diff --git a/packages/design-system/src/components/N8nInput/Input.vue b/packages/design-system/src/components/N8nInput/Input.vue
index 776b0bf7c895f..7df719728a881 100644
--- a/packages/design-system/src/components/N8nInput/Input.vue
+++ b/packages/design-system/src/components/N8nInput/Input.vue
@@ -32,7 +32,7 @@ const props = withDefaults(defineProps<InputProps>(), {
 	readonly: false,
 	clearable: false,
 	rows: 2,
-	maxlength: Infinity,
+	maxlength: undefined,
 	title: '',
 	name: () => uid('input'),
 	autocomplete: 'off',
@@ -81,6 +81,7 @@ defineExpose({ focus, blur, select });
 		:clearable="clearable"
 		:rows="rows"
 		:title="title"
+		:maxlength="maxlength"
 		v-bind="$attrs"
 	>
 		<template v-if="$slots.prepend" #prepend>
diff --git a/packages/editor-ui/src/components/ButtonParameter/ButtonParameter.vue b/packages/editor-ui/src/components/ButtonParameter/ButtonParameter.vue
index 47c86755b731c..31dda21f0fa27 100644
--- a/packages/editor-ui/src/components/ButtonParameter/ButtonParameter.vue
+++ b/packages/editor-ui/src/components/ButtonParameter/ButtonParameter.vue
@@ -1,21 +1,16 @@
 <script setup lang="ts">
-import { ApplicationError, type INodeProperties, type NodePropertyAction } from 'n8n-workflow';
+import { type INodeProperties, type NodePropertyAction } from 'n8n-workflow';
 import type { INodeUi, IUpdateInformation } from '@/Interface';
 import { ref, computed, onMounted } from 'vue';
 import { N8nButton, N8nInput, N8nTooltip } from 'n8n-design-system/components';
 import { useI18n } from '@/composables/useI18n';
 import { useToast } from '@/composables/useToast';
 import { useNDVStore } from '@/stores/ndv.store';
-import { getSchemas, getParentNodes } from './utils';
-import { useRootStore } from '@/stores/root.store';
+import { getParentNodes, generateCodeForAiTransform } from './utils';
 import { useTelemetry } from '@/composables/useTelemetry';
-import { generateCodeForPrompt } from '@/api/ai';
+import { useUIStore } from '@/stores/ui.store';
 
-import { format } from 'prettier';
-import jsParser from 'prettier/plugins/babel';
-import * as estree from 'prettier/plugins/estree';
-import { useSettingsStore } from '@/stores/settings.store';
-import type { AskAiRequest } from '@/types/assistant.types';
+const AI_TRANSFORM_CODE_GENERATED_FOR_PROMPT = 'codeGeneratedForPrompt';
 
 const emit = defineEmits<{
 	valueChanged: [value: IUpdateInformation];
@@ -27,8 +22,7 @@ const props = defineProps<{
 	path: string;
 }>();
 
-const rootStore = useRootStore();
-const settingsStore = useSettingsStore();
+const { activeNode } = useNDVStore();
 
 const i18n = useI18n();
 
@@ -53,6 +47,11 @@ const isSubmitEnabled = computed(() => {
 
 	return true;
 });
+const promptUpdated = computed(() => {
+	const lastPrompt = activeNode?.parameters[AI_TRANSFORM_CODE_GENERATED_FOR_PROMPT] as string;
+	if (!lastPrompt) return false;
+	return lastPrompt.trim() !== prompt.value.trim();
+});
 
 function startLoading() {
 	isLoading.value = true;
@@ -69,7 +68,6 @@ function getPath(parameter: string) {
 }
 
 async function onSubmit() {
-	const { activeNode } = useNDVStore();
 	const { showMessage } = useToast();
 	const action: string | NodePropertyAction | undefined =
 		props.parameter.typeOptions?.buttonConfig?.action;
@@ -93,46 +91,26 @@ async function onSubmit() {
 	startLoading();
 
