diff --git a/src/Libraries/Microsoft.Extensions.Compliance.Abstractions/Classification/DataClassification.cs b/src/Libraries/Microsoft.Extensions.Compliance.Abstractions/Classification/DataClassification.cs
index dc8fc03273b..d78023d9da1 100644
--- a/src/Libraries/Microsoft.Extensions.Compliance.Abstractions/Classification/DataClassification.cs
+++ b/src/Libraries/Microsoft.Extensions.Compliance.Abstractions/Classification/DataClassification.cs
@@ -2,6 +2,7 @@
 // The .NET Foundation licenses this file to you under the MIT license.
 
 using System;
+using System.ComponentModel;
 using Microsoft.Shared.Diagnostics;
 
 namespace Microsoft.Extensions.Compliance.Classification;
@@ -9,6 +10,7 @@ namespace Microsoft.Extensions.Compliance.Classification;
 /// <summary>
 /// Represents a single classification which is part of a data taxonomy.
 /// </summary>
+[TypeConverter(typeof(DataClassificationTypeConverter))]
 public readonly struct DataClassification : IEquatable<DataClassification>
 {
     /// <summary>
diff --git a/src/Libraries/Microsoft.Extensions.Compliance.Abstractions/Classification/DataClassificationTypeConverter.cs b/src/Libraries/Microsoft.Extensions.Compliance.Abstractions/Classification/DataClassificationTypeConverter.cs
new file mode 100644
index 00000000000..eed6de8724f
--- /dev/null
+++ b/src/Libraries/Microsoft.Extensions.Compliance.Abstractions/Classification/DataClassificationTypeConverter.cs
@@ -0,0 +1,108 @@
+// Licensed to the .NET Foundation under one or more agreements.
+// The .NET Foundation licenses this file to you under the MIT license.
+
+using System;
+using System.ComponentModel;
+using System.Diagnostics.CodeAnalysis;
+using System.Globalization;
+using Microsoft.Shared.DiagnosticIds;
+
+namespace Microsoft.Extensions.Compliance.Classification;
+
+/// <summary>
+/// Provides a way to convert a <see cref="DataClassification"/> to and from a string.
+/// </summary>
+[Experimental(DiagnosticIds.Experiments.Compliance, UrlFormat = DiagnosticIds.UrlFormat)]
+public class DataClassificationTypeConverter : TypeConverter
+{
+    private const char Delimiter = ':';
+
+    /// <inheritdoc/>
+    public override bool CanConvertFrom(ITypeDescriptorContext? context, Type sourceType)
+    {
+        return sourceType == typeof(string);
+    }
+
+    /// <inheritdoc/>
+    public override bool CanConvertTo(ITypeDescriptorContext? context, Type? destinationType)
+    {
+        return destinationType == typeof(DataClassification);
+    }
+
+    /// <inheritdoc/>
+    [SuppressMessage("Performance",
+        "LA0001:Use the 'Microsoft.Shared.Diagnostics.Throws' class instead of explicitly throwing exception for improved performance",
+        Justification = "Using the Throws class causes static analysis to incorrectly assume that code after the throw is reachable.")]
+    public override object? ConvertFrom(ITypeDescriptorContext? context, CultureInfo? culture, object value)
+    {
+        if (value is not string stringValue)
+        {
+            throw new ArgumentException("Value must be a string.", nameof(value));
+        }
+
+        if (stringValue == nameof(DataClassification.None))
+        {
+            return DataClassification.None;
+        }
+
+        if (stringValue == nameof(DataClassification.Unknown))
+        {
+            return DataClassification.Unknown;
+        }
+
+        if (TryParse(stringValue, out var taxonomyName, out var taxonomyValue))
+        {
+            return new DataClassification(taxonomyName, taxonomyValue);
+        }
+
+        throw new FormatException($"Invalid data classification format: '{stringValue}'.");
+    }
+
+    /// <inheritdoc/>
+    public override bool IsValid(ITypeDescriptorContext? context, object? value)
+    {
+        if (value is not string stringValue)
+        {
+            return false;
+        }
+
+        if (stringValue == nameof(DataClassification.None) ||
+            stringValue == nameof(DataClassification.Unknown))
+        {
+            return true;
+        }
+
+        return TryParse(stringValue, out var taxonomyName, out var taxonomyValue);
+    }
+
+    /// <summary>
+    /// Attempts to parse a string in the format "TaxonomyName:Value".
