diff --git a/openmetadata-ui/src/main/resources/ui/playwright/e2e/Pages/DataContractInheritance.spec.ts b/openmetadata-ui/src/main/resources/ui/playwright/e2e/Pages/DataContractInheritance.spec.ts
index b57f7761ac6b..4857ee9c3747 100644
--- a/openmetadata-ui/src/main/resources/ui/playwright/e2e/Pages/DataContractInheritance.spec.ts
+++ b/openmetadata-ui/src/main/resources/ui/playwright/e2e/Pages/DataContractInheritance.spec.ts
@@ -71,7 +71,8 @@ const DATA_PRODUCT_SLA = {
 const fillContractDetailsForm = async (
   page: Page,
   contractName: string,
-  description: string
+  description: string,
+  status?: 'Draft' | 'In Review' | 'Approved'
 ) => {
   await page.getByTestId('contract-name').fill(contractName);
   await page.fill('.om-block-editor[contenteditable="true"]', description);
@@ -82,6 +83,14 @@ const fillContractDetailsForm = async (
   await firstOwner.click();
 
   await expect(page.getByTestId('user-tag')).toBeVisible();
+
+  if (status) {
+    await page.getByTestId('contract-status').click();
+    await expect(
+      page.locator(`.contract-status-dropdown [title="${status}"]`)
+    ).toBeVisible();
+    await page.locator(`.contract-status-dropdown [title="${status}"]`).click();
+  }
 };
 
 const fillTermsOfServiceForm = async (page: Page, termsContent: string) => {
@@ -440,7 +449,8 @@ test.describe('Data Contract Inheritance', () => {
       await fillContractDetailsForm(
         page,
         DATA_PRODUCT_CONTRACT_DETAILS.name,
-        DATA_PRODUCT_CONTRACT_DETAILS.description
+        DATA_PRODUCT_CONTRACT_DETAILS.description,
+        'Approved'
       );
     });
 
@@ -565,7 +575,8 @@ test.describe('Data Contract Inheritance', () => {
       await fillContractDetailsForm(
         page,
         `dp_partial_${uuid()}`,
-        'Data Product contract for partial inheritance'
+        'Data Product contract for partial inheritance',
+        'Approved'
       );
     });
 
@@ -683,7 +694,8 @@ test.describe('Data Contract Inheritance', () => {
       await fillContractDetailsForm(
         page,
         `dp_sla_edit_test_${uuid()}`,
-        'Data Product contract with SLA for edit test'
+        'Data Product contract with SLA for edit test',
+        'Approved'
       );
     });
 
@@ -860,7 +872,8 @@ test.describe('Data Contract Inheritance', () => {
       await fillContractDetailsForm(
         page,
         DP_CONTRACT_DETAILS.name,
-        DP_CONTRACT_DETAILS.description
+        DP_CONTRACT_DETAILS.description,
+        'Approved'
       );
 
       await fillTermsOfServiceForm(page, DP_CONTRACT_DETAILS.termsOfService);
@@ -1000,7 +1013,8 @@ test.describe('Data Contract Inheritance', () => {
       await fillContractDetailsForm(
         page,
         DP_CONTRACT_DETAILS.name,
-        DP_CONTRACT_DETAILS.description
+        DP_CONTRACT_DETAILS.description,
+        'Approved'
       );
 
       await saveContract(page);
@@ -1069,7 +1083,8 @@ test.describe('Data Contract Inheritance', () => {
       await fillContractDetailsForm(
         page,
         DP_CONTRACT_DETAILS.name,
-        DP_CONTRACT_DETAILS.description
+        DP_CONTRACT_DETAILS.description,
+        'Approved'
       );
 
       await saveContract(page);
@@ -1150,7 +1165,8 @@ test.describe('Data Contract Inheritance', () => {
       await fillContractDetailsForm(
         page,
         DP_CONTRACT_DETAILS.name,
-        DP_CONTRACT_DETAILS.description
+        DP_CONTRACT_DETAILS.description,
+        'Approved'
       );
 
       await saveContract(page);
@@ -1250,7 +1266,8 @@ test.describe('Data Contract Inheritance', () => {
       await fillContractDetailsForm(
         page,
         DP_CONTRACT_DETAILS.name,
-        DP_CONTRACT_DETAILS.description
+        DP_CONTRACT_DETAILS.description,
+        'Approved'
       );
 