 	try {
-		const schemas = getSchemas();
-
-		const payload: AskAiRequest.RequestPayload = {
-			question: prompt.value,
-			context: {
-				schema: schemas.parentNodesSchemas,
-				inputSchema: schemas.inputSchema!,
-				ndvPushRef: useNDVStore().pushRef,
-				pushRef: rootStore.pushRef,
-			},
-			forNode: 'transform',
-		};
 		switch (type) {
 			case 'askAiCodeGeneration':
-				let value;
-				if (settingsStore.isAskAiEnabled) {
-					const { restApiContext } = useRootStore();
-					const { code } = await generateCodeForPrompt(restApiContext, payload);
-					value = code;
-				} else {
-					throw new ApplicationError('AI code generation is not enabled');
-				}
+				const updateInformation = await generateCodeForAiTransform(
+					prompt.value,
+					getPath(target as string),
+				);
+				if (!updateInformation) return;
 
-				if (value === undefined) return;
+				//updade code parameter
+				emit('valueChanged', updateInformation);
 
-				const formattedCode = await format(String(value), {
-					parser: 'babel',
-					plugins: [jsParser, estree],
+				//update code generated for prompt parameter
+				emit('valueChanged', {
+					name: getPath(AI_TRANSFORM_CODE_GENERATED_FOR_PROMPT),
+					value: prompt.value,
 				});
 
-				const updateInformation = {
-					name: getPath(target as string),
-					value: formattedCode,
-				};
-
-				emit('valueChanged', updateInformation);
-
 				useTelemetry().trackAiTransform('generationFinished', {
 					prompt: prompt.value,
-					code: formattedCode,
+					code: updateInformation.value,
 				});
 				break;
 			default:
@@ -168,6 +146,16 @@ function onPromptInput(inputValue: string) {
 	});
 }
 
+function useDarkBackdrop(): string {
+	const theme = useUIStore().appliedTheme;
+
+	if (theme === 'light') {
+		return 'background-color: var(--color-background-xlight);';
+	} else {
+		return 'background-color: var(--color-background-light);';
+	}
+}
+
 onMounted(() => {
 	parentNodes.value = getParentNodes();
 });
@@ -185,13 +173,18 @@ onMounted(() => {
 		>
 		</n8n-input-label>
 		<div :class="$style.inputContainer" :hidden="!hasInputField">
-			<div :class="$style.meta">
+			<div :class="$style.meta" :style="useDarkBackdrop()">
 				<span
 					v-if="inputFieldMaxLength"
 					v-show="prompt.length > 1"
 					:class="$style.counter"
 					v-text="`${prompt.length} / ${inputFieldMaxLength}`"
 				/>
+				<span
+					v-if="promptUpdated"
+					:class="$style['warning-text']"
+					v-text="'Instructions changed. Click \'Generate code\' before running this node again'"
+				/>
 			</div>
 			<N8nInput
 				v-model="prompt"
@@ -255,9 +248,15 @@ onMounted(() => {
 	display: flex;
 	justify-content: space-between;
 	position: absolute;
-	bottom: var(--spacing-2xs);
+	padding-bottom: var(--spacing-2xs);
+	padding-top: var(--spacing-2xs);
+	margin: 1px;
+	margin-right: var(--spacing-s);
+	bottom: 0;
 	left: var(--spacing-xs);
 	right: var(--spacing-xs);
+	gap: 10px;
+	align-items: end;
 	z-index: 1;
 
 	* {
@@ -267,10 +266,15 @@ onMounted(() => {
 }
 .counter {
 	color: var(--color-text-light);
+	flex-shrink: 0;
 }
 .controls {
 	padding: var(--spacing-2xs) 0;
 	display: flex;
 	justify-content: flex-end;
 }
+.warning-text {
+	color: var(--color-warning);
+	line-height: 1.2;
+}
 </style>
diff --git a/packages/editor-ui/src/components/ButtonParameter/utils.ts b/packages/editor-ui/src/components/ButtonParameter/utils.ts
index 14d3ca4d78334..f0b09aec18708 100644
--- a/packages/editor-ui/src/components/ButtonParameter/utils.ts
+++ b/packages/editor-ui/src/components/ButtonParameter/utils.ts
@@ -1,9 +1,16 @@
 import type { Schema } from '@/Interface';
-import type { INodeExecutionData } from 'n8n-workflow';
+import { ApplicationError, type INodeExecutionData } from 'n8n-workflow';
 import { useWorkflowsStore } from '@/stores/workflows.store';
 import { useNDVStore } from '@/stores/ndv.store';
 import { useDataSchema } from '@/composables/useDataSchema';
 import { executionDataToJson } from '@/utils/nodeTypesUtils';
+import { generateCodeForPrompt } from '../../api/ai';
+import { useRootStore } from '../../stores/root.store';
+import { type AskAiRequest } from '../../types/assistant.types';
+import { useSettingsStore } from '../../stores/settings.store';
+import { format } from 'prettier';
+import jsParser from 'prettier/plugins/babel';
+import * as estree from 'prettier/plugins/estree';
 
