diff --git a/examples/src/app.js b/examples/src/app.js
index bfda0ce816..628f34b60f 100644
--- a/examples/src/app.js
+++ b/examples/src/app.js
@@ -12,6 +12,7 @@ import Multiselect from './components/Multiselect';
 import NumericSelect from './components/NumericSelect';
 import Virtualized from './components/Virtualized';
 import States from './components/States';
+import AllowCreate from './components/AllowCreate';
 
 ReactDOM.render(
 	<div>
@@ -26,6 +27,7 @@ ReactDOM.render(
 		{/*
 		<SelectedValuesField label="Option Creation (tags mode)" options={FLAVOURS} allowCreate hint="Enter a value that's NOT in the list, then hit return" />
 		*/}
+		<AllowCreate label="Option Creation (tags mode)" allowCreate />
 	</div>,
 	document.getElementById('example')
 );
diff --git a/examples/src/components/AllowCreate.js b/examples/src/components/AllowCreate.js
new file mode 100644
index 0000000000..4cab93a320
--- /dev/null
+++ b/examples/src/components/AllowCreate.js
@@ -0,0 +1,61 @@
+import React from 'react';
+import Select from 'react-select';
+
+const FLAVOURS = [
+	{ label: 'Chocolate', value: 'chocolate' },
+	{ label: 'Vanilla', value: 'vanilla' },
+	{ label: 'Strawberry', value: 'strawberry' },
+	{ label: 'Caramel', value: 'caramel' },
+	{ label: 'Cookies and Cream', value: 'cookiescream' },
+	{ label: 'Peppermint', value: 'peppermint' },
+];
+
+var AllowCreate = React.createClass({
+	displayName: 'AllowCreate',
+
+	propTypes: {
+		allowCreate: React.PropTypes.bool,
+		label: React.PropTypes.string,
+	},
+
+	getInitialState () {
+		return {
+			disabled: false,
+			crazy: false,
+			options: FLAVOURS,
+			value: [],
+		};
+	},
+
+	onLabelClick (data, event) {
+		console.log(data, event);
+	},
+
+	handleSelectChange (value){
+		this.setState({ value });
+	},
+
+	renderHint () {
+		return (
+			<div className="hint">Create options in tag mode</div>
+		);
+	},
+
+	render () {
+		return (
+			<div className="section">
+				<h3 className="section-heading">{this.props.label}</h3>
+				<Select
+					allowCreate={this.props.allowCreate}
+					value={this.state.value}
+					multi
+					placeholder="Select your favourite(s)"
+					options={this.state.options}
+					onChange={this.handleSelectChange} />
+				{this.renderHint()}
+			</div>
+		);
+	}
+});
+
+module.exports = AllowCreate;
diff --git a/src/Option.js b/src/Option.js
index 3ab7b481c2..1ea0ca2079 100644
--- a/src/Option.js
+++ b/src/Option.js
@@ -3,18 +3,20 @@ import classNames from 'classnames';
 
