diff --git a/Code/Tools/ProjectManager/Resources/ProjectManager.qss b/Code/Tools/ProjectManager/Resources/ProjectManager.qss
index 712c01aa02..6694168f2b 100644
--- a/Code/Tools/ProjectManager/Resources/ProjectManager.qss
+++ b/Code/Tools/ProjectManager/Resources/ProjectManager.qss
@@ -523,6 +523,14 @@ QProgressBar::chunk {
     background-color: #444444;
 }
 
+#gemCatalogMenuButton {
+    qproperty-flat: true;
+    max-width:36px;
+    min-width:36px;
+    max-height:24px;
+    min-height:24px;
+}
+
 #GemCatalogHeaderLabel {
     font-size: 12px;
     color: #FFFFFF;
diff --git a/Code/Tools/ProjectManager/Source/GemCatalog/GemCatalogHeaderWidget.cpp b/Code/Tools/ProjectManager/Source/GemCatalog/GemCatalogHeaderWidget.cpp
index 0ecea215bf..5da163bafe 100644
--- a/Code/Tools/ProjectManager/Source/GemCatalog/GemCatalogHeaderWidget.cpp
+++ b/Code/Tools/ProjectManager/Source/GemCatalog/GemCatalogHeaderWidget.cpp
@@ -8,14 +8,13 @@
 
 #include <GemCatalog/GemCatalogHeaderWidget.h>
 #include <AzCore/std/functional.h>
-#include <TagWidget.h>
-
 #include <QHBoxLayout>
 #include <QMouseEvent>
 #include <QLabel>
 #include <QPushButton>
-#include <QMenu>
 #include <QProgressBar>
+#include <TagWidget.h>
+#include <QMenu>
 
 namespace O3DE::ProjectManager
 {
@@ -406,7 +405,6 @@ namespace O3DE::ProjectManager
 
         CartButton* cartButton = new CartButton(gemModel, downloadController);
         hLayout->addWidget(cartButton);
-
         hLayout->addSpacing(16);
 
         // Separating line
@@ -418,9 +416,9 @@ namespace O3DE::ProjectManager
         hLayout->addSpacing(16);
 
         QMenu* gemMenu = new QMenu(this);
-        m_openGemReposAction = gemMenu->addAction(tr("Show Gem Repos"));
-
-        connect(m_openGemReposAction, &QAction::triggered, this,[this](){ emit OpenGemsRepo(); });
+        gemMenu->addAction( tr("Show Gem Repos"), [this]() { emit OpenGemsRepo(); });
+        gemMenu->addSeparator();
+        gemMenu->addAction( tr("Add Existing Gem"), [this]() { emit AddGem(); });
 
         QPushButton* gemMenuButton = new QPushButton(this);
         gemMenuButton->setObjectName("gemCatalogMenuButton");
diff --git a/Code/Tools/ProjectManager/Source/GemCatalog/GemCatalogHeaderWidget.h b/Code/Tools/ProjectManager/Source/GemCatalog/GemCatalogHeaderWidget.h
index fa381e54ae..19adec5607 100644
--- a/Code/Tools/ProjectManager/Source/GemCatalog/GemCatalogHeaderWidget.h
+++ b/Code/Tools/ProjectManager/Source/GemCatalog/GemCatalogHeaderWidget.h
@@ -8,24 +8,23 @@
 
 #pragma once
 
-#include <AzCore/std/function/function_fwd.h>
-
 #if !defined(Q_MOC_RUN)
+#include <AzCore/std/function/function_fwd.h>
 #include <AzQtComponents/Components/SearchLineEdit.h>
 #include <GemCatalog/GemModel.h>
 #include <GemCatalog/GemSortFilterProxyModel.h>
 #include <TagWidget.h>
-#include <DownloadController.h>
-
 #include <QFrame>
-#include <QLabel>
-#include <QDialog>
-#include <QMoveEvent>
-#include <QHideEvent>
-#include <QVBoxLayout>
-#include <QAction>
+#include <DownloadController.h>
 #endif
 
+QT_FORWARD_DECLARE_CLASS(QPushButton)
+QT_FORWARD_DECLARE_CLASS(QLabel)
+QT_FORWARD_DECLARE_CLASS(QVBoxLayout)
+QT_FORWARD_DECLARE_CLASS(QHBoxLayout)
+QT_FORWARD_DECLARE_CLASS(QHideEvent)
+QT_FORWARD_DECLARE_CLASS(QMoveEvent)
+
 namespace O3DE::ProjectManager
 {
     class CartOverlayWidget
@@ -87,12 +86,11 @@ namespace O3DE::ProjectManager
         void ReinitForProject();
 