 export function getParentNodes() {
 	const activeNode = useNDVStore().activeNode;
@@ -44,3 +51,41 @@ export function getSchemas() {
 		parentNodesSchemas,
 	};
 }
+
+export async function generateCodeForAiTransform(prompt: string, path: string) {
+	const schemas = getSchemas();
+
+	const payload: AskAiRequest.RequestPayload = {
+		question: prompt,
+		context: {
+			schema: schemas.parentNodesSchemas,
+			inputSchema: schemas.inputSchema!,
+			ndvPushRef: useNDVStore().pushRef,
+			pushRef: useRootStore().pushRef,
+		},
+		forNode: 'transform',
+	};
+
+	let value;
+	if (useSettingsStore().isAskAiEnabled) {
+		const { restApiContext } = useRootStore();
+		const { code } = await generateCodeForPrompt(restApiContext, payload);
+		value = code;
+	} else {
+		throw new ApplicationError('AI code generation is not enabled');
+	}
+
+	if (value === undefined) return;
+
+	const formattedCode = await format(String(value), {
+		parser: 'babel',
+		plugins: [jsParser, estree],
+	});
+
+	const updateInformation = {
+		name: path,
+		value: formattedCode,
+	};
+
+	return updateInformation;
+}
diff --git a/packages/editor-ui/src/components/NodeExecuteButton.vue b/packages/editor-ui/src/components/NodeExecuteButton.vue
index bfd6e0e38ddd8..629efd791c21b 100644
--- a/packages/editor-ui/src/components/NodeExecuteButton.vue
+++ b/packages/editor-ui/src/components/NodeExecuteButton.vue
@@ -7,7 +7,12 @@ import {
 	FORM_TRIGGER_NODE_TYPE,
 	CHAT_TRIGGER_NODE_TYPE,
 } from '@/constants';
-import type { INodeTypeDescription } from 'n8n-workflow';
+import {
+	AI_TRANSFORM_CODE_GENERATED_FOR_PROMPT,
+	AI_TRANSFORM_JS_CODE,
+	AI_TRANSFORM_NODE_TYPE,
+	type INodeTypeDescription,
+} from 'n8n-workflow';
 import { useWorkflowsStore } from '@/stores/workflows.store';
 import { useNDVStore } from '@/stores/ndv.store';
 import { useNodeTypesStore } from '@/stores/nodeTypes.store';
@@ -21,6 +26,8 @@ import { useUIStore } from '@/stores/ui.store';
 import { useRouter } from 'vue-router';
 import { useI18n } from '@/composables/useI18n';
 import { useTelemetry } from '@/composables/useTelemetry';
+import { type IUpdateInformation } from '../Interface';
+import { generateCodeForAiTransform } from '@/components/ButtonParameter/utils';
 
 const NODE_TEST_STEP_POPUP_COUNT_KEY = 'N8N_NODE_TEST_STEP_POPUP_COUNT';
 const MAX_POPUP_COUNT = 10;
@@ -47,6 +54,7 @@ const props = withDefaults(
 const emit = defineEmits<{
 	stopExecution: [];
 	execute: [];
+	valueChanged: [value: IUpdateInformation];
 }>();
 
 defineOptions({
@@ -54,6 +62,7 @@ defineOptions({
 });
 
 const lastPopupCountUpdate = ref(0);
+const codeGenerationInProgress = ref(false);
 
