diff --git a/public/app/features/alerting/unified/api/ruler.ts b/public/app/features/alerting/unified/api/ruler.ts
index 536b7ce754f..c3a515df9dd 100644
--- a/public/app/features/alerting/unified/api/ruler.ts
+++ b/public/app/features/alerting/unified/api/ruler.ts
@@ -70,7 +70,7 @@ async function rulerGetRequest<T>(url: string, empty: T): Promise<T> {
       .toPromise();
     return response.data;
   } catch (e) {
-    if (e?.status === 404) {
+    if (e?.status === 404 || e?.data?.message?.includes('group does not exist')) {
       return empty;
     } else if (e?.status === 500 && e?.data?.message?.includes('mapping values are not allowed in this context')) {
       throw {
diff --git a/public/app/features/alerting/unified/components/RuleGroupPicker.tsx b/public/app/features/alerting/unified/components/RuleGroupPicker.tsx
deleted file mode 100644
index 6b553a3e976..00000000000
--- a/public/app/features/alerting/unified/components/RuleGroupPicker.tsx
+++ /dev/null
@@ -1,64 +0,0 @@
-import { Cascader, CascaderOption } from '@grafana/ui';
-import React, { FC, useEffect, useMemo } from 'react';
-import { useDispatch } from 'react-redux';
-import { useUnifiedAlertingSelector } from '../hooks/useUnifiedAlertingSelector';
-import { fetchRulerRulesAction } from '../state/actions';
-
-interface RuleGroupValue {
-  namespace: string;
-  group: string;
-}
-
-interface Props {
-  value?: RuleGroupValue;
-  onChange: (value: RuleGroupValue) => void;
-  dataSourceName: string;
-}
-
-const stringifyValue = ({ namespace, group }: RuleGroupValue) => namespace + '|||' + group;
-const parseValue = (value: string): RuleGroupValue => {
-  const [namespace, group] = value.split('|||');
-  return { namespace, group };
-};
-
-export const RuleGroupPicker: FC<Props> = ({ value, onChange, dataSourceName }) => {
-  const rulerRequests = useUnifiedAlertingSelector((state) => state.rulerRules);
-  const dispatch = useDispatch();
-  useEffect(() => {
-    dispatch(fetchRulerRulesAction(dataSourceName));
-  }, [dataSourceName, dispatch]);
-
-  const rulesConfig = rulerRequests[dataSourceName]?.result;
-
-  const options = useMemo((): CascaderOption[] => {
-    if (rulesConfig) {
-      return Object.entries(rulesConfig).map(([namespace, group]) => {
-        return {
-          label: namespace,
-          value: namespace,
-          items: group.map(({ name }) => {
-            return { label: name, value: stringifyValue({ namespace, group: name }) };
-          }),
-        };
-      });
-    }
-    return [];
-  }, [rulesConfig]);
-
-  // @TODO replace cascader with separate dropdowns
-  return (
-    <Cascader
-      placeholder="Select a rule group"
-      onSelect={(value) => {
-        console.log('selected', value);
-        onChange(parseValue(value));
-      }}
-      initialValue={value ? stringifyValue(value) : undefined}
-      displayAllSelectedLevels={true}
-      separator=" > "
-      key={JSON.stringify(options)}
-      options={options}
-      changeOnSelect={false}
-    />
-  );
-};
diff --git a/public/app/features/alerting/unified/components/rule-editor/AlertTypeStep.tsx b/public/app/features/alerting/unified/components/rule-editor/AlertTypeStep.tsx
index 85facfa6a70..84db059ed56 100644
--- a/public/app/features/alerting/unified/components/rule-editor/AlertTypeStep.tsx
+++ b/public/app/features/alerting/unified/components/rule-editor/AlertTypeStep.tsx
@@ -7,9 +7,9 @@ import { RuleEditorSection } from './RuleEditorSection';
 import { useFormContext } from 'react-hook-form';
 import { RuleFormType, RuleFormValues } from '../../types/rule-form';
 import { DataSourcePicker, DataSourcePickerProps } from '@grafana/runtime';
-import { RuleGroupPicker } from '../RuleGroupPicker';
 import { useRulesSourcesWithRuler } from '../../hooks/useRuleSourcesWithRuler';
 import { RuleFolderPicker } from './RuleFolderPicker';
+import { GroupAndNamespaceFields } from './GroupAndNamespaceFields';
 
