diff --git a/app/api/channels/route.ts b/app/api/channels/route.ts
index 2aa4114..9066c04 100644
--- a/app/api/channels/route.ts
+++ b/app/api/channels/route.ts
@@ -5,18 +5,11 @@
 
 import { auth } from "@/auth";
 import { db } from "@/db";
-import { channels, members } from "@/db/schema";
+import { categories, channels, members } from "@/db/schema";
 import { and, eq } from "drizzle-orm";
 import { NextResponse } from "next/server";
 
-/**
- * Handles the POST request to create a new channel within a specific server.
- *
- * @async
- * @function POST
- * @param {Request} req - The incoming HTTP request containing JSON payload with `name` and `serverId`.
- * @returns {Promise<NextResponse>} The created channel object with status 201, or an error response (401, 400, 403, 500).
- */
+/** Handles the POST request to create a new channel within a specific server. */
 export async function POST(req: Request) {
   try {
     const session = await auth();
@@ -25,7 +18,7 @@ export async function POST(req: Request) {
       return NextResponse.json({ error: "Unauthorized" }, { status: 401 });
     }
 
-    const { name, serverId } = await req.json();
+    const { name, serverId, categoryId } = await req.json();
 
     if (!name || !serverId) {
       return NextResponse.json(
@@ -61,12 +54,31 @@ export async function POST(req: Request) {
       );
     }
 
+    // Validate category existence and server association if provided
+    if (categoryId) {
+      const [category] = await db
+        .select()
+        .from(categories)
+        .where(
+          and(eq(categories.id, categoryId), eq(categories.serverId, serverId)),
+        )
+        .limit(1);
+
+      if (!category) {
+        return NextResponse.json(
+          { error: "Invalid category provided for this server" },
+          { status: 400 },
+        );
+      }
+    }
+
     // Create the channel in the database
     const [newChannel] = await db
       .insert(channels)
       .values({
         name: name.trim().toLowerCase().replace(/\s+/g, "-"),
         serverId,
+        categoryId: categoryId || null,
       })
       .returning();
 
diff --git a/components/modals/CreateChannelModal.tsx b/components/modals/CreateChannelModal.tsx
index 677a9f0..2a8e0d3 100644
--- a/components/modals/CreateChannelModal.tsx
+++ b/components/modals/CreateChannelModal.tsx
@@ -7,59 +7,47 @@
 
 import { useEffect, useState } from "react";
 import { useRouter } from "next/navigation";
-import { X, Loader2 } from "lucide-react";
+import { X } from "lucide-react";
 import { useActiveServer } from "@/lib/context/ServerContext";
 import { ActionButton } from "../ui/ActionButton";
 
-/**
- * Properties for the CreateChannelModal component.
- *
- * @interface CreateChannelModalProps
- * @property {boolean} isOpen - Determines whether the modal is visible.
- * @property {() => void} onClose - Callback function executed to close the modal.
- * @property {string} serverId - The unique identifier of the target server where the channel is created.
- */
+/** Properties for the CreateChannelModal component. */
 interface CreateChannelModalProps {
   isOpen: boolean;
   onClose: () => void;
   serverId: string;
+  defaultCategoryId?: string | null;
 }
 
-/**
- * Renders a modal dialog allowing users to input a name and create a new server channel.
- *
- * @param {CreateChannelModalProps} props - The component props.
- * @param {boolean} props.isOpen - Determines whether the modal is visible.
- * @param {() => void} props.onClose - Callback function executed to close the modal.
- * @param {string} props.serverId - The unique identifier of the target server where the channel is created.
- * @returns {JSX.Element | null} The rendered modal component or null if closed.
- */
+/** Renders a modal dialog allowing users to input a name and create a new server channel. */
 export function CreateChannelModal({
   isOpen,
   onClose,
   serverId,
+  defaultCategoryId = null,
 }: CreateChannelModalProps) {
   const [name, setName] = useState("");
+  const [categoryId, setCategoryId] = useState<string | null>(
+    defaultCategoryId,
+  );
   const [isLoading, setIsLoading] = useState(false);
   const [error, setError] = useState<string | null>(null);
 
   const router = useRouter();
   const { addChannel } = useActiveServer();
 
+  // Update categoryId if the defaultCategoryId changes when the page opens
+  useEffect(() => {
+    setCategoryId(defaultCategoryId);
+  }, [defaultCategoryId, isOpen]);
+
   if (!isOpen) return null;
 
   const isValid = name.trim().length != 0;
   const canSave = isValid && !isLoading;
 
-  /**
-   * Handles form submission to create a new channel via the API.
-   *
-   * @async
-   * @function handleSubmit
-   * @param {React.FormEvent} e - The form submission event.
-   * @returns {Promise<void>} Resolves when the channel creation request completes.
-   */
-  const handleSubmit = async (e: React.FormEvent) => {
+  /** Handles form submission to create a new channel via the API. */
+  const handleSubmit = async (e: React.SubmitEvent) => {
     e.preventDefault();
     if (!name.trim() || isLoading) return;
 
@@ -70,7 +58,11 @@ export function CreateChannelModal({
       const response = await fetch("/api/channels", {
         method: "POST",
         headers: { "Content-Type": "application/json" },
-        body: JSON.stringify({ name, serverId }),
+        body: JSON.stringify({
+          name,
+          serverId,
+          categoryId: categoryId || null,
+        }),
       });
 
       if (!response.ok) {
diff --git a/components/sidebar/ChannelSidebar.tsx b/components/sidebar/ChannelSidebar.tsx
index 3ef1637..f086e70 100644
--- a/components/sidebar/ChannelSidebar.tsx
+++ b/components/sidebar/ChannelSidebar.tsx
@@ -209,6 +209,7 @@ export function ChannelSidebar() {
         isOpen={isCreateModalOpen}
         onClose={() => setIsCreateModalOpen(false)}
         serverId={activeServer.id}
+        defaultCategoryId={selectedCategoryId}
       />
 
       <EditChannelModal