diff --git a/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/CodeActions/Models/ExtractToNewComponentCodeActionParams.cs b/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/CodeActions/Models/ExtractToNewComponentCodeActionParams.cs
new file mode 100644
index 00000000000..9c30b64aeed
--- /dev/null
+++ b/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/CodeActions/Models/ExtractToNewComponentCodeActionParams.cs
@@ -0,0 +1,19 @@
+// Copyright (c) .NET Foundation. All rights reserved.
+// Licensed under the MIT license. See License.txt in the project root for license information.
+
+using System;
+using System.Text.Json.Serialization;
+
+namespace Microsoft.AspNetCore.Razor.LanguageServer.CodeActions.Models;
+
+internal sealed class ExtractToNewComponentCodeActionParams
+{
+    [JsonPropertyName("uri")]
+    public required Uri Uri { get; set; }
+    [JsonPropertyName("extractStart")]
+    public int ExtractStart { get; set; }
+    [JsonPropertyName("extractEnd")]
+    public int ExtractEnd { get; set; }
+    [JsonPropertyName("namespace")]
+    public required string Namespace { get; set; }
+}
diff --git a/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/CodeActions/Razor/ExtractToCodeBehindCodeActionResolver.cs b/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/CodeActions/Razor/ExtractToCodeBehindCodeActionResolver.cs
index 4fc7b9fd4eb..82558438ee4 100644
--- a/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/CodeActions/Razor/ExtractToCodeBehindCodeActionResolver.cs
+++ b/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/CodeActions/Razor/ExtractToCodeBehindCodeActionResolver.cs
@@ -64,7 +64,7 @@ internal sealed class ExtractToCodeBehindCodeActionResolver(
             return null;
         }
 
-        var codeBehindPath = GenerateCodeBehindPath(path);
+        var codeBehindPath = FileUtilities.GenerateUniquePath(path, $"{Path.GetExtension(path)}.cs");
 
         // VS Code in Windows expects path to start with '/'
         var updatedCodeBehindPath = _languageServerFeatureOptions.ReturnCodeActionAndRenamePathsWithPrefixedSlash && !codeBehindPath.StartsWith("/")
@@ -134,33 +134,6 @@ internal sealed class ExtractToCodeBehindCodeActionResolver(
         };
     }
 
-    /// <summary>
-    /// Generate a file path with adjacent to our input path that has the
-    /// correct codebehind extension, using numbers to differentiate from
-    /// any collisions.
-    /// </summary>
-    /// <param name="path">The origin file path.</param>
-    /// <returns>A non-existent file path with the same base name and a codebehind extension.</returns>
-    private static string GenerateCodeBehindPath(string path)
-    {
-        var baseFileName = Path.GetFileNameWithoutExtension(path);
-        var extension = Path.GetExtension(path);
-        var directoryName = Path.GetDirectoryName(path).AssumeNotNull();
-
-        var n = 0;
-        string codeBehindPath;
-        do
-        {
-            var identifier = n > 0 ? n.ToString(CultureInfo.InvariantCulture) : string.Empty;  // Make it look nice
-
-            codeBehindPath = Path.Combine(directoryName, $"{baseFileName}{identifier}{extension}.cs");
-            n++;
-        }
-        while (File.Exists(codeBehindPath));
-
-        return codeBehindPath;
-    }
-
     private async Task<string> GenerateCodeBehindClassAsync(IProjectSnapshot project, Uri codeBehindUri, string className, string namespaceName, string contents, RazorCodeDocument razorCodeDocument, CancellationToken cancellationToken)
     {
         using var _ = StringBuilderPool.GetPooledObject(out var builder);
diff --git a/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/CodeActions/Razor/ExtractToNewComponentCodeActionProvider.cs b/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/CodeActions/Razor/ExtractToNewComponentCodeActionProvider.cs
new file mode 100644
index 00000000000..6c3b3e8ee38
--- /dev/null
+++ b/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/CodeActions/Razor/ExtractToNewComponentCodeActionProvider.cs
@@ -0,0 +1,103 @@
+// Copyright (c) .NET Foundation. All rights reserved.
+// Licensed under the MIT license. See License.txt in the project root for license information.