 const alertTypeOptions: SelectableValue[] = [
   {
@@ -123,27 +123,8 @@ export const AlertTypeStep: FC<Props> = ({ editingExistingRule }) => {
           </Field>
         )}
       </div>
-      {ruleFormType === RuleFormType.system && (
-        <Field
-          label="Group"
-          className={styles.formInput}
-          error={errors.location?.message}
-          invalid={!!errors.location?.message}
-        >
-          {dataSourceName ? (
-            <InputControl
-              as={RuleGroupPicker}
-              name="location"
-              control={control}
-              dataSourceName={dataSourceName}
-              rules={{
-                required: { value: true, message: 'Please select a group' },
-              }}
-            />
-          ) : (
-            <Select placeholder="Select a data source first" onChange={() => {}} disabled={true} />
-          )}
-        </Field>
+      {ruleFormType === RuleFormType.system && dataSourceName && (
+        <GroupAndNamespaceFields dataSourceName={dataSourceName} />
       )}
       {ruleFormType === RuleFormType.threshold && (
         <Field
diff --git a/public/app/features/alerting/unified/components/rule-editor/AnnotationKeyInput.tsx b/public/app/features/alerting/unified/components/rule-editor/AnnotationKeyInput.tsx
index 1d319f70668..a6b94aabf77 100644
--- a/public/app/features/alerting/unified/components/rule-editor/AnnotationKeyInput.tsx
+++ b/public/app/features/alerting/unified/components/rule-editor/AnnotationKeyInput.tsx
@@ -1,6 +1,6 @@
 import { SelectableValue } from '@grafana/data';
-import { Input, Select } from '@grafana/ui';
-import React, { FC, useMemo, useState } from 'react';
+import React, { FC, useMemo } from 'react';
+import { SelectWithAdd } from './SelectWIthAdd';
 
 enum AnnotationOptions {
   description = 'Description',
@@ -18,47 +18,21 @@ interface Props {
   className?: string;
 }
 
-export const AnnotationKeyInput: FC<Props> = ({ value, onChange, existingKeys, width, className }) => {
-  const isCustomByDefault = !!value && !Object.keys(AnnotationOptions).includes(value); // custom by default if value does not match any of available options
-  const [isCustom, setIsCustom] = useState(isCustomByDefault);
-
+export const AnnotationKeyInput: FC<Props> = ({ value, existingKeys, ...rest }) => {
   const annotationOptions = useMemo(
-    (): SelectableValue[] => [
-      ...Object.entries(AnnotationOptions)
+    (): SelectableValue[] =>
+      Object.entries(AnnotationOptions)
         .filter(([optKey]) => !existingKeys.includes(optKey)) // remove keys already taken in other annotations
         .map(([key, value]) => ({ value: key, label: value })),
-      { value: '__add__', label: '+ Custom name' },
-    ],
     [existingKeys]
   );
 
