diff --git a/app/client/cypress/integration/Smoke_TestSuite/ClientSideTests/Comments/AddComments_spec.js b/app/client/cypress/integration/Smoke_TestSuite/ClientSideTests/Comments/AddComments_spec.js
index 16390d2e44..eef6ad32f0 100644
--- a/app/client/cypress/integration/Smoke_TestSuite/ClientSideTests/Comments/AddComments_spec.js
+++ b/app/client/cypress/integration/Smoke_TestSuite/ClientSideTests/Comments/AddComments_spec.js
@@ -121,6 +121,19 @@ describe("Comments", function() {
     });
   });
 
+  it("Can invite new collaborators, with substring emails", () => {
+    cy.get(commentsLocators.cancelCommentButton).click({ force: true });
+    cy.get(homePage.shareApp).click({ force: true });
+    cy.shareApp("cypresstest@appsmith.com", homePage.viewerRole);
+    cy.get(commonLocators.canvas).click(30, 30);
+    cy.wait(300);
+    cy.get(commentsLocators.mentionsInput).type("@test@appsmith.com", {
+      delay: 100,
+    });
+    cy.wait(1000);
+    cy.contains("Invite a new user").should("exist");
+  });
+
   it("unread indicator is visible for another app user when a new comment is added", () => {
     // share app with TESTUSERNAME2
     cy.get(homePage.shareApp).click({ force: true });
diff --git a/app/client/cypress/locators/commentsLocators.json b/app/client/cypress/locators/commentsLocators.json
index de72ea0d8b..13114ea2aa 100644
--- a/app/client/cypress/locators/commentsLocators.json
+++ b/app/client/cypress/locators/commentsLocators.json
@@ -2,6 +2,7 @@
   "switchToCommentModeBtn": ".t--switch-comment-mode-on",
   "mentionsInput": "[data-testid='mentions-input']",
   "postButtonAddComment": "[data-cy='add-comment-submit']",
+  "cancelCommentButton": "[data-cy='add-comment-cancel']",
   "inlineCommentThreadPin": ".t--inline-comment-pin-trigger-",
   "toggleCommentModeOnUnread": ".t--toggle-comment-mode-on--unread",
   "toggleCommentModeOn": ".t--toggle-comment-mode-on"
diff --git a/app/client/src/comments/inlineComments/AddCommentInput.tsx b/app/client/src/comments/inlineComments/AddCommentInput.tsx
index f84e36b716..51a862ce26 100644
--- a/app/client/src/comments/inlineComments/AddCommentInput.tsx
+++ b/app/client/src/comments/inlineComments/AddCommentInput.tsx
@@ -267,6 +267,7 @@ function AddCommentInput({
 
   const filteredSuggestions = useMemo(() => {
     let suggestionResults = suggestions;
+    let hasExactMatch = false;
     if (!suggestionsQuery) return suggestionResults;
     else {
       const filter = suggestionsQuery.toLowerCase();
@@ -274,14 +275,18 @@ function AddCommentInput({
         .filter((suggestion) => {
           const name = suggestion.name.toLowerCase();
           const username = suggestion.user?.username.toLowerCase() || "";
+          hasExactMatch = name === filter || username === filter;
           return name.indexOf(filter) !== -1 || username.indexOf(filter) !== -1;
         })
         .sort(sortMentionData(filter));
     }
-
-    if (suggestionResults.length !== 0) return suggestionResults;
-
-    return [{ name: suggestionsQuery, isInviteTrigger: true }];
+    const couldBeNewEmail = isEmail(suggestionsQuery);
+    const inviteNew = [{ name: suggestionsQuery, isInviteTrigger: true }];
+    // Show invite prompt only if there is no exact match and user has typed email.
+    return [
+      ...suggestionResults,
+      ...(couldBeNewEmail && !hasExactMatch ? inviteNew : []),
+    ];
   }, [suggestionsQuery, suggestions, trigger]);
 
   const onAddMention = (mention: MentionData) => {
@@ -332,6 +337,7 @@ function AddCommentInput({
             <Button
               category={Category.tertiary}
               className={"cancel-button"}
+              data-cy="add-comment-cancel"
               onClick={_onCancel}
               text={createMessage(CANCEL)}
             />