 const router = useRouter();
 const { runWorkflow, runWorkflowResolvePending, stopCurrentExecution } = useRunWorkflow({ router });
@@ -76,7 +85,7 @@ const nodeType = computed((): INodeTypeDescription | null => {
 });
 
 const isNodeRunning = computed(() => {
-	if (!uiStore.isActionActive['workflowRunning']) return false;
+	if (!uiStore.isActionActive['workflowRunning'] || codeGenerationInProgress.value) return false;
 	const triggeredNode = workflowsStore.executedNode;
 	return (
 		workflowsStore.isNodeExecuting(node.value?.name ?? '') || triggeredNode === node.value?.name
@@ -142,6 +151,10 @@ const disabledHint = computed(() => {
 		return '';
 	}
 
+	if (codeGenerationInProgress.value) {
+		return i18n.baseText('ndv.execute.generatingCode');
+	}
+
 	if (isTriggerNode.value && node?.value?.disabled) {
 		return i18n.baseText('ndv.execute.nodeIsDisabled');
 	}
@@ -163,6 +176,9 @@ const disabledHint = computed(() => {
 });
 
 const tooltipText = computed(() => {
+	if (shouldGenerateCode.value) {
+		return i18n.baseText('ndv.execute.generateCodeAndTestNode.description');
+	}
 	if (disabledHint.value) return disabledHint.value;
 	if (props.tooltip && !isLoading.value && testStepButtonPopupCount() < MAX_POPUP_COUNT) {
 		return props.tooltip;
@@ -199,9 +215,37 @@ const buttonLabel = computed(() => {
 });
 
 const isLoading = computed(
-	() => isNodeRunning.value && !isListeningForEvents.value && !isListeningForWorkflowEvents.value,
+	() =>
+		codeGenerationInProgress.value ||
+		(isNodeRunning.value && !isListeningForEvents.value && !isListeningForWorkflowEvents.value),
 );
 
+const buttonIcon = computed(() => {
+	if (shouldGenerateCode.value) return 'terminal';
+	if (!isListeningForEvents.value && !props.hideIcon) return 'flask';
+	return undefined;
+});
+
+const shouldGenerateCode = computed(() => {
+	if (node.value?.type !== AI_TRANSFORM_NODE_TYPE) {
+		return false;
+	}
+	if (!node.value?.parameters?.instructions) {
+		return false;
+	}
+	if (!node.value?.parameters?.jsCode) {
+		return true;
+	}
+	if (
+		node.value?.parameters[AI_TRANSFORM_CODE_GENERATED_FOR_PROMPT] &&
+		(node.value?.parameters?.instructions as string).trim() !==
+			(node.value?.parameters?.[AI_TRANSFORM_CODE_GENERATED_FOR_PROMPT] as string).trim()
+	) {
+		return true;
+	}
+	return false;
+});
+
 async function stopWaitingForWebhook() {
 	try {
 		await workflowsStore.removeTestWebhook(workflowsStore.workflowId);
@@ -227,6 +271,35 @@ function onMouseOver() {
 }
 
