diff --git a/core/components/atoms/avatar/Avatar.tsx b/core/components/atoms/avatar/Avatar.tsx
index 489cb2d98..a3b8dfd78 100644
--- a/core/components/atoms/avatar/Avatar.tsx
+++ b/core/components/atoms/avatar/Avatar.tsx
@@ -63,6 +63,10 @@ export interface AvatarProps extends BaseProps {
    * Show presence indicator for the `Avatar`
    */
   presence?: TPresence;
+  /**
+   * Show status indicator for the `Avatar`
+   */
+  status?: React.ReactNode;
   /**
    * Stroke color of `Presence indicator` & `Status indicator` in `Avatar`
    */
@@ -88,6 +92,7 @@ export const Avatar = (props: AvatarProps) => {
     tooltipSuffix,
     tabIndex,
     presence,
+    status,
     strokeColor,
     role = 'presentation',
   } = props;
@@ -112,6 +117,7 @@ export const Avatar = (props: AvatarProps) => {
 
   const darkAppearance = ['secondary', 'success', 'warning', 'accent1', 'accent4'];
   const showPresence = presence && !disabled && shape === 'round';
+  const showStatus = status && size === 'regular' && shape === 'round';
 
   const AvatarClassNames = classNames(
     {
@@ -215,6 +221,11 @@ export const Avatar = (props: AvatarProps) => {
       {showPresence && (
         <span data-test="DesignSystem-Avatar--Presence" className={presenceClassNames} style={borderStyle} />
       )}
+      {showStatus && (
+        <span data-test="DesignSystem-Avatar--Status" className="Avatar-status" style={borderStyle}>
+          {status}
+        </span>
+      )}
     </span>
   );
 
diff --git a/core/components/atoms/avatar/__stories__/assets/status-image.png b/core/components/atoms/avatar/__stories__/assets/status-image.png
new file mode 100644
index 000000000..a303c6ebe
Binary files /dev/null and b/core/components/atoms/avatar/__stories__/assets/status-image.png differ
diff --git a/core/components/atoms/avatar/__stories__/statusWithIcon.story.jsx b/core/components/atoms/avatar/__stories__/statusWithIcon.story.jsx
new file mode 100644
index 000000000..178872189
--- /dev/null
+++ b/core/components/atoms/avatar/__stories__/statusWithIcon.story.jsx
@@ -0,0 +1,30 @@
+import * as React from 'react';
+import { Avatar, Icon, Tooltip } from '@/index';
+
+// CSF format story
+export const statusWithIcon = () => {
+  return (
+    <Avatar
+      lastName="Doe"
+      firstName="John"
+      appearance="primary"
+      status={
+        <Tooltip tooltip="Verified" position="top">
+          <Icon name="done" size={10} appearance="white" className="p-1 bg-success" />
+        </Tooltip>
+      }
+    />
+  );
+};
+
+export default {
+  title: 'Components/Avatar/Avatar/Status/Status With Icon',
+  component: Avatar,
+  parameters: {
+    docs: {
+      docPage: {
+        title: 'Avatar',
+      },
+    },
+  },
+};
diff --git a/core/components/atoms/avatar/__stories__/statusWithImage.story.jsx b/core/components/atoms/avatar/__stories__/statusWithImage.story.jsx
new file mode 100644
index 000000000..abded76a1
--- /dev/null
+++ b/core/components/atoms/avatar/__stories__/statusWithImage.story.jsx
@@ -0,0 +1,31 @@
+import * as React from 'react';
+import { Avatar, Tooltip } from '@/index';
+import StatusImage from './assets/status-image.png';
+
+// CSF format story
+export const statusWithImage = () => {
+  return (
+    <Avatar
+      firstName="Tom"
+      lastName="Yusuf"
+      appearance="accent1"
+      status={
+        <Tooltip tooltip="DND" position="top">
+          <img width="14px" alt="DND" src={StatusImage} />
+        </Tooltip>
+      }
+    />
+  );
+};
+
+export default {
+  title: 'Components/Avatar/Avatar/Status/Status With Image',
+  component: Avatar,
+  parameters: {
+    docs: {
+      docPage: {
+        title: 'Avatar',
+      },
+    },
+  },
+};
diff --git a/core/components/atoms/avatar/__tests__/Avatar.test.tsx b/core/components/atoms/avatar/__tests__/Avatar.test.tsx
index 51d743e69..3c160c82f 100644
--- a/core/components/atoms/avatar/__tests__/Avatar.test.tsx
+++ b/core/components/atoms/avatar/__tests__/Avatar.test.tsx
@@ -20,6 +20,8 @@ const sizes: AvatarSize[] = ['regular', 'tiny'];
 const shapes: AvatarShape[] = ['round', 'square'];
 const booleanValues = [true, false];
 