+
+using System;
+using System.Collections.Generic;
+using System.Collections.Immutable;
+using System.Diagnostics.CodeAnalysis;
+using System.Linq;
+using System.Text;
+using System.Threading;
+using System.Threading.Tasks;
+using Microsoft.AspNetCore.Razor.Language;
+using Microsoft.AspNetCore.Razor.Language.Components;
+using Microsoft.AspNetCore.Razor.Language.Extensions;
+using Microsoft.AspNetCore.Razor.Language.Syntax;
+using Microsoft.AspNetCore.Razor.LanguageServer.CodeActions.Models;
+using Microsoft.AspNetCore.Razor.Threading;
+using Microsoft.CodeAnalysis.Razor.Logging;
+using Microsoft.CodeAnalysis.Razor.Workspaces;
+
+namespace Microsoft.AspNetCore.Razor.LanguageServer.CodeActions.Razor;
+
+internal sealed class ExtractToNewComponentCodeActionProvider(ILoggerFactory loggerFactory) : IRazorCodeActionProvider
+{
+    private readonly ILogger _logger = loggerFactory.GetOrCreateLogger<ExtractToNewComponentCodeActionProvider>();
+
+    public Task<ImmutableArray<RazorVSInternalCodeAction>> ProvideAsync(RazorCodeActionContext context, CancellationToken cancellationToken)
+    {
+        if (context is null)
+        {
+            return SpecializedTasks.EmptyImmutableArray<RazorVSInternalCodeAction>();
+        }
+
+        if (!context.SupportsFileCreation)
+        {
+            return SpecializedTasks.EmptyImmutableArray<RazorVSInternalCodeAction>();
+        }
+
+        if (!FileKinds.IsComponent(context.CodeDocument.GetFileKind()))
+        {
+            return SpecializedTasks.EmptyImmutableArray<RazorVSInternalCodeAction>();
+        }
+
+        var syntaxTree = context.CodeDocument.GetSyntaxTree();
+        if (syntaxTree?.Root is null)
+        {
+            return SpecializedTasks.EmptyImmutableArray<RazorVSInternalCodeAction>();
+        }
+
+        var owner = syntaxTree.Root.FindInnermostNode(context.Location.AbsoluteIndex, includeWhitespace: true);
+        if (owner is null)
+        {
+            _logger.LogWarning($"Owner should never be null.");
+            return SpecializedTasks.EmptyImmutableArray<RazorVSInternalCodeAction>();
+        }
+
+        var componentNode = owner.FirstAncestorOrSelf<MarkupElementSyntax>();
+
+        // Make sure we've found tag
+        if (componentNode is null)
+        {
+            return SpecializedTasks.EmptyImmutableArray<RazorVSInternalCodeAction>();
+        }
+
+        // Do not provide code action if the cursor is inside proper html content (i.e. page text)
+        if (context.Location.AbsoluteIndex > componentNode.StartTag.Span.End &&
+            context.Location.AbsoluteIndex < componentNode.EndTag.SpanStart)
+        {
+            return SpecializedTasks.EmptyImmutableArray<RazorVSInternalCodeAction>();
+        }
+
+        if (!TryGetNamespace(context.CodeDocument, out var @namespace))
+        {
+            return SpecializedTasks.EmptyImmutableArray<RazorVSInternalCodeAction>();
+        }
+
+        var actionParams = new ExtractToNewComponentCodeActionParams()
+        {
+            Uri = context.Request.TextDocument.Uri,
+            ExtractStart = componentNode.Span.Start,
+            ExtractEnd = componentNode.Span.End,
+            Namespace = @namespace
+        };
+
+        var resolutionParams = new RazorCodeActionResolutionParams()
+        {
+            Action = LanguageServerConstants.CodeActions.ExtractToNewComponentAction,
+            Language = LanguageServerConstants.CodeActions.Languages.Razor,
+            Data = actionParams,
+        };
+
+        var codeAction = RazorCodeActionFactory.CreateExtractToNewComponent(resolutionParams);
+
+        return Task.FromResult<ImmutableArray<RazorVSInternalCodeAction>>([codeAction]);
+    }
+
+    private static bool TryGetNamespace(RazorCodeDocument codeDocument, [NotNullWhen(returnValue: true)] out string? @namespace)
+        // If the compiler can't provide a computed namespace it will fallback to "__GeneratedComponent" or
+        // similar for the NamespaceNode. This would end up with extracting to a wrong namespace
+        // and causing compiler errors. Avoid offering this refactoring if we can't accurately get a
+        // good namespace to extract to
+        => codeDocument.TryComputeNamespace(fallbackToRootNamespace: true, out @namespace);
+}
diff --git a/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/CodeActions/Razor/ExtractToNewComponentCodeActionResolver.cs b/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/CodeActions/Razor/ExtractToNewComponentCodeActionResolver.cs
new file mode 100644
index 00000000000..8b176aeb891
--- /dev/null
+++ b/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/CodeActions/Razor/ExtractToNewComponentCodeActionResolver.cs
@@ -0,0 +1,139 @@
+// Copyright (c) .NET Foundation. All rights reserved.
