diff --git a/npm/ng-packs/packages/schematics/src/commands/proxy-add/index.ts b/npm/ng-packs/packages/schematics/src/commands/proxy-add/index.ts
index 3ac5053851..1400cfca1c 100644
--- a/npm/ng-packs/packages/schematics/src/commands/proxy-add/index.ts
+++ b/npm/ng-packs/packages/schematics/src/commands/proxy-add/index.ts
@@ -9,6 +9,7 @@ import {
   createProxyClearer,
   createProxyConfigReader,
   createProxyConfigSaver,
+  createProxyWarningSaver,
   removeDefaultPlaceholders,
   resolveProject,
 } from '../../utils';
@@ -40,9 +41,11 @@ export default function(schema: GenerateProxySchema) {
 
       const saveProxyConfig = createProxyConfigSaver(data, targetPath);
 
+      const saveProxyWarning = createProxyWarningSaver(targetPath);
+
       const generateApis = createApisGenerator(schema, generated);
 
-      return chainAndMerge([clearProxy, saveProxyConfig, generateApis])(host);
+      return chainAndMerge([clearProxy, saveProxyConfig, saveProxyWarning, generateApis])(host);
     },
   ]);
 }
diff --git a/npm/ng-packs/packages/schematics/src/constants/proxy.ts b/npm/ng-packs/packages/schematics/src/constants/proxy.ts
index ee105029c4..fbf7f127bd 100644
--- a/npm/ng-packs/packages/schematics/src/constants/proxy.ts
+++ b/npm/ng-packs/packages/schematics/src/constants/proxy.ts
@@ -1,2 +1,18 @@
 export const PROXY_PATH = '/proxy';
 export const PROXY_CONFIG_PATH = `${PROXY_PATH}/generate-proxy.json`;
+export const PROXY_WARNING_PATH = `${PROXY_PATH}/README.md`;
+
+export const PROXY_WARNING = `# Proxy Generation Output
+
+This directory includes the output of the latest proxy generation.
+The \`services\`, \`models\`, and \`enums\` folders will be overwritten when proxy generation is run again.
+Therefore, please do not place your own content in those folders.
+
+In addition, \`generate-proxy.json\` works like a lock file.
+It includes information used by the proxy generator, so please do not delete or modify it.
+
+Finally, the name of this folder should not be changed for two reasons:
+- Proxy generator will keep creating this folder and you will have multiple copies of the same content.
+- ABP Suite generates imports from this folder and uses the path \`/proxy\` when doing so.
+
+`;
diff --git a/npm/ng-packs/packages/schematics/src/utils/source.ts b/npm/ng-packs/packages/schematics/src/utils/source.ts
index 89d1fd17d8..b495e75c20 100644
--- a/npm/ng-packs/packages/schematics/src/utils/source.ts
+++ b/npm/ng-packs/packages/schematics/src/utils/source.ts
@@ -1,7 +1,13 @@
 import { strings } from '@angular-devkit/core';
 import { SchematicsException, Tree } from '@angular-devkit/schematics';
 import got from 'got';
-import { API_DEFINITION_ENDPOINT, PROXY_CONFIG_PATH, PROXY_PATH } from '../constants';
+import {
+  API_DEFINITION_ENDPOINT,
+  PROXY_CONFIG_PATH,
+  PROXY_PATH,
+  PROXY_WARNING,
+  PROXY_WARNING_PATH,
+} from '../constants';
 import { Exception } from '../enums';
 import { ApiDefinition, GenerateProxySchema, Project, ProxyConfig, WriteOp } from '../models';
 import { getAssignedPropertyFromObjectliteral } from './ast';
@@ -116,6 +122,19 @@ export function createProxyClearer(targetPath: string) {
   };
 }
 
+export function createProxyWarningSaver(targetPath: string) {
+  targetPath += PROXY_WARNING_PATH;
+  const createFileWriter = createFileWriterCreator(targetPath);
+
+  return (tree: Tree) => {
+    const op = tree.exists(targetPath) ? 'overwrite' : 'create';
+    const writeWarningMD = createFileWriter(op, PROXY_WARNING);
+    writeWarningMD(tree);
+
+    return tree;
+  };
+}
+
 export function createProxyConfigSaver(apiDefinition: ApiDefinition, targetPath: string) {
   const createProxyConfigJson = createProxyConfigJsonCreator(apiDefinition);
   const readPreviousConfig = createProxyConfigReader(targetPath);
@@ -145,6 +164,10 @@ export function createProxyConfigSaver(apiDefinition: ApiDefinition, targetPath:
 export function createProxyConfigWriterCreator(targetPath: string) {
   targetPath += PROXY_CONFIG_PATH;
 
+  return createFileWriterCreator(targetPath);
+}
+
+export function createFileWriterCreator(targetPath: string) {
   return (op: WriteOp, data: string) => (tree: Tree) => {
     try {
       tree[op](targetPath, data);