       await fillTermsOfServiceForm(page, DP_CONTRACT_DETAILS.termsOfService);
diff --git a/openmetadata-ui/src/main/resources/ui/src/components/DataContract/AddDataContract/AddDataContract.test.tsx b/openmetadata-ui/src/main/resources/ui/src/components/DataContract/AddDataContract/AddDataContract.test.tsx
index e297b9fe9a79..5ffeb2ee7ecc 100644
--- a/openmetadata-ui/src/main/resources/ui/src/components/DataContract/AddDataContract/AddDataContract.test.tsx
+++ b/openmetadata-ui/src/main/resources/ui/src/components/DataContract/AddDataContract/AddDataContract.test.tsx
@@ -17,10 +17,10 @@ import { EDataContractTab } from '../../../constants/DataContract.constants';
 import { EntityType } from '../../../enums/entity.enum';
 import {
   DataContract,
+  EntityStatus,
   SemanticsRule,
 } from '../../../generated/entity/data/dataContract';
 import { Column, Table } from '../../../generated/entity/data/table';
-import { EntityStatus } from '../../../generated/entity/domains/dataProduct';
 import { EntityReference } from '../../../generated/entity/type';
 import { createContract, updateContract } from '../../../rest/contractAPI';
 import { showErrorToast, showSuccessToast } from '../../../utils/ToastUtils';
@@ -96,6 +96,10 @@ jest.mock('../ContractDetailFormTab/ContractDetailFormTab', () => ({
         <button onClick={() => onChange({ name: 'Test Contract Change' })}>
           Change
         </button>
+        <button
+          onClick={() => onChange({ entityStatus: EntityStatus.InReview })}>
+          Change Status
+        </button>
         <button onClick={onNext}>Next</button>
       </div>
     )),
@@ -442,7 +446,7 @@ describe('AddDataContract', () => {
             type: EntityType.TABLE,
           },
           semantics: undefined, // validSemantics - undefined when no semantics provided
-          entityStatus: EntityStatus.Approved,
+          entityStatus: EntityStatus.Draft,
         })
       );
       expect(showSuccessToast).toHaveBeenCalledWith(
@@ -474,7 +478,7 @@ describe('AddDataContract', () => {
             type: EntityType.TABLE,
           },
           semantics: undefined, // validSemantics - undefined when no semantics provided
-          entityStatus: EntityStatus.Approved,
+          entityStatus: EntityStatus.Draft,
         })
       );
       expect(showSuccessToast).toHaveBeenCalledWith(
@@ -483,6 +487,32 @@ describe('AddDataContract', () => {
       expect(mockOnSave).toHaveBeenCalled();
     });
 
+    it('should use selected entity status when creating a contract', async () => {
+      render(<AddDataContract onCancel={mockOnCancel} onSave={mockOnSave} />);
+
+      const changeButton = screen.getByText('Change');
+      await act(async () => {
+        fireEvent.click(changeButton);
+      });
+
+      const statusButton = screen.getByText('Change Status');
+      await act(async () => {
+        fireEvent.click(statusButton);
+      });
+
+      const saveButton = screen.getByTestId('save-contract-btn');
+
+      await act(async () => {
+        fireEvent.click(saveButton);
+      });
+
+      expect(createContract).toHaveBeenCalledWith(
+        expect.objectContaining({
+          entityStatus: EntityStatus.InReview,
+        })
+      );
+    });
+
     it('should call updateContract for existing contract with JSON patch', async () => {
       render(
         <AddDataContract
diff --git a/openmetadata-ui/src/main/resources/ui/src/components/DataContract/AddDataContract/AddDataContract.tsx b/openmetadata-ui/src/main/resources/ui/src/components/DataContract/AddDataContract/AddDataContract.tsx
index 4323e578a41d..90f63a825ee6 100644
--- a/openmetadata-ui/src/main/resources/ui/src/components/DataContract/AddDataContract/AddDataContract.tsx
+++ b/openmetadata-ui/src/main/resources/ui/src/components/DataContract/AddDataContract/AddDataContract.tsx
@@ -289,7 +289,7 @@ const AddDataContract: React.FC<{
           semantics: validSemantics,
           security: validSecurity,
           termsOfUse: termsOfUseContent,
-          entityStatus: EntityStatus.Approved,
+          entityStatus: formValues.entityStatus ?? EntityStatus.Draft,
         });
       }
 
diff --git a/openmetadata-ui/src/main/resources/ui/src/components/DataContract/ContractDetailFormTab/ContractDetailFormTab.test.tsx b/openmetadata-ui/src/main/resources/ui/src/components/DataContract/ContractDetailFormTab/ContractDetailFormTab.test.tsx
index f632c272a9b1..b734e4c647eb 100644
--- a/openmetadata-ui/src/main/resources/ui/src/components/DataContract/ContractDetailFormTab/ContractDetailFormTab.test.tsx
+++ b/openmetadata-ui/src/main/resources/ui/src/components/DataContract/ContractDetailFormTab/ContractDetailFormTab.test.tsx
@@ -12,8 +12,12 @@
  */
 import '@testing-library/jest-dom';
 import { act, fireEvent, render, screen } from '@testing-library/react';
-import { DataContract } from '../../../generated/entity/data/dataContract';
+import {
+  DataContract,
+  EntityStatus,
+} from '../../../generated/entity/data/dataContract';
 import { EntityReference } from '../../../generated/entity/type';
+import { FieldTypes } from '../../../interface/FormUtils.interface';
 import { ContractDetailFormTab } from './ContractDetailFormTab';
 
