diff --git a/wp-modules/editor/editor.php b/wp-modules/editor/editor.php
index 18821f978..af1ca254a 100644
--- a/wp-modules/editor/editor.php
+++ b/wp-modules/editor/editor.php
@@ -174,6 +174,24 @@ function register_pattern_post_type() {
 			'default'      => get_pattern_defaults()['keywords'],
 		)
 	);
+
+	register_post_meta(
+		$post_type_key,
+		'customCategories',
+		array(
+			'show_in_rest' => array(
+				'schema' => array(
+					'type'  => 'array',
+					'items' => array(
+						'type' => 'string',
+					),
+				),
+			),
+			'single'       => true,
+			'type'         => 'array',
+			'default'      => [],
+		)
+	);
 }
 add_action( 'init', __NAMESPACE__ . '\register_pattern_post_type' );
 
diff --git a/wp-modules/editor/js/src/components/PatternManagerMetaControls/index.tsx b/wp-modules/editor/js/src/components/PatternManagerMetaControls/index.tsx
index 9052b73c5..fc16fa1c1 100644
--- a/wp-modules/editor/js/src/components/PatternManagerMetaControls/index.tsx
+++ b/wp-modules/editor/js/src/components/PatternManagerMetaControls/index.tsx
@@ -49,6 +49,7 @@ export default function PatternManagerMetaControls() {
 			<CategoriesPanel
 				categories={ postMeta.categories }
 				categoryOptions={ queriedCategories }
+				customCategories={ postMeta.customCategories }
 				handleChange={ updatePostMeta }
 			/>
 			<KeywordsPanel
diff --git a/wp-modules/editor/js/src/components/SidebarPanels/CategoriesPanel.tsx b/wp-modules/editor/js/src/components/SidebarPanels/CategoriesPanel.tsx
index 324b5c5e8..df33dc679 100644
--- a/wp-modules/editor/js/src/components/SidebarPanels/CategoriesPanel.tsx
+++ b/wp-modules/editor/js/src/components/SidebarPanels/CategoriesPanel.tsx
@@ -1,7 +1,8 @@
 import { __ } from '@wordpress/i18n';
 import { PluginDocumentSettingPanel } from '@wordpress/edit-post';
 import { Spinner } from '@wordpress/components';
-import Select from 'react-select';
+import Creatable from 'react-select/creatable';
+import convertToSlug from '../../utils/convertToSlug';
 
 import type { BaseSidebarProps, AdditionalSidebarProps } from './types';
 
@@ -12,16 +13,32 @@ import type { BaseSidebarProps, AdditionalSidebarProps } from './types';
 export default function CategoriesPanel( {
 	categories,
 	categoryOptions,
+	customCategories,
 	handleChange,
-}: BaseSidebarProps< 'categories' > &
+}: BaseSidebarProps< 'categories' | 'customCategories' > &
 	AdditionalSidebarProps< 'categoryOptions' > ) {
+	// The list of currently selected categories, formatted for react-select.
+	const selectedCategories: typeof categoryOptions = categories.reduce(
+		( acc, categoryName ) =>
+			! acc.includes( categoryName )
+				? [
+						...acc,
+						categoryOptions.find(
+							( matchedCategory ) =>
+								matchedCategory.value === categoryName
+						),
+				  ]
+				: acc,
+		[]
+	);
+
 	return (
 		<PluginDocumentSettingPanel
 			name="patternmanager-pattern-editor-pattern-categories"
 			title={ __( 'Pattern Categories', 'pattern-manager' ) }
 		>
 			{ categoryOptions ? (
-				<Select
+				<Creatable
 					isMulti
 					isClearable
 					closeMenuOnSelect={ false }
@@ -29,19 +46,44 @@ export default function CategoriesPanel( {
 						'Add Pattern Categories',
 						'pattern-manager'
 					) }
-					value={ categories?.map( ( category ) =>
-						categoryOptions.find(
-							( matchedCategory ) =>
-								matchedCategory.value === category
-						)
-					) }
+					value={ selectedCategories }
 					options={ categoryOptions }
 					onChange={ ( categorySelections ) => {
+						const selections = categorySelections.map(
+							( category ) => category.value
+						);
+
+						const customCategorySelections = categoryOptions.reduce(
+							( acc, category ) => {
+								const customCategoryFound =
+									selections.includes( category.value ) &&
+									/^pm_custom_category_/.test(
+										category.value
+									);
+
+								return customCategoryFound
+									? [ ...acc, category.label ]
+									: acc;
+							},
+							[]
+						);
+
+						handleChange( 'categories', selections, {
+							customCategories: customCategorySelections,
+						} );
+					} }
+					onCreateOption={ ( newCategoryTitle ) => {
 						handleChange(
-							'categories',
-							categorySelections.map(
-								( category ) => category.value
-							)
+							'customCategories',
+							[ ...customCategories, newCategoryTitle ],
+							{
+								categories: [
+									...categories,
+									`pm_custom_category_${ convertToSlug(
+										newCategoryTitle
+									) }`,
+								],
+							}
 						);
 					} }
 					menuPlacement="auto"
diff --git a/wp-modules/editor/js/src/hooks/usePatternData.ts b/wp-modules/editor/js/src/hooks/usePatternData.ts
index 9c76e9bb1..2d749cee0 100644
--- a/wp-modules/editor/js/src/hooks/usePatternData.ts
+++ b/wp-modules/editor/js/src/hooks/usePatternData.ts
@@ -3,6 +3,7 @@ import sortAlphabetically from '../utils/sortAlphabetically';
 import { useSelect, useDispatch } from '@wordpress/data';
 import { useEffect } from '@wordpress/element';
 import { PostMeta, SelectQuery } from '../types';
+import convertToSlug from '../utils/convertToSlug';
 
