diff --git a/cmd/ktor/main.go b/cmd/ktor/main.go
index 11f623c..048c093 100644
--- a/cmd/ktor/main.go
+++ b/cmd/ktor/main.go
@@ -310,7 +310,7 @@ func main() {
 				os.Exit(1)
 			}
 
-			command.Generate(client, projectDir, projectName, []string{}, verboseLogger, hasGlobalLog, ctx)
+			command.Generate(client, projectDir, projectName, []string{}, args.VersionCatalog, verboseLogger, hasGlobalLog, ctx)
 			return
 		}
 
@@ -324,7 +324,7 @@ func main() {
 			return
 		}
 
-		command.Generate(client, result.ProjectDir, result.ProjectName, result.Plugins, verboseLogger, hasGlobalLog, ctx)
+		command.Generate(client, result.ProjectDir, result.ProjectName, result.Plugins, result.VersionCatalog, verboseLogger, hasGlobalLog, ctx)
 	case cli.OpenAPI:
 		specPath := args.CommandArgs[0]
 		projectDir, err := filepath.Abs(".")
diff --git a/internal/app/cli/command/generate.go b/internal/app/cli/command/generate.go
index 0d92bc8..f91aaf6 100644
--- a/internal/app/cli/command/generate.go
+++ b/internal/app/cli/command/generate.go
@@ -12,14 +12,14 @@ import (
 	"os"
 )
 
-func Generate(client *http.Client, projectDir, projectName string, plugins []string, verboseLogger *log.Logger, hasGlobalLog bool, ctx context.Context) {
+func Generate(client *http.Client, projectDir, projectName string, plugins []string, versionCatalog bool, verboseLogger *log.Logger, hasGlobalLog bool, ctx context.Context) {
 	homeDir, err := os.UserHomeDir()
 	if err != nil {
 		fmt.Fprintln(os.Stderr, i18n.Get(i18n.CannotDetermineHomeDir))
 		os.Exit(1)
 	}
 
-	err = generate.Project(client, verboseLogger, projectDir, projectName, plugins, ctx)
+	err = generate.Project(client, verboseLogger, projectDir, projectName, plugins, versionCatalog, ctx)
 
 	if err != nil {
 		cli.ExitWithProjectError(err, projectDir, hasGlobalLog, homeDir)
diff --git a/internal/app/cli/processing.go b/internal/app/cli/processing.go
index eb511eb..ae4e7ad 100644
--- a/internal/app/cli/processing.go
+++ b/internal/app/cli/processing.go
@@ -42,11 +42,12 @@ type commandSpec struct {
 type Flag string
 
 const (
-	Version    Flag = "version"
-	Help            = "help"
-	Verbose         = "verbose"
-	OutDir          = "outDir"
-	ProjectDir      = "projectDir"
+	Version        Flag = "version"
+	Help                = "help"
+	Verbose             = "verbose"
+	OutDir              = "outDir"
+	ProjectDir          = "projectDir"
+	VersionCatalog      = "versionCatalog"
 )
 
 var AllFlagsSpec = map[Flag]flagSpec{
@@ -64,6 +65,9 @@ var commandFlagSpec = map[Command]map[Flag]flagSpec{
 	DevCommand: {
 		ProjectDir: {Aliases: []string{"-p", "--project"}, Description: i18n.Get(i18n.ProjectDirOptionDescr), hasArg: true},
 	},
+	NewCommand: {
+		VersionCatalog: {Aliases: []string{"--version-catalog"}, Description: i18n.Get(i18n.VersionCatalogOptionDescr), hasArg: false},
+	},
 }
 
 type flagSpec struct {
@@ -77,6 +81,7 @@ type Input struct {
 	CommandArgs    []string
 	CommandOptions map[Flag]string
 	Verbose        bool
+	VersionCatalog bool
 }
 
 func ProcessArgs(args *Args) (*Input, error) {
@@ -183,7 +188,8 @@ func ProcessArgs(args *Args) (*Input, error) {
 		}
 	}
 
