diff --git a/plugins/scaffolder/src/components/fields/OwnershipEntityRefPicker/OwnershipEntityRefPicker.test.tsx b/plugins/scaffolder/src/components/fields/OwnershipEntityRefPicker/OwnershipEntityRefPicker.test.tsx
index a290adbaee..81bbb21438 100644
--- a/plugins/scaffolder/src/components/fields/OwnershipEntityRefPicker/OwnershipEntityRefPicker.test.tsx
+++ b/plugins/scaffolder/src/components/fields/OwnershipEntityRefPicker/OwnershipEntityRefPicker.test.tsx
@@ -15,117 +15,191 @@
  */
 
 import React from 'react';
-import { render } from '@testing-library/react';
+import { render, waitFor } from '@testing-library/react';
 import { CatalogApi } from '@backstage/catalog-client';
 import { FieldProps } from '@rjsf/core';
-import { EntityPickerProps } from '../EntityPicker/schema';
-import { Entity } from '@backstage/catalog-model';
 import { OwnershipEntityRefPicker } from './OwnershipEntityRefPicker';
+import { TestApiProvider } from '@backstage/test-utils';
+import { catalogApiRef } from '@backstage/plugin-catalog-react';
+import { Entity } from '@backstage/catalog-model';
+import { IdentityApi, identityApiRef } from '@backstage/core-plugin-api';
+import userEvent from '@testing-library/user-event';
 
-const makeUserEntity = (
-  kind: string,
-  memberOf: string[],
-  name: string,
-): Entity => ({
-  apiVersion: 'scaffolder.backstage.io/v1beta3',
-  kind,
-  metadata: { name },
-  spec: {
-    memberOf: memberOf,
-  },
-});
-
-const makeGroupEntity = (
-  kind: string,
-  members: string[],
-  name: string,
-): Entity => ({
-  apiVersion: 'scaffolder.backstage.io/v1beta3',
-  kind,
-  metadata: { name },
-  spec: {
-    members: members,
-  },
-});
+// Create a mock IdentityApi
+const mockIdentityApi: IdentityApi = {
+  getProfileInfo: () =>
+    Promise.resolve({
+      displayName: 'Bob',
+      email: 'bob@example.com',
+      picture: 'https://example.com/picture.jpg',
+    }),
+  getBackstageIdentity: () =>
+    Promise.resolve({
+      id: 'Bob',
+      idToken: 'token',
+      type: 'user',
+      userEntityRef: 'user:default/Bob',
+      ownershipEntityRefs: ['group:default/group1', 'group:default/group2'],
+    }),
+  getCredentials: () => Promise.resolve({ token: 'token' }),
+  signOut: () => Promise.resolve(),
+};
 
 describe('<OwnershipEntityRefPicker />', () => {
   let entities: Entity[];
   const onChange = jest.fn();
   const schema = {};
   const required = false;
-  let uiSchema: EntityPickerProps['uiSchema'];
-  const rawErrors: string[] = [];
-  const formData = undefined;
-
-  let props: FieldProps;
 
   const catalogApi: jest.Mocked<CatalogApi> = {
-    getLocationById: jest.fn(),
-    getEntityByName: jest.fn(),
-    addLocation: jest.fn(),
-    getLocationByRef: jest.fn(),
-    removeEntityByUid: jest.fn(),
+    getEntities: jest.fn(async () => ({ items: entities })),
   } as any;
 
   beforeEach(() => {
     entities = [
-      makeUserEntity('User', ['group1', 'group2'], 'Bob'),
-      makeGroupEntity('Group', ['Alice', 'Dave'], 'group3'),
+      {
+        apiVersion: 'backstage.io/v1alpha1',
+        kind: 'Group',
+        metadata: { name: 'group1' },
+        spec: { members: ['Bob'] },
+      },
+      {
+        apiVersion: 'backstage.io/v1alpha1',
+        kind: 'Group',
+        metadata: { name: 'group2' },
+        spec: { members: ['Bob'] },
+      },
+      {
+        apiVersion: 'backstage.io/v1alpha1',
+        kind: 'Group',
+        metadata: { name: 'group3' },
+        spec: { members: ['Alice'] },
+      },
     ];
+
+    onChange.mockClear();
+    catalogApi.getEntities.mockClear();
   });
 
-  afterEach(() => jest.resetAllMocks());
+  afterEach(() => {
+    jest.resetAllMocks();
+  });
 
-  it('should only return the groups a user is part of', async () => {
-    catalogApi.getEntityByRef.mockResolvedValueOnce(entities[0]);
+  it('should only return the groups a user is part of and not the groups a user is not part of', async () => {
+    const userGroups = entities.filter(
+      entity =>
+        entity.spec &&
+        Array.isArray(entity.spec.members) &&
+        entity.spec.members.includes('Bob'),
+    );
 
-    uiSchema = { 'ui:options': { catalogApi } };
-    props = {
+    catalogApi.getEntities.mockResolvedValue({ items: userGroups });
+
+    const props = {
       onChange,
       schema,
       required,
-      uiSchema,
-      rawErrors,
-      formData,
     } as unknown as FieldProps<any>;
 
-    render(<OwnershipEntityRefPicker {...props} />);
+    render(
+      <TestApiProvider
+        apis={[
+          [identityApiRef, mockIdentityApi],
+          [catalogApiRef, catalogApi],
+        ]}
+      >
+        <OwnershipEntityRefPicker {...props} />
+      </TestApiProvider>,
+    );
 
