diff --git a/apps/web/pages/api/auth/setup.test.ts b/apps/web/pages/api/auth/setup.test.ts
new file mode 100644
index 00000000000000..bd0a1ad43391fd
--- /dev/null
+++ b/apps/web/pages/api/auth/setup.test.ts
@@ -0,0 +1,90 @@
+import prismock from "../../../../../tests/libs/__mocks__/prisma";
+
+import type { Request, Response } from "express";
+import type { NextApiRequest, NextApiResponse } from "next";
+import { createMocks } from "node-mocks-http";
+import { describe, test, expect, vi } from "vitest";
+
+import { UserPermissionRole, CreationSource, IdentityProvider } from "@calcom/prisma/enums";
+
+import handler from "./setup";
+
+type CustomNextApiRequest = NextApiRequest & Request;
+type CustomNextApiResponse = NextApiResponse & Response;
+
+vi.mock("@calcom/lib/server/i18n", () => {
+  return {
+    getTranslation: (key: string) => {
+      return () => key;
+    },
+  };
+});
+
+describe("setup", () => {
+  test("should return a 400 error if users already exists", async () => {
+    const { req, res } = createMocks<CustomNextApiRequest, CustomNextApiResponse>({
+      method: "POST",
+      body: {
+        email: "test@example.com",
+        username: "test",
+      },
+    });
+
+    await prismock.user.create({
+      data: {
+        email: "test@example.com",
+      },
+    });
+
+    await handler(req, res);
+
+    expect(res.statusCode).toBe(400);
+  });
+
+  test("should return 422 if request body is invalid", async () => {
+    const { req, res } = createMocks<CustomNextApiRequest, CustomNextApiResponse>({
+      method: "POST",
+      body: {
+        email: "test@example.com",
+      },
+    });
+
+    await handler(req, res);
+
+    expect(res.statusCode).toBe(422);
+  });
+
+  test("should create a new admin user", async () => {
+    const { req, res } = createMocks<CustomNextApiRequest, CustomNextApiResponse>({
+      method: "POST",
+      body: {
+        username: "test",
+        full_name: "Test User",
+        email_address: "test@example.com",
+        password: "ADMINtestingpassword123!",
+      },
+    });
+
+    await handler(req, res);
+
+    expect(res.statusCode).toBe(200);
+
+    const user = await prismock.user.findFirst({
+      where: {
+        email: "test@example.com",
+      },
+    });
+
+    expect(user).toEqual(
+      expect.objectContaining({
+        email: "test@example.com",
+        username: "test",
+        locked: false,
+        organizationId: null,
+        identityProvider: IdentityProvider.CAL,
+        role: UserPermissionRole.ADMIN,
+        creationSource: CreationSource.SELF_SERVE_ADMIN,
+      })
+    );
+  });
+});
diff --git a/apps/web/pages/api/auth/setup.ts b/apps/web/pages/api/auth/setup.ts
index f6a6222ed5b532..c3223cb7a3ba13 100644
--- a/apps/web/pages/api/auth/setup.ts
+++ b/apps/web/pages/api/auth/setup.ts
@@ -1,12 +1,11 @@
 import type { NextApiRequest } from "next";
 import z from "zod";
 
-import { hashPassword } from "@calcom/features/auth/lib/hashPassword";
 import { isPasswordValid } from "@calcom/features/auth/lib/isPasswordValid";
 import { emailRegex } from "@calcom/lib/emailSchema";
 import { HttpError } from "@calcom/lib/http-error";
 import { defaultHandler, defaultResponder } from "@calcom/lib/server";
-import slugify from "@calcom/lib/slugify";
+import { UserCreationService } from "@calcom/lib/server/service/userCreationService";
 import prisma from "@calcom/prisma";
 import { IdentityProvider } from "@calcom/prisma/enums";
 import { CreationSource } from "@calcom/prisma/enums";
@@ -34,22 +33,19 @@ async function handler(req: NextApiRequest) {
     throw new HttpError({ statusCode: 422, message: parsedQuery.error.message });
   }
 
-  const username = slugify(parsedQuery.data.username.trim());
   const userEmail = parsedQuery.data.email_address.toLowerCase();
 
-  const hashedPassword = await hashPassword(parsedQuery.data.password);
-
-  await prisma.user.create({
+  await UserCreationService.createUser({
     data: {
-      username,
+      username: parsedQuery.data.username.trim(),
       email: userEmail,
-      password: { create: { hash: hashedPassword } },
+      password: parsedQuery.data.password,
       role: "ADMIN",
       name: parsedQuery.data.full_name,
       emailVerified: new Date(),
       locale: "en", // TODO: We should revisit this
       identityProvider: IdentityProvider.CAL,
-      creationSource: CreationSource.WEBAPP,
+      creationSource: CreationSource.SELF_SERVE_ADMIN,
     },
   });
 
diff --git a/packages/prisma/migrations/20250209030127_add_self_serve_admin_to_creation_source/migration.sql b/packages/prisma/migrations/20250209030127_add_self_serve_admin_to_creation_source/migration.sql
new file mode 100644
index 00000000000000..e495cd8516612d
--- /dev/null
+++ b/packages/prisma/migrations/20250209030127_add_self_serve_admin_to_creation_source/migration.sql
@@ -0,0 +1,2 @@
+-- AlterEnum
+ALTER TYPE "CreationSource" ADD VALUE 'self_serve_admin';
diff --git a/packages/prisma/schema.prisma b/packages/prisma/schema.prisma
index e69f513399920b..38d02202f29d07 100644
--- a/packages/prisma/schema.prisma
+++ b/packages/prisma/schema.prisma
@@ -43,9 +43,10 @@ enum PeriodType {
 }
 
 enum CreationSource {
-  API_V1 @map("api_v1")
-  API_V2 @map("api_v2")
-  WEBAPP @map("webapp")
+  API_V1           @map("api_v1")
+  API_V2           @map("api_v2")
+  WEBAPP           @map("webapp")
+  SELF_SERVE_ADMIN @map("self_serve_admin")
 }
 
 model Host {