Autocomplete disallow free text entry?

According to the API documentation, the change event's ui property is null if the entry was not chosen from the list, so you can disallow free text as simply as this:

$('#selector').autocomplete({
    source: url,
    minlength: 2,
    change: function(event, ui) {
        if (ui.item == null) {
          event.currentTarget.value = ''; 
          event.currentTarget.focus();
        }
    }
});

If you want the user to just get the item from the list then use autocomplete combobox.

http://jqueryui.com/demos/autocomplete/#combobox

HTH

One way would be to use additional validation on form submit (if you are using a form) to highlight an error if the text isn't one of the valid option.

Another way would be to attach to the auto complete's change event which will get fired even if an options isn't selected. You can then do validation to ensure the user input is in your list or display an error if it is not.