diff --git a/x-pack/plugins/observability_solution/inventory/public/components/badge_filter_with_popover/badge_filter_with_popover.test.tsx b/x-pack/plugins/observability_solution/inventory/public/components/badge_filter_with_popover/badge_filter_with_popover.test.tsx
new file mode 100644
index 0000000000000..cda2f0bcb42d3
--- /dev/null
+++ b/x-pack/plugins/observability_solution/inventory/public/components/badge_filter_with_popover/badge_filter_with_popover.test.tsx
@@ -0,0 +1,61 @@
+/*
+ * 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 React from 'react';
+import { render, fireEvent, screen } from '@testing-library/react';
+import { BadgeFilterWithPopover } from '.';
+import { EuiThemeProvider, copyToClipboard } from '@elastic/eui';
+import { ENTITY_TYPE } from '../../../common/es_fields/entities';
+
+jest.mock('@elastic/eui', () => ({
+  ...jest.requireActual('@elastic/eui'),
+  copyToClipboard: jest.fn(),
+}));
+
+describe('BadgeFilterWithPopover', () => {
+  const mockOnFilter = jest.fn();
+  const field = ENTITY_TYPE;
+  const value = 'host';
+  const label = 'Host';
+  const popoverContentDataTestId = 'inventoryBadgeFilterWithPopoverContent';
+  const popoverContentTitleTestId = 'inventoryBadgeFilterWithPopoverTitle';
+
+  beforeEach(() => {
+    jest.clearAllMocks();
+  });
+
+  it('renders the badge with the correct label', () => {
+    render(
+      <BadgeFilterWithPopover field={field} value={value} onFilter={mockOnFilter} label={label} />,
+      { wrapper: EuiThemeProvider }
+    );
+    expect(screen.queryByText(label)).toBeInTheDocument();
+    expect(screen.getByText(label).textContent).toBe(label);
+  });
+
+  it('opens the popover when the badge is clicked', () => {
+    render(<BadgeFilterWithPopover field={field} value={value} onFilter={mockOnFilter} />);
+    expect(screen.queryByTestId(popoverContentDataTestId)).not.toBeInTheDocument();
+    fireEvent.click(screen.getByText(value));
+    expect(screen.queryByTestId(popoverContentDataTestId)).toBeInTheDocument();
+    expect(screen.queryByTestId(popoverContentTitleTestId)?.textContent).toBe(`${field}:${value}`);
+  });
+
+  it('calls onFilter when the "Filter for" button is clicked', () => {
+    render(<BadgeFilterWithPopover field={field} value={value} onFilter={mockOnFilter} />);
+    fireEvent.click(screen.getByText(value));
+    fireEvent.click(screen.getByTestId('inventoryBadgeFilterWithPopoverFilterForButton'));
+    expect(mockOnFilter).toHaveBeenCalled();
+  });
+
+  it('copies value to clipboard when the "Copy value" button is clicked', () => {
+    render(<BadgeFilterWithPopover field={field} value={value} onFilter={mockOnFilter} />);
+    fireEvent.click(screen.getByText(value));
+    fireEvent.click(screen.getByTestId('inventoryBadgeFilterWithPopoverCopyValueButton'));
+    expect(copyToClipboard).toHaveBeenCalledWith(value);
+  });
+});
diff --git a/x-pack/plugins/observability_solution/inventory/public/components/badge_filter_with_popover/index.tsx b/x-pack/plugins/observability_solution/inventory/public/components/badge_filter_with_popover/index.tsx
new file mode 100644
index 0000000000000..d1e952e189d6e
--- /dev/null
+++ b/x-pack/plugins/observability_solution/inventory/public/components/badge_filter_with_popover/index.tsx
@@ -0,0 +1,103 @@
+/*
+ * 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 {
+  EuiBadge,
+  EuiButtonEmpty,
+  EuiFlexGrid,
+  EuiFlexGroup,
+  EuiFlexItem,
+  EuiPopover,
+  EuiPopoverFooter,
+  copyToClipboard,
+  useEuiTheme,
+} from '@elastic/eui';
+import { css } from '@emotion/react';
+import { i18n } from '@kbn/i18n';
+import React, { useState } from 'react';
+
+interface Props {
+  field: string;
+  value: string;
+  label?: string;
+  onFilter: () => void;
+}
+
+export function BadgeFilterWithPopover({ field, value, onFilter, label }: Props) {
+  const [isOpen, setIsOpen] = useState(false);
+  const theme = useEuiTheme();
+
+  return (
+    <EuiPopover
+      button={
+        <EuiBadge
+          data-test-subj="inventoryBadgeFilterWithPopoverButton"
+          color="hollow"
+          onClick={() => setIsOpen((state) => !state)}
+          onClickAriaLabel={i18n.translate(
+            'xpack.inventory.badgeFilterWithPopover.openPopoverBadgeLabel',
+            { defaultMessage: 'Open popover' }
+          )}
+        >
+          {label || value}
+        </EuiBadge>
+      }
+      isOpen={isOpen}
+      closePopover={() => setIsOpen(false)}
+    >
+      <span data-test-subj="inventoryBadgeFilterWithPopoverTitle">
+        <EuiFlexGroup
+          data-test-subj="inventoryBadgeFilterWithPopoverContent"
+          responsive={false}
+          gutterSize="xs"
+          css={css`
+            font-family: ${theme.euiTheme.font.familyCode};
+          `}
+        >
+          <EuiFlexItem grow={false}>
+            <span
+              css={css`
+                font-weight: bold;
+              `}
+            >
+              {field}:
+            </span>
+          </EuiFlexItem>
+          <EuiFlexItem grow={false}>
+            <span className="eui-textBreakWord">{value}</span>
+          </EuiFlexItem>
+        </EuiFlexGroup>
+      </span>
+      <EuiPopoverFooter>
+        <EuiFlexGrid responsive={false} columns={2}>
+          <EuiFlexItem>
+            <EuiButtonEmpty
+              data-test-subj="inventoryBadgeFilterWithPopoverFilterForButton"
+              iconType="plusInCircle"
+              onClick={onFilter}
+            >
+              {i18n.translate('xpack.inventory.badgeFilterWithPopover.filterForButtonEmptyLabel', {
+                defaultMessage: 'Filter for',
+              })}
+            </EuiButtonEmpty>
+          </EuiFlexItem>
+          <EuiFlexItem>
+            <EuiButtonEmpty
+              data-test-subj="inventoryBadgeFilterWithPopoverCopyValueButton"
+              iconType="copyClipboard"
+              onClick={() => copyToClipboard(value)}
+            >
+              {i18n.translate('xpack.inventory.badgeFilterWithPopover.copyValueButtonEmptyLabel', {
+                defaultMessage: 'Copy value',
+              })}
+            </EuiButtonEmpty>
+          </EuiFlexItem>
+        </EuiFlexGrid>
+      </EuiPopoverFooter>
+    </EuiPopover>
+  );
+}
diff --git a/x-pack/plugins/observability_solution/inventory/public/components/entities_grid/entities_grid.stories.tsx b/x-pack/plugins/observability_solution/inventory/public/components/entities_grid/entities_grid.stories.tsx
index b0e6c2fcc5ee4..996f0ec951581 100644
--- a/x-pack/plugins/observability_solution/inventory/public/components/entities_grid/entities_grid.stories.tsx
+++ b/x-pack/plugins/observability_solution/inventory/public/components/entities_grid/entities_grid.stories.tsx
@@ -5,12 +5,13 @@
  * 2.0.
  */
 
