diff --git a/AutomatedTesting/Gem/PythonTests/scripting/TestSuite_Active.py b/AutomatedTesting/Gem/PythonTests/scripting/TestSuite_Active.py
index 963693b54c..dda75f0a0c 100755
--- a/AutomatedTesting/Gem/PythonTests/scripting/TestSuite_Active.py
+++ b/AutomatedTesting/Gem/PythonTests/scripting/TestSuite_Active.py
@@ -200,6 +200,10 @@ class TestAutomation(TestAutomationBase):
         from . import NodePalette_SearchText_Deletion as test_module
         self._run_test(request, workspace, editor, test_module)
 
+    def test_VariableManager_UnpinVariableType_Works(self, request, workspace, editor, launcher_platform):
+        from . import VariableManager_UnpinVariableType_Works as test_module
+        self._run_test(request, workspace, editor, test_module)
+
 # NOTE: We had to use hydra_test_utils.py, as TestAutomationBase run_test method
 # fails because of pyside_utils import
 @pytest.mark.SUITE_periodic
diff --git a/AutomatedTesting/Gem/PythonTests/scripting/VariableManager_UnpinVariableType_Works.py b/AutomatedTesting/Gem/PythonTests/scripting/VariableManager_UnpinVariableType_Works.py
new file mode 100644
index 0000000000..7076f60385
--- /dev/null
+++ b/AutomatedTesting/Gem/PythonTests/scripting/VariableManager_UnpinVariableType_Works.py
@@ -0,0 +1,121 @@
+"""
+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.
+"""
+
+
+# fmt: off
+class Tests():
+    variable_manager_opened         = ("VariableManager is opened successfully",                    "Failed to open VariableManager")
+    variable_pinned                 = ("Variable is pinned",                                        "Variable is not pinned, But it should be unpinned")
+    variable_unpinned               = ("Variable is unpinned",                                      "Variable is not unpinned, But it should be pinned")
+    variable_unpinned_after_reopen  = ("Variable is unpinned after reopening create variable menu", "Variable is not unpinned after reopening create variable menu")
+# fmt: on
+
+
+def VariableManager_UnpinVariableType_Works():
+    """
+    Summary:
+     Unpin variable types in create variable menu.
+    Expected Behavior:
+     The variable unpinned in create variable menu remains unpinned after reopening create variable menu.
+    Test Steps:
+     1) Open Script Canvas window (Tools > Script Canvas)
+     2) Get the SC window object
+     3) Open Variable Manager in Script Canvas window
+     4) Create new graph
+     5) Click on the Create Variable button in the Variable Manager
+     6) Unpin Boolean by clicking the "Pin" icon on its left side
+     7) Close and Reopen Create Variable menu and make sure Boolean is unpinned after reopening Create Variable menu
+     8) Restore default layout and close SC window
+    Note:
+     - This test file must be called from the Open 3D Engine Editor command terminal
+     - Any passed and failed tests are written to the Editor.log file.
+        Parsing the file or running a log_monitor are required to observe the test results.
+    :return: None
+    """
+
+    from PySide2 import QtWidgets
+    import azlmbr.legacy.general as general
+
+    import pyside_utils
+    from utils import TestHelper as helper
+    from utils import Report
+    from PySide2.QtCore import Qt
+
+    GENERAL_WAIT = 1.0  # seconds
+
+    def find_pane(window, pane_name):
+        return window.findChild(QtWidgets.QDockWidget, pane_name)
+
+    def click_menu_option(window, option_text):
+        action = pyside_utils.find_child_by_pattern(window, {"text": option_text, "type": QtWidgets.QAction})
+        action.trigger()
+
+    # 1) Open Script Canvas window (Tools > Script Canvas)
+    general.idle_enable(True)
+    general.open_pane("Script Canvas")
+    helper.wait_for_condition(lambda: general.is_pane_visible("Script Canvas"), 6.0)
+
+    # 2) Get the SC window object
+    editor_window = pyside_utils.get_editor_main_window()
+    sc = editor_window.findChild(QtWidgets.QDockWidget, "Script Canvas")
+    sc_main = sc.findChild(QtWidgets.QMainWindow)
+
+    # 3) Open Variable Manager in Script Canvas window
+    pane = find_pane(sc, "VariableManager")
+    if not pane.isVisible():
+        click_menu_option(sc, "Variable Manager")
+    pane = find_pane(sc, "VariableManager")
+    Report.result(Tests.variable_manager_opened, pane.isVisible())
+
+    # 4) Create new graph
+    create_new_graph = pyside_utils.find_child_by_pattern(
+        sc_main, {"objectName": "action_New_Script", "type": QtWidgets.QAction}
+    )
+    create_new_graph.trigger()
+
+    # 5) Click on the Create Variable button in the Variable Manager
+    variable_manager = sc_main.findChild(QtWidgets.QDockWidget, "VariableManager")
+    button = variable_manager.findChild(QtWidgets.QPushButton, "addButton")
+    button.click()
+
+    # 6) Unpin Boolean by clicking the "Pin" icon on its left side
+    table_view = variable_manager.findChild(QtWidgets.QTableView, "variablePalette")
+    model_index = pyside_utils.find_child_by_pattern(table_view, "Boolean")
+    # Make sure Boolean is pinned
+    is_boolean = model_index.siblingAtColumn(0)
+    result = helper.wait_for_condition(lambda: is_boolean.data(Qt.DecorationRole) is not None, GENERAL_WAIT)
+    Report.result(Tests.variable_pinned, result)
+    # Unpin Boolean and make sure Boolean is unpinned.
+    pyside_utils.item_view_index_mouse_click(table_view, is_boolean)
+    result = helper.wait_for_condition(lambda: is_boolean.data(Qt.DecorationRole) is None, GENERAL_WAIT)
+    Report.result(Tests.variable_unpinned, result)
+
+    # 7) Close and Reopen Create Variable menu and make sure Boolean is unpinned after reopening Create Variable menu
+    button.click()
+    button.click()
+    model_index = pyside_utils.find_child_by_pattern(table_view, "Boolean")
+    result = helper.wait_for_condition(
+        lambda: model_index.siblingAtColumn(0).data(Qt.DecorationRole) is None, GENERAL_WAIT
+    )
+    Report.result(Tests.variable_unpinned_after_reopen, result)
+
+    # 8) Restore default layout and close SC window
+    click_menu_option(sc, "Restore Default Layout")
+    general.close_pane("Script Canvas")
+
+
+if __name__ == "__main__":
+    import ImportPathHelper as imports
+
+    imports.init()
+
+    from utils import Report
+
+    Report.start_test(VariableManager_UnpinVariableType_Works)