diff --git a/spark/src/main/scala/org/apache/spark/sql/delta/catalog/DeltaCatalog.scala b/spark/src/main/scala/org/apache/spark/sql/delta/catalog/DeltaCatalog.scala
index 8e61187283b..00653003493 100644
--- a/spark/src/main/scala/org/apache/spark/sql/delta/catalog/DeltaCatalog.scala
+++ b/spark/src/main/scala/org/apache/spark/sql/delta/catalog/DeltaCatalog.scala
@@ -146,8 +146,19 @@ class DeltaCatalog extends DelegatingCatalogExtension
       .getOrElse(spark.sessionState.catalog.defaultTablePath(id))
     val storage = DataSource.buildStorageFormatFromOptions(writeOptions)
       .copy(locationUri = Option(loc))
-    val tableType =
-      if (location.isDefined) CatalogTableType.EXTERNAL else CatalogTableType.MANAGED
+    // PROP_IS_MANAGED_LOCATION indicates that the table location is not user-specified but
+    // system-generated. The table should be created as managed table in this case.
+    val isManagedLocation = Option(allTableProperties.get(TableCatalog.PROP_IS_MANAGED_LOCATION))
+      .exists(_.equalsIgnoreCase("true"))
+    // Note: Spark generates the table location for managed tables in
+    // `DeltaCatalog#delegate#createTable`, so `isManagedLocation` should never be true if
+    // Unity Catalog is not involved. For safety we also check `isUnityCatalog` here.
+    val respectManagedLoc = isUnityCatalog || org.apache.spark.util.Utils.isTesting
+    val tableType = if (location.isEmpty || (isManagedLocation && respectManagedLoc)) {
+      CatalogTableType.MANAGED
+    } else {
+      CatalogTableType.EXTERNAL
+    }
     val commentOpt = Option(allTableProperties.get("comment"))
 
 
diff --git a/spark/src/test/scala/org/apache/spark/sql/delta/CustomCatalogSuite.scala b/spark/src/test/scala/org/apache/spark/sql/delta/CustomCatalogSuite.scala
index 3578d66c5cc..79305a230d0 100644
--- a/spark/src/test/scala/org/apache/spark/sql/delta/CustomCatalogSuite.scala
+++ b/spark/src/test/scala/org/apache/spark/sql/delta/CustomCatalogSuite.scala
@@ -296,6 +296,22 @@ class CustomCatalogSuite extends QueryTest with SharedSparkSession
       }
     }
   }
+
+  test("custom catalog that generates location for managed tables") {
+    // Reset catalog manager so that the new `spark_catalog` implementation can apply.
+    spark.sessionState.catalogManager.reset()
+    withSQLConf("spark.sql.catalog.spark_catalog" -> classOf[DummySessionCatalog].getName) {
+      withTable("t") {
+        withTempPath { path =>
+          sql(s"CREATE TABLE t (id LONG) USING delta TBLPROPERTIES (fakeLoc='$path')")
+          val t = spark.sessionState.catalogManager.v2SessionCatalog.asInstanceOf[TableCatalog]
+            .loadTable(Identifier.of(Array("default"), "t"))
+          // It should be a managed table.
+          assert(!t.properties().containsKey(TableCatalog.PROP_EXTERNAL))
+        }
+      }
+    }
+  }
 }
 
 class DummyCatalog extends TableCatalog {
@@ -396,9 +412,10 @@ class DummySessionCatalogInner extends DelegatingCatalogExtension {
 }
 
 // A dummy catalog that adds a layer between DeltaCatalog and the Spark SessionCatalog,
-// to attach additional table storage properties after the table is loaded.
+// to attach additional table storage properties after the table is loaded, and generates location
+// for managed tables.
 class DummySessionCatalog extends TableCatalog {
-  private var deltaCatalog: DelegatingCatalogExtension = null
+  private var deltaCatalog: DeltaCatalog = null
 
   override def initialize(name: String, options: CaseInsensitiveStringMap): Unit = {
     val inner = new DummySessionCatalogInner()
@@ -421,7 +438,16 @@ class DummySessionCatalog extends TableCatalog {
       schema: StructType,
       partitions: Array[Transform],
       properties: java.util.Map[String, String]): Table = {
-    deltaCatalog.createTable(ident, schema, partitions, properties)
+    if (!properties.containsKey(TableCatalog.PROP_EXTERNAL) &&
+      !properties.containsKey(TableCatalog.PROP_LOCATION)) {
+      val newProps = new java.util.HashMap[String, String]
+      newProps.putAll(properties)
+      newProps.put(TableCatalog.PROP_LOCATION, properties.get("fakeLoc"))
+      newProps.put(TableCatalog.PROP_IS_MANAGED_LOCATION, "true")
+      deltaCatalog.createTable(ident, schema, partitions, newProps)
+    } else {
+      deltaCatalog.createTable(ident, schema, partitions, properties)
+    }
   }
 
   override def alterTable(ident: Identifier, changes: TableChange*): Table = {