+    /// </summary>
+    /// <param name="value">The input string to parse.</param>
+    /// <param name="taxonomyName">When this method returns, contains the parsed taxonomy name if the parsing succeeded, or an empty string if it failed.</param>
+    /// <param name="taxonomyValue">When this method returns, contains the parsed taxonomy value if the parsing succeeded, or the original input string if it failed.</param>
+    /// <returns><see langword="true"/> if the string was successfully parsed; otherwise, <see langword="false"/>.</returns>
+    private static bool TryParse(string value, out string taxonomyName, out string taxonomyValue)
+    {
+        taxonomyName = string.Empty;
+        taxonomyValue = value;
+
+        if (value.Length <= 1)
+        {
+            return false;
+        }
+
+        ReadOnlySpan<char> valueSpan = value.AsSpan();
+        int index = valueSpan.IndexOf(Delimiter);
+
+        if (index <= 0 || index >= (value.Length - 1))
+        {
+            return false;
+        }
+
+        taxonomyName = valueSpan.Slice(0, index).ToString();
+        taxonomyValue = valueSpan.Slice(index + 1).ToString();
+
+        return true;
+    }
+}
diff --git a/src/Libraries/Microsoft.Extensions.Compliance.Abstractions/README.md b/src/Libraries/Microsoft.Extensions.Compliance.Abstractions/README.md
index 8a3d7cba4b4..83287b8918e 100644
--- a/src/Libraries/Microsoft.Extensions.Compliance.Abstractions/README.md
+++ b/src/Libraries/Microsoft.Extensions.Compliance.Abstractions/README.md
@@ -20,6 +20,90 @@ Or directly in the C# project file:
 
 ## Usage Example
 
+### Data Classification
+
+The `DataClassification` structure encapsulates a classification label within a specific taxonomy for your data. It allows you to mark sensitive information and enforce policies based on classifications.
+
+- **Taxonomy Name:** Identifies the classification system.
+- **Value:** Represents the specific label within the taxonomy.
+
+#### Creating Custom Classifications
+
+You can define custom classifications by creating static members that represent different types of sensitive data. This provides a consistent way to label and handle data across your application.
+
+Example:
+```csharp
+using Microsoft.Extensions.Compliance.Classification;
+
+public static class MyTaxonomyClassifications
+{
+    public static string Name => "MyTaxonomy";
+
+    public static DataClassification PrivateInformation => new DataClassification(Name, nameof(PrivateInformation));
+    public static DataClassification CreditCardNumber => new DataClassification(Name, nameof(CreditCardNumber));
+    public static DataClassification SocialSecurityNumber => new DataClassification(Name, nameof(SocialSecurityNumber));
+}
+```
+
+#### Binding Data Classification Settings
+
+You can bind data classification settings directly from your configuration using the options pattern. For example:
+
+appsettings.json
+```json
+{
+    "Key": {
+        "PhoneNumber": "MyTaxonomy:PrivateInformation",
+        "ExampleDictionary": {
+            "CreditCard": "MyTaxonomy:CreditCardNumber",
+            "SSN": "MyTaxonomy:SocialSecurityNumber",
+        }
+    }
+}
+```
+
+```csharp
+using Microsoft.Extensions.DependencyInjection;
+using Microsoft.Extensions.Compliance.Classification;
+using Microsoft.Extensions.Configuration;
+using Microsoft.Extensions.Options;
+
+public class TestOptions
+{
+    public DataClassification? PhoneNumber { get; set; }
+    public IDictionary<string, DataClassification> ExampleDictionary { get; set; } = new Dictionary<string, DataClassification>();
+}
+
+class Program
+{
+    static void Main(string[] args)
+    {
+        // Build configuration from an external json file.
+        IConfiguration configuration = new ConfigurationBuilder()
+            .AddJsonFile("appsettings.json", optional: false, reloadOnChange: true)
+            .Build();
+
+        // Setup DI container and bind the configuration section "Key" to TestOptions.
+        IServiceCollection services = new ServiceCollection();
+        services.Configure<TestOptions>(configuration.GetSection("Key"));
+
+        // Build the service provider.
+        IServiceProvider serviceProvider = services.BuildServiceProvider();
+
+        // Get the bound options.
+        TestOptions options = serviceProvider.GetRequiredService<IOptions<TestOptions>>().Value;
+
+        // Simple output demonstrating binding results.
