react';
 
-import SelectControlled from '@/components/SelectControlled';
-import { HDX_LOCAL_DEFAULT_SOURCES } from '@/config';
+import SelectControlled, {
+  SelectControlledSpecialValues,
+} from '@/components/SelectControlled';
 import { useSources } from '@/source';
 
 import styles from '../../styles/SourceSelectControlled.module.scss';
@@ -43,9 +57,22 @@ export const SourceSelectRightSection = ({
   };
 };
 
+const SOURCE_KIND_ICONS: Record<string, React.ReactNode> = {
+  [SourceKind.Log]: <IconLogs size={16} />,
+  [SourceKind.Trace]: <IconConnection size={16} />,
+  [SourceKind.Session]: <IconDeviceLaptop size={16} />,
+  [SourceKind.Metric]: <IconChartLine size={16} />,
+};
+
+const OPTION_ICONS: Record<string, React.ReactNode> = {
+  [SelectControlledSpecialValues.CreateNewValue]: <IconPlus size={14} />,
+  [SelectControlledSpecialValues.EditValue]: <IconSettings size={14} />,
+};
+
 function SourceSelectControlledComponent({
   size,
   onCreate,
+  onEdit,
   allowedSourceKinds,
   connectionId,
   comboboxProps,
@@ -54,41 +81,86 @@ function SourceSelectControlledComponent({
 }: {
   size?: string;
   onCreate?: () => void;
+  onEdit?: () => void;
   allowedSourceKinds?: SourceKind[];
   connectionId?: string;
   sourceSchemaPreview?: React.ReactNode;
 } & UseControllerProps<any> &
   SelectProps) {
   const { data } = useSources();
-  const hasLocalDefaultSources = !!HDX_LOCAL_DEFAULT_SOURCES;
+  const selectedSourceId = useWatch({
+    control: props.control,
+    name: props.name,
+  });
 
-  const values = useMemo(
-    () => [
-      ...(
-        data
-          ?.filter(
-            source =>
-              (!allowedSourceKinds ||
-                allowedSourceKinds.includes(source.kind)) &&
-              (!connectionId || source.connection === connectionId),
-          )
-          .map(d => ({
-            value: d.id,
-            label: d.name,
-          })) ?? []
-      ).sort((a, b) => a.label.localeCompare(b.label)),
-      ...(onCreate && !hasLocalDefaultSources
-        ? [
-            {
-              value: '_create_new_value',
-              label: 'Create New Source',
-            },
-          ]
-        : []),
-    ],
-    [data, onCreate, allowedSourceKinds, connectionId, hasLocalDefaultSources],
+  const selectedSourceKind = useMemo(
+    () => data?.find(s => s.id === selectedSourceId)?.kind,
+    [data, selectedSourceId],
   );
 
+  const leftIcon = SOURCE_KIND_ICONS[selectedSourceKind ?? ''] ?? (
+    <IconStack size={16} />
+  );
+
+  const sourceKindMap = useMemo(() => {
+    const map = new Map<string, SourceKind>();
+    data?.forEach(s => map.set(s.id, s.kind));
+    return map;
+  }, [data]);
+
+  const renderOption = useCallback(
+    ({ option }: { option: ComboboxItem }) => {
+      const icon =
+        OPTION_ICONS[option.value] ??
+        SOURCE_KIND_ICONS[sourceKindMap.get(option.value) ?? ''];
+      if (!icon) return option.label;
+      return (
+        <Group gap="xs" wrap="nowrap">
+          {icon}
+          {option.label}
+        </Group>
+      );
+    },
+    [sourceKindMap],
+  );
+
+  const hasActions = !!onCreate || !!onEdit;
+
+  const values = useMemo(() => {
+    const sourceItems = (
+      data
+        ?.filter(
+          source =>
+            (!allowedSourceKinds || allowedSourceKinds.includes(source.kind)) &&
+            (!connectionId || source.connection === connectionId),
+        )
+        .map(d => ({
+          value: d.id,
+          label: d.name,
+        })) ?? []
+    ).sort((a, b) => a.label.localeCompare(b.label));
+
+    if (!hasActions) {
+      return sourceItems;
+    }
+
+    const actionItems: { value: string; label: string }[] = [];
+    if (onCreate) {
+      actionItems.push({
+        value: SelectControlledSpecialValues.CreateNewValue,
+        label: 'Create New Source',
+      });
+    }
+    if (onEdit) {
+      actionItems.push({
+        value: SelectControlledSpecialValues.EditValue,
+        label: 'Edit Sources',
+      });
+    }
+
+    return [...sourceItems, { group: 'Actions', items: actionItems }];
+  }, [data, onCreate, onEdit, allowedSourceKinds, connectionId, hasActions]);
+
   const rightSectionProps = SourceSelectRightSection({ sourceSchemaPreview });
 
