diff --git a/docs/components/content/examples/SelectMenuExampleClearableCustomization.vue b/docs/components/content/examples/SelectMenuExampleClearableCustomization.vue
new file mode 100644
index 00000000..a36b2996
--- /dev/null
+++ b/docs/components/content/examples/SelectMenuExampleClearableCustomization.vue
@@ -0,0 +1,105 @@
+<script setup lang="ts">
+const options = ref([
+  { id: 1, name: 'bug', color: 'd73a4a' },
+  { id: 2, name: 'documentation', color: '0075ca' },
+  { id: 3, name: 'duplicate', color: 'cfd3d7' },
+  { id: 4, name: 'enhancement', color: 'a2eeef' },
+  { id: 5, name: 'good first issue', color: '7057ff' },
+  { id: 6, name: 'help wanted', color: '008672' },
+  { id: 7, name: 'invalid', color: 'e4e669' },
+  { id: 8, name: 'question', color: 'd876e3' },
+  { id: 9, name: 'wontfix', color: 'ffffff' }
+])
+
+const selected = ref([])
+
+const labels = computed({
+  get: () => selected.value,
+  set: async (labels) => {
+    const promises = labels.map(async (label) => {
+      if (label.id) {
+        return label
+      }
+
+      // In a real app, you would make an API call to create the label
+      const response = {
+        id: options.value.length + 1,
+        name: label.name,
+        color: generateColorFromString(label.name)
+      }
+
+      options.value.push(response)
+
+      return response
+    })
+
+    selected.value = await Promise.all(promises)
+  }
+})
+
+function hashCode(str) {
+  let hash = 0
+  for (let i = 0; i < str.length; i++) {
+    hash = str.charCodeAt(i) + ((hash << 5) - hash)
+  }
+  return hash
+}
+
+function intToRGB(i) {
+  const c = (i & 0x00FFFFFF)
+    .toString(16)
+    .toUpperCase()
+
+  return '00000'.substring(0, 6 - c.length) + c
+}
+
+function generateColorFromString(str) {
+  return intToRGB(hashCode(str))
+}
+</script>
+
+<template>
+  <USelectMenu
+    v-model="labels"
+    by="id"
+    name="labels"
+    :options="options"
+    option-attribute="name"
+    clearable
+    multiple
+    searchable
+    creatable
+  >
+    <template #label>
+      <template v-if="labels.length">
+        <span class="flex items-center -space-x-1">
+          <span v-for="label of labels" :key="label.id" class="flex-shrink-0 w-2 h-2 mt-px rounded-full" :style="{ background: `#${label.color}` }" />
+        </span>
+        <span>{{ labels.length }} label{{ labels.length > 1 ? 's' : '' }}</span>
+      </template>
+      <template v-else>
+        <span class="text-gray-500 dark:text-gray-400 truncate">Select labels</span>
+      </template>
+    </template>
+
+    <template #option="{ option }">
+      <span
+        class="flex-shrink-0 w-2 h-2 mt-px rounded-full"
+        :style="{ background: `#${option.color}` }"
+      />
+      <span class="truncate">{{ option.name }}</span>
+    </template>
+
+    <template #option-create="{ option }">
+      <span class="flex-shrink-0">New label:</span>
+      <span
+        class="flex-shrink-0 w-2 h-2 mt-px rounded-full -mx-1"
+        :style="{ background: `#${generateColorFromString(option.name)}` }"
+      />
+      <span class="block truncate">{{ option.name }}</span>
+    </template>
+    <template #clearable="{ onClear }">
+      <UButton icon="i-heroicons-trash-20-solid" size="xs" class="text-gray-400 dark:text-gray-500" variant="ghost" @click.capture.stop="onClear" />
+    </template>
+  </USelectMenu>
+</template>
diff --git a/docs/content/2.components/select-menu.md b/docs/content/2.components/select-menu.md
index 859bc109..1b9bba4a 100644
--- a/docs/content/2.components/select-menu.md
+++ b/docs/content/2.components/select-menu.md
@@ -161,7 +161,7 @@ componentProps:
 ::
 
 ## Clearable
-Use the `clearable` prop to enable the remove selected option.
+The `clearable` prop allows users to easily remove their selected option(s) with a clear button.
 
 ::component-example
 ---
@@ -171,6 +171,26 @@ componentProps:
 ---
 ::
 
+
+### Customization
+#### Slot Props
+The slot provides four key props:
+
+| Prop | Type | Description |
+|------|------|-------------|
+| `selected` | `Object` | The currently selected value/item in the component |
+| `disabled` | `Boolean` | Whether the component is in a disabled state |
+| `loading` | `Boolean` | Whether the component is in a loading state |
+| `onClear` | `Function` | Callback function to clear the selected value when the clear button is clicked |
+
+::component-example
+---
+component: 'select-menu-example-clearable-customization'
+componentProps:
+  class: 'w-full lg:w-52'
+---
+::
+
 ## Creatable
 
 Use the `creatable` prop to enable the creation of new options when the search doesn't return any results (only works with `searchable`).