 async function onClick() {
+	if (shouldGenerateCode.value) {
+		// Generate code if user hasn't clicked 'Generate Code' button
+		// and update parameters
+		codeGenerationInProgress.value = true;
+		try {
+			const prompt = node.value?.parameters?.instructions as string;
+			const updateInformation = await generateCodeForAiTransform(
+				prompt,
+				`parameters.${AI_TRANSFORM_JS_CODE}`,
+			);
+			if (!updateInformation) return;
+
+			emit('valueChanged', updateInformation);
+
+			emit('valueChanged', {
+				name: `parameters.${AI_TRANSFORM_CODE_GENERATED_FOR_PROMPT}`,
+				value: prompt,
+			});
+
+			useTelemetry().trackAiTransform('generationFinished', {
+				prompt,
+				code: updateInformation.value,
+			});
+		} catch (error) {
+			// throw error defined in the node about code missing
+		}
+		codeGenerationInProgress.value = false;
+	}
+
 	if (isChatNode.value || (isChatChild.value && ndvStore.isNDVDataEmpty('input'))) {
 		ndvStore.setActiveNodeName(null);
 		nodeViewEventBus.emit('openChat');
@@ -296,7 +369,7 @@ async function onClick() {
 					:label="buttonLabel"
 					:type="type"
 					:size="size"
-					:icon="!isListeningForEvents && !hideIcon ? 'flask' : undefined"
+					:icon="buttonIcon"
 					:transparent-background="transparent"
 					:title="
 						!isTriggerNode && !tooltipText ? i18n.baseText('ndv.execute.testNode.description') : ''
diff --git a/packages/editor-ui/src/components/NodeSettings.vue b/packages/editor-ui/src/components/NodeSettings.vue
index 6ae5412b948cf..8f3f43331443c 100644
--- a/packages/editor-ui/src/components/NodeSettings.vue
+++ b/packages/editor-ui/src/components/NodeSettings.vue
@@ -974,6 +974,7 @@ onBeforeUnmount(() => {
 						telemetry-source="parameters"
 						@execute="onNodeExecute"
 						@stop-execution="onStopExecution"
+						@value-changed="valueChanged"
 					/>
 				</div>
 			</div>
diff --git a/packages/editor-ui/src/components/ParameterOptions.vue b/packages/editor-ui/src/components/ParameterOptions.vue
index bfe99398055cc..b3311b44c926e 100644
--- a/packages/editor-ui/src/components/ParameterOptions.vue
+++ b/packages/editor-ui/src/components/ParameterOptions.vue
@@ -5,6 +5,8 @@ import type { PropType } from 'vue';
 import { isResourceLocatorValue } from '@/utils/typeGuards';
 import { isValueExpression } from '@/utils/nodeTypesUtils';
 import { i18n } from '@/plugins/i18n';
+import { useNDVStore } from '@/stores/ndv.store';
+import { AI_TRANSFORM_NODE_TYPE } from '@/constants';
 
 export default defineComponent({
 	name: 'ParameterOptions',
@@ -49,6 +51,9 @@ export default defineComponent({
 	},
 	emits: ['update:modelValue', 'menu-expanded'],
 	computed: {
+		activeNode() {
+			return useNDVStore().activeNode;
+		},
 		isDefault(): boolean {
 			return this.parameter.default === this.value;
 		},
@@ -106,7 +111,7 @@ export default defineComponent({
 
 			const actions = [
 				{
-					label: this.$locale.baseText('parameterInput.resetValue'),
+					label: this.resetValueLabel,
 					value: 'resetValue',
 					disabled: this.isDefault,
 				},
@@ -129,6 +134,14 @@ export default defineComponent({
 
 			return actions;
 		},
+
+		resetValueLabel() {
+			if (this.activeNode && [AI_TRANSFORM_NODE_TYPE].includes(this.activeNode.type)) {
+				return i18n.baseText('parameterInput.clearContents');
+			}
+
+			return this.$locale.baseText('parameterInput.resetValue');
+		},
 	},
 	methods: {
 		onMenuToggle(visible: boolean) {
diff --git a/packages/editor-ui/src/components/__tests__/ButtonParameter.test.ts b/packages/editor-ui/src/components/__tests__/ButtonParameter.test.ts
index 28e80091e5f19..d018e23418a5d 100644
--- a/packages/editor-ui/src/components/__tests__/ButtonParameter.test.ts
+++ b/packages/editor-ui/src/components/__tests__/ButtonParameter.test.ts
@@ -44,7 +44,7 @@ describe('ButtonParameter', () => {
 	beforeEach(() => {
 		vi.mocked(useNDVStore).mockReturnValue({
 			ndvInputData: [{}],
-			activeNode: { name: 'TestNode' },
+			activeNode: { name: 'TestNode', parameters: {} },
 		} as any);
 
