diff --git a/CHANGELOG.md b/CHANGELOG.md
index 82d1175a15c0..f28a7c2522ab 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -55,6 +55,7 @@ Inspired from [Keep a Changelog](https://keepachangelog.com/en/1.0.0/)
 - [BUG][Multiple Datasource] Fix missing customApiRegistryPromise param for test connection ([#5944](https://github.com/opensearch-project/OpenSearch-Dashboards/pull/5944))
 - [BUG][Multiple Datasource] Add a migration function for datasource to add migrationVersion field ([#6025](https://github.com/opensearch-project/OpenSearch-Dashboards/pull/6025))
 - [BUG][MD]Expose picker using function in data source management plugin setup([#6030](https://github.com/opensearch-project/OpenSearch-Dashboards/pull/6030))
+- [BUG][Multiple Datasource] Fix data source filter bug and add tests ([#6152](https://github.com/opensearch-project/OpenSearch-Dashboards/pull/6152))
 
 ### 🚞 Infrastructure
 
diff --git a/src/plugins/data_source_management/public/components/data_source_selector/__snapshots__/data_source_selector.test.tsx.snap b/src/plugins/data_source_management/public/components/data_source_selector/__snapshots__/data_source_selector.test.tsx.snap
index 07359ef9ac05..2b8e3eba860d 100644
--- a/src/plugins/data_source_management/public/components/data_source_selector/__snapshots__/data_source_selector.test.tsx.snap
+++ b/src/plugins/data_source_management/public/components/data_source_selector/__snapshots__/data_source_selector.test.tsx.snap
@@ -202,6 +202,29 @@ exports[`DataSourceSelector: check dataSource options should hide prepend if rem
 />
 `;
 
+exports[`DataSourceSelector: check dataSource options should return empty options if filter out all options and hide local cluster 1`] = `
+<EuiComboBox
+  aria-label="Select a data source"
+  async={false}
+  compressed={false}
+  data-test-subj="dataSourceSelectorComboBox"
+  fullWidth={false}
+  isClearable={true}
+  isDisabled={false}
+  onChange={[Function]}
+  options={Array []}
+  placeholder="Select a data source"
+  prepend="Data source"
+  selectedOptions={Array []}
+  singleSelection={
+    Object {
+      "asPlainText": true,
+    }
+  }
+  sortMatchesBy="none"
+/>
+`;
+
 exports[`DataSourceSelector: check dataSource options should show custom placeholder text if configured 1`] = `
 <EuiComboBox
   aria-label="Make a selection"
diff --git a/src/plugins/data_source_management/public/components/data_source_selector/data_source_selector.test.tsx b/src/plugins/data_source_management/public/components/data_source_selector/data_source_selector.test.tsx
index 83f98ae01b70..86eb892e8cd8 100644
--- a/src/plugins/data_source_management/public/components/data_source_selector/data_source_selector.test.tsx
+++ b/src/plugins/data_source_management/public/components/data_source_selector/data_source_selector.test.tsx
@@ -143,7 +143,7 @@ describe('DataSourceSelector: check dataSource options', () => {
         disabled={false}
         hideLocalCluster={false}
         fullWidth={false}
-        filterFn={(ds) => ds.attributes.auth.type !== AuthType.NoAuth}
+        dataSourceFilter={(ds) => ds.attributes.auth.type !== AuthType.NoAuth}
       />
     );
 
@@ -152,4 +152,22 @@ describe('DataSourceSelector: check dataSource options', () => {
     expect(component).toMatchSnapshot();
     expect(toasts.addWarning).toBeCalledTimes(0);
   });
+
+  it('should return empty options if filter out all options and hide local cluster', async () => {
+    component = shallow(
+      <DataSourceSelector
+        savedObjectsClient={client}
+        notifications={toasts}
+        onSelectedDataSource={jest.fn()}
+        disabled={false}
+        hideLocalCluster={true}
+        fullWidth={false}
+        dataSourceFilter={(ds) => ds.attributes.auth.type === 'random'}
+      />
+    );
+    component.instance().componentDidMount!();
+    await nextTick();
+    expect(component).toMatchSnapshot();
+    expect(toasts.addWarning).toBeCalledTimes(0);
+  });
 });
diff --git a/src/plugins/data_source_management/public/components/data_source_selector/data_source_selector.tsx b/src/plugins/data_source_management/public/components/data_source_selector/data_source_selector.tsx
index d2f92e89388a..e7503cba645a 100644
--- a/src/plugins/data_source_management/public/components/data_source_selector/data_source_selector.tsx
+++ b/src/plugins/data_source_management/public/components/data_source_selector/data_source_selector.tsx
@@ -6,8 +6,9 @@
 import React from 'react';
 import { i18n } from '@osd/i18n';
 import { EuiComboBox } from '@elastic/eui';
-import { SavedObjectsClientContract, ToastsStart } from 'opensearch-dashboards/public';
+import { SavedObjectsClientContract, ToastsStart, SavedObject } from 'opensearch-dashboards/public';
 import { getDataSourcesWithFields } from '../utils';
+import { DataSourceAttributes } from '../../types';
 
 export const LocalCluster: DataSourceOption = {
   label: i18n.translate('dataSource.localCluster', {
@@ -26,7 +27,7 @@ export interface DataSourceSelectorProps {
   defaultOption?: DataSourceOption[];
   placeholderText?: string;
   removePrepend?: boolean;
-  filterFn?: (dataSource: any) => boolean;
+  dataSourceFilter?: (dataSource: SavedObject<DataSourceAttributes>) => boolean;
   compressed?: boolean;
 }
 
@@ -73,14 +74,13 @@ export class DataSourceSelector extends React.Component<
     getDataSourcesWithFields(this.props.savedObjectsClient, ['id', 'title', 'auth.type'])
       .then((fetchedDataSources) => {
         if (fetchedDataSources?.length) {
-          let filteredDataSources = [];
-          if (this.props.filterFn) {
-            filteredDataSources = fetchedDataSources.filter((ds) => this.props.filterFn!(ds));
+          let filteredDataSources = fetchedDataSources;
+          if (this.props.dataSourceFilter) {
+            filteredDataSources = fetchedDataSources.filter((ds) =>
+              this.props.dataSourceFilter!(ds)
+            );
           }
 
-          if (filteredDataSources.length === 0) {
-            filteredDataSources = fetchedDataSources;
-          }
           const dataSourceOptions = filteredDataSources.map((dataSource) => ({
             id: dataSource.id,
             label: dataSource.attributes?.title || '',
diff --git a/src/plugins/data_source_management/public/components/utils.ts b/src/plugins/data_source_management/public/components/utils.ts
index 6f55b71b2503..5773363efd61 100644
--- a/src/plugins/data_source_management/public/components/utils.ts
+++ b/src/plugins/data_source_management/public/components/utils.ts
@@ -3,7 +3,7 @@
  * SPDX-License-Identifier: Apache-2.0
  */
 
-import { HttpStart, SavedObjectsClientContract } from 'src/core/public';
+import { HttpStart, SavedObjectsClientContract, SavedObject } from 'src/core/public';
 import {
   DataSourceAttributes,
   DataSourceTableItem,
@@ -39,8 +39,8 @@ export async function getDataSources(savedObjectsClient: SavedObjectsClientContr
 export async function getDataSourcesWithFields(
   savedObjectsClient: SavedObjectsClientContract,
   fields: string[]
-) {
-  const response = await savedObjectsClient.find({
+): Promise<Array<SavedObject<DataSourceAttributes>>> {
+  const response = await savedObjectsClient.find<DataSourceAttributes>({
     type: 'data-source',
     fields,
     perPage: 10000,