+const statusComponent = <div>status</div>;
+
 describe('Avatar component', () => {
   const mapper = {
     appearance: valueHelper(appearances, { required: true, iterate: true }),
@@ -270,3 +272,47 @@ describe('Avatar component with prop:presence', () => {
     expect(presenceEle).toHaveStyle('box-shadow: 0 0 0 var(--spacing-s) red');
   });
 });
+
+describe('Avatar component with prop:status', () => {
+  it('should have the Avatar-status class when size is regular', () => {
+    const { getByTestId } = render(<Avatar status={statusComponent}>Design</Avatar>);
+    const statusElement = getByTestId('DesignSystem-Avatar--Status');
+    expect(statusElement).toBeInTheDocument();
+    expect(statusElement).toHaveClass('Avatar-status');
+  });
+
+  it('should not have the Avatar-status class when size is tiny', () => {
+    render(
+      <Avatar status={statusComponent} size="tiny">
+        Design
+      </Avatar>
+    );
+    const statusElement = screen.queryByText('DesignSystem-Avatar--Status');
+    expect(statusElement).not.toBeInTheDocument();
+  });
+
+  it('should have the Avatar-status class when shape is round', () => {
+    const { getByTestId } = render(<Avatar status={statusComponent}>Design</Avatar>);
+    const statusElement = getByTestId('DesignSystem-Avatar--Status');
+    expect(statusElement).toBeInTheDocument();
+    expect(statusElement).toHaveClass('Avatar-status');
+  });
+
+  it('should not have the Avatar-status class when shape is square', () => {
+    render(
+      <Avatar status={statusComponent} shape="square">
+        Design
+      </Avatar>
+    );
+    const statusElement = screen.queryByText('DesignSystem-Avatar--Status');
+    expect(statusElement).not.toBeInTheDocument();
+  });
+
+  it('status should have custom stroke color', () => {
+    const { getByTestId } = render(
+      <Avatar firstName="John" lastName="Doe" status={statusComponent} strokeColor="red" />
+    );
+    const statusElement = getByTestId('DesignSystem-Avatar--Status');
+    expect(statusElement).toHaveStyle('box-shadow: 0 0 0 var(--spacing-s) red');
+  });
+});
diff --git a/css/src/components/avatar.css b/css/src/components/avatar.css
index 967464e25..017457548 100644
--- a/css/src/components/avatar.css
+++ b/css/src/components/avatar.css
@@ -123,3 +123,17 @@
 .Avatar-presence--away {
   background: var(--secondary-dark);
 }
+
+.Avatar-status {
+  top: calc(-1 * var(--spacing-s));
+  right: calc(-1 * var(--spacing-s));
+  width: var(--spacing-l);
+  height: var(--spacing-l);
+  border-radius: 50%;
+  display: flex;
+  align-items: center;
+  justify-content: center;
+  position: absolute;
+  cursor: pointer;
+  overflow: hidden;
+}
diff --git a/figma/Avatar.figma.tsx b/figma/Avatar.figma.tsx
index f7a10b192..44ccf896d 100644
--- a/figma/Avatar.figma.tsx
+++ b/figma/Avatar.figma.tsx
@@ -1,5 +1,5 @@
 import React from 'react';
-import { Avatar } from '@/index';
+import { Avatar, Icon, Tooltip } from '@/index';
 import figma from '@figma/code-connect';
 
 figma.connect(Avatar, 'https://www.figma.com/design/w8sqBtJpvq86D06UE7gN0T/MDS---Web?node-id=37-592', {
@@ -39,6 +39,13 @@ figma.connect(Avatar, 'https://www.figma.com/design/w8sqBtJpvq86D06UE7gN0T/MDS--
     icon: figma.enum('Type', {
       Icon: <Avatar.Icon name="person" />,
     }),
+    status: figma.enum('Status', {
+      true: (
+        <Tooltip tooltip="done" position="top">
+          <Icon name="done" size={10} appearance="white" />
+        </Tooltip>
+      ),
+    }),
   },
   example: ({ icon, image, ...rest }) => (
     <Avatar {...rest} withTooltip={true}>