diff --git a/x-pack/test/observability_functional/apps/observability/index.ts b/x-pack/test/observability_functional/apps/observability/index.ts
index f061fe68649d5..dce84cee32dfa 100644
--- a/x-pack/test/observability_functional/apps/observability/index.ts
+++ b/x-pack/test/observability_functional/apps/observability/index.ts
@@ -17,6 +17,7 @@ export default function ({ loadTestFile }: FtrProviderContext) {
     loadTestFile(require.resolve('./pages/alerts/rule_stats'));
     loadTestFile(require.resolve('./pages/alerts/state_synchronization'));
     loadTestFile(require.resolve('./pages/alerts/table_storage'));
+    loadTestFile(require.resolve('./pages/alerts/custom_threshold_preview_chart'));
     loadTestFile(require.resolve('./pages/alerts/custom_threshold'));
     loadTestFile(require.resolve('./pages/cases/case_details'));
     loadTestFile(require.resolve('./pages/overview/alert_table'));
diff --git a/x-pack/test/observability_functional/apps/observability/pages/alerts/custom_threshold_preview_chart.ts b/x-pack/test/observability_functional/apps/observability/pages/alerts/custom_threshold_preview_chart.ts
new file mode 100644
index 0000000000000..6bc0564c711c1
--- /dev/null
+++ b/x-pack/test/observability_functional/apps/observability/pages/alerts/custom_threshold_preview_chart.ts
@@ -0,0 +1,89 @@
+/*
+ * Copyright Elasticsearch B.V. and/or licensed to Elasticsearch B.V. under one
+ * or more contributor license agreements. Licensed under the Elastic License
+ * 2.0; you may not use this file except in compliance with the Elastic License
+ * 2.0.
+ */
+
+import expect from 'expect';
+import { FtrProviderContext } from '../../../../ftr_provider_context';
+
+export default ({ getService, getPageObject }: FtrProviderContext) => {
+  const common = getPageObject('common');
+  const esArchiver = getService('esArchiver');
+  const testSubjects = getService('testSubjects');
+  const kibanaServer = getService('kibanaServer');
+  const supertest = getService('supertest');
+  const find = getService('find');
+  const logger = getService('log');
+  const retry = getService('retry');
+
+  describe('Custom threshold preview chart', () => {
+    const observability = getService('observability');
+    const DATA_VIEW_1 = 'metricbeat-*';
+    const DATA_VIEW_1_ID = 'data-view-id_1';
+    const DATA_VIEW_1_NAME = 'test-data-view-name_1';
+
+    before(async () => {
+      await esArchiver.load('x-pack/test/functional/es_archives/infra/metrics_and_logs');
+      await observability.alerts.common.createDataView({
+        supertest,
+        name: DATA_VIEW_1_NAME,
+        id: DATA_VIEW_1_ID,
+        title: DATA_VIEW_1,
+        logger,
+      });
+      await observability.alerts.common.navigateToRulesPage();
+    });
+
+    after(async () => {
+      await esArchiver.unload('x-pack/test/functional/es_archives/infra/metrics_and_logs');
+      // This also deletes the created data views
+      await kibanaServer.savedObjects.cleanStandardList();
+    });
+
+    it('does render the empty chart only once at bootstrap', async () => {
+      await observability.alerts.rulesPage.clickCreateRuleButton();
+      await observability.alerts.rulesPage.clickOnObservabilityCategory();
+      await observability.alerts.rulesPage.clickOnCustomThresholdRule();
+      await common.sleep(1000);
+      expect(await find.existsByCssSelector('[data-rendering-count="2"]')).toBe(true);
+    });
+
+    it('does render the correct error message', async () => {
+      await testSubjects.setValue('ruleNameInput', 'test custom threshold rule');
+
+      await testSubjects.click('customEquation');
+      const customEquationField = await find.byCssSelector(
+        '[data-test-subj="thresholdRuleCustomEquationEditorFieldText"]'
+      );
+      await customEquationField.click();
+      // set an invalid equation
+      await customEquationField.type('A + ');
+
+      await testSubjects.click('o11yClosablePopoverTitleButton');
+
+      await testSubjects.existOrFail('embeddable-lens-failure');
+      const el = await find.byCssSelector('[data-test-subj="embeddable-lens-failure"] p');
+      const textContent = await el.getVisibleText();
+      expect(textContent).toBe('An error occurred while rendering the chart');
+    });
+
+    it('does render the chart after fixing the error', async () => {
+      await testSubjects.click('customEquation');
+      const customEquationField = await find.byCssSelector(
+        '[data-test-subj="thresholdRuleCustomEquationEditorFieldText"]'
+      );
+      await customEquationField.click();
+      // fix the equation
+      await customEquationField.type('A');
+      await testSubjects.click('o11yClosablePopoverTitleButton');
+
+      // check no error is visible
+      await testSubjects.missingOrFail('embeddable-lens-failure');
+      await retry.waitFor('Chart rendered correctly', () => {
+        return find.existsByCssSelector('[data-render-complete="true"]');
+      });
+    });
+  });
+};