diff --git a/public/app/features/explore/extensions/ToolbarExtensionPoint.test.tsx b/public/app/features/explore/extensions/ToolbarExtensionPoint.test.tsx
index cce2e4012f5..893a391da3b 100644
--- a/public/app/features/explore/extensions/ToolbarExtensionPoint.test.tsx
+++ b/public/app/features/explore/extensions/ToolbarExtensionPoint.test.tsx
@@ -60,7 +60,8 @@ describe('ToolbarExtensionPoint', () => {
             pluginId: 'grafana',
             id: '1',
             type: PluginExtensionTypes.link,
-            title: 'Dashboard',
+            title: 'Add to dashboard',
+            category: 'Dashboards',
             description: 'Add the current query as a panel to a dashboard',
             onClick: jest.fn(),
           },
@@ -82,12 +83,13 @@ describe('ToolbarExtensionPoint', () => {
       expect(screen.getByRole('button', { name: 'Add' })).toBeVisible();
     });
 
-    it('should render "Add" extension point menu button in split mode', async () => {
+    it('should render menu with extensions when "Add" is clicked in split mode', async () => {
       renderWithExploreStore(<ToolbarExtensionPoint exploreId={'left'} timeZone="browser" splitted={true} />);
 
       await userEvent.click(screen.getByRole('button', { name: 'Add' }));
 
-      expect(screen.getByRole('menuitem', { name: 'Dashboard' })).toBeVisible();
+      expect(screen.getByRole('group', { name: 'Dashboards' })).toBeVisible();
+      expect(screen.getByRole('menuitem', { name: 'Add to dashboard' })).toBeVisible();
       expect(screen.getByRole('menuitem', { name: 'ML: Forecast' })).toBeVisible();
     });
 
@@ -96,7 +98,8 @@ describe('ToolbarExtensionPoint', () => {
 
       await userEvent.click(screen.getByRole('button', { name: 'Add' }));
 
-      expect(screen.getByRole('menuitem', { name: 'Dashboard' })).toBeVisible();
+      expect(screen.getByRole('group', { name: 'Dashboards' })).toBeVisible();
+      expect(screen.getByRole('menuitem', { name: 'Add to dashboard' })).toBeVisible();
       expect(screen.getByRole('menuitem', { name: 'ML: Forecast' })).toBeVisible();
     });
 
@@ -104,7 +107,7 @@ describe('ToolbarExtensionPoint', () => {
       renderWithExploreStore(<ToolbarExtensionPoint exploreId="left" timeZone="browser" splitted={false} />);
 
       await userEvent.click(screen.getByRole('button', { name: 'Add' }));
-      await userEvent.click(screen.getByRole('menuitem', { name: 'Dashboard' }));
+      await userEvent.click(screen.getByRole('menuitem', { name: 'Add to dashboard' }));
 
       const { extensions } = getPluginLinkExtensions({ extensionPointId: PluginExtensionPoints.ExploreToolbarAction });
       const [extension] = extensions;
@@ -157,6 +160,59 @@ describe('ToolbarExtensionPoint', () => {
     });
   });
 
