diff --git a/Gems/Multiplayer/Code/Source/AutoGen/MultiplayerEditor.AutoPackets.xml b/Gems/Multiplayer/Code/Source/AutoGen/MultiplayerEditor.AutoPackets.xml
index 8f55ecd2b8..dd553a2413 100644
--- a/Gems/Multiplayer/Code/Source/AutoGen/MultiplayerEditor.AutoPackets.xml
+++ b/Gems/Multiplayer/Code/Source/AutoGen/MultiplayerEditor.AutoPackets.xml
@@ -7,7 +7,9 @@
   
     <Packet Name="EditorServerInit" Desc="A packet that initializes a local server launched from the editor">
         <Member Type="bool" Name="lastUpdate" Init="false"/>
-        <Member Type="AzNetworking::TcpPacketEncodingBuffer" Name="assetData"/>
+
+        <!--16379 is 16384 (max TCP packet size) - 1 byte (bool lastUpdate) - 4 bytes (serialization overhead for ByteBuffer) -->
+        <Member Type="AzNetworking::ByteBuffer&lt;16379&gt;" Name="assetData"/> 
     </Packet>
 
     <Packet Name="EditorServerReady" Desc="A response packet the local server should send when ready for traffic"/>
diff --git a/Gems/Multiplayer/Code/Source/Editor/MultiplayerEditorConnection.cpp b/Gems/Multiplayer/Code/Source/Editor/MultiplayerEditorConnection.cpp
index 601919ea7b..18b128f05e 100644
--- a/Gems/Multiplayer/Code/Source/Editor/MultiplayerEditorConnection.cpp
+++ b/Gems/Multiplayer/Code/Source/Editor/MultiplayerEditorConnection.cpp
@@ -11,9 +11,9 @@
  */
 
 #include <Multiplayer/IMultiplayer.h>
+#include <Multiplayer/INetworkSpawnableLibrary.h>
 #include <Multiplayer/MultiplayerConstants.h>
 #include <Editor/MultiplayerEditorConnection.h>
-#include <Editor/MultiplayerEditorUtils.h>
 #include <Source/AutoGen/AutoComponentTypes.h>
 
 #include <AzCore/Asset/AssetManager.h>
@@ -56,16 +56,12 @@ namespace Multiplayer
     )
     {
         // Editor Server Init is intended for non-release targets
-        if (!packet.GetLastUpdate())
-        {
-            // More packets are expected, flush this to the buffer
-            m_byteStream.Write(GetMaxEditorServerInitSize(), reinterpret_cast<void*>(packet.ModifyAssetData().GetBuffer()));
-        }
-        else
-        {
-            // This is the last expected packet, flush it to the buffer
-            m_byteStream.Write(packet.GetAssetData().GetSize(), reinterpret_cast<void*>(packet.ModifyAssetData().GetBuffer()));
+        m_byteStream.Write(packet.GetAssetData().GetSize(), reinterpret_cast<void*>(packet.ModifyAssetData().GetBuffer()));
 
+        // In case if this is the last update, process the byteStream buffer. Otherwise more packets are expected
+        if (packet.GetLastUpdate())
+        {
+            // This is the last expected packet
             // Read all assets out of the buffer
             m_byteStream.Seek(0, AZ::IO::GenericStream::SeekMode::ST_SEEK_BEGIN);
             AZStd::vector<AZ::Data::Asset<AZ::Data::AssetData>> assetData;
@@ -107,6 +103,9 @@ namespace Multiplayer
             m_byteStream.Seek(0, AZ::IO::GenericStream::SeekMode::ST_SEEK_BEGIN);
             m_byteStream.Truncate();
 
+            // Spawnable library needs to be rebuilt since now we have newly registered in-memory spawnable assets
+            AZ::Interface<INetworkSpawnableLibrary>::Get()->BuildSpawnablesList();
+
             // Load the level via the root spawnable that was registered
             const AZ::CVarFixedString loadLevelString = "LoadLevel Root.spawnable";
             AZ::Interface<AZ::IConsole>::Get()->PerformCommand(loadLevelString.c_str());
diff --git a/Gems/Multiplayer/Code/Source/Editor/MultiplayerEditorSystemComponent.cpp b/Gems/Multiplayer/Code/Source/Editor/MultiplayerEditorSystemComponent.cpp
index e1690d8ecc..7c2a7e4fd7 100644
--- a/Gems/Multiplayer/Code/Source/Editor/MultiplayerEditorSystemComponent.cpp
+++ b/Gems/Multiplayer/Code/Source/Editor/MultiplayerEditorSystemComponent.cpp
@@ -12,11 +12,11 @@
 
 #include <Multiplayer/IMultiplayer.h>
 #include <Multiplayer/IMultiplayerTools.h>
+#include <Multiplayer/INetworkSpawnableLibrary.h>
 #include <Multiplayer/MultiplayerConstants.h>
 
 #include <MultiplayerSystemComponent.h>
 #include <Editor/MultiplayerEditorSystemComponent.h>
-#include <Editor/MultiplayerEditorUtils.h>
 #include <Source/AutoGen/Multiplayer.AutoPackets.h>
 
 #include <AzCore/Component/ComponentApplicationBus.h>
@@ -192,6 +192,9 @@ namespace Multiplayer
                 m_serverProcess = LaunchEditorServer();
             }
 