 const Option = React.createClass({
 	propTypes: {
+		addLabelText: React.PropTypes.string,               // text to display with value while creating new option
 		children: React.PropTypes.node,
-		className: React.PropTypes.string,             // className (based on mouse position)
+		className: React.PropTypes.string,                  // className (based on mouse position)
 		instancePrefix: React.PropTypes.string.isRequired,  // unique prefix for the ids (used for aria)
-		isDisabled: React.PropTypes.bool,              // the option is disabled
-		isFocused: React.PropTypes.bool,               // the option is focused
-		isSelected: React.PropTypes.bool,              // the option is selected
-		onFocus: React.PropTypes.func,                 // method to handle mouseEnter on option element
-		onSelect: React.PropTypes.func,                // method to handle click on option element
-		onUnfocus: React.PropTypes.func,               // method to handle mouseLeave on option element
-		option: React.PropTypes.object.isRequired,     // object that is base for that option
-		optionIndex: React.PropTypes.number,           // index of the option, used to generate unique ids for aria
+		isDisabled: React.PropTypes.bool,                   // the option is disabled
+		isFocused: React.PropTypes.bool,                    // the option is focused
+		isSelected: React.PropTypes.bool,                   // the option is selected
+		onFocus: React.PropTypes.func,                      // method to handle mouseEnter on option element
+		onSelect: React.PropTypes.func,                     // method to handle click on option element
+		onUnfocus: React.PropTypes.func,                    // method to handle mouseLeave on option element
+		option: React.PropTypes.object.isRequired,          // object that is base for that option
+		optionIndex: React.PropTypes.number                 // index of the option, used to generate unique ids for aria
 	},
+
 	blockEvent (event) {
 		event.preventDefault();
 		event.stopPropagation();
@@ -68,7 +70,6 @@ const Option = React.createClass({
 	render () {
 		var { option, instancePrefix, optionIndex } = this.props;
 		var className = classNames(this.props.className, option.className);
-
 		return option.disabled ? (
 			<div className={className}
 				onMouseDown={this.blockEvent}
@@ -79,7 +80,7 @@ const Option = React.createClass({
 			<div className={className}
 				style={option.style}
 				role="option"
-				 onMouseDown={this.handleMouseDown}
+				onMouseDown={this.handleMouseDown}
 				onMouseEnter={this.handleMouseEnter}
 				onMouseMove={this.handleMouseMove}
 				onTouchStart={this.handleTouchStart}
@@ -87,7 +88,7 @@ const Option = React.createClass({
 				onTouchEnd={this.handleTouchEnd}
 				id={instancePrefix + '-option-' + optionIndex}
 				title={option.title}>
-				{this.props.children}
+				{ option.create ? this.props.addLabelText.replace('{label}', option.label) : this.props.children }
 			</div>
 		);
 	}
diff --git a/src/Select.js b/src/Select.js
index acee0830dc..6e71664e01 100644
--- a/src/Select.js
+++ b/src/Select.js
@@ -749,9 +749,11 @@ const Select = React.createClass({
 
 	filterOptions (excludeOptions) {
 		var filterValue = this.state.inputValue;
+		var originalFilterValue = filterValue;
 		var options = this.props.options || [];
+		var filteredOptions = [];
 		if (typeof this.props.filterOptions === 'function') {
-			return this.props.filterOptions.call(this, options, filterValue, excludeOptions);
+			filteredOptions = this.props.filterOptions.call(this, options, filterValue, excludeOptions);
 		} else if (this.props.filterOptions) {
 			if (this.props.ignoreAccents) {
 				filterValue = stripDiacritics(filterValue);
@@ -760,7 +762,7 @@ const Select = React.createClass({
 				filterValue = filterValue.toLowerCase();
 			}
 			if (excludeOptions) excludeOptions = excludeOptions.map(i => i[this.props.valueKey]);
-			return options.filter(option => {
+			filteredOptions = options.filter(option => {
 				if (excludeOptions && excludeOptions.indexOf(option[this.props.valueKey]) > -1) return false;
 				if (this.props.filterOption) return this.props.filterOption.call(this, option, filterValue);
 				if (!filterValue) return true;
@@ -783,8 +785,26 @@ const Select = React.createClass({
 				);
 			});
 		} else {
-			return options;
+			filteredOptions = options;
+		}
+		if (this.props.allowCreate && filterValue) {
+			let addNewOption = true;
+			//NOTE: only add the "Add" option if none of the options are an exact match
+			filteredOptions.map(option => {
+				if (option.label.toLowerCase() === filterValue || option.value.toLowerCase() === filterValue) {
+					addNewOption = false;
+				}
+			});
+			if (addNewOption) {
+				let newOption = this.props.newOptionCreator ? this.props.newOptionCreator(originalFilterValue) : {
+					value: originalFilterValue,
+					label: originalFilterValue,
+					create: true
+				};
+				filteredOptions.unshift(newOption);
+			}
 		}
+		return filteredOptions;
 	},
 
