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I'm only seeing New External Client App Option, I can't see the option to create new Connected App, I'm using Developer Edition with System Administrator profile on my user. enter image description here

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  • Somebody downthumbed this and the answer was helpful. Commented Aug 7 at 17:37

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"External Client Apps" are a replacement for/evolution of "Connected Apps" focused on addressing issues with packaging Connected Apps. Looks like Salesforce introduced that in Summer '25.

If you go to Apps -> External Client Apps -> Settings, there is an option to Allow creation of connected apps

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