diff --git a/CodeEdit/Features/CEWorkspace/Models/CEWorkspaceFileManager+FileManagement.swift b/CodeEdit/Features/CEWorkspace/Models/CEWorkspaceFileManager+FileManagement.swift
index 29182c645..2618f1e19 100644
--- a/CodeEdit/Features/CEWorkspace/Models/CEWorkspaceFileManager+FileManagement.swift
+++ b/CodeEdit/Features/CEWorkspace/Models/CEWorkspaceFileManager+FileManagement.swift
@@ -116,6 +116,57 @@ extension CEWorkspaceFileManager {
         }
     }
 
+    /// This function is used to create a file with contents
+    func addFileWithContents(
+        fileName: String,
+        toFile file: CEWorkspaceFile,
+        useExtension: String? = nil,
+        contents: Data?
+    ) throws -> CEWorkspaceFile {
+        do {
+            var fileExtension: String
+            if fileName.contains(".") {
+                fileExtension = ""
+            } else {
+                fileExtension = useExtension ?? findCommonFileExtension(for: file)
+                if !fileExtension.isEmpty && !fileExtension.starts(with: ".") {
+                    fileExtension = "." + fileExtension
+                }
+            }
+
+            var fileUrl = file.nearestFolder.appendingPathComponent("\(fileName)\(fileExtension)")
+            var fileNumber = 0
+            while fileManager.fileExists(atPath: fileUrl.path) {
+                fileNumber += 1
+                fileUrl = fileUrl.deletingLastPathComponent()
+                    .appendingPathComponent("\(fileName)\(fileNumber)\(fileExtension)")
+            }
+
+            guard fileUrl.fileName.isValidFilename else {
+                throw FileManagerError.invalidFileName
+            }
+
+            guard fileManager.createFile(
+                atPath: fileUrl.path,
+                contents: contents,
+                attributes: [FileAttributeKey.creationDate: Date()]
+            ) else {
+                throw CocoaError.error(.fileWriteUnknown, url: fileUrl)
+            }
+
+            try rebuildFiles(fromItem: file.isFolder ? file : file.parent ?? file)
+            notifyObservers(updatedItems: [file.isFolder ? file : file.parent ?? file])
+
+            guard let newFile = getFile(fileUrl.path, createIfNotFound: true) else {
+                throw FileManagerError.fileNotIndexed
+            }
+            return newFile
+        } catch {
+            logger.error("Failed to add file with contents: \(error, privacy: .auto)")
+            throw error
+        }
+    }
+
     /// Finds a common file extension in the same directory as a file. Defaults to `txt` if no better alternatives
     /// are found.
     /// - Parameter file: The file to use to determine a common extension.
diff --git a/CodeEdit/Features/NavigatorArea/ProjectNavigator/OutlineView/ProjectNavigatorMenu.swift b/CodeEdit/Features/NavigatorArea/ProjectNavigator/OutlineView/ProjectNavigatorMenu.swift
index eb7c7764c..7698a2b0e 100644
--- a/CodeEdit/Features/NavigatorArea/ProjectNavigator/OutlineView/ProjectNavigatorMenu.swift
+++ b/CodeEdit/Features/NavigatorArea/ProjectNavigator/OutlineView/ProjectNavigatorMenu.swift
@@ -58,6 +58,7 @@ final class ProjectNavigatorMenu: NSMenu {
         let showFileInspector = menuItem("Show File Inspector", action: nil)
 
         let newFile = menuItem("New File...", action: #selector(newFile))
+        let newFileFromClipboard = menuItem("New File from Clipboard", action: #selector(newFileFromClipboard))
         let newFolder = menuItem("New Folder", action: #selector(newFolder))
 
         let rename = menuItem("Rename", action: #selector(renameFile))
@@ -94,6 +95,7 @@ final class ProjectNavigatorMenu: NSMenu {
             showFileInspector,
             NSMenuItem.separator(),
             newFile,
+            newFileFromClipboard,
             newFolder
         ]
 
diff --git a/CodeEdit/Features/NavigatorArea/ProjectNavigator/OutlineView/ProjectNavigatorMenuActions.swift b/CodeEdit/Features/NavigatorArea/ProjectNavigator/OutlineView/ProjectNavigatorMenuActions.swift
index 8cdd59349..ebe1776d2 100644
--- a/CodeEdit/Features/NavigatorArea/ProjectNavigator/OutlineView/ProjectNavigatorMenuActions.swift
+++ b/CodeEdit/Features/NavigatorArea/ProjectNavigator/OutlineView/ProjectNavigatorMenuActions.swift
@@ -98,6 +98,51 @@ extension ProjectNavigatorMenu {
         }
     }
 
+    /// Opens the rename file dialogue on the cell this was presented from.
+    @objc
+    func renameFile() {
+        guard let newFile = workspace?.listenerModel.highlightedFileItem else { return }
+        let row = sender.outlineView.row(forItem: newFile)
+        guard row > 0,
+              let cell = sender.outlineView.view(
+                atColumn: 0,
+                row: row,
+                makeIfNecessary: false
+              ) as? ProjectNavigatorTableViewCell else {
+            return
+        }
+        sender.outlineView.window?.makeFirstResponder(cell.textField)
+    }
+
+    // TODO: Automatically identified the file type
+    /// Action that creates a new file with clipboard content
+    @objc
+    func newFileFromClipboard() {
+        guard let item else { return }
+        do {
+            let clipBoardContent = NSPasteboard.general.string(forType: .string)?.data(using: .utf8)
+            if let newFile = try workspace?
+                .workspaceFileManager?
+                .addFileWithContents(
+                    fileName: "untitled",
+                    toFile: item,
+                    useExtension: "",
+                    contents: clipBoardContent
+                ) {
+                workspace?.listenerModel.highlightedFileItem = newFile
+                workspace?.editorManager?.openTab(item: newFile)
+            }
+            /// To resolve racing condition
+            DispatchQueue.main.asyncAfter(deadline: .now() + 0.1) {
+                self.renameFile()
+            }
+        } catch {
+            let alert = NSAlert(error: error)
+            alert.addButton(withTitle: "Dismiss")
+            alert.runModal()
+        }
+    }
+
     // TODO: allow custom folder names
     /// Action that creates a new untitled folder
     @objc
@@ -143,21 +188,6 @@ extension ProjectNavigatorMenu {
         reloadData()
     }
 
-    /// Opens the rename file dialogue on the cell this was presented from.
-    @objc
-    func renameFile() {
-        let row = sender.outlineView.row(forItem: item)
-        guard row > 0,
-              let cell = sender.outlineView.view(
-                atColumn: 0,
-                row: row,
-                makeIfNecessary: false
-              ) as? ProjectNavigatorTableViewCell else {
-            return
-        }
-        sender.outlineView.window?.makeFirstResponder(cell.textField)
-    }
-
     /// Action that moves the item to trash.
     @objc
     func trash() {