+// Licensed under the MIT license. See License.txt in the project root for license information.
+
+using System;
+using System.Collections.Generic;
+using System.Globalization;
+using System.IO;
+using System.Linq;
+using System.Text;
+using System.Text.Json;
+using System.Threading;
+using System.Threading.Tasks;
+using Microsoft.AspNetCore.Razor.Language;
+using Microsoft.AspNetCore.Razor.LanguageServer.CodeActions.Models;
+using Microsoft.AspNetCore.Razor.LanguageServer.Hosting;
+using Microsoft.AspNetCore.Razor.Utilities;
+using Microsoft.CodeAnalysis;
+using Microsoft.CodeAnalysis.Text;
+using Microsoft.CodeAnalysis.Razor;
+using Microsoft.CodeAnalysis.Razor.ProjectSystem;
+using Microsoft.CodeAnalysis.Razor.Protocol.CodeActions;
+using Microsoft.CodeAnalysis.Razor.Workspaces;
+using Microsoft.CodeAnalysis.Razor.Protocol;
+using Microsoft.VisualStudio.LanguageServer.Protocol;
+using Newtonsoft.Json.Linq;
+
+namespace Microsoft.AspNetCore.Razor.LanguageServer.CodeActions.Razor;
+
+internal sealed class ExtractToNewComponentCodeActionResolver(
+    IDocumentContextFactory documentContextFactory,
+    LanguageServerFeatureOptions languageServerFeatureOptions) : IRazorCodeActionResolver
+{
+
+    private readonly IDocumentContextFactory _documentContextFactory = documentContextFactory;
+    private readonly LanguageServerFeatureOptions _languageServerFeatureOptions = languageServerFeatureOptions;
+
+    public string Action => LanguageServerConstants.CodeActions.ExtractToNewComponentAction;
+
+    public async Task<WorkspaceEdit?> ResolveAsync(JsonElement data, CancellationToken cancellationToken)
+    {
+        if (data.ValueKind == JsonValueKind.Undefined)
+        {
+            return null;
+        }
+
+        var actionParams = JsonSerializer.Deserialize<ExtractToNewComponentCodeActionParams>(data.GetRawText());
+        if (actionParams is null)
+        {
+            return null;
+        }
+
+        if (!_documentContextFactory.TryCreate(actionParams.Uri, out var documentContext))
+        {
+            return null;
+        }
+
+        var componentDocument = await documentContext.GetCodeDocumentAsync(cancellationToken).ConfigureAwait(false);
+        if (componentDocument.IsUnsupported())
+        {
+            return null;
+        }
+
+        if (!FileKinds.IsComponent(componentDocument.GetFileKind()))
+        {
+            return null;
+        }
+
+        var path = FilePathNormalizer.Normalize(actionParams.Uri.GetAbsoluteOrUNCPath());
+        var directoryName = Path.GetDirectoryName(path).AssumeNotNull();
+        var templatePath = Path.Combine(directoryName, "Component");
+        var componentPath = FileUtilities.GenerateUniquePath(templatePath, ".razor");
+
+        // VS Code in Windows expects path to start with '/'
+        var updatedComponentPath = _languageServerFeatureOptions.ReturnCodeActionAndRenamePathsWithPrefixedSlash && !componentPath.StartsWith('/')
+            ? '/' + componentPath
+            : componentPath;
+
+        var newComponentUri = new UriBuilder
+        {
+            Scheme = Uri.UriSchemeFile,
+            Path = updatedComponentPath,
+            Host = string.Empty,
+        }.Uri;
+
+        var text = await documentContext.GetSourceTextAsync(cancellationToken).ConfigureAwait(false);
+        if (text is null)
+        {
+            return null;
+        }
+
+        var componentName = Path.GetFileNameWithoutExtension(componentPath);
+        var newComponentContent = text.GetSubTextString(new TextSpan(actionParams.ExtractStart, actionParams.ExtractEnd - actionParams.ExtractStart)).Trim();
+
+        var start = componentDocument.Source.Text.Lines.GetLinePosition(actionParams.ExtractStart);
+        var end = componentDocument.Source.Text.Lines.GetLinePosition(actionParams.ExtractEnd);
+        var removeRange = new Range
+        {
+            Start = new Position(start.Line, start.Character),
+            End = new Position(end.Line, end.Character)
+        };
+
+        var componentDocumentIdentifier = new OptionalVersionedTextDocumentIdentifier { Uri = actionParams.Uri };
+        var newComponentDocumentIdentifier = new OptionalVersionedTextDocumentIdentifier { Uri = newComponentUri };
+
+        var documentChanges = new SumType<TextDocumentEdit, CreateFile, RenameFile, DeleteFile>[]
+        {
+            new CreateFile { Uri = newComponentUri },
+            new TextDocumentEdit
+            {
+                TextDocument = componentDocumentIdentifier,
+                Edits = new[]
+                {
+                    new TextEdit
+                    {
+                        NewText = $"<{componentName} />",