-  if (isCustom) {
-    return (
-      <Input
-        width={width}
-        autoFocus={true}
-        value={value || ''}
-        placeholder="key"
-        className={className}
-        onChange={(e) => onChange((e.target as HTMLInputElement).value)}
-      />
-    );
-  } else {
-    return (
-      <Select
-        width={width}
-        options={annotationOptions}
-        value={value}
-        className={className}
-        onChange={(val: SelectableValue) => {
-          const value = val?.value;
-          if (value === '__add__') {
-            setIsCustom(true);
-          } else {
-            onChange(value);
-          }
-        }}
-      />
-    );
-  }
+  return (
+    <SelectWithAdd
+      value={value}
+      options={annotationOptions}
+      custom={!!value && !Object.keys(AnnotationOptions).includes(value)}
+      {...rest}
+    />
+  );
 };
diff --git a/public/app/features/alerting/unified/components/rule-editor/GroupAndNamespaceFields.tsx b/public/app/features/alerting/unified/components/rule-editor/GroupAndNamespaceFields.tsx
new file mode 100644
index 00000000000..b060e72adc6
--- /dev/null
+++ b/public/app/features/alerting/unified/components/rule-editor/GroupAndNamespaceFields.tsx
@@ -0,0 +1,85 @@
+import React, { FC, useEffect, useMemo, useState } from 'react';
+import { useDispatch } from 'react-redux';
+import { useUnifiedAlertingSelector } from '../../hooks/useUnifiedAlertingSelector';
+import { fetchRulerRulesAction } from '../../state/actions';
+import { RuleFormValues } from '../../types/rule-form';
+import { useFormContext } from 'react-hook-form';
+import { SelectableValue } from '@grafana/data';
+import { SelectWithAdd } from './SelectWIthAdd';
+import { Field, InputControl } from '@grafana/ui';
+import { css } from '@emotion/css';
+
+interface Props {
+  dataSourceName: string;
+}
+
+export const GroupAndNamespaceFields: FC<Props> = ({ dataSourceName }) => {
+  const { control, watch, errors, setValue } = useFormContext<RuleFormValues>();
+
+  const [customGroup, setCustomGroup] = useState(false);
+
+  const rulerRequests = useUnifiedAlertingSelector((state) => state.rulerRules);
+  const dispatch = useDispatch();
+  useEffect(() => {
+    dispatch(fetchRulerRulesAction(dataSourceName));
+  }, [dataSourceName, dispatch]);
+
+  const rulesConfig = rulerRequests[dataSourceName]?.result;
+
+  const namespace = watch('namespace');
+
+  const namespaceOptions = useMemo(
+    (): Array<SelectableValue<string>> =>
+      rulesConfig ? Object.keys(rulesConfig).map((namespace) => ({ label: namespace, value: namespace })) : [],
+    [rulesConfig]
+  );
+
+  const groupOptions = useMemo(
+    (): Array<SelectableValue<string>> =>
+      (namespace && rulesConfig?.[namespace]?.map((group) => ({ label: group.name, value: group.name }))) || [],
+    [namespace, rulesConfig]
+  );
+
+  return (
+    <>
+      <Field label="Namespace" error={errors.namespace?.message} invalid={!!errors.namespace?.message}>
+        <InputControl
+          as={SelectWithAdd}
+          className={inputStyle}
+          name="namespace"
+          options={namespaceOptions}
+          control={control}
+          width={42}
+          rules={{
+            required: { value: true, message: 'Required.' },
+          }}
+          onChange={(values) => {
+            setValue('group', ''); //reset if namespace changes
+            return values[0];
+          }}
+          onCustomChange={(custom: boolean) => {
+            custom && setCustomGroup(true);
+          }}
+        />
+      </Field>
+      <Field label="Group" error={errors.group?.message} invalid={!!errors.group?.message}>
+        <InputControl
+          as={SelectWithAdd}
+          name="group"
+          className={inputStyle}
+          options={groupOptions}
+          width={42}
+          custom={customGroup}
+          control={control}
+          rules={{
+            required: { value: true, message: 'Required.' },
+          }}
+        />
+      </Field>
+    </>
+  );
+};
+
+const inputStyle = css`
+  width: 330px;
+`;
diff --git a/public/app/features/alerting/unified/components/rule-editor/SelectWIthAdd.tsx b/public/app/features/alerting/unified/components/rule-editor/SelectWIthAdd.tsx
new file mode 100644
index 00000000000..6aa55826be5
--- /dev/null
+++ b/public/app/features/alerting/unified/components/rule-editor/SelectWIthAdd.tsx
@@ -0,0 +1,79 @@
+import { SelectableValue } from '@grafana/data';
+import { Input, Select } from '@grafana/ui';
+import React, { FC, useEffect, useMemo, useState } from 'react';
+
+interface Props {
+  onChange: (value: string) => void;
+  options: Array<SelectableValue<string>>;
+  value?: string;
+  addLabel?: string;
+  className?: string;
+  placeholder?: string;
+  custom?: boolean;
+  onCustomChange?: (custom: boolean) => void;
+  width?: number;
+  disabled?: boolean;
+}
+
+export const SelectWithAdd: FC<Props> = ({
+  value,
+  onChange,
+  options,
+  className,
+  placeholder,
+  width,
+  custom,
+  onCustomChange,
+  disabled = false,
+  addLabel = '+ Add new',
+}) => {
+  const [isCustom, setIsCustom] = useState(custom);
+
+  useEffect(() => {
+    if (custom) {
+      setIsCustom(custom);
+    }
+  }, [custom]);
+
+  const _options = useMemo((): Array<SelectableValue<string>> => [...options, { value: '__add__', label: addLabel }], [
+    options,
+    addLabel,
+  ]);
+
+  if (isCustom) {
+    return (
+      <Input
+        width={width}
+        autoFocus={!custom}
+        value={value || ''}
+        placeholder={placeholder}
+        className={className}
+        disabled={disabled}
+        onChange={(e) => onChange((e.target as HTMLInputElement).value)}
+      />
+    );
+  } else {
+    return (
+      <Select
+        width={width}
+        options={_options}
+        value={value}
+        className={className}
+        placeholder={placeholder}
+        disabled={disabled}
+        onChange={(val: SelectableValue) => {
+          const value = val?.value;
+          if (value === '__add__') {
+            setIsCustom(true);
+            if (onCustomChange) {
+              onCustomChange(true);
+            }
+            onChange('');
+          } else {
+            onChange(value);
+          }
+        }}
+      />
+    );
+  }
+};
diff --git a/public/app/features/alerting/unified/state/actions.ts b/public/app/features/alerting/unified/state/actions.ts
index 237373315ad..7bc471b5fa8 100644
--- a/public/app/features/alerting/unified/state/actions.ts
+++ b/public/app/features/alerting/unified/state/actions.ts
@@ -164,9 +164,9 @@ export function deleteRuleAction(ruleIdentifier: RuleIdentifier): ThunkResult<vo
 }
 