 		vi.mocked(useWorkflowsStore).mockReturnValue({
diff --git a/packages/editor-ui/src/plugins/i18n/locales/en.json b/packages/editor-ui/src/plugins/i18n/locales/en.json
index a5c3c7c686356..c78e0620ce509 100644
--- a/packages/editor-ui/src/plugins/i18n/locales/en.json
+++ b/packages/editor-ui/src/plugins/i18n/locales/en.json
@@ -919,9 +919,11 @@
 	"ndv.backToCanvas.waitingForTriggerWarning": "Waiting for a Trigger node to execute. Close this view to see the Workflow Canvas.",
 	"ndv.execute.testNode": "Test step",
 	"ndv.execute.testNode.description": "Runs the current node. Will also run previous nodes if they have not been run yet",
+	"ndv.execute.generateCodeAndTestNode.description": "Generate code and then runs the current node. Will also run previous nodes if they have not been run yet",
 	"ndv.execute.executing": "Executing",
 	"ndv.execute.fetchEvent": "Fetch Test Event",
 	"ndv.execute.fixPrevious": "Fix previous node first",
+	"ndv.execute.generatingCode": "Genereting code from instructions",
 	"ndv.execute.listenForTestEvent": "Listen for test event",
 	"ndv.execute.testChat": "Test chat",
 	"ndv.execute.testStep": "Test step",
@@ -1389,6 +1391,7 @@
 	"parameterInput.parameterHasIssues": "Parameter: \"{shortPath}\" has issues",
 	"parameterInput.parameterHasIssuesAndExpression": "Parameter: \"{shortPath}\" has issues and an expression",
 	"parameterInput.refreshList": "Refresh List",
+	"parameterInput.clearContents": "Clear Contents",
 	"parameterInput.resetValue": "Reset Value",
 	"parameterInput.select": "Select",
 	"parameterInput.selectDateAndTime": "Select date and time",
diff --git a/packages/nodes-base/nodes/AiTransform/AiTransform.node.ts b/packages/nodes-base/nodes/AiTransform/AiTransform.node.ts
index 3741fc980edf2..d22292607ef50 100644
--- a/packages/nodes-base/nodes/AiTransform/AiTransform.node.ts
+++ b/packages/nodes-base/nodes/AiTransform/AiTransform.node.ts
@@ -5,6 +5,8 @@ import {
 	type INodeExecutionData,
 	type INodeType,
 	type INodeTypeDescription,
+	AI_TRANSFORM_CODE_GENERATED_FOR_PROMPT,
+	AI_TRANSFORM_JS_CODE,
 } from 'n8n-workflow';
 
 import set from 'lodash/set';
@@ -46,36 +48,29 @@ export class AiTransform implements INodeType {
 						inputFieldMaxLength: 500,
 						action: {
 							type: 'askAiCodeGeneration',
-							target: 'jsCode',
+							target: AI_TRANSFORM_JS_CODE,
 						},
 					},
 				},
 			},
 			{
-				displayName: 'Transformation Code',
-				name: 'jsCode',
+				displayName: 'Code Generated For Prompt',
+				name: AI_TRANSFORM_CODE_GENERATED_FOR_PROMPT,
+				type: 'hidden',
+				default: '',
+			},
+			{
+				displayName: 'Generated JavaScript',
+				name: AI_TRANSFORM_JS_CODE,
 				type: 'string',
 				typeOptions: {
 					editor: 'jsEditor',
 					editorIsReadOnly: true,
 				},
 				default: '',
-				description:
-					'Read-only. To edit this code, adjust the prompt or copy and paste it into a Code node.',
+				hint: 'Read-only. To edit this code, adjust the prompt or copy and paste it into a Code node.',
 				noDataExpression: true,
 			},
-			{
-				displayName:
-					"Click on 'Test step' to run the transformation code. Further executions will use the generated code (and not invoke AI again).",
-				name: 'hint',
-				type: 'notice',
-				default: '',
-				displayOptions: {
-					show: {
-						jsCode: [{ _cnd: { exists: true } }],
-					},
-				},
-			},
 		],
 	};
 
diff --git a/packages/workflow/src/Constants.ts b/packages/workflow/src/Constants.ts
index f8d028ae91f55..5ed9059e09f98 100644
--- a/packages/workflow/src/Constants.ts
+++ b/packages/workflow/src/Constants.ts
@@ -117,3 +117,5 @@ export const SINGLE_EXECUTION_NODES: { [key: string]: { [key: string]: NodeParam
 };
 
 export const SEND_AND_WAIT_OPERATION = 'sendAndWait';
+export const AI_TRANSFORM_CODE_GENERATED_FOR_PROMPT = 'codeGeneratedForPrompt';
+export const AI_TRANSFORM_JS_CODE = 'jsCode';