+                        Range = removeRange,
+                    }
+                },
+            },
+            new TextDocumentEdit
+            {
+                TextDocument = newComponentDocumentIdentifier,
+                Edits  = new[]
+                {
+                    new TextEdit
+                    {
+                        NewText = newComponentContent,
+                        Range = new Range { Start = new Position(0, 0), End = new Position(0, 0) },
+                    }
+                },
+            }
+        };
+
+        return new WorkspaceEdit
+        {
+            DocumentChanges = documentChanges,
+        };
+    }
+}
diff --git a/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/CodeActions/Razor/RazorCodeActionFactory.cs b/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/CodeActions/Razor/RazorCodeActionFactory.cs
index 832f3c2a351..6a7d697c1ca 100644
--- a/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/CodeActions/Razor/RazorCodeActionFactory.cs
+++ b/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/CodeActions/Razor/RazorCodeActionFactory.cs
@@ -14,6 +14,7 @@ internal static class RazorCodeActionFactory
     private readonly static Guid s_fullyQualifyComponentTelemetryId = new("3d9abe36-7d10-4e08-8c18-ad88baa9a923");
     private readonly static Guid s_createComponentFromTagTelemetryId = new("a28e0baa-a4d5-4953-a817-1db586035841");
     private readonly static Guid s_createExtractToCodeBehindTelemetryId = new("f63167f7-fdc6-450f-8b7b-b240892f4a27");
+    private readonly static Guid s_createExtractToNewComponentTelemetryId = new("af67b0a3-f84b-4808-97a7-b53e85b22c64");
     private readonly static Guid s_generateMethodTelemetryId = new("c14fa003-c752-45fc-bb29-3a123ae5ecef");
     private readonly static Guid s_generateAsyncMethodTelemetryId = new("9058ca47-98e2-4f11-bf7c-a16a444dd939");
 
@@ -67,6 +68,19 @@ public static RazorVSInternalCodeAction CreateExtractToCodeBehind(RazorCodeActio
         return codeAction;
     }
 
+    public static RazorVSInternalCodeAction CreateExtractToNewComponent(RazorCodeActionResolutionParams resolutionParams)
+    {
+        var title = SR.ExtractTo_NewComponent_Title;
+        var data = JsonSerializer.SerializeToElement(resolutionParams);
+        var codeAction = new RazorVSInternalCodeAction()
+        {
+            Title = title,
+            Data = data,
+            TelemetryId = s_createExtractToNewComponentTelemetryId,
+        };
+        return codeAction;
+    }
+
     public static RazorVSInternalCodeAction CreateGenerateMethod(Uri uri, string methodName, string eventName)
     {
         var @params = new GenerateMethodCodeActionParams
diff --git a/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Extensions/IServiceCollectionExtensions.cs b/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Extensions/IServiceCollectionExtensions.cs
index 167a0c55101..59707cbcd56 100644
--- a/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Extensions/IServiceCollectionExtensions.cs
+++ b/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Extensions/IServiceCollectionExtensions.cs
@@ -146,6 +146,8 @@ public static void AddCodeActionsServices(this IServiceCollection services)
         // Razor Code actions
         services.AddSingleton<IRazorCodeActionProvider, ExtractToCodeBehindCodeActionProvider>();
         services.AddSingleton<IRazorCodeActionResolver, ExtractToCodeBehindCodeActionResolver>();
+        services.AddSingleton<IRazorCodeActionProvider, ExtractToNewComponentCodeActionProvider>();
+        services.AddSingleton<IRazorCodeActionResolver ,ExtractToNewComponentCodeActionResolver>();
         services.AddSingleton<IRazorCodeActionProvider, ComponentAccessibilityCodeActionProvider>();
         services.AddSingleton<IRazorCodeActionResolver, CreateComponentCodeActionResolver>();
         services.AddSingleton<IRazorCodeActionResolver, AddUsingsCodeActionResolver>();
diff --git a/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/SR.resx b/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/SR.resx
index 1fb4ef212c8..b94c06607a4 100644
--- a/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/SR.resx
+++ b/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/SR.resx
@@ -183,4 +183,7 @@
   <data name="Statement" xml:space="preserve">
     <value>statement</value>
   </data>
+  <data name="ExtractTo_NewComponent_Title" xml:space="preserve">
+    <value>Extract element to new component</value>
+  </data>
 </root>
\ No newline at end of file
diff --git a/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.cs.xlf b/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.cs.xlf