-	return &Input{Command: Command(args.Command), CommandArgs: args.CommandArgs[argsIndex:], CommandOptions: commandOpts, Verbose: flags[Verbose]}, nil
+	_, versionCatalog := commandOpts[VersionCatalog]
+	return &Input{Command: Command(args.Command), CommandArgs: args.CommandArgs[argsIndex:], CommandOptions: commandOpts, Verbose: flags[Verbose], VersionCatalog: versionCatalog}, nil
 }
 
 func hasVararg(spec commandSpec) bool {
diff --git a/internal/app/generate/project.go b/internal/app/generate/project.go
index e463986..9beb2d0 100644
--- a/internal/app/generate/project.go
+++ b/internal/app/generate/project.go
@@ -18,7 +18,7 @@ import (
 )
 
 // Project Returns *app.Error on error
-func Project(client *http.Client, logger *log.Logger, projectDir, project string, plugins []string, ctx context.Context) error {
+func Project(client *http.Client, logger *log.Logger, projectDir, project string, plugins []string, versionCatalog bool, ctx context.Context) error {
 	err := os.MkdirAll(projectDir, 0755)
 	logger.Printf(i18n.Get(i18n.CreatingDir, projectDir))
 
@@ -46,6 +46,12 @@ func Project(client *http.Client, logger *log.Logger, projectDir, project string
 	}
 
 	logger.Println(i18n.Get(i18n.RequestGenServer))
+
+	versionCatalogValue := "false"
+	if versionCatalog {
+		versionCatalogValue = "true"
+	}
+
 	projectPayload := network.ProjectPayload{
 		Settings: network.ProjectSettings{
 			Name:           project,
@@ -55,7 +61,7 @@ func Project(client *http.Client, logger *log.Logger, projectDir, project string
 			KtorVersion:    settings.KtorVersion.DefaultId,
 			KotlinVersion:  settings.KotlinVersion.DefaultId,
 			BuildSystemArgs: map[network.BuildSystemArgs]string{
-				network.VersionCatalogBuildArg: "",
+				network.VersionCatalogBuildArg: versionCatalogValue,
 			},
 		},
 		Plugins:       plugins,
diff --git a/internal/app/i18n/bundle.en.go b/internal/app/i18n/bundle.en.go
index 1bb5aba..58896b7 100644
--- a/internal/app/i18n/bundle.en.go
+++ b/internal/app/i18n/bundle.en.go
@@ -52,6 +52,7 @@ var en = map[Message]string{
 	SelectedPluginsCount:               "%d plugins added.",
 	ProjectNameCaption:                 "Project name:",
 	LocationCaption:                    "Location:",
+	VersionCatalogCaption:              "Use Gradle version catalog:",
 	SearchPluginsCaption:               "Search for plugins:",
 	CreateProjectButton:                "CREATE PROJECT (CTRL+G)",
 	NoPluginsFound:                     "No plugins found for the search query.",
@@ -117,4 +118,5 @@ var en = map[Message]string{
 	KtorGradlePluginNotFound:      "Ktor Gradle plugin of version %s or above cannot be found in the project %s.\n",
 	StartingCommandMsg:            "Starting %s command: JAVA_HOME=%s %s\n",
 	ErrorExecutingCommandMsg:      "Error while executing %s command: %s\n",
+	VersionCatalogOptionDescr:     "Use Gradle version catalog for dependency management.",
 }
diff --git a/internal/app/i18n/messages.go b/internal/app/i18n/messages.go
index d234e00..d0f170d 100644
--- a/internal/app/i18n/messages.go
+++ b/internal/app/i18n/messages.go
@@ -54,6 +54,7 @@ const (
 	SelectedPluginsCount
 	ProjectNameCaption
 	LocationCaption
+	VersionCatalogCaption
 	SearchPluginsCaption
 	CreateProjectButton
 	NoPluginsFound
@@ -117,4 +118,5 @@ const (
 	KtorGradlePluginNotFound
 	StartingCommandMsg
 	ErrorExecutingCommandMsg
+	VersionCatalogOptionDescr
 )
diff --git a/internal/app/interactive/draw/state.go b/internal/app/interactive/draw/state.go
index 8feb112..a3d9b97 100644
--- a/internal/app/interactive/draw/state.go
+++ b/internal/app/interactive/draw/state.go
@@ -28,6 +28,7 @@ type Element int
 const (
 	ProjectNameInput Element = iota
 	LocationInput
+	VersionCatalogCheckbox
 	SearchInput
 	Tabs
 	CreateButton
diff --git a/internal/app/interactive/draw/tui.go b/internal/app/interactive/draw/tui.go
index 54f05ba..b07e7e0 100644
--- a/internal/app/interactive/draw/tui.go
+++ b/internal/app/interactive/draw/tui.go
@@ -60,6 +60,31 @@ func Tui(scr tcell.Screen, st *State, mdl *model.State) {
 		posY++
 	}
 