 jest.mock('../../../utils/formUtils', () => ({
@@ -47,6 +51,10 @@ jest.mock('react-i18next', () => ({
       const translations: Record<string, string> = {
         'label.contract-title': 'Contract Title',
         'label.owner-plural': 'Owners',
+        'label.status': 'Status',
+        'label.draft': 'Draft label',
+        'label.in-review': 'In Review label',
+        'label.approved': 'Approved label',
         'label.description': 'Description',
         'label.contract-detail-plural': 'Contract Details',
         'message.contract-detail-plural-description': 'Enter contract details',
@@ -99,6 +107,7 @@ describe('ContractDetailFormTab', () => {
 
       expect(screen.getByText('Enter contract details')).toBeInTheDocument();
       expect(screen.getByText('Contract Title')).toBeInTheDocument();
+      expect(screen.getByText('Status')).toBeInTheDocument();
       expect(screen.getByText('Owners')).toBeInTheDocument();
       expect(screen.getByText('Description')).toBeInTheDocument();
     });
@@ -127,6 +136,7 @@ describe('ContractDetailFormTab', () => {
       render(<ContractDetailFormTab {...commonProps} />);
 
       expect(screen.getByText('Contract Title')).toBeInTheDocument();
+      expect(screen.getByText('Status')).toBeInTheDocument();
       expect(screen.getByText('Description')).toBeInTheDocument();
       expect(screen.getByText('Owners')).toBeInTheDocument();
     });
@@ -261,6 +271,21 @@ describe('ContractDetailFormTab', () => {
             name: 'owners',
             label: 'Owners',
           }),
+          expect.objectContaining({
+            formItemProps: {
+              initialValue: EntityStatus.Draft,
+            },
+            name: 'entityStatus',
+            label: 'Status',
+            props: expect.objectContaining({
+              options: [
+                { label: 'Draft label', value: EntityStatus.Draft },
+                { label: 'In Review label', value: EntityStatus.InReview },
+                { label: 'Approved label', value: EntityStatus.Approved },
+              ],
+            }),
+            type: FieldTypes.SELECT,
+          }),
           expect.objectContaining({
             name: 'description',
             label: 'Description',
diff --git a/openmetadata-ui/src/main/resources/ui/src/components/DataContract/ContractDetailFormTab/ContractDetailFormTab.tsx b/openmetadata-ui/src/main/resources/ui/src/components/DataContract/ContractDetailFormTab/ContractDetailFormTab.tsx
index 9dd6684c712b..cf547a7a8f02 100644
--- a/openmetadata-ui/src/main/resources/ui/src/components/DataContract/ContractDetailFormTab/ContractDetailFormTab.tsx
+++ b/openmetadata-ui/src/main/resources/ui/src/components/DataContract/ContractDetailFormTab/ContractDetailFormTab.tsx
@@ -16,13 +16,31 @@ import { useEffect } from 'react';
 import { useTranslation } from 'react-i18next';
 import { ReactComponent as RightIcon } from '../../../assets/svg/right-arrow.svg';
 import { EntityType } from '../../../enums/entity.enum';
-import { DataContract } from '../../../generated/entity/data/dataContract';
+import {
+  DataContract,
+  EntityStatus,
+} from '../../../generated/entity/data/dataContract';
 import { useEntityRules } from '../../../hooks/useEntityRules';
 import { FieldProp, FieldTypes } from '../../../interface/FormUtils.interface';
 import { getEntityName } from '../../../utils/EntityNameUtils';
 import { generateFormFields } from '../../../utils/formUtils';
 import './contract-detail-form-tab.less';
 
+const DATA_CONTRACT_STATUS_OPTION_KEYS = [
+  {
+    labelKey: 'label.draft',
+    value: EntityStatus.Draft,
+  },
+  {
+    labelKey: 'label.in-review',
+    value: EntityStatus.InReview,
+  },
+  {
+    labelKey: 'label.approved',
+    value: EntityStatus.Approved,
+  },
+];
+
 export const ContractDetailFormTab: React.FC<{
   initialValues?: Partial<DataContract>;
   onNext: () => void;
@@ -40,6 +58,12 @@ export const ContractDetailFormTab: React.FC<{
   const { t } = useTranslation();
   const [form] = Form.useForm();
   const { entityRules } = useEntityRules(EntityType.TABLE);
+  const dataContractStatusOptions = DATA_CONTRACT_STATUS_OPTION_KEYS.map