 export default function usePatternData( postMeta: PostMeta ) {
 	const { editPost } = useDispatch( 'core/editor' );
@@ -70,6 +71,30 @@ export default function usePatternData( postMeta: PostMeta ) {
 		);
 	}, [] );
 
+	/**
+	 * Registered and newly added custom categories, combined.
+	 * Needed for including new categories before the post is saved.
+	 */
+	const combinedCategories = [
+		...postMeta.customCategories.reduce( ( acc, categoryLabel ) => {
+			const missingCategory = ! categories.some(
+				( queriedCategory ) => queriedCategory.label === categoryLabel
+			);
+
+			return missingCategory
+				? [
+						...acc,
+						{
+							label: categoryLabel,
+							value: `pm_custom_category_${ convertToSlug(
+								categoryLabel
+							) }`,
+						},
+				  ]
+				: acc;
+		}, categories ),
+	];
+
 	/**
 	 * The alphabetized list of transformable block types, mapped for react-select.
 	 * Template-part types are added to support template part replacement in site editor.
@@ -195,7 +220,7 @@ export default function usePatternData( postMeta: PostMeta ) {
 
 	return {
 		queriedBlockTypes: blockTypes,
-		queriedCategories: categories,
+		queriedCategories: combinedCategories,
 		queriedPostTypes: postTypes,
 		updatePostMeta,
 		updatePostMetaMulti,
diff --git a/wp-modules/editor/js/src/types.ts b/wp-modules/editor/js/src/types.ts
index 9e25266a0..1f4691dcf 100644
--- a/wp-modules/editor/js/src/types.ts
+++ b/wp-modules/editor/js/src/types.ts
@@ -3,6 +3,7 @@
 export type PostMeta = {
 	blockTypes: string[];
 	categories: string[];
+	customCategories: string[];
 	description: string;
 	inserter: boolean;
 	keywords: string[];
@@ -16,7 +17,10 @@ export type PatternPostData = PostMeta & {
 };
 
 export type SelectQuery = ( dataStore: string ) => {
-	getBlockPatternCategories: () => { name: string; label: string }[];
+	getBlockPatternCategories: () => {
+		name: string;
+		label: string;
+	}[];
 	getBlockTypes: () => { name: string; transforms?: unknown }[];
 	getCurrentPostAttribute: ( attributeName: 'meta' ) => PostMeta;
 	getEditedPostAttribute: ( postAttribute: string ) => unknown;
@@ -34,6 +38,7 @@ export type SelectQuery = ( dataStore: string ) => {
 export type Pattern = {
 	blockTypes: string[];
 	categories: string[];
+	customCategories: string[];
 	content: string;
 	description: string;
 	inserter: boolean;
diff --git a/wp-modules/editor/model.php b/wp-modules/editor/model.php
index f46bdb56c..d5070690a 100644
--- a/wp-modules/editor/model.php
+++ b/wp-modules/editor/model.php
@@ -18,6 +18,7 @@
 use function PatternManager\PatternDataHandlers\delete_pattern;
 use function PatternManager\PatternDataHandlers\tree_shake_theme_images;
 use function PatternManager\PatternDataHandlers\update_pattern;
+use function PatternManager\PatternDataHandlers\create_category_registration_file;
 