+	posY += 2
+	posX = padding
+
+	// Draw version catalog checkbox with text first
+	checkboxStyle := buttonStyle
+	textStyleForCheckbox := strongStyle
+	if st.ActiveElement == VersionCatalogCheckbox {
+		checkboxStyle = activeTabStyle
+		textStyleForCheckbox = activeTabStyle
+	}
+
+	checkboxVal := ' '
+	if mdl.VersionCatalog {
+		checkboxVal = 'x'
+	}
+
+	// Draw label first, then [x] or [ ] checkbox
+	posX, posY = drawInlineText(scr, posX, posY, strongStyle, i18n.Get(i18n.VersionCatalogCaption))
+	posX++
+	scr.SetContent(posX, posY, '[', nil, textStyleForCheckbox)
+	posX++
+	scr.SetContent(posX, posY, checkboxVal, nil, checkboxStyle)
+	posX++
+	scr.SetContent(posX, posY, ']', nil, textStyleForCheckbox)
+
 	if !st.PluginsShown {
 		return
 	}
diff --git a/internal/app/interactive/entry.go b/internal/app/interactive/entry.go
index d6e06ac..6223069 100644
--- a/internal/app/interactive/entry.go
+++ b/internal/app/interactive/entry.go
@@ -3,14 +3,15 @@ package interactive
 import (
 	"context"
 	"fmt"
+	"net/http"
+	"slices"
+	"strings"
+
 	"github.com/gdamore/tcell/v2"
 	"github.com/ktorio/ktor-cli/internal/app/i18n"
 	"github.com/ktorio/ktor-cli/internal/app/interactive/draw"
 	"github.com/ktorio/ktor-cli/internal/app/interactive/model"
 	"github.com/ktorio/ktor-cli/internal/app/network"
-	"net/http"
-	"slices"
-	"strings"
 )
 
 func Run(client *http.Client, ctx context.Context) (result model.Result, err error) {
@@ -71,14 +72,14 @@ func Run(client *http.Client, ctx context.Context) (result model.Result, err err
 			processEvent(event, drawState, mdl, &result, &mdl.ProjectName)
 		case draw.LocationInput:
 			processEvent(event, drawState, mdl, &result, &mdl.ProjectDir)
+		case draw.VersionCatalogCheckbox:
+			processEvent(event, drawState, mdl, &result, nil)
 		case draw.SearchInput:
 			processEvent(event, drawState, mdl, &result, &mdl.Search)
 		case draw.Tabs:
 			processEvent(event, drawState, mdl, &result, nil)
 		case draw.CreateButton:
 			processEvent(event, drawState, mdl, &result, nil)
-		default:
-			panic("unhandled default case")
 		}
 
 		draw.HideCursorIfNeeded(drawState, scr)
@@ -162,6 +163,11 @@ func processEvent(ev tcell.Event, drawState *draw.State, mdl *model.State, resul
 				return
 			}
 
