diff --git a/.changes/unreleased/Under the Hood-20230811-100902.yaml b/.changes/unreleased/Under the Hood-20230811-100902.yaml
new file mode 100644
index 00000000000..9fe64ab6442
--- /dev/null
+++ b/.changes/unreleased/Under the Hood-20230811-100902.yaml	
@@ -0,0 +1,7 @@
+kind: Under the Hood
+body: 'add internal flag: --no-partial-parse-file-diff to inform whether to compute
+  a file diff during partial parsing'
+time: 2023-08-11T10:09:02.832241-04:00
+custom:
+  Author: michelleark
+  Issue: "8363"
diff --git a/core/dbt/cli/main.py b/core/dbt/cli/main.py
index 390cde0adc4..b53ff3277ba 100644
--- a/core/dbt/cli/main.py
+++ b/core/dbt/cli/main.py
@@ -141,6 +141,7 @@ def invoke(self, args: List[str], **kwargs) -> dbtRunnerResult:
 @p.macro_debugging
 @p.partial_parse
 @p.partial_parse_file_path
+@p.partial_parse_file_diff
 @p.populate_cache
 @p.print
 @p.printer_width
diff --git a/core/dbt/cli/params.py b/core/dbt/cli/params.py
index e75f5f6419b..3c016958fb4 100644
--- a/core/dbt/cli/params.py
+++ b/core/dbt/cli/params.py
@@ -257,6 +257,14 @@
     type=click.Path(exists=True, dir_okay=False, resolve_path=True),
 )
 
+partial_parse_file_diff = click.option(
+    "--partial-parse-file-diff/--no-partial-parse-file-diff",
+    envvar="DBT_PARTIAL_PARSE_FILE_DIFF",
+    help="Internal flag for whether to compute a file diff during partial parsing.",
+    hidden=True,
+    default=True,
+)
+
 populate_cache = click.option(
     "--populate-cache/--no-populate-cache",
     envvar="DBT_POPULATE_CACHE",
diff --git a/core/dbt/parser/manifest.py b/core/dbt/parser/manifest.py
index c7decc1e482..a4bcef28f01 100644
--- a/core/dbt/parser/manifest.py
+++ b/core/dbt/parser/manifest.py
@@ -284,8 +284,17 @@ def get_full_manifest(
             adapter.clear_macro_manifest()
         macro_hook = adapter.connections.set_query_header
 
+        flags = get_flags()
+        if not flags.PARTIAL_PARSE_FILE_DIFF:
+            file_diff = FileDiff.from_dict(
+                {
+                    "deleted": [],
+                    "changed": [],
+                    "added": [],
+                }
+            )
         # Hack to test file_diffs
-        if os.environ.get("DBT_PP_FILE_DIFF_TEST"):
+        elif os.environ.get("DBT_PP_FILE_DIFF_TEST"):
             file_diff_path = "file_diff.json"
             if path_exists(file_diff_path):
                 file_diff_dct = read_json(file_diff_path)
diff --git a/tests/functional/partial_parsing/test_file_diff.py b/tests/functional/partial_parsing/test_file_diff.py
index a9f4c8fdd09..f2493de19df 100644
--- a/tests/functional/partial_parsing/test_file_diff.py
+++ b/tests/functional/partial_parsing/test_file_diff.py
@@ -1,6 +1,8 @@
 import os
+import pytest
 
-from dbt.tests.util import run_dbt, write_artifact
+from dbt.tests.util import run_dbt, write_artifact, write_file
+from tests.functional.partial_parsing.fixtures import model_one_sql, model_two_sql
 
 
 first_file_diff = {
@@ -17,7 +19,7 @@
 }
 
 
-class TestFileDiffs:
+class TestFileDiffPaths:
     def test_file_diffs(self, project):
 
         os.environ["DBT_PP_FILE_DIFF_TEST"] = "true"
@@ -35,3 +37,27 @@ def test_file_diffs(self, project):
         write_artifact(second_file_diff, "file_diff.json")
         results = run_dbt()
         assert len(results) == 2
+
+
+class TestFileDiffs:
+    @pytest.fixture(scope="class")
+    def models(self):
+        return {
+            "model_one.sql": model_one_sql,
+        }
+
+    def test_no_file_diffs(self, project):
+        # We start with a project with one model
+        manifest = run_dbt(["parse"])
+        assert len(manifest.nodes) == 1
+
+        # add a model file
+        write_file(model_two_sql, project.project_root, "models", "model_two.sql")
+
+        # parse without computing a file diff
+        manifest = run_dbt(["--partial-parse", "--no-partial-parse-file-diff", "parse"])
+        assert len(manifest.nodes) == 1
+
+        # default behaviour - parse with computing a file diff
+        manifest = run_dbt(["--partial-parse", "parse"])
+        assert len(manifest.nodes) == 2