index 20bb58692c9..e9bd2e979f3 100644
--- a/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.cs.xlf
+++ b/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.cs.xlf
@@ -47,6 +47,11 @@
         <target state="translated">Extrahovat blok do kódu na pozadí</target>
         <note />
       </trans-unit>
+      <trans-unit id="ExtractTo_NewComponent_Title">
+        <source>Extract element to new component</source>
+        <target state="new">Extract element to new component</target>
+        <note />
+      </trans-unit>
       <trans-unit id="File_Externally_Modified">
         <source>File was externally modified: {0}</source>
         <target state="translated">Došlo k externí úpravě souboru: {0}</target>
diff --git a/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.de.xlf b/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.de.xlf
index c886ab68c2f..94402ecb4de 100644
--- a/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.de.xlf
+++ b/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.de.xlf
@@ -47,6 +47,11 @@
         <target state="translated">Block auf CodeBehind extrahieren</target>
         <note />
       </trans-unit>
+      <trans-unit id="ExtractTo_NewComponent_Title">
+        <source>Extract element to new component</source>
+        <target state="new">Extract element to new component</target>
+        <note />
+      </trans-unit>
       <trans-unit id="File_Externally_Modified">
         <source>File was externally modified: {0}</source>
         <target state="translated">Datei wurde extern modifiziert: {0}.</target>
diff --git a/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.es.xlf b/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.es.xlf
index 7b2b4b26587..3e5b8b11c1e 100644
--- a/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.es.xlf
+++ b/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.es.xlf
@@ -47,6 +47,11 @@
         <target state="translated">Extraer el bloque al código subyacente</target>
         <note />
       </trans-unit>
+      <trans-unit id="ExtractTo_NewComponent_Title">
+        <source>Extract element to new component</source>
+        <target state="new">Extract element to new component</target>
+        <note />
+      </trans-unit>
       <trans-unit id="File_Externally_Modified">
         <source>File was externally modified: {0}</source>
         <target state="translated">El archivo se modificó externamente: {0}</target>
diff --git a/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.fr.xlf b/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.fr.xlf
index d6ecf5e41ae..4808f1c26a4 100644
--- a/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.fr.xlf
+++ b/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.fr.xlf
@@ -47,6 +47,11 @@
         <target state="translated">Extraire le bloc vers le code-behind</target>
         <note />
       </trans-unit>
+      <trans-unit id="ExtractTo_NewComponent_Title">
+        <source>Extract element to new component</source>
+        <target state="new">Extract element to new component</target>
+        <note />
+      </trans-unit>
       <trans-unit id="File_Externally_Modified">
         <source>File was externally modified: {0}</source>
         <target state="translated">Le fichier a été modifié en externe : {0}</target>
diff --git a/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.it.xlf b/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.it.xlf
index 32f81ab0c1c..33470714554 100644
--- a/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.it.xlf
+++ b/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.it.xlf
@@ -47,6 +47,11 @@
         <target state="translated">Estrai il blocco in code-behind</target>
         <note />
       </trans-unit>
+      <trans-unit id="ExtractTo_NewComponent_Title">
+        <source>Extract element to new component</source>
+        <target state="new">Extract element to new component</target>
+        <note />
+      </trans-unit>
       <trans-unit id="File_Externally_Modified">
         <source>File was externally modified: {0}</source>
         <target state="translated">Il file è stato modificato esternamente: {0}</target>
diff --git a/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.ja.xlf b/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.ja.xlf
index 08fba968925..fd8f4765763 100644
--- a/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.ja.xlf
+++ b/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.ja.xlf
@@ -47,6 +47,11 @@
         <target state="translated">ブロック抽出から分離コード</target>
         <note />
       </trans-unit>
+      <trans-unit id="ExtractTo_NewComponent_Title">