+  describe('with extension points without categories', () => {
+    beforeAll(() => {
+      getPluginLinkExtensionsMock.mockReturnValue({
+        extensions: [
+          {
+            pluginId: 'grafana',
+            id: '1',
+            type: PluginExtensionTypes.link,
+            title: 'Dashboard',
+            description: 'Add the current query as a panel to a dashboard',
+            onClick: jest.fn(),
+          },
+          {
+            pluginId: 'grafana-ml-app',
+            id: '2',
+            type: PluginExtensionTypes.link,
+            title: 'ML: Forecast',
+            description: 'Add the query as a ML forecast',
+            path: '/a/grafana-ml-ap/forecast',
+          },
+        ],
+      });
+    });
+
+    it('should render "Add" extension point menu button', () => {
+      renderWithExploreStore(<ToolbarExtensionPoint exploreId="left" timeZone="browser" splitted={false} />);
+
+      expect(screen.getByRole('button', { name: 'Add' })).toBeVisible();
+    });
+
+    it('should render "Add" extension point menu button in split mode', async () => {
+      renderWithExploreStore(<ToolbarExtensionPoint exploreId={'left'} timeZone="browser" splitted={true} />);
+
+      await userEvent.click(screen.getByRole('button', { name: 'Add' }));
+
+      // Make sure we don't have anything related to categories rendered
+      expect(screen.queryAllByRole('group').length).toBe(0);
+      expect(screen.getByRole('menuitem', { name: 'Dashboard' })).toBeVisible();
+      expect(screen.getByRole('menuitem', { name: 'ML: Forecast' })).toBeVisible();
+    });
+
+    it('should render menu with extensions when "Add" is clicked', async () => {
+      renderWithExploreStore(<ToolbarExtensionPoint exploreId="left" timeZone="browser" splitted={false} />);
+
+      await userEvent.click(screen.getByRole('button', { name: 'Add' }));
+
+      // Make sure we don't have anything related to categories rendered
+      expect(screen.queryAllByRole('group').length).toBe(0);
+      expect(screen.getByRole('menuitem', { name: 'Dashboard' })).toBeVisible();
+      expect(screen.getByRole('menuitem', { name: 'ML: Forecast' })).toBeVisible();
+    });
+  });
+
   describe('without extension points', () => {
     beforeAll(() => {
       contextSrvMock.hasAccess.mockReturnValue(true);
diff --git a/public/app/features/explore/extensions/ToolbarExtensionPoint.tsx b/public/app/features/explore/extensions/ToolbarExtensionPoint.tsx
index f360f839a39..0d6508b8acb 100644
--- a/public/app/features/explore/extensions/ToolbarExtensionPoint.tsx
+++ b/public/app/features/explore/extensions/ToolbarExtensionPoint.tsx
@@ -3,14 +3,14 @@ import React, { lazy, ReactElement, Suspense, useMemo, useState } from 'react';
 import { type PluginExtensionLink, PluginExtensionPoints, RawTimeRange } from '@grafana/data';
 import { getPluginLinkExtensions } from '@grafana/runtime';
 import { DataQuery, TimeZone } from '@grafana/schema';
-import { Dropdown, Menu, ToolbarButton } from '@grafana/ui';
+import { Dropdown, ToolbarButton } from '@grafana/ui';
 import { contextSrv } from 'app/core/services/context_srv';
-import { truncateTitle } from 'app/features/plugins/extensions/utils';
 import { AccessControlAction, ExplorePanelData, useSelector } from 'app/types';
 
 import { getExploreItemSelector } from '../state/selectors';
 
 import { ConfirmNavigationModal } from './ConfirmNavigationModal';
+import { ToolbarExtensionPointMenu } from './ToolbarExtensionPointMenu';
 
 const AddToDashboard = lazy(() =>
   import('./AddToDashboard').then(({ AddToDashboard }) => ({ default: AddToDashboard }))
@@ -49,24 +49,7 @@ export function ToolbarExtensionPoint(props: Props): ReactElement | null {
     );
   }
 
-  const menu = (
-    <Menu>
-      {extensions.map((extension) => (
-        <Menu.Item
-          ariaLabel={extension.title}
-          icon={extension?.icon || 'plug'}
-          key={extension.id}
-          label={truncateTitle(extension.title, 25)}
-          onClick={(event) => {
-            if (extension.path) {
-              return setSelectedExtension(extension);
-            }
-            extension.onClick?.(event);
-          }}
-        />
-      ))}
-    </Menu>
-  );
+  const menu = <ToolbarExtensionPointMenu extensions={extensions} onSelect={setSelectedExtension} />;
 