+        Console.WriteLine("Configuration bound to TestOptions:");
+        Console.WriteLine($"PhoneNumber: {options.PhoneNumber}");
+        foreach (var item in options.ExampleDictionary)
+        {
+            Console.WriteLine($"{item.Key}: {item.Value}");
+        }
+    }
+}
+```
+
 ### Implementing Redactors
 
 Redactors can be implemented by inheriting from `Microsoft.Extensions.Compliance.Redaction.Redactor`. For example:
diff --git a/test/Libraries/Microsoft.Extensions.Compliance.Abstractions.Tests/Classification/DataClassificationTypeConverterTests.cs b/test/Libraries/Microsoft.Extensions.Compliance.Abstractions.Tests/Classification/DataClassificationTypeConverterTests.cs
new file mode 100644
index 00000000000..ff981c34f36
--- /dev/null
+++ b/test/Libraries/Microsoft.Extensions.Compliance.Abstractions.Tests/Classification/DataClassificationTypeConverterTests.cs
@@ -0,0 +1,182 @@
+// Licensed to the .NET Foundation under one or more agreements.
+// The .NET Foundation licenses this file to you under the MIT license.
+
+using System;
+using System.Collections.Generic;
+using FluentAssertions;
+using Microsoft.Extensions.Configuration;
+using Microsoft.Extensions.DependencyInjection;
+using Microsoft.Extensions.Options;
+using Xunit;
+
+namespace Microsoft.Extensions.Compliance.Classification.Tests;
+
+public class DataClassificationTypeConverterTests
+{
+    public static IEnumerable<object[]> DefaultDataClassificationTestData()
+    {
+        yield return new object[] { "None", DataClassification.None };
+        yield return new object[] { "Unknown", DataClassification.Unknown };
+    }
+
+    public static IEnumerable<object[]> CustomDataClassificationTestData()
+    {
+        yield return new object[] { "Example:Test", new DataClassification("Example", "Test") };
+        yield return new object[] { "Taxonomy:Value", new DataClassification("Taxonomy", "Value") };
+        yield return new object[] { "Custom:Data", new DataClassification("Custom", "Data") };
+    }
+
+    [Fact]
+    public void BindServiceCollection_ShouldReturnIOptionsWithExpectedDataClassification()
+    {
+        // Arrange
+        var configuration = new ConfigurationBuilder()
+            .AddInMemoryCollection(new[]
+            {
+                new KeyValuePair<string, string?>("Key:Example", "Example:Test"),
+                new KeyValuePair<string, string?>("Key:Facts:Value", "Taxonomy:Value"),
+                new KeyValuePair<string, string?>("Key:Facts:Data", "Custom:Data"),
+                new KeyValuePair<string, string?>("Key:Facts:None", "None"),
+                new KeyValuePair<string, string?>("Key:Facts:Unknown", "Unknown"),
+                new KeyValuePair<string, string?>("Key:Facts:Invalid", "Invalid"),
+            })
+            .Build();
+
+        IServiceCollection serviceCollection = new ServiceCollection()
+            .Configure<TestOptions>(configuration.GetSection("Key"));
+
+        // Act
+        using var sp = serviceCollection.BuildServiceProvider();
+        var options = sp.GetRequiredService<IOptions<TestOptions>>();
+
+        var expected = new Dictionary<string, DataClassification>
+        {
+           { "Value", new DataClassification("Taxonomy", "Value") },
+           { "Data", new DataClassification("Custom", "Data") },
+           { "None", DataClassification.None },
+           { "Unknown", DataClassification.Unknown },
+        };
+
+        // Assert
+        options.Value.Example.Should().NotBeNull().And.Be(new DataClassification("Example", "Test"));
+        options.Value.Facts.Should().NotBeEmpty().And.Equal(expected);
+
+        // Odd quirk: binding to dictionary succeeds but doesn't include invalid values
+        options.Value.Facts.Should().NotContainKey("Invalid");
+    }
+
+    [Theory]
+    [InlineData(typeof(string), true)]
+    [InlineData(typeof(int), false)]
+    [InlineData(typeof(DataClassification), false)]
+    public void CanConvertFrom_ShouldReturnExpectedResult(Type sourceType, bool expected)
+    {
+        // Arrange
+        var converter = new DataClassificationTypeConverter();
+
+        // Act
+        var result = converter.CanConvertFrom(null, sourceType);
+
+        // Assert
+        result.Should().Be(expected);
+    }
+
+    [Theory]
+    [InlineData(typeof(DataClassification), true)]
+    [InlineData(typeof(int), false)]
+    [InlineData(typeof(string), false)]
+    public void CanConvertTo_ShouldReturnExpectedResult(Type destinationType, bool expected)
+    {
+        // Arrange
+        var converter = new DataClassificationTypeConverter();
+
+        // Act
+        var result = converter.CanConvertTo(null, destinationType);
+
+        // Assert
+        result.Should().Be(expected);
+    }
+
+    [Theory]
+    [InlineData("None", "", "None")]
+    [InlineData("Unknown", "", "Unknown")]
+    [InlineData("Example:Test", "Example", "Test")]
+    public void ConvertFrom_ShouldReturnExpectedResult_ForValidInput(string input, string expectedTaxonomyName, string expectedValue)
+    {
+        // Arrange
+        var converter = new DataClassificationTypeConverter();
+
+        // Act
+        var result = converter.ConvertFrom(null, null, input);
+
+        // Assert
+        result.Should().NotBeNull();
+        result.Should().BeOfType<DataClassification>();
+
+#pragma warning disable CS8605 // Unboxing a possibly null value.
