diff --git a/core/src/main/java/feast/core/service/SpecService.java b/core/src/main/java/feast/core/service/SpecService.java
index 5b98d065977..8fec6ac5112 100644
--- a/core/src/main/java/feast/core/service/SpecService.java
+++ b/core/src/main/java/feast/core/service/SpecService.java
@@ -288,19 +288,14 @@ public ApplyFeatureSetResponse applyFeatureSet(FeatureSetProto.FeatureSet newFea
     // Validate incoming feature set
     FeatureSetValidator.validateSpec(newFeatureSet);
 
-    // Ensure that the project already exists
+    // Find project or create new one if it does not exist
     String project_name = newFeatureSet.getSpec().getProject();
     Project project =
         projectRepository
             .findById(newFeatureSet.getSpec().getProject())
-            .orElseThrow(
-                () ->
-                    new IllegalArgumentException(
-                        String.format(
-                            "Project name does not exist. Please create a project first: %s",
-                            project_name)));
-
-    // Ensure that the project is not archived
+            .orElse(new Project(project_name));
+
+    // Ensure that the project retrieved from repository is not archived
     if (project.isArchived()) {
       throw new IllegalArgumentException(String.format("Project is archived: %s", project_name));
     }
diff --git a/core/src/test/java/feast/core/service/SpecServiceTest.java b/core/src/test/java/feast/core/service/SpecServiceTest.java
index 1eb56caac26..43a66135dce 100644
--- a/core/src/test/java/feast/core/service/SpecServiceTest.java
+++ b/core/src/test/java/feast/core/service/SpecServiceTest.java
@@ -170,6 +170,10 @@ public void setUp() {
     when(projectRepository.findAllByArchivedIsFalse())
         .thenReturn(Collections.singletonList(new Project("project1")));
     when(projectRepository.findById("project1")).thenReturn(Optional.of(new Project("project1")));
+    Project archivedProject = new Project("archivedproject");
+    archivedProject.setArchived(true);
+    when(projectRepository.findById(archivedProject.getName()))
+        .thenReturn(Optional.of(archivedProject));
 
     Store store1 = newDummyStore("SERVING");
     Store store2 = newDummyStore("WAREHOUSE");
@@ -706,6 +710,55 @@ public void applyFeatureSetShouldUpdateFeatureSetWhenConstraintsAreUpdated()
     }
   }
 
+  @Test
+  public void applyFeatureSetShouldCreateProjectWhenNotAlreadyExists()
+      throws InvalidProtocolBufferException {
+    Field f3f1 = new Field("f3f1", Enum.INT64);
+    Field f3f2 = new Field("f3f2", Enum.INT64);
+    Field f3e1 = new Field("f3e1", Enum.STRING);
+    FeatureSetProto.FeatureSet incomingFeatureSet =
+        (new FeatureSet(
+                "f3",
+                "newproject",
+                5,
+                100L,
+                Arrays.asList(f3e1),
+                Arrays.asList(f3f2, f3f1),
+                defaultSource,
+                FeatureSetStatus.STATUS_READY))
+            .toProto();
+
+    ApplyFeatureSetResponse applyFeatureSetResponse =
+        specService.applyFeatureSet(incomingFeatureSet);
+    assertThat(applyFeatureSetResponse.getStatus(), equalTo(Status.CREATED));
+    assertThat(
+        applyFeatureSetResponse.getFeatureSet().getSpec().getProject(),
+        equalTo(incomingFeatureSet.getSpec().getProject()));
+  }
+
+  @Test
+  public void applyFeatureSetShouldFailWhenProjectIsArchived()
+      throws InvalidProtocolBufferException {
+    Field f3f1 = new Field("f3f1", Enum.INT64);
+    Field f3f2 = new Field("f3f2", Enum.INT64);
+    Field f3e1 = new Field("f3e1", Enum.STRING);
+    FeatureSetProto.FeatureSet incomingFeatureSet =
+        (new FeatureSet(
+                "f3",
+                "archivedproject",
+                5,
+                100L,
+                Arrays.asList(f3e1),
+                Arrays.asList(f3f2, f3f1),
+                defaultSource,
+                FeatureSetStatus.STATUS_READY))
+            .toProto();
+
+    expectedException.expect(IllegalArgumentException.class);
+    expectedException.expectMessage("Project is archived");
+    specService.applyFeatureSet(incomingFeatureSet);
+  }
+
   @Test
   public void shouldUpdateStoreIfConfigChanges() throws InvalidProtocolBufferException {
     when(storeRepository.findById("SERVING")).thenReturn(Optional.of(stores.get(0)));