 /**
  * Gets the pattern content and title from the PHP file.
@@ -54,6 +55,9 @@ function save_pattern_to_file( WP_Post $post ) {
 		return;
 	}
 
+	// Add the utility file for custom category registration.
+	create_category_registration_file();
+
 	$pattern = get_pattern_by_name( $post->post_name );
 
 	update_pattern(
diff --git a/wp-modules/pattern-data-handlers/pattern-data-handlers.php b/wp-modules/pattern-data-handlers/pattern-data-handlers.php
index c43888605..92e8f5f34 100644
--- a/wp-modules/pattern-data-handlers/pattern-data-handlers.php
+++ b/wp-modules/pattern-data-handlers/pattern-data-handlers.php
@@ -69,7 +69,7 @@ function format_pattern_data( $pattern_data, $file ) {
 	}
 
 	// For properties of type array, parse data as comma-separated.
-	foreach ( array( 'categories', 'keywords', 'blockTypes', 'postTypes' ) as $property ) {
+	foreach ( array( 'categories', 'keywords', 'blockTypes', 'postTypes', 'customCategories' ) as $property ) {
 		if ( ! empty( $pattern_data[ $property ] ) ) {
 			$pattern_data[ $property ] = array_map(
 				// Trim whitespace at start and end of each element.
@@ -196,6 +196,15 @@ function get_patterns_directory() {
 	return get_stylesheet_directory() . '/patterns/';
 }
 
+/**
+ * Gets the directory the pattern utilities are in.
+ *
+ * @return string
+ */
+function get_utilities_directory() {
+	return get_stylesheet_directory() . '/patterns/utilities/';
+}
+
 /**
  * Gets the file paths for patterns.
  *
@@ -213,15 +222,16 @@ function get_pattern_file_paths() {
  */
 function get_pattern_by_path( $path ) {
 	$default_headers = array(
-		'title'         => 'Title',
-		'slug'          => 'Slug',
-		'description'   => 'Description',
-		'viewportWidth' => 'Viewport Width',
-		'categories'    => 'Categories',
-		'keywords'      => 'Keywords',
-		'blockTypes'    => 'Block Types',
-		'postTypes'     => 'Post Types',
-		'inserter'      => 'Inserter',
+		'title'            => 'Title',
+		'slug'             => 'Slug',
+		'description'      => 'Description',
+		'viewportWidth'    => 'Viewport Width',
+		'categories'       => 'Categories',
+		'keywords'         => 'Keywords',
+		'blockTypes'       => 'Block Types',
+		'postTypes'        => 'Post Types',
+		'inserter'         => 'Inserter',
+		'customCategories' => 'Custom Categories',
 	);
 
 	$pattern_data = format_pattern_data( get_file_data( $path, $default_headers ), $path );
@@ -239,16 +249,17 @@ function get_pattern_by_path( $path ) {
  */
 function get_pattern_defaults() {
 	return [
-		'name'          => '',
-		'title'         => '',
-		'description'   => '',
-		'content'       => '',
-		'viewportWidth' => 1280,
-		'categories'    => [],
-		'keywords'      => [],
-		'blockTypes'    => [],
-		'postTypes'     => [],
-		'inserter'      => true,
+		'name'             => '',
+		'title'            => '',
+		'description'      => '',
+		'content'          => '',
+		'viewportWidth'    => 1280,
+		'categories'       => [],
+		'keywords'         => [],
+		'blockTypes'       => [],
+		'postTypes'        => [],
+		'inserter'         => true,
+		'customCategories' => [],
 	];
 }
 
@@ -317,6 +328,32 @@ function update_pattern( $pattern ) {
 	return $pattern_file_created;
 }
 