+        var dataClassification = (DataClassification)result;
+#pragma warning restore CS8605 // Unboxing a possibly null value.
+
+        dataClassification.TaxonomyName.Should().Be(expectedTaxonomyName);
+        dataClassification.Value.Should().Be(expectedValue);
+    }
+
+    [Theory]
+    [InlineData("InvalidFormat", typeof(FormatException))]
+    [InlineData("InvalidFormat:", typeof(FormatException))]
+    [InlineData(":InvalidFormat", typeof(FormatException))]
+    [InlineData(":", typeof(FormatException))]
+    [InlineData("", typeof(FormatException))]
+    [InlineData("\t", typeof(FormatException))]
+    [InlineData("\n", typeof(FormatException))]
+    [InlineData(42, typeof(ArgumentException))]
+    [InlineData(false, typeof(ArgumentException))]
+    [InlineData(null, typeof(ArgumentException))]
+    public void ConvertFrom_ShouldThrowException_ForInvalidInput(object? input, Type expectedException)
+    {
+        // Arrange
+        var converter = new DataClassificationTypeConverter();
+
+        // Act
+        var act = () => converter.ConvertFrom(null, null, input!);
+
+        // Assert
+        Assert.Throws(expectedException, act);
+    }
+
+    [Theory]
+    [InlineData("None", true)]
+    [InlineData("Unknown", true)]
+    [InlineData("Example:Test", true)]
+    [InlineData("InvalidFormat", false)]
+    [InlineData("InvalidFormat:", false)]
+    [InlineData(":InvalidFormat", false)]
+    [InlineData(":", false)]
+    [InlineData("", false)]
+    [InlineData("\t", false)]
+    [InlineData("\n", false)]
+    [InlineData(42, false)]
+    [InlineData(false, false)]
+    [InlineData(null, false)]
+    public void IsValid_ShouldReturnExpectedResult(object? input, bool expected)
+    {
+        // Arrange
+        var converter = new DataClassificationTypeConverter();
+
+        // Act
+        var result = converter.IsValid(null, input);
+
+        // Assert
+        result.Should().Be(expected);
+    }
+
+    private class TestOptions
+    {
+#pragma warning disable S3459 // Unassigned members should be removed
+#pragma warning disable S1144 // Unused private types or members should be removed
+        public DataClassification? Example { get; set; }
+#pragma warning restore S1144 // Unused private types or members should be removed
+#pragma warning restore S3459 // Unassigned members should be removed
+        public IDictionary<string, DataClassification> Facts { get; set; } = new Dictionary<string, DataClassification>();
+    }
+}
diff --git a/test/Libraries/Microsoft.Extensions.Compliance.Abstractions.Tests/Microsoft.Extensions.Compliance.Abstractions.Tests.csproj b/test/Libraries/Microsoft.Extensions.Compliance.Abstractions.Tests/Microsoft.Extensions.Compliance.Abstractions.Tests.csproj
index b9d0cf40bb7..19ff10a6142 100644
--- a/test/Libraries/Microsoft.Extensions.Compliance.Abstractions.Tests/Microsoft.Extensions.Compliance.Abstractions.Tests.csproj
+++ b/test/Libraries/Microsoft.Extensions.Compliance.Abstractions.Tests/Microsoft.Extensions.Compliance.Abstractions.Tests.csproj
@@ -8,4 +8,9 @@
     <ProjectReference Include="..\..\..\src\Libraries\Microsoft.Extensions.Compliance.Abstractions\Microsoft.Extensions.Compliance.Abstractions.csproj" ProjectUnderTest="true" />
     <ProjectReference Include="..\..\..\src\Libraries\Microsoft.Extensions.Compliance.Testing\Microsoft.Extensions.Compliance.Testing.csproj" />
   </ItemGroup>
+
+  <ItemGroup>
+    <PackageReference Include="Microsoft.Extensions.Configuration" />
+    <PackageReference Include="Microsoft.Extensions.DependencyInjection" />
+  </ItemGroup>
 </Project>