 async function saveLotexRule(values: RuleFormValues, existing?: RuleWithLocation): Promise<RuleIdentifier> {
-  const { dataSourceName, location } = values;
+  const { dataSourceName, group, namespace } = values;
   const formRule = formValuesToRulerAlertingRuleDTO(values);
-  if (dataSourceName && location) {
+  if (dataSourceName && group && namespace) {
     // if we're updating a rule...
     if (existing) {
       // refetch it so we always have the latest greatest
@@ -175,7 +175,7 @@ async function saveLotexRule(values: RuleFormValues, existing?: RuleWithLocation
         throw new Error('Rule not found.');
       }
       // if namespace or group was changed, delete the old rule
-      if (freshExisting.namespace !== location.namespace || freshExisting.group.name !== location.group) {
+      if (freshExisting.namespace !== namespace || freshExisting.group.name !== group) {
         await deleteRule(freshExisting);
       } else {
         // if same namespace or group, update the group replacing the old rule with new
@@ -185,14 +185,14 @@ async function saveLotexRule(values: RuleFormValues, existing?: RuleWithLocation
             existingRule === freshExisting.rule ? formRule : existingRule
           ),
         };
-        await setRulerRuleGroup(dataSourceName, location.namespace, payload);
-        return getRuleIdentifier(dataSourceName, location.namespace, location.group, formRule);
+        await setRulerRuleGroup(dataSourceName, namespace, payload);
+        return getRuleIdentifier(dataSourceName, namespace, group, formRule);
       }
     }
 
     // if creating new rule or existing rule was in a different namespace/group, create new rule in target group
 
-    const targetGroup = await fetchRulerRulesGroup(dataSourceName, location.namespace, location.group);
+    const targetGroup = await fetchRulerRulesGroup(dataSourceName, namespace, group);
 
     const payload: RulerRuleGroupDTO = targetGroup
       ? {
@@ -200,12 +200,12 @@ async function saveLotexRule(values: RuleFormValues, existing?: RuleWithLocation
           rules: [...targetGroup.rules, formRule],
         }
       : {
-          name: location.group,
+          name: group,
           rules: [formRule],
         };
 
-    await setRulerRuleGroup(dataSourceName, location.namespace, payload);
-    return getRuleIdentifier(dataSourceName, location.namespace, location.group, formRule);
+    await setRulerRuleGroup(dataSourceName, namespace, payload);
+    return getRuleIdentifier(dataSourceName, namespace, group, formRule);
   } else {
     throw new Error('Data source and location must be specified');
   }
diff --git a/public/app/features/alerting/unified/types/rule-form.ts b/public/app/features/alerting/unified/types/rule-form.ts
index 251c69ea52a..e9a1208dba3 100644
--- a/public/app/features/alerting/unified/types/rule-form.ts
+++ b/public/app/features/alerting/unified/types/rule-form.ts
@@ -31,7 +31,8 @@ export interface RuleFormValues {
   evaluateFor: string;
 
   // system alerts
-  location?: { namespace: string; group: string };
+  namespace: string;
+  group: string;
   forTime: number;
   forTimeUnit: string;
   expression: string;
diff --git a/public/app/features/alerting/unified/utils/rule-form.ts b/public/app/features/alerting/unified/utils/rule-form.ts
index d85d66e5707..55fbd1332e1 100644
--- a/public/app/features/alerting/unified/utils/rule-form.ts
+++ b/public/app/features/alerting/unified/utils/rule-form.ts
@@ -29,6 +29,8 @@ export const defaultFormValues: RuleFormValues = Object.freeze({
   evaluateFor: '5m',
 
   // system
+  group: '',
+  namespace: '',
   expression: '',
   forTime: 1,
   forTimeUnit: 'm',
@@ -114,10 +116,8 @@ export function rulerRuleToFormValues(ruleWithLocation: RuleWithLocation): RuleF
         name: rule.alert,
         type: RuleFormType.system,
         dataSourceName: ruleSourceName,
-        location: {
-          namespace,
-          group: group.name,
-        },
+        namespace,
+        group: group.name,
         expression: rule.expr,
         forTime,
         forTimeUnit,