diff --git a/Code/Framework/AzToolsFramework/AzToolsFramework/Entity/PrefabEditorEntityOwnershipService.cpp b/Code/Framework/AzToolsFramework/AzToolsFramework/Entity/PrefabEditorEntityOwnershipService.cpp
index fa7d5f6e9b..6e96511507 100644
--- a/Code/Framework/AzToolsFramework/AzToolsFramework/Entity/PrefabEditorEntityOwnershipService.cpp
+++ b/Code/Framework/AzToolsFramework/AzToolsFramework/Entity/PrefabEditorEntityOwnershipService.cpp
@@ -252,13 +252,20 @@ namespace AzToolsFramework
         }
 
         AZStd::string out;
-        if (m_loaderInterface->SaveTemplateToString(m_rootInstance->GetTemplateId(), out))
+
+        if (!m_loaderInterface->SaveTemplateToString(m_rootInstance->GetTemplateId(), out))
         {
-            const size_t bytesToWrite = out.size();
-            const size_t bytesWritten = stream.Write(bytesToWrite, out.data());
-            return bytesWritten == bytesToWrite;
+            return false;
         }
-        return false;
+
+        const size_t bytesToWrite = out.size();
+        const size_t bytesWritten = stream.Write(bytesToWrite, out.data());
+        if(bytesWritten != bytesToWrite)
+        {
+            return false;
+        }
+        m_prefabSystemComponent->SetTemplateDirtyFlag(templateId, false);
+        return true;
     }
 
     void PrefabEditorEntityOwnershipService::CreateNewLevelPrefab(AZStd::string_view filename, const AZStd::string& templateFilename)
diff --git a/Code/Framework/AzToolsFramework/AzToolsFramework/UI/Prefab/LevelRootUiHandler.cpp b/Code/Framework/AzToolsFramework/AzToolsFramework/UI/Prefab/LevelRootUiHandler.cpp
index 7915403c0a..d6b7aebddc 100644
--- a/Code/Framework/AzToolsFramework/AzToolsFramework/UI/Prefab/LevelRootUiHandler.cpp
+++ b/Code/Framework/AzToolsFramework/AzToolsFramework/UI/Prefab/LevelRootUiHandler.cpp
@@ -58,8 +58,17 @@ namespace AzToolsFramework
 
         if (!path.empty())
         {
-            infoString =
-                QObject::tr("<span style=\"font-style: italic; font-weight: 400;\">(%1)</span>").arg(path.Filename().Native().data());
+            QString saveFlag = "";
+            auto dirtyOutcome = m_prefabPublicInterface->HasUnsavedChanges(path);
+
+            if (dirtyOutcome.IsSuccess() && dirtyOutcome.GetValue() == true)
+            {
+                saveFlag = "*";
+            }
+
+            infoString = QObject::tr("<span style=\"font-style: italic; font-weight: 400;\">(%1%2)</span>")
+                             .arg(path.Filename().Native().data())
+                             .arg(saveFlag);
         }
 
         return infoString;