+            // Spawnable library needs to be rebuilt since now we have newly registered in-memory spawnable assets
+            AZ::Interface<INetworkSpawnableLibrary>::Get()->BuildSpawnablesList();
+
             // Now that the server has launched, attempt to connect the NetworkInterface         
             INetworkInterface* editorNetworkInterface = AZ::Interface<INetworking>::Get()->RetrieveNetworkInterface(AZ::Name(MPEditorInterfaceName));
             AZ_Assert(editorNetworkInterface, "MP Editor Network Interface was unregistered before Editor could connect.");
@@ -212,10 +215,10 @@ namespace Multiplayer
             while (byteStream.GetCurPos() < byteStream.GetLength())
             {
                 MultiplayerEditorPackets::EditorServerInit packet;
-                AzNetworking::TcpPacketEncodingBuffer& outBuffer = packet.ModifyAssetData();
+                auto& outBuffer = packet.ModifyAssetData();
 
                 // Size the packet's buffer appropriately
-                size_t readSize = GetMaxEditorServerInitSize();
+                size_t readSize = outBuffer.GetCapacity();
                 size_t byteStreamSize = byteStream.GetLength() - byteStream.GetCurPos();
                 if (byteStreamSize < readSize)
                 {
@@ -233,6 +236,11 @@ namespace Multiplayer
                 editorNetworkInterface->SendReliablePacket(m_editorConnId, packet);
             }
         }
+    }
 
+    void MultiplayerEditorSystemComponent::OnGameEntitiesReset()
+    {
+        // Rebuild the library to clear temporary in-memory spawnable assets
+        AZ::Interface<INetworkSpawnableLibrary>::Get()->BuildSpawnablesList();
     }
 }
diff --git a/Gems/Multiplayer/Code/Source/Editor/MultiplayerEditorSystemComponent.h b/Gems/Multiplayer/Code/Source/Editor/MultiplayerEditorSystemComponent.h
index 81b138c675..b6b111ee2a 100644
--- a/Gems/Multiplayer/Code/Source/Editor/MultiplayerEditorSystemComponent.h
+++ b/Gems/Multiplayer/Code/Source/Editor/MultiplayerEditorSystemComponent.h
@@ -68,7 +68,8 @@ namespace Multiplayer
         
         //!  GameEntityContextEventBus::Handler overrides
         //! @{
-        void OnGameEntitiesStarted() override; 
+        void OnGameEntitiesStarted() override;
+        void OnGameEntitiesReset() override;
         //! @}
 
         IEditor* m_editor = nullptr;
diff --git a/Gems/Multiplayer/Code/Source/Editor/MultiplayerEditorUtils.h b/Gems/Multiplayer/Code/Source/Editor/MultiplayerEditorUtils.h
deleted file mode 100644
index c5f01cdb5b..0000000000
--- a/Gems/Multiplayer/Code/Source/Editor/MultiplayerEditorUtils.h
+++ /dev/null
@@ -1,27 +0,0 @@
-/*
-* All or portions of this file Copyright (c) Amazon.com, Inc. or its affiliates or
-* its licensors.
-*
-* For complete copyright and license terms please see the LICENSE at the root of this
-* distribution (the "License"). All use of this software is governed by the License,
-* or, if provided, by the license below or the license accompanying this file. Do not
-* remove or modify any license notices. This file is distributed on an "AS IS" BASIS,
-* WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
-*
-*/
-
-#pragma once
-
-#include <AzNetworking/DataStructures/ByteBuffer.h>
-
-
-namespace Multiplayer
-{
-    static constexpr size_t GetMaxEditorServerInitSize()
-    {
-        constexpr size_t totalCapacity = AzNetworking::TcpPacketEncodingBuffer::GetCapacity();
-        constexpr size_t packetOverhead = sizeof(bool) + 2 * sizeof(uint16_t); // m_lastUpdate + m_assetBuffer
-        static_assert(totalCapacity > packetOverhead);
-        return totalCapacity - packetOverhead;
-    }
-}
diff --git a/Gems/Multiplayer/Code/Source/NetworkEntity/NetworkSpawnableLibrary.cpp b/Gems/Multiplayer/Code/Source/NetworkEntity/NetworkSpawnableLibrary.cpp
index 935744f807..ec5a804834 100644
--- a/Gems/Multiplayer/Code/Source/NetworkEntity/NetworkSpawnableLibrary.cpp
+++ b/Gems/Multiplayer/Code/Source/NetworkEntity/NetworkSpawnableLibrary.cpp
@@ -32,6 +32,9 @@ namespace Multiplayer
 
     void NetworkSpawnableLibrary::BuildSpawnablesList()
     {
+        m_spawnables.clear();
+        m_spawnablesReverseLookup.clear();
+
         auto enumerateCallback = [this](const AZ::Data::AssetId id, const AZ::Data::AssetInfo& info)
         {
             if (info.m_assetType == AZ::AzTypeInfo<AzFramework::Spawnable>::Uuid())
diff --git a/Gems/Multiplayer/Code/multiplayer_files.cmake b/Gems/Multiplayer/Code/multiplayer_files.cmake
index b15fff4cfc..9f5ca8c805 100644
--- a/Gems/Multiplayer/Code/multiplayer_files.cmake
+++ b/Gems/Multiplayer/Code/multiplayer_files.cmake
@@ -68,7 +68,6 @@ set(FILES
     Source/ConnectionData/ServerToClientConnectionData.inl
     Source/Editor/MultiplayerEditorConnection.cpp
     Source/Editor/MultiplayerEditorConnection.h
-    Source/Editor/MultiplayerEditorUtils.h
     Source/EntityDomains/FullOwnershipEntityDomain.cpp
     Source/EntityDomains/FullOwnershipEntityDomain.h
     Source/NetworkEntity/EntityReplication/EntityReplicationManager.cpp