   return (
@@ -96,12 +168,15 @@ function SourceSelectControlledComponent({
       {...props}
       data={values}
       comboboxProps={{ withinPortal: false, ...comboboxProps }}
+      classNames={{ groupLabel: styles.groupLabel }}
+      renderOption={renderOption}
       searchable
       placeholder="Data Source"
-      leftSection={<IconStack size={16} />}
+      leftSection={leftIcon}
       maxDropdownHeight={280}
       size={size}
       onCreate={onCreate}
+      onEdit={onEdit}
       {...rightSectionProps}
     />
   );
diff --git a/packages/app/styles/SourceSelectControlled.module.scss b/packages/app/styles/SourceSelectControlled.module.scss
index ce218646..f586b5d2 100644
--- a/packages/app/styles/SourceSelectControlled.module.scss
+++ b/packages/app/styles/SourceSelectControlled.module.scss
@@ -10,3 +10,9 @@
     cursor: pointer;
   }
 }
+
+.groupLabel {
+  &::after {
+    border-color: var(--color-border);
+  }
+}
diff --git a/packages/app/tests/e2e/features/sources.spec.ts b/packages/app/tests/e2e/features/sources.spec.ts
index 8d2604df..b56bad6f 100644
--- a/packages/app/tests/e2e/features/sources.spec.ts
+++ b/packages/app/tests/e2e/features/sources.spec.ts
@@ -102,15 +102,13 @@ test.describe('Sources Functionality', { tag: ['@sources'] }, () => {
     await searchPage.goto();
   });
 
-  test('should open source settings menu', async () => {
-    // Click source settings menu
-    await searchPage.sourceMenu.click();
+  test('should show source actions in dropdown', async () => {
+    // Open source selector dropdown
+    await searchPage.sourceDropdown.click();
 
-    // Verify create new source menu item is visible
+    // Verify action items are visible in the dropdown
     await expect(searchPage.createNewSourceItem).toBeVisible();
-
-    // Verify edit source menu items are visible
-    await expect(searchPage.editSourceMenuItem).toBeVisible();
+    await expect(searchPage.editSourcesItem).toBeVisible();
   });
 
   test(
@@ -144,7 +142,7 @@ test.describe('Sources Functionality', { tag: ['@sources'] }, () => {
   );
 
   test('should show proper fields when creating a new source', async () => {
-    await searchPage.sourceMenu.click();
+    await searchPage.sourceDropdown.click();
     await searchPage.createNewSourceItem.click();
     // for each source type (log, trace, session, metric), verify the correct fields are shown
     for (const sourceData of allSourcesData) {
diff --git a/packages/app/tests/e2e/global-setup-fullstack.ts b/packages/app/tests/e2e/global-setup-fullstack.ts
index 89ff37a6..73d2eca7 100644
--- a/packages/app/tests/e2e/global-setup-fullstack.ts
+++ b/packages/app/tests/e2e/global-setup-fullstack.ts
@@ -251,7 +251,7 @@ async function globalSetup(_config: FullConfig) {
     await page.goto('/search', { timeout: PAGE_LOAD_TIMEOUT_MS });
 
     // Wait for source selector to be ready (indicates sources are loaded)
-    await page.waitForSelector('[data-testid="source-settings-menu"]', {
+    await page.waitForSelector('[data-testid="source-selector"]', {
       state: 'visible',
       timeout: SOURCE_SELECTOR_TIMEOUT_MS,
     });
diff --git a/packages/app/tests/e2e/page-objects/SearchPage.ts b/packages/app/tests/e2e/page-objects/SearchPage.ts
index 631c5be2..f99eb4fc 100644
--- a/packages/app/tests/e2e/page-objects/SearchPage.ts
+++ b/packages/app/tests/e2e/page-objects/SearchPage.ts
@@ -25,8 +25,6 @@ export class SearchPage {
   readonly savedSearchModal: SavedSearchModalComponent;
   readonly alertModal: SearchPageAlertModalComponent;
   readonly defaultTimeout: number = 3000;
-  readonly editSourceMenuItem: Locator;
-
   private readonly alertsButtonLocator: Locator;
 