+			if draw.IsElementActive(drawState, draw.VersionCatalogCheckbox) && ev.Rune() == ' ' {
+				mdl.VersionCatalog = !mdl.VersionCatalog
+				return
+			}
+
 			if draw.IsElementActive(drawState, draw.Tabs) && ev.Rune() == ' ' {
 				toggleSelectedPlugin(drawState, mdl)
 				mdl.StatusLine = fmt.Sprintf(i18n.Get(i18n.SelectedPluginsCount, len(mdl.AddedPlugins)))
@@ -237,7 +243,9 @@ func processEvent(ev tcell.Event, drawState *draw.State, mdl *model.State, resul
 			switch {
 			case drawState.ActiveElement == draw.ProjectNameInput:
 				draw.SwitchElement(drawState, 1)
-			case drawState.ActiveElement == draw.LocationInput && drawState.PluginsShown:
+			case drawState.ActiveElement == draw.LocationInput:
+				draw.SwitchElement(drawState, 1)
+			case drawState.ActiveElement == draw.VersionCatalogCheckbox && drawState.PluginsShown:
 				draw.SwitchElement(drawState, 1)
 			case drawState.PluginsShown:
 				draw.SwitchElement(drawState, 1)
@@ -263,11 +271,15 @@ func processEvent(ev tcell.Event, drawState *draw.State, mdl *model.State, resul
 				onInputChanged(drawState, mdl, *input)
 			}
 		case key == tcell.KeyEnter && mod == tcell.ModNone:
-			if drawState.ActiveElement == draw.Tabs {
+			switch drawState.ActiveElement {
+			case draw.VersionCatalogCheckbox:
+				mdl.VersionCatalog = !mdl.VersionCatalog
+				return
+			case draw.Tabs:
 				toggleSelectedPlugin(drawState, mdl)
 				mdl.StatusLine = fmt.Sprintf(i18n.Get(i18n.SelectedPluginsCount, len(mdl.AddedPlugins)))
 				return
-			} else if drawState.ActiveElement == draw.CreateButton {
+			case draw.CreateButton:
 				if generateProject(result, mdl) {
 					return
 				}
@@ -278,6 +290,8 @@ func processEvent(ev tcell.Event, drawState *draw.State, mdl *model.State, resul
 				model.InitProjectDir(mdl)
 				model.CheckProjectSettings(mdl)
 			case draw.LocationInput:
+				// Just move to version catalog checkbox, don't show plugins yet
+			case draw.VersionCatalogCheckbox:
 				drawState.PluginsShown = true
 			default:
 				// do nothing yet
@@ -290,6 +304,8 @@ func processEvent(ev tcell.Event, drawState *draw.State, mdl *model.State, resul
 				model.InitProjectDir(mdl)
 				model.CheckProjectSettings(mdl)
 			case draw.LocationInput:
+				// Just move to version catalog checkbox, don't show plugins yet
+			case draw.VersionCatalogCheckbox:
 				drawState.PluginsShown = true
 			default:
 				// do nothing yet
@@ -305,6 +321,7 @@ func processEvent(ev tcell.Event, drawState *draw.State, mdl *model.State, resul
 func generateProject(result *model.Result, mdl *model.State) bool {
 	result.ProjectName = mdl.ProjectName
 	result.ProjectDir = mdl.GetProjectPath()
+	result.VersionCatalog = mdl.VersionCatalog
 
 	result.Plugins = []string{}
 	for id := range mdl.AddedPlugins {
diff --git a/internal/app/interactive/model/state.go b/internal/app/interactive/model/state.go
index a778f98..69fe6da 100644
--- a/internal/app/interactive/model/state.go
+++ b/internal/app/interactive/model/state.go
@@ -33,10 +33,11 @@ type State struct {
 }
 
 type Result struct {
-	ProjectName string
-	ProjectDir  string
-	Plugins     []string
-	Quit        bool
+	ProjectName    string
+	ProjectDir     string
+	Plugins        []string
+	VersionCatalog bool
+	Quit           bool
 }
 
 func NewState() *State {