+        <source>Extract element to new component</source>
+        <target state="new">Extract element to new component</target>
+        <note />
+      </trans-unit>
       <trans-unit id="File_Externally_Modified">
         <source>File was externally modified: {0}</source>
         <target state="translated">ファイルが外部で変更されました: {0}</target>
diff --git a/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.ko.xlf b/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.ko.xlf
index 2642eb6486d..62d14e8d091 100644
--- a/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.ko.xlf
+++ b/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.ko.xlf
@@ -47,6 +47,11 @@
         <target state="translated">코드 숨김에 블록 추출</target>
         <note />
       </trans-unit>
+      <trans-unit id="ExtractTo_NewComponent_Title">
+        <source>Extract element to new component</source>
+        <target state="new">Extract element to new component</target>
+        <note />
+      </trans-unit>
       <trans-unit id="File_Externally_Modified">
         <source>File was externally modified: {0}</source>
         <target state="translated">{0}의 파일이 외부에서 수정되었습니다.</target>
diff --git a/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.pl.xlf b/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.pl.xlf
index fc746b124d2..b5ca44e0fb3 100644
--- a/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.pl.xlf
+++ b/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.pl.xlf
@@ -47,6 +47,11 @@
         <target state="translated">Wyodrębnij blok do kodu znajdującego się poza</target>
         <note />
       </trans-unit>
+      <trans-unit id="ExtractTo_NewComponent_Title">
+        <source>Extract element to new component</source>
+        <target state="new">Extract element to new component</target>
+        <note />
+      </trans-unit>
       <trans-unit id="File_Externally_Modified">
         <source>File was externally modified: {0}</source>
         <target state="translated">Plik został zmodyfikowany na zewnątrz: {0}</target>
diff --git a/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.pt-BR.xlf b/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.pt-BR.xlf
index 9380bdda8f2..023270c89c0 100644
--- a/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.pt-BR.xlf
+++ b/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.pt-BR.xlf
@@ -47,6 +47,11 @@
         <target state="translated">Extrair o bloco para codificar atrás</target>
         <note />
       </trans-unit>
+      <trans-unit id="ExtractTo_NewComponent_Title">
+        <source>Extract element to new component</source>
+        <target state="new">Extract element to new component</target>
+        <note />
+      </trans-unit>
       <trans-unit id="File_Externally_Modified">
         <source>File was externally modified: {0}</source>
         <target state="translated">O arquivo foi modificado externamente: {0}</target>
diff --git a/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.ru.xlf b/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.ru.xlf
index 3cd2089390d..9b4b541b350 100644
--- a/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.ru.xlf
+++ b/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.ru.xlf
@@ -47,6 +47,11 @@
         <target state="translated">Извлечь блок в код программной части</target>
         <note />
       </trans-unit>
+      <trans-unit id="ExtractTo_NewComponent_Title">
+        <source>Extract element to new component</source>
+        <target state="new">Extract element to new component</target>
+        <note />
+      </trans-unit>
       <trans-unit id="File_Externally_Modified">
         <source>File was externally modified: {0}</source>
         <target state="translated">Файл был изменен извне: {0}</target>
diff --git a/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.tr.xlf b/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.tr.xlf
index 350cc2a946a..211840b046c 100644
--- a/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.tr.xlf
+++ b/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.tr.xlf
@@ -47,6 +47,11 @@
         <target state="translated">Bloğu arkadaki koda ayıkla</target>
         <note />
       </trans-unit>
+      <trans-unit id="ExtractTo_NewComponent_Title">
+        <source>Extract element to new component</source>
+        <target state="new">Extract element to new component</target>
+        <note />
+      </trans-unit>
       <trans-unit id="File_Externally_Modified">
         <source>File was externally modified: {0}</source>
         <target state="translated">Dosya dışarıdan değiştirildi: {0}</target>
