diff --git a/Code/Framework/AzToolsFramework/AzToolsFramework/Prefab/Template/Template.cpp b/Code/Framework/AzToolsFramework/AzToolsFramework/Prefab/Template/Template.cpp
index e5ab403ea6..8da926cd08 100644
--- a/Code/Framework/AzToolsFramework/AzToolsFramework/Prefab/Template/Template.cpp
+++ b/Code/Framework/AzToolsFramework/AzToolsFramework/Prefab/Template/Template.cpp
@@ -66,7 +66,16 @@ namespace AzToolsFramework
 
         bool Template::IsValid() const
         {
-            return !m_prefabDom.IsNull() && !m_filePath.empty();
+            if (m_prefabDom.IsNull() || m_filePath.empty())
+            {
+                return false;
+            }
+            else if (!m_prefabDom.IsObject())
+            {
+                return false;
+            }
+            auto source = m_prefabDom.FindMember(PrefabDomUtils::SourceName);
+            return (source != m_prefabDom.MemberEnd());
         }
 
         bool Template::IsLoadedWithErrors() const
@@ -175,6 +184,26 @@ namespace AzToolsFramework
             return findInstancesResult->get();
         }
 
+        bool Template::IsProcedural() const
+        {
+            if (m_isProcedural.has_value())
+            {
+                return m_isProcedural.value();
+            }
+            else if (!IsValid())
+            {
+                return false;
+            }
+            auto source = m_prefabDom.FindMember(PrefabDomUtils::SourceName);
+            if (!source->value.IsString())
+            {
+                return false;
+            }
+            AZ::IO::PathView path(source->value.GetString());
+            m_isProcedural = AZStd::make_optional(path.Extension().Match(".procprefab"));
+            return m_isProcedural.value();
+        }
+
         const AZ::IO::Path& Template::GetFilePath() const
         {
             return m_filePath;
diff --git a/Code/Framework/AzToolsFramework/AzToolsFramework/Prefab/Template/Template.h b/Code/Framework/AzToolsFramework/AzToolsFramework/Prefab/Template/Template.h
index f7a41431f8..9453edfabc 100644
--- a/Code/Framework/AzToolsFramework/AzToolsFramework/Prefab/Template/Template.h
+++ b/Code/Framework/AzToolsFramework/AzToolsFramework/Prefab/Template/Template.h
@@ -65,6 +65,9 @@ namespace AzToolsFramework
             const AZ::IO::Path& GetFilePath() const;
             void SetFilePath(const AZ::IO::PathView& path);
 
+            // To tell if this Template was created from an product asset
+            bool IsProcedural() const;
+
         private:
             // Container for keeping links representing the Template's nested instances.
             Links m_links;
@@ -80,6 +83,9 @@ namespace AzToolsFramework
 
             // Flag to tell if this Template has changes that have yet to be saved to file.
             bool m_isDirty = false;
+
+            // Flag to tell if this Template was generated outside the Editor
+            mutable AZStd::optional<bool> m_isProcedural;
         };
     } // namespace Prefab
 } // namespace AzToolsFramework
diff --git a/Code/Framework/AzToolsFramework/Tests/Prefab/ProceduralPrefabAssetTests.cpp b/Code/Framework/AzToolsFramework/Tests/Prefab/ProceduralPrefabAssetTests.cpp
index 0b9e73bbac..fb53fa962a 100644
--- a/Code/Framework/AzToolsFramework/Tests/Prefab/ProceduralPrefabAssetTests.cpp
+++ b/Code/Framework/AzToolsFramework/Tests/Prefab/ProceduralPrefabAssetTests.cpp
@@ -14,6 +14,7 @@
 #include <Prefab/PrefabTestFixture.h>
 #include <Prefab/Procedural/ProceduralPrefabAsset.h>
 #include <AzCore/Serialization/Json/RegistrationContext.h>
+#include <AzToolsFramework/Prefab/Template/Template.h>
 
 namespace UnitTest
 {
@@ -132,4 +133,32 @@ namespace UnitTest
         EXPECT_TRUE(outputValue.HasMember("member"));
         EXPECT_STREQ(outputValue.FindMember("member")->value.GetString(), "value");
     }
+
+    TEST_F(ProceduralPrefabAssetTest, Template_IsProcPrefab_DefaultsToNotProcPrefab)
+    {
+        AzToolsFramework::Prefab::PrefabDom dom;
+        dom.SetObject();
+        dom.AddMember("Source", "foo.prefab", dom.GetAllocator());
+        AzToolsFramework::Prefab::Template fooTemplate("foo", AZStd::move(dom));
+        EXPECT_FALSE(fooTemplate.IsProcedural());
+    }
+
+    TEST_F(ProceduralPrefabAssetTest, Template_IsProcPrefab_DomDrivesFlagToTrue)
+    {
+        AzToolsFramework::Prefab::PrefabDom dom;
+        dom.SetObject();
+        dom.AddMember("Source", "foo.procprefab", dom.GetAllocator());
+        AzToolsFramework::Prefab::Template fooTemplate("foo", AZStd::move(dom));
+        EXPECT_TRUE(fooTemplate.IsProcedural());
+        // the second time should use the cached version of the flag
+        EXPECT_TRUE(fooTemplate.IsProcedural());
+    }
+
+    TEST_F(ProceduralPrefabAssetTest, Template_IsProcPrefab_FailsWithNoSource)
+    {
+        AzToolsFramework::Prefab::PrefabDom dom;
+        dom.SetObject();
+        AzToolsFramework::Prefab::Template fooTemplate("foo", AZStd::move(dom));
+        EXPECT_FALSE(fooTemplate.IsProcedural());
+    }
 }