   return (
     <>
diff --git a/public/app/features/explore/extensions/ToolbarExtensionPointMenu.tsx b/public/app/features/explore/extensions/ToolbarExtensionPointMenu.tsx
new file mode 100644
index 00000000000..651cc5103e8
--- /dev/null
+++ b/public/app/features/explore/extensions/ToolbarExtensionPointMenu.tsx
@@ -0,0 +1,76 @@
+import React, { ReactElement, useMemo } from 'react';
+
+import { PluginExtensionLink } from '@grafana/data';
+import { Menu } from '@grafana/ui';
+import { truncateTitle } from 'app/features/plugins/extensions/utils';
+
+type Props = {
+  extensions: PluginExtensionLink[];
+  onSelect: (extension: PluginExtensionLink) => void;
+};
+
+export function ToolbarExtensionPointMenu({ extensions, onSelect }: Props): ReactElement | null {
+  const { categorised, uncategorised } = useExtensionLinksByCategory(extensions);
+  const showDivider = uncategorised.length > 0 && Object.keys(categorised).length > 0;
+
+  return (
+    <Menu>
+      <>
+        {Object.keys(categorised).map((category) => (
+          <Menu.Group key={category} label={truncateTitle(category, 25)}>
+            {renderItems(categorised[category], onSelect)}
+          </Menu.Group>
+        ))}
+        {showDivider && <Menu.Divider key="divider" />}
+        {renderItems(uncategorised, onSelect)}
+      </>
+    </Menu>
+  );
+}
+
+function renderItems(extensions: PluginExtensionLink[], onSelect: (link: PluginExtensionLink) => void): JSX.Element[] {
+  return extensions.map((extension) => (
+    <Menu.Item
+      ariaLabel={extension.title}
+      icon={extension?.icon || 'plug'}
+      key={extension.id}
+      label={truncateTitle(extension.title, 25)}
+      onClick={(event) => {
+        if (extension.path) {
+          return onSelect(extension);
+        }
+        extension.onClick?.(event);
+      }}
+    />
+  ));
+}
+
+type ExtensionLinksResult = {
+  uncategorised: PluginExtensionLink[];
+  categorised: Record<string, PluginExtensionLink[]>;
+};
+
+function useExtensionLinksByCategory(extensions: PluginExtensionLink[]): ExtensionLinksResult {
+  return useMemo(() => {
+    const uncategorised: PluginExtensionLink[] = [];
+    const categorised: Record<string, PluginExtensionLink[]> = {};
+
+    for (const link of extensions) {
+      if (!link.category) {
+        uncategorised.push(link);
+        continue;
+      }
+
+      if (!Array.isArray(categorised[link.category])) {
+        categorised[link.category] = [];
+      }
+      categorised[link.category].push(link);
+      continue;
+    }
+
+    return {
+      uncategorised,
+      categorised,
+    };
+  }, [extensions]);
+}
diff --git a/public/app/features/explore/extensions/getExploreExtensionConfigs.test.tsx b/public/app/features/explore/extensions/getExploreExtensionConfigs.test.tsx
index 959194fea6d..402f80bdf83 100644
--- a/public/app/features/explore/extensions/getExploreExtensionConfigs.test.tsx
+++ b/public/app/features/explore/extensions/getExploreExtensionConfigs.test.tsx
@@ -15,12 +15,13 @@ describe('getExploreExtensionConfigs', () => {
       expect(extensions).toEqual([
         {
           type: 'link',
-          title: 'Dashboard',
+          title: 'Add to dashboard',
           description: 'Use the query and panel from explore and create/add it to a dashboard',
           extensionPointId: PluginExtensionPoints.ExploreToolbarAction,
           icon: 'apps',
           configure: expect.any(Function),
           onClick: expect.any(Function),
+          category: 'Dashboards',
         },
       ]);
     });
diff --git a/public/app/features/explore/extensions/getExploreExtensionConfigs.tsx b/public/app/features/explore/extensions/getExploreExtensionConfigs.tsx
index a325e63a6eb..7f95f4e714f 100644
--- a/public/app/features/explore/extensions/getExploreExtensionConfigs.tsx
+++ b/public/app/features/explore/extensions/getExploreExtensionConfigs.tsx
@@ -14,10 +14,11 @@ export function getExploreExtensionConfigs(): PluginExtensionLinkConfig[] {
   try {
     return [
       createExtensionLinkConfig<PluginExtensionExploreContext>({
-        title: 'Dashboard',
+        title: 'Add to dashboard',
         description: 'Use the query and panel from explore and create/add it to a dashboard',
         extensionPointId: PluginExtensionPoints.ExploreToolbarAction,
         icon: 'apps',
+        category: 'Dashboards',
         configure: () => {
           const canAddPanelToDashboard =
             contextSrv.hasAccess(AccessControlAction.DashboardsCreate, contextSrv.isEditor) ||