diff --git a/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.zh-Hans.xlf b/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.zh-Hans.xlf
index 02e7c59af60..c746d3ecc08 100644
--- a/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.zh-Hans.xlf
+++ b/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.zh-Hans.xlf
@@ -47,6 +47,11 @@
         <target state="translated">将块提取到代码隐藏中</target>
         <note />
       </trans-unit>
+      <trans-unit id="ExtractTo_NewComponent_Title">
+        <source>Extract element to new component</source>
+        <target state="new">Extract element to new component</target>
+        <note />
+      </trans-unit>
       <trans-unit id="File_Externally_Modified">
         <source>File was externally modified: {0}</source>
         <target state="translated">已从外部修改了文件: {0}。</target>
diff --git a/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.zh-Hant.xlf b/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.zh-Hant.xlf
index c283c24de51..ddd96b48565 100644
--- a/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.zh-Hant.xlf
+++ b/src/Razor/src/Microsoft.AspNetCore.Razor.LanguageServer/Resources/xlf/SR.zh-Hant.xlf
@@ -47,6 +47,11 @@
         <target state="translated">擷取區塊以在後方編碼</target>
         <note />
       </trans-unit>
+      <trans-unit id="ExtractTo_NewComponent_Title">
+        <source>Extract element to new component</source>
+        <target state="new">Extract element to new component</target>
+        <note />
+      </trans-unit>
       <trans-unit id="File_Externally_Modified">
         <source>File was externally modified: {0}</source>
         <target state="translated">已在外部修改檔案: {0}</target>
diff --git a/src/Razor/src/Microsoft.CodeAnalysis.Razor.Workspaces/Protocol/LanguageServerConstants.cs b/src/Razor/src/Microsoft.CodeAnalysis.Razor.Workspaces/Protocol/LanguageServerConstants.cs
index be2fb1feec3..cdd0ce37190 100644
--- a/src/Razor/src/Microsoft.CodeAnalysis.Razor.Workspaces/Protocol/LanguageServerConstants.cs
+++ b/src/Razor/src/Microsoft.CodeAnalysis.Razor.Workspaces/Protocol/LanguageServerConstants.cs
@@ -37,6 +37,8 @@ public static class CodeActions
 
         public const string ExtractToCodeBehindAction = "ExtractToCodeBehind";
 
+        public const string ExtractToNewComponentAction = "ExtractToNewComponent";
+
         public const string CreateComponentFromTag = "CreateComponentFromTag";
 
         public const string AddUsing = "AddUsing";
diff --git a/src/Razor/test/Microsoft.AspNetCore.Razor.LanguageServer.Test/CodeActions/Razor/ExtractToNewComponentCodeActionProviderTest.cs b/src/Razor/test/Microsoft.AspNetCore.Razor.LanguageServer.Test/CodeActions/Razor/ExtractToNewComponentCodeActionProviderTest.cs
new file mode 100644
index 00000000000..120a93192a6
--- /dev/null
+++ b/src/Razor/test/Microsoft.AspNetCore.Razor.LanguageServer.Test/CodeActions/Razor/ExtractToNewComponentCodeActionProviderTest.cs
@@ -0,0 +1,101 @@
+// Copyright (c) .NET Foundation. All rights reserved.
+// Licensed under the MIT license. See License.txt in the project root for license information.
+
+using System;
+using System.Collections.Generic;
+using System.Linq;
+using System.Text;
+using System.Threading.Tasks;
+using Microsoft.AspNetCore.Razor.Language;
+using Microsoft.AspNetCore.Razor.Language.Components;
+using Microsoft.AspNetCore.Razor.Language.Extensions;
+using Microsoft.AspNetCore.Razor.LanguageServer.CodeActions;
+using Microsoft.AspNetCore.Razor.LanguageServer.CodeActions.Razor;
+using Microsoft.AspNetCore.Razor.Test.Common.LanguageServer;
+using Microsoft.CodeAnalysis.Razor.ProjectSystem;
+using Microsoft.CodeAnalysis.Razor.Protocol.CodeActions;
+using Microsoft.CodeAnalysis.Razor.Workspaces;
+using Microsoft.CodeAnalysis.Testing;
+using Microsoft.CodeAnalysis.Text;
+using Microsoft.VisualStudio.LanguageServer.Protocol;
+using Moq;
+using Xunit;
+using Xunit.Abstractions;
+
+namespace Microsoft.AspNetCore.Razor.LanguageServer.Test.CodeActions.Razor;
+
+public class ExtractToNewComponentCodeActionProviderTest(ITestOutputHelper testOutput) : LanguageServerTestBase(testOutput)
+{
+    [Fact (Skip = "Not fully set up yet")]
+    public async Task Handle_InvalidFileKind()
+    {
+        // Arrange
+        var documentPath = "c:/Test.razor";
+        var contents = """
+            @page "/test"
+            <div>
+                <h1>This is my title!</h1>
+                <p>This is my paragraph!</p>
+                <button class="btn btn-primary">Click me</button>
+                <div class="sampleClass">
+                    <p>This is my other paragraph!</p>
+                    <img src="https://th.bing.com/th/id/OIP.3xPWxl3Dn6pMYuBKt9zp3QHaG5?w=1185&h=1104&rs=1&pid=ImgDetMain"