   // Page-specific locators
@@ -39,8 +37,6 @@ export class SearchPage {
   private readonly luceneTab: Locator;
   private readonly sqlTab: Locator;
   private readonly sourceSelector: Locator;
-  private readonly sourceSettingsMenu: Locator;
-  private readonly createNewSourceMenuItem: Locator;
 
   constructor(page: Page, defaultTimeout: number = 3000) {
     this.page = page;
@@ -71,19 +67,14 @@ export class SearchPage {
     this.sqlTab = page.getByRole('option', { name: 'SQL', exact: true });
     this.luceneTab = page.getByRole('option', { name: 'Lucene', exact: true });
     this.sourceSelector = page.getByTestId('source-selector');
-    this.sourceSettingsMenu = page.getByTestId('source-settings-menu');
-    this.editSourceMenuItem = page.getByTestId('edit-sources-menu-item');
-    this.createNewSourceMenuItem = page.getByTestId(
-      'create-new-source-menu-item',
-    );
-  }
-
-  get sourceMenu() {
-    return this.sourceSettingsMenu;
   }
 
   get createNewSourceItem() {
-    return this.createNewSourceMenuItem;
+    return this.page.getByRole('option', { name: 'Create New Source' });
+  }
+
+  get editSourcesItem() {
+    return this.page.getByRole('option', { name: 'Edit Sources' });
   }
 
   /**
@@ -103,8 +94,8 @@ export class SearchPage {
   }
 
   async openEditSourceModal() {
-    await this.sourceSettingsMenu.click();
-    await this.editSourceMenuItem.click();
+    await this.sourceSelector.click();
+    await this.editSourcesItem.click();
   }
 
   async sourceModalShowOptionalFields() {
diff --git a/yarn.lock b/yarn.lock
index d43c9f15..47ef97d6 100644
--- a/yarn.lock
+++ b/yarn.lock
@@ -4340,7 +4340,7 @@ __metadata:
     "@storybook/addon-themes": "npm:^10.1.4"
     "@storybook/nextjs": "npm:^10.1.4"
     "@storybook/react": "npm:^10.1.4"
-    "@tabler/icons-react": "npm:^3.5.0"
+    "@tabler/icons-react": "npm:^3.39.0"
     "@tanstack/react-query": "npm:^5.56.2"
     "@tanstack/react-query-devtools": "npm:^5.56.2"
     "@tanstack/react-table": "npm:^8.7.9"
@@ -8798,21 +8798,21 @@ __metadata:
   languageName: node
   linkType: hard
 
-"@tabler/icons-react@npm:^3.5.0":
-  version: 3.5.0
-  resolution: "@tabler/icons-react@npm:3.5.0"
+"@tabler/icons-react@npm:^3.39.0":
+  version: 3.40.0
+  resolution: "@tabler/icons-react@npm:3.40.0"
   dependencies:
-    "@tabler/icons": "npm:3.5.0"
+    "@tabler/icons": "npm:3.40.0"
   peerDependencies:
     react: ">= 16"
-  checksum: 10c0/9669d26e2ab4654d3d1c124a5ffd42c276d5a7ebc83b81ecb200e1f89dc3e9271557cf6eccc78bdd0ebdd0536fa4cd566e2b638ab4407e9415457c28ef05786e
+  checksum: 10c0/a6985c9e8d1986c14594f5bc7007d2398b7b1efd2202304a24e23eb1fa6a48a23f9a6aaa3c5626781990cc0f0a46773c0a0cb747b6984dde26f03ba4ebd1d9cf
   languageName: node
   linkType: hard
 
-"@tabler/icons@npm:3.5.0":
-  version: 3.5.0
-  resolution: "@tabler/icons@npm:3.5.0"
-  checksum: 10c0/0d6b15266e116dcf56bca417d013f1027b57404e5ed7f9a2a14e216eabdd04980ff971129491b666ffdc11953107c0b4540033c92d611fa74e127fc9d443fc4f
+"@tabler/icons@npm:3.40.0":
+  version: 3.40.0
+  resolution: "@tabler/icons@npm:3.40.0"
+  checksum: 10c0/d335323695dff9218b486bb84a79893f86d5c284dc022c86bfdcfc550605c48ddffe72161c93f6fcab47ba6d828311c101fc5e306fb698b5b5104cf6250ed314
   languageName: node
   linkType: hard