-    expect(onChange).toHaveBeenCalledWith(['group1', 'group2']);
+    await waitFor(() =>
+      expect(catalogApi.getEntities).toHaveBeenCalledTimes(1),
+    );
+
+    expect(catalogApi.getEntities).toHaveBeenCalledWith({
+      filter: {
+        kind: ['Group'],
+        'relations.hasMember': ['group:default/group1', 'group:default/group2'],
+      },
+    });
+
+    // Check that getEntities was set up to return the correct data
+    await expect(catalogApi.getEntities.mock.results[0].value).resolves.toEqual(
+      {
+        items: [
+          {
+            apiVersion: 'backstage.io/v1alpha1',
+            kind: 'Group',
+            metadata: { name: 'group1' },
+            spec: { members: ['Bob'] },
+          },
+          {
+            apiVersion: 'backstage.io/v1alpha1',
+            kind: 'Group',
+            metadata: { name: 'group2' },
+            spec: { members: ['Bob'] },
+          },
+        ],
+      },
+    );
+
+    await expect(
+      catalogApi.getEntities.mock.results[0].value,
+    ).resolves.not.toEqual(
+      expect.objectContaining({
+        items: expect.arrayContaining([
+          expect.objectContaining({
+            metadata: { name: 'group3' },
+          }),
+        ]),
+      }),
+    );
   });
 
-  it('should not return groups a user is not part of', async () => {
-    // Mock 'getEntityByRef' to return the entity that represents Bob
-    catalogApi.getEntityByRef.mockResolvedValueOnce(entities[0]);
+  it('should display the groups a user is part of and not display the groups a user is not part of', async () => {
+    const userGroups = entities.filter(
+      entity =>
+        entity.spec &&
+        Array.isArray(entity.spec.members) &&
+        entity.spec.members.includes('Bob'),
+    );
+    catalogApi.getEntities.mockResolvedValue({ items: userGroups });
 
-    uiSchema = { 'ui:options': { catalogApi } };
-    props = {
+    const props = {
       onChange,
       schema,
       required,
-      uiSchema,
-      rawErrors,
-      formData,
     } as unknown as FieldProps<any>;
 
-    render(<OwnershipEntityRefPicker {...props} />);
+    const { queryByText, getByRole } = render(
+      <TestApiProvider
+        apis={[
+          [identityApiRef, mockIdentityApi],
+          [catalogApiRef, catalogApi],
+        ]}
+      >
+        <OwnershipEntityRefPicker {...props} />
+      </TestApiProvider>,
+    );
 
-    // The onChange should not have been called with 'group3', since Bob is not part of 'group3'
-    expect(onChange).not.toHaveBeenCalledWith(['group3']);
-  });
+    await waitFor(() =>
+      expect(catalogApi.getEntities).toHaveBeenCalledTimes(1),
+    );
 
-  it('should render without imploding', () => {
-    uiSchema = { 'ui:options': { catalogApi } };
-    props = {
-      onChange,
-      schema,
-      required,
-      uiSchema,
-      rawErrors,
-      formData,
-    } as unknown as FieldProps<any>;
+    // Simulate user input
+    const inputField = getByRole('combobox');
+    userEvent.click(inputField);
+    userEvent.type(inputField, 'group');
 
-    const { container } = render(<OwnershipEntityRefPicker {...props} />);
-    expect(container).not.toBeNull();
+    // Wait for the dropdown elements to appear
+    await waitFor(() => {
+      const group1Element = queryByText('group1');
+      const group2Element = queryByText('group2');
+      expect(group1Element).toBeInTheDocument();
+      expect(group2Element).toBeInTheDocument();
+    });
+
+    // Assert that 'group3' is not rendered in the component
+    expect(queryByText('group3')).not.toBeInTheDocument();
   });
 });
diff --git a/plugins/scaffolder/src/components/fields/OwnershipEntityRefPicker/OwnershipEntityRefPicker.tsx b/plugins/scaffolder/src/components/fields/OwnershipEntityRefPicker/OwnershipEntityRefPicker.tsx
index 5fee57eb86..f89c6ff789 100644
--- a/plugins/scaffolder/src/components/fields/OwnershipEntityRefPicker/OwnershipEntityRefPicker.tsx
+++ b/plugins/scaffolder/src/components/fields/OwnershipEntityRefPicker/OwnershipEntityRefPicker.tsx
@@ -30,12 +30,16 @@ export { OwnershipEntityRefPickerSchema };
 export const OwnershipEntityRefPicker = (
   props: OwnershipEntityRefPickerProps,
 ) => {
-  const { uiSchema, required, rawErrors, formData } = props;
+  const {
+    schema: { title, description },
+    required,
+    rawErrors,
+  } = props;
 
   const identityApi = useApi(identityApiRef);
   const catalogApi = useApi(catalogApiRef);
   const [groups, setGroups] = useState<string[]>([]);
-  const [selectedGroup, setSelectedGroup] = useState('');
+  const [selectedGroup, setSelectedGroup] = useState<string | null>(null);
 
   useEffect(() => {
     const fetchUserGroups = async () => {
@@ -63,20 +67,20 @@ export const OwnershipEntityRefPicker = (
     <FormControl
       margin="normal"
       required={required}
-      error={rawErrors?.length > 0 && !formData}
+      error={rawErrors?.length > 0}
     >
       <Autocomplete
         id="OwnershipEntityRefPicker-dropdown"
         options={groups || []}
-        value={selectedGroup || null}
+        value={selectedGroup}
         onChange={(_, value) => setSelectedGroup(value || '')}
         getOptionLabel={group => group}
         renderInput={params => (
           <TextField
             {...params}
-            label={uiSchema['ui:options']?.title}
+            label={title}
             margin="dense"
-            helperText={uiSchema['ui:options']?.description}
+            helperText={description}
             FormHelperTextProps={{ margin: 'dense', style: { marginLeft: 0 } }}
             variant="outlined"
             required={required}