     signals:
+        void AddGem();
         void OpenGemsRepo();
-
+        
     private:
         AzQtComponents::SearchLineEdit* m_filterLineEdit = nullptr;
         inline constexpr static int s_height = 60;
-
-        QAction* m_openGemReposAction = nullptr;
     };
 } // namespace O3DE::ProjectManager
diff --git a/Code/Tools/ProjectManager/Source/GemCatalog/GemCatalogScreen.cpp b/Code/Tools/ProjectManager/Source/GemCatalog/GemCatalogScreen.cpp
index 69c5844e84..b145363460 100644
--- a/Code/Tools/ProjectManager/Source/GemCatalog/GemCatalogScreen.cpp
+++ b/Code/Tools/ProjectManager/Source/GemCatalog/GemCatalogScreen.cpp
@@ -19,6 +19,10 @@
 #include <QTimer>
 #include <PythonBindingsInterface.h>
 #include <QMessageBox>
+#include <QDir>
+#include <QStandardPaths>
+#include <QFileDialog>
+#include <QMessageBox>
 
 namespace O3DE::ProjectManager
 {
@@ -74,6 +78,7 @@ namespace O3DE::ProjectManager
     void GemCatalogScreen::ReinitForProject(const QString& projectPath)
     {
         m_gemModel->clear();
+        m_gemsToRegisterWithProject.clear();
         FillModel(projectPath);
 
         if (m_filterWidget)
@@ -90,6 +95,47 @@ namespace O3DE::ProjectManager
 
         connect(m_gemModel, &GemModel::dataChanged, m_filterWidget, &GemFilterWidget::ResetGemStatusFilter);
         connect(m_gemModel, &GemModel::gemStatusChanged, this, &GemCatalogScreen::OnGemStatusChanged);
+        connect(
+            m_headerWidget, &GemCatalogHeaderWidget::AddGem,
+            [&]()
+            {
+                EngineInfo engineInfo;
+                QString defaultPath;
+
+                AZ::Outcome<EngineInfo> engineInfoResult = PythonBindingsInterface::Get()->GetEngineInfo();
+                if (engineInfoResult.IsSuccess())
+                {
+                    engineInfo = engineInfoResult.GetValue();
+                    defaultPath = engineInfo.m_defaultGemsFolder;
+                }
+
+                if (defaultPath.isEmpty())
+                {
+                    defaultPath = QStandardPaths::writableLocation(QStandardPaths::DocumentsLocation);
+                }
+
+                QString directory = QDir::toNativeSeparators(QFileDialog::getExistingDirectory(this, tr("Browse"), defaultPath));
+                if (!directory.isEmpty())
+                {
+                    // register the gem to the o3de_manifest.json and to the project after the user confirms
+                    // project creation/update
+                    auto registerResult = PythonBindingsInterface::Get()->RegisterGem(directory);
+                    if(!registerResult)
+                    {
+                        QMessageBox::critical(this, tr("Failed to add gem"), registerResult.GetError().c_str());
+                    }
+                    else
+                    {
+                        m_gemsToRegisterWithProject.insert(directory);
+                        AZ::Outcome<GemInfo, void> gemInfoResult = PythonBindingsInterface::Get()->GetGemInfo(directory);
+                        if (gemInfoResult)
+                        {
+                            m_gemModel->AddGem(gemInfoResult.GetValue<GemInfo>());
+                            m_gemModel->UpdateGemDependencies();
+                        }
+                    }
+                }
+            });
 
         // Select the first entry after everything got correctly sized
         QTimer::singleShot(200, [=]{
@@ -251,6 +297,12 @@ namespace O3DE::ProjectManager
 
                 return EnableDisableGemsResult::Failed;
             }
+
+            // register external gems that were added with relative paths
+            if (m_gemsToRegisterWithProject.contains(gemPath))
+            {
+                pythonBindings->RegisterGem(QDir(projectPath).relativeFilePath(gemPath), projectPath);
+            }
         }
 
         for (const QModelIndex& modelIndex : toBeRemoved)
diff --git a/Code/Tools/ProjectManager/Source/GemCatalog/GemCatalogScreen.h b/Code/Tools/ProjectManager/Source/GemCatalog/GemCatalogScreen.h
index 62528ba942..8e9f31c710 100644
--- a/Code/Tools/ProjectManager/Source/GemCatalog/GemCatalogScreen.h
+++ b/Code/Tools/ProjectManager/Source/GemCatalog/GemCatalogScreen.h
@@ -18,6 +18,8 @@
 #include <GemCatalog/GemInspector.h>
 #include <GemCatalog/GemModel.h>
 #include <GemCatalog/GemSortFilterProxyModel.h>
+#include <QSet>
+#include <QString>
 #endif
 
 namespace O3DE::ProjectManager
@@ -70,5 +72,6 @@ namespace O3DE::ProjectManager
         GemFilterWidget* m_filterWidget = nullptr;
         DownloadController* m_downloadController = nullptr;
         bool m_notificationsEnabled = true;
+        QSet<QString> m_gemsToRegisterWithProject;
     };
 } // namespace O3DE::ProjectManager
diff --git a/Code/Tools/ProjectManager/Source/PythonBindings.cpp b/Code/Tools/ProjectManager/Source/PythonBindings.cpp
index bc8773b0c8..f001195e85 100644
--- a/Code/Tools/ProjectManager/Source/PythonBindings.cpp
+++ b/Code/Tools/ProjectManager/Source/PythonBindings.cpp
@@ -556,6 +556,47 @@ namespace O3DE::ProjectManager
         return AZ::Success(AZStd::move(gemNames));
     }
 