+                         alt="Alternate Text" />
+                </div>
+            </div>
+            @$$code {}
+            """;
+        TestFileMarkupParser.GetPosition(contents, out contents, out var cursorPosition);
+
+        var request = new VSCodeActionParams()
+        {
+            TextDocument = new VSTextDocumentIdentifier { Uri = new Uri(documentPath) },
+            Range = new Range(),
+            Context = new VSInternalCodeActionContext()
+        };
+
+        var location = new SourceLocation(cursorPosition, -1, -1);
+        var context = CreateRazorCodeActionContext(request, location, documentPath, contents);
+        context.CodeDocument.SetFileKind(FileKinds.Legacy);
+
+        var provider = new ExtractToNewComponentCodeActionProvider(LoggerFactory);
+
+        // Act
+        var commandOrCodeActionContainer = await provider.ProvideAsync(context, default);
+
+        // Assert
+        Assert.Empty(commandOrCodeActionContainer);
+    }
+
+    private static RazorCodeActionContext CreateRazorCodeActionContext(VSCodeActionParams request, SourceLocation location, string filePath, string text, bool supportsFileCreation = true)
+        => CreateRazorCodeActionContext(request, location, filePath, text, relativePath: filePath, supportsFileCreation: supportsFileCreation);
+
+    private static RazorCodeActionContext CreateRazorCodeActionContext(VSCodeActionParams request, SourceLocation location, string filePath, string text, string? relativePath, bool supportsFileCreation = true)
+    {
+        var sourceDocument = RazorSourceDocument.Create(text, RazorSourceDocumentProperties.Create(filePath, relativePath));
+        var options = RazorParserOptions.Create(o =>
+        {
+            o.Directives.Add(ComponentCodeDirective.Directive);
+            o.Directives.Add(FunctionsDirective.Directive);
+        });
+        var syntaxTree = RazorSyntaxTree.Parse(sourceDocument, options);
+
+        var codeDocument = TestRazorCodeDocument.Create(sourceDocument, imports: default);
+        codeDocument.SetFileKind(FileKinds.Component);
+        codeDocument.SetCodeGenerationOptions(RazorCodeGenerationOptions.Create(o =>
+        {
+            o.RootNamespace = "ExtractToCodeBehindTest";
+        }));
+        codeDocument.SetSyntaxTree(syntaxTree);
+
+        var documentSnapshot = Mock.Of<IDocumentSnapshot>(document =>
+            document.GetGeneratedOutputAsync() == Task.FromResult(codeDocument) &&
+            document.GetTextAsync() == Task.FromResult(codeDocument.GetSourceText()), MockBehavior.Strict);
+
+        var sourceText = SourceText.From(text);
+
+        var context = new RazorCodeActionContext(request, documentSnapshot, codeDocument, location, sourceText, supportsFileCreation, SupportsCodeActionResolve: true);
+
+        return context;
+    }
+}
diff --git a/src/Shared/Microsoft.AspNetCore.Razor.Utilities.Shared/FileUtilities.cs b/src/Shared/Microsoft.AspNetCore.Razor.Utilities.Shared/FileUtilities.cs
new file mode 100644
index 00000000000..c93a6e35fd2
--- /dev/null
+++ b/src/Shared/Microsoft.AspNetCore.Razor.Utilities.Shared/FileUtilities.cs
@@ -0,0 +1,43 @@
+// Copyright (c) .NET Foundation. All rights reserved.
+// Licensed under the MIT license. See License.txt in the project root for license information.
+
+using System;
+using System.Globalization;
+using System.IO;
+
+namespace Microsoft.AspNetCore.Razor.Utilities;
+
+internal static class FileUtilities
+{
+    /// <summary>
+    /// Generate a file path adjacent to the input path that has the
+    /// specified file extension, using numbers to differentiate for
+    /// any collisions.
+    /// </summary>
+    /// <param name="path">The input file path.</param>
+    /// <param name="extension">The input file extension with a prepended ".".</param>
+    /// <returns>A non-existent file path with a name in the specified format and a corresponding extension.</returns>
+    public static string GenerateUniquePath(string path, string extension)
+    {
+        if (!Path.IsPathRooted(path))
+        {
+            throw new ArgumentException("The path is not rooted.", nameof(path));
+        }
+
+        var directoryName = Path.GetDirectoryName(path).AssumeNotNull();
+        var baseFileName = Path.GetFileNameWithoutExtension(path);
+
+        var n = 0;
+        string uniquePath;
+        do
+        {
+            var identifier = n > 0 ? n.ToString(CultureInfo.InvariantCulture) : string.Empty;  // Make it look nice
+
+            uniquePath = Path.Combine(directoryName, $"{baseFileName}{identifier}{extension}");
+            n++;
+        }
+        while (File.Exists(uniquePath));
+
+        return uniquePath;
+    }
+}