 	renderMenu (options, valueArray, focusedOption) {
@@ -824,6 +844,7 @@ const Select = React.createClass({
 							onSelect={this.selectValue}
 							onFocus={this.focusOption}
 							option={option}
+							addLabelText={this.props.addLabelText}
 							isSelected={isSelected}
 							ref={optionRef}
 							>
diff --git a/test/Select-test.js b/test/Select-test.js
index 6ac47d2900..5d2705344b 100644
--- a/test/Select-test.js
+++ b/test/Select-test.js
@@ -1133,10 +1133,6 @@ describe('Select', () => {
 	});
 
 	describe('with allowCreate=true', () => {
-
-		// TODO: allowCreate hasn't been implemented yet in 1.x
-		return;
-
 		beforeEach(() => {
 
 			options = [
@@ -1169,17 +1165,18 @@ describe('Select', () => {
 		it('fires an onChange with the new value when selecting the Add option', () => {
 
 			typeSearchText('xyz');
-			TestUtils.Simulate.click(ReactDOM.findDOMNode(instance).querySelector('.Select-menu .Select-option'));
+			console.log(ReactDOM.findDOMNode(instance).querySelector('.Select-menu .Select-option').outerHTML);
+			TestUtils.Simulate.mouseDown(ReactDOM.findDOMNode(instance).querySelector('.Select-menu .Select-option'));
 
-			expect(onChange, 'was called with', 'xyz');
+			expect(onChange, 'was called with', { value: 'xyz', label: 'xyz', create: true });
 		});
 
 		it('allows updating the options with a new label, following the onChange', () => {
 
 			typeSearchText('xyz');
-			TestUtils.Simulate.click(ReactDOM.findDOMNode(instance).querySelector('.Select-menu .Select-option'));
+			TestUtils.Simulate.mouseDown(ReactDOM.findDOMNode(instance).querySelector('.Select-menu .Select-option'));
 
-			expect(onChange, 'was called with', 'xyz');
+			expect(onChange, 'was called with', { value: 'xyz', label: 'xyz', create: true });
 
 			// Now the client adds the option, with a new label
 			wrapper.setPropsForChild({
@@ -1218,28 +1215,14 @@ describe('Select', () => {
 				'to have text', 'Add test to values?');
 		});
 
-		it('does not display the option label when an existing value is entered', () => {
+		it('does not display the add option label when an existing value is entered', () => {
 
 			typeSearchText('zzzzz');
 
 			expect(ReactDOM.findDOMNode(instance).querySelectorAll('.Select-menu .Select-option'),
 				'to have length', 1);
 			expect(ReactDOM.findDOMNode(instance), 'queried for first', '.Select-menu .Select-option',
-				'to have text', 'Add zzzzz to values?');
-		});
-
-		it('renders the existing option and an add option when an existing display label is entered', () => {
-
-			typeSearchText('test value');
-
-			// First item should be the add option (as the "value" is not in the collection)
-			expect(ReactDOM.findDOMNode(instance).querySelectorAll('.Select-menu .Select-option')[0],
-				'to have text', 'Add test value to values?');
-			// Second item should be the existing option with the matching label
-			expect(ReactDOM.findDOMNode(instance).querySelectorAll('.Select-menu .Select-option')[1],
 				'to have text', 'test value');
-			expect(ReactDOM.findDOMNode(instance).querySelectorAll('.Select-menu .Select-option'),
-				'to have length', 2);
 		});
 	});
 
@@ -3226,7 +3209,7 @@ describe('Select', () => {
 
 			it('updates the backspace message when the selected values update', () => {
 
-				wrapper.setPropselectorChild({ value: [ 'three', 'two', 'one' ] });
+				wrapper.setPropsForChild({ value: [ 'three', 'two', 'one' ] });
 				expect(instance,
 					'to contain',
 					<span className="Select-aria-only" aria-live="assertive">