+    AZ::Outcome<void, AZStd::string> PythonBindings::RegisterGem(const QString& gemPath, const QString& projectPath)
+    {
+        bool registrationResult = false;
+        auto result = ExecuteWithLockErrorHandling(
+            [&]
+        {
+            auto externalProjectPath = projectPath.isEmpty() ? pybind11::none() : QString_To_Py_Path(projectPath);
+            auto pythonRegistrationResult = m_register.attr("register")(
+                pybind11::none(), // engine_path
+                pybind11::none(), // project_path
+                QString_To_Py_Path(gemPath), // gem folder
+                pybind11::none(), // external subdirectory
+                pybind11::none(), // template_path
+                pybind11::none(), // restricted folder 
+                pybind11::none(), // repo uri 
+                pybind11::none(), // default_engines_folder
+                pybind11::none(), // default_projects_folder
+                pybind11::none(), // default_gems_folder
+                pybind11::none(), // default_templates_folder
+                pybind11::none(), // default_restricted_folder
+                pybind11::none(), // default_third_party_folder
+                pybind11::none(), // external_subdir_engine_path
+                externalProjectPath // external_subdir_project_path
+                );
+
+            // Returns an exit code so boolify it then invert result
+            registrationResult = !pythonRegistrationResult.cast<bool>();
+        });
+
+        if (!result.IsSuccess())
+        {
+            return AZ::Failure<AZStd::string>(result.GetError().c_str());
+        }
+        else if (!registrationResult)
+        {
+            return AZ::Failure<AZStd::string>(AZStd::string::format("Failed to register gem path %s", gemPath.toUtf8().constData()));
+        }
+
+        return AZ::Success();
+    }
+
     bool PythonBindings::AddProject(const QString& path)
     {
         bool registrationResult = false;
diff --git a/Code/Tools/ProjectManager/Source/PythonBindings.h b/Code/Tools/ProjectManager/Source/PythonBindings.h
index 638ce6b1d4..9d2c8c850f 100644
--- a/Code/Tools/ProjectManager/Source/PythonBindings.h
+++ b/Code/Tools/ProjectManager/Source/PythonBindings.h
@@ -42,6 +42,7 @@ namespace O3DE::ProjectManager
         AZ::Outcome<QVector<GemInfo>, AZStd::string> GetEngineGemInfos() override;
         AZ::Outcome<QVector<GemInfo>, AZStd::string> GetAllGemInfos(const QString& projectPath) override;
         AZ::Outcome<QVector<AZStd::string>, AZStd::string> GetEnabledGemNames(const QString& projectPath) override;
+        AZ::Outcome<void, AZStd::string> RegisterGem(const QString& gemPath, const QString& projectPath = {}) override;
 
         // Project
         AZ::Outcome<ProjectInfo> CreateProject(const QString& projectTemplatePath, const ProjectInfo& projectInfo) override;
diff --git a/Code/Tools/ProjectManager/Source/PythonBindingsInterface.h b/Code/Tools/ProjectManager/Source/PythonBindingsInterface.h
index 19442540a4..6b9ac39213 100644
--- a/Code/Tools/ProjectManager/Source/PythonBindingsInterface.h
+++ b/Code/Tools/ProjectManager/Source/PythonBindingsInterface.h
@@ -91,6 +91,14 @@ namespace O3DE::ProjectManager
          */
         virtual AZ::Outcome<QVector<AZStd::string>, AZStd::string> GetEnabledGemNames(const QString& projectPath) = 0;
 
+        /**
+         * Registers the gem to the specified project, or to the o3de_manifest.json if no project path is given
+         * @param gemPath the path to the gem
+         * @param projectPath the path to the project. If empty, will register the external path in o3de_manifest.json 
+         * @return An outcome with the success flag as well as an error message in case of a failure.
+         */
+        virtual AZ::Outcome<void, AZStd::string> RegisterGem(const QString& gemPath, const QString& projectPath = {}) = 0;
+
 
         // Projects 
 
diff --git a/scripts/o3de/o3de/register.py b/scripts/o3de/o3de/register.py
index 0de161177c..6ad54a11f3 100644
--- a/scripts/o3de/o3de/register.py
+++ b/scripts/o3de/o3de/register.py
@@ -596,7 +596,7 @@ def register(engine_path: pathlib.Path = None,
     :param default_third_party_folder: default 3rd party cache folder
     :param external_subdir_engine_path: Path to the engine to use when registering an external subdirectory.
      The registration occurs in the engine.json file in this case
-    :param external_subdir_engine_path: Path to the project to use when registering an external subdirectory.
+    :param external_subdir_project_path: Path to the project to use when registering an external subdirectory.
      The registrations occurs in the project.json in this case
     :param remove: add/remove the entries
     :param force: force update of the engine_path for specified "engine_name" from the engine.json file