diff --git a/CHANGELOG.md b/CHANGELOG.md
index 3cccddc1b0..a41b7dae54 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -27,6 +27,7 @@ and this project adheres to [Semantic Versioning](https://semver.org/spec/v2.0.0
 - Use `ownerDocument` instead of `document` ([#1158](https://github.com/tailwindlabs/headlessui/pull/1158))
 - Ensure focus trap, Tabs and Dialog play well together ([#1231](https://github.com/tailwindlabs/headlessui/pull/1231))
 - Add `multi` value support for Listbox & Combobox ([#1243](https://github.com/tailwindlabs/headlessui/pull/1243))
+- Improve Combobox Input value ([#1248](https://github.com/tailwindlabs/headlessui/pull/1248))
 
 ### Added
 
@@ -56,6 +57,7 @@ and this project adheres to [Semantic Versioning](https://semver.org/spec/v2.0.0
 - Re-expose `el` ([#1230](https://github.com/tailwindlabs/headlessui/pull/1230))
 - Ensure focus trap, Tabs and Dialog play well together ([#1231](https://github.com/tailwindlabs/headlessui/pull/1231))
 - Add `multi` value support for Listbox & Combobox ([#1243](https://github.com/tailwindlabs/headlessui/pull/1243))
+- Improve Combobox Input value ([#1248](https://github.com/tailwindlabs/headlessui/pull/1248))
 
 ### Added
 
diff --git a/packages/@headlessui-react/src/components/combobox/combobox.test.tsx b/packages/@headlessui-react/src/components/combobox/combobox.test.tsx
index c520dba6da..2f7553d98d 100644
--- a/packages/@headlessui-react/src/components/combobox/combobox.test.tsx
+++ b/packages/@headlessui-react/src/components/combobox/combobox.test.tsx
@@ -4393,6 +4393,59 @@ describe('Mouse interactions', () => {
       expect(getComboboxInput()?.value).toBe('')
     })
   )
+
+  it(
+    'should sync the input field correctly and reset it when resetting the value from outside (when using displayValue)',
+    suppressConsoleLogs(async () => {
+      let people = [
+        { id: 1, name: 'Alice' },
+        { id: 2, name: 'Bob' },
+        { id: 3, name: 'Charlie' },
+      ]
+
+      function Example() {
+        let [value, setValue] = useState<typeof people[number] | null>(people[1])
+
+        return (
+          <>
+            <Combobox value={value} onChange={setValue}>
+              <Combobox.Input
+                onChange={NOOP}
+                displayValue={(person: typeof people[number]) => person?.name}
+              />
+              <Combobox.Button>Trigger</Combobox.Button>
+              <Combobox.Options>
+                {people.map((person) => (
+                  <Combobox.Option key={person.id} value={person}>
+                    {person.name}
+                  </Combobox.Option>
+                ))}
+              </Combobox.Options>
+            </Combobox>
+            <button onClick={() => setValue(null)}>reset</button>
+          </>
+        )
+      }
+
+      render(<Example />)
+
+      // Open combobox
+      await click(getComboboxButton())
+
+      // Verify the input has the selected value
+      expect(getComboboxInput()?.value).toBe('Bob')
+
+      // Override the input by typing something
+      await type(word('test'), getComboboxInput())
+      expect(getComboboxInput()?.value).toBe('test')
+
+      // Reset from outside
+      await click(getByText('reset'))
+
+      // Verify the input is reset correctly
+      expect(getComboboxInput()?.value).toBe('')
+    })
+  )
 })
 
 describe('Multi-select', () => {
diff --git a/packages/@headlessui-react/src/components/combobox/combobox.tsx b/packages/@headlessui-react/src/components/combobox/combobox.tsx
index f279e4e7f5..eb02856588 100644
--- a/packages/@headlessui-react/src/components/combobox/combobox.tsx
+++ b/packages/@headlessui-react/src/components/combobox/combobox.tsx
@@ -386,11 +386,10 @@ let ComboboxRoot = forwardRefWithAs(function Combobox<
 
   let syncInputValue = useCallback(() => {
     if (!inputRef.current) return
-    if (value === undefined) return
     let displayValue = inputPropsRef.current.displayValue
 
     if (typeof displayValue === 'function') {
-      inputRef.current.value = displayValue(value)
+      inputRef.current.value = displayValue(value) ?? ''
     } else if (typeof value === 'string') {
       inputRef.current.value = value
     } else {
diff --git a/packages/@headlessui-vue/src/components/combobox/combobox.test.ts b/packages/@headlessui-vue/src/components/combobox/combobox.test.ts
index 2742c42740..0a13653473 100644
--- a/packages/@headlessui-vue/src/components/combobox/combobox.test.ts
+++ b/packages/@headlessui-vue/src/components/combobox/combobox.test.ts
@@ -4615,6 +4615,54 @@ describe('Mouse interactions', () => {
       expect(getComboboxInput()?.value).toBe('')
     })
   )
+
+  it(
+    'should sync the input field correctly and reset it when resetting the value from outside (when using displayValue)',
+    suppressConsoleLogs(async () => {
+      renderTemplate({
+        template: html`
+          <Combobox v-model="value">
+            <ComboboxInput :displayValue="person => person?.name" />
+            <ComboboxButton>Trigger</ComboboxButton>
+            <ComboboxOptions>
+              <ComboboxOption v-for="person in people" :key="person.id" :value="person"
+                >{{ person.name }}</ComboboxOption
+              >
+            </ComboboxOptions>
+          </Combobox>
+          <button @click="value = null">reset</button>
+        `,
+        setup: () => {
+          let people = [
+            { id: 1, name: 'Alice' },
+            { id: 2, name: 'Bob' },
+            { id: 3, name: 'Charlie' },
+          ]
+
+          return {
+            people,
+            value: ref(people[1]),
+          }
+        },
+      })
+
+      // Open combobox
+      await click(getComboboxButton())
+
+      // Verify the input has the selected value
+      expect(getComboboxInput()?.value).toBe('Bob')
+
+      // Override the input by typing something
+      await type(word('test'), getComboboxInput())
+      expect(getComboboxInput()?.value).toBe('test')
+
+      // Reset from outside
+      await click(getByText('reset'))
+
+      // Verify the input is reset correctly
+      expect(getComboboxInput()?.value).toBe('')
+    })
+  )
 })
 
 describe('Multi-select', () => {
diff --git a/packages/@headlessui-vue/src/components/combobox/combobox.ts b/packages/@headlessui-vue/src/components/combobox/combobox.ts
index 4363c6c0a0..45581ff4d6 100644
--- a/packages/@headlessui-vue/src/components/combobox/combobox.ts
+++ b/packages/@headlessui-vue/src/components/combobox/combobox.ts
@@ -216,11 +216,10 @@ export let Combobox = defineComponent({
       syncInputValue() {
         let value = api.value.value
         if (!dom(api.inputRef)) return
-        if (value === undefined) return
         let displayValue = api.inputPropsRef.value.displayValue
 
         if (typeof displayValue === 'function') {
-          api.inputRef!.value!.value = displayValue(value)
+          api.inputRef!.value!.value = displayValue(value) ?? ''
         } else if (typeof value === 'string') {
           api.inputRef!.value!.value = value
         } else {