-import { EuiDataGridSorting } from '@elastic/eui';
+import { EuiDataGridSorting, EuiFlexGroup, EuiFlexItem, EuiLink } from '@elastic/eui';
 import { Meta, Story } from '@storybook/react';
-import React, { useMemo, useState } from 'react';
 import { orderBy } from 'lodash';
+import React, { useMemo, useState } from 'react';
 import { EntitiesGrid } from '.';
-import { ENTITY_LAST_SEEN } from '../../../common/es_fields/entities';
+import { EntityType } from '../../../common/entities';
+import { ENTITY_LAST_SEEN, ENTITY_TYPE } from '../../../common/es_fields/entities';
 import { entitiesMock } from './mock/entities_mock';
 
 const stories: Meta<{}> = {
@@ -25,22 +26,44 @@ export const Example: Story<{}> = () => {
     id: ENTITY_LAST_SEEN,
     direction: 'desc',
   });
-
-  const sortedItems = useMemo(
-    () => orderBy(entitiesMock, sort.id, sort.direction),
-    [sort.direction, sort.id]
+  const [selectedEntityType, setSelectedEntityType] = useState<EntityType | undefined>();
+  const filteredAndSortedItems = useMemo(
+    () =>
+      orderBy(
+        selectedEntityType
+          ? entitiesMock.filter((mock) => mock[ENTITY_TYPE] === selectedEntityType)
+          : entitiesMock,
+        sort.id,
+        sort.direction
+      ),
+    [selectedEntityType, sort.direction, sort.id]
   );
 
   return (
-    <EntitiesGrid
-      entities={sortedItems}
-      loading={false}
-      sortDirection={sort.direction}
-      sortField={sort.id}
-      onChangePage={setPageIndex}
-      onChangeSort={setSort}
-      pageIndex={pageIndex}
-    />
+    <EuiFlexGroup>
+      <EuiFlexItem grow={false}>
+        {`Entity filter: ${selectedEntityType || 'N/A'}`}
+        <EuiLink
+          disabled={!selectedEntityType}
+          data-test-subj="inventoryExampleClearFilterButton"
+          onClick={() => setSelectedEntityType(undefined)}
+        >
+          Clear filter
+        </EuiLink>
+      </EuiFlexItem>
+      <EuiFlexItem grow={false}>
+        <EntitiesGrid
+          entities={filteredAndSortedItems}
+          loading={false}
+          sortDirection={sort.direction}
+          sortField={sort.id}
+          onChangePage={setPageIndex}
+          onChangeSort={setSort}
+          pageIndex={pageIndex}
+          onFilterByType={setSelectedEntityType}
+        />
+      </EuiFlexItem>
+    </EuiFlexGroup>
   );
 };
 
@@ -60,6 +83,7 @@ export const EmptyGridExample: Story<{}> = () => {
       onChangePage={setPageIndex}
       onChangeSort={setSort}
       pageIndex={pageIndex}
+      onFilterByType={() => {}}
     />
   );
 };
diff --git a/x-pack/plugins/observability_solution/inventory/public/components/entities_grid/index.tsx b/x-pack/plugins/observability_solution/inventory/public/components/entities_grid/index.tsx
index d5ab911605109..6e26548520a43 100644
--- a/x-pack/plugins/observability_solution/inventory/public/components/entities_grid/index.tsx
+++ b/x-pack/plugins/observability_solution/inventory/public/components/entities_grid/index.tsx
@@ -5,7 +5,6 @@
  * 2.0.
  */
 import {
-  EuiBadge,
   EuiButtonIcon,
   EuiDataGrid,
   EuiDataGridCellValueElementProps,
@@ -20,6 +19,7 @@ import { i18n } from '@kbn/i18n';
 import { FormattedDate, FormattedMessage, FormattedTime } from '@kbn/i18n-react';
 import { last } from 'lodash';
 import React, { useCallback, useState } from 'react';
+import { EntityType } from '../../../common/entities';
 import {
   ENTITY_DISPLAY_NAME,
   ENTITY_LAST_SEEN,
@@ -27,7 +27,7 @@ import {
 } from '../../../common/es_fields/entities';
 import { APIReturnType } from '../../api';
 import { getEntityTypeLabel } from '../../utils/get_entity_type_label';
-import { EntityType } from '../../../common/entities';
+import { BadgeFilterWithPopover } from '../badge_filter_with_popover';
 
 type InventoryEntitiesAPIReturnType = APIReturnType<'GET /internal/inventory/entities'>;
 
@@ -106,6 +106,7 @@ interface Props {
   pageIndex: number;
   onChangeSort: (sorting: EuiDataGridSorting['columns'][0]) => void;
   onChangePage: (nextPage: number) => void;
+  onFilterByType: (entityType: EntityType) => void;
 }
 
 const PAGE_SIZE = 20;
@@ -118,6 +119,7 @@ export function EntitiesGrid({
   pageIndex,
   onChangePage,
   onChangeSort,
+  onFilterByType,
 }: Props) {
   const [visibleColumns, setVisibleColumns] = useState(columns.map(({ id }) => id));
 
@@ -141,10 +143,14 @@ export function EntitiesGrid({
       const columnEntityTableId = columnId as EntityColumnIds;
       switch (columnEntityTableId) {
         case ENTITY_TYPE:
+          const entityType = entity[columnEntityTableId] as EntityType;
           return (
-            <EuiBadge color="hollow">
-              {getEntityTypeLabel(entity[columnEntityTableId] as EntityType)}
-            </EuiBadge>
+            <BadgeFilterWithPopover
+              field={ENTITY_TYPE}
+              value={entityType}
+              label={getEntityTypeLabel(entityType)}
+              onFilter={() => onFilterByType(entityType)}
+            />
           );
         case ENTITY_LAST_SEEN:
           return (
@@ -183,7 +189,7 @@ export function EntitiesGrid({
           return entity[columnId as EntityColumnIds] || '';
       }
     },
-    [entities]
+    [entities, onFilterByType]
   );
 
   if (loading) {
diff --git a/x-pack/plugins/observability_solution/inventory/public/pages/inventory_page/index.tsx b/x-pack/plugins/observability_solution/inventory/public/pages/inventory_page/index.tsx
index 2fcb147cbe61f..7af9a9fc21acc 100644
--- a/x-pack/plugins/observability_solution/inventory/public/pages/inventory_page/index.tsx
+++ b/x-pack/plugins/observability_solution/inventory/public/pages/inventory_page/index.tsx
@@ -7,6 +7,7 @@
 import { EuiDataGridSorting } from '@elastic/eui';
 import React from 'react';
 import useEffectOnce from 'react-use/lib/useEffectOnce';
+import { EntityType } from '../../../common/entities';
 import { EntitiesGrid } from '../../components/entities_grid';
 import { useInventorySearchBarContext } from '../../context/inventory_search_bar_context_provider';
 import { useInventoryAbortableAsync } from '../../hooks/use_inventory_abortable_async';
@@ -81,6 +82,17 @@ export function InventoryPage() {
     });
   }
 
+  function handleTypeFilter(entityType: EntityType) {
+    inventoryRoute.push('/', {
+      path: {},
+      query: {
+        ...query,
+        // Override the current entity types
+        entityTypes: [entityType],
+      },
+    });
+  }
+
   return (
     <EntitiesGrid
       entities={value.entities}
@@ -90,6 +102,7 @@ export function InventoryPage() {
       onChangePage={handlePageChange}
       onChangeSort={handleSortChange}
       pageIndex={pageIndex}
+      onFilterByType={handleTypeFilter}
     />
   );
 }