+/**
+ * Create a utility file for handling custom category registration.
+ *
+ * @return bool
+ */
+function create_category_registration_file() {
+	// Spin up the filesystem api.
+	$wp_filesystem = \PatternManager\GetWpFilesystem\get_wp_filesystem_api();
+
+	$utils_dir     = get_utilities_directory();
+	$file_contents = construct_category_registration_php_file_contents();
+	$file_name     = 'category-registration.php';
+
+	if ( ! $wp_filesystem->exists( $utils_dir ) ) {
+		$wp_filesystem->mkdir( $utils_dir );
+	}
+
+	$utils_file_created = $wp_filesystem->put_contents(
+		$utils_dir . $file_name,
+		$file_contents,
+		FS_CHMOD_FILE
+	);
+
+	return $utils_file_created;
+}
+
 /**
  * Deletes a pattern.
  *
@@ -367,15 +404,115 @@ function construct_pattern_php_file_contents( $pattern_data ) {
  * Viewport Width: ' . $pattern['viewportWidth'] . '
  * Block Types: ' . implode( ', ', $pattern['blockTypes'] ) . '
  * Post Types: ' . implode( ', ', $pattern['postTypes'] ) . '
- * Inserter: ' . ( $pattern['inserter'] ? 'true' : 'false' ) . '
- */
-
+ * Inserter: ' . ( $pattern['inserter'] ? 'true' : 'false' ) . maybe_add_custom_category_header( $pattern['customCategories'] ) . '
+ */' . create_formatted_custom_category_registration( $pattern['customCategories'] ) . '
 ?>
 ' . trim( $pattern['content'] ) . '
 ';
 	return $file_contents;
 }
 
+/**
+ * Returns a string that conditionally contains the custom category header.
+ *
+ * @param array $custom_categories The custom category titles/labels.
+ * @return string
+ */
+function maybe_add_custom_category_header( $custom_categories ) {
+	$custom_category_header = '';
+
+	if ( ! empty( $custom_categories ) ) {
+		$custom_category_header = "\n * Custom Categories: " . implode( ', ', $custom_categories );
+	}
+
+	return $custom_category_header;
+}
+
+/**
+ * Returns a formatted string that will conditionally register custom categories when saved to the pattern file.
+ * Categories are checked against the pattern category registry before being registered.
+ *
+ * @param array $custom_categories The custom category titles/labels to be parsed.
+ * @return string
+ */
+function create_formatted_custom_category_registration( $custom_categories ) {
+	$custom_category_registration = '';
+
+	if ( ! empty( $custom_categories ) ) {
+		$custom_categories = array_map(
+			fn ( $category_label ) => "'$category_label'",
+			$custom_categories,
+		);
+
+		$custom_category_registration = '
+if ( file_exists( __DIR__ . "/utilities/category-registration.php" ) ) {
+	require_once( __DIR__ . "/utilities/category-registration.php" );
+	PmPatternCategoryUtilities\register_custom_categories( [ ' . implode( ', ', $custom_categories ) . ' ] );
+}';
+	}
+
+	return $custom_category_registration;
+}
+
+/**
+ * Returns a string containing the code for the category-registration file.
+ *
+ * @return string
+ */
+function construct_category_registration_php_file_contents() {
+	$file_contents = '<?php
+/**
+ * Module Name: Pattern Category Utilities
+ * Description: This module contains functions for registering custom pattern categories.
+ * Namespace: PmPatternCategoryUtilities
+ *
+ * @package pattern-manager
+ */
+
+declare(strict_types=1);
+
+namespace PmPatternCategoryUtilities;
+
+/**
+ * Register an array of custom pattern categories.
+ *
+ * @param array $custom_category_labels The list of new category labels.
+ */
+function register_custom_categories( $custom_category_labels ) {
+	$registered_categories = get_registered_categories();
+
+	foreach ( $custom_category_labels as $category_label ) {
+		if ( ! in_array( $category_label, $registered_categories, true ) ) {
+			$category_name = strtolower( str_replace( \' \', \'-\', $category_label ) );
+
+			register_block_pattern_category(
+				"pm_custom_category_$category_name",
+				array(
+					\'label\'   => $category_label,
+					\'pm_meta\' => \'pm_custom_category\',
+				),
+			);
+		}
+	}
+}
+
+/**
+ * Get the currently registered pattern categories.
+ *
+ * @return array
+ */
+function get_registered_categories() {
+	$registered_categories = \WP_Block_Pattern_Categories_Registry::get_instance()->get_all_registered();
+
+	return array_map(
+		fn ( $category ) => $category[\'label\'],
+		$registered_categories
+	);
+}';
+
+	return $file_contents;
+}
+
 /**
  * Scan all patterns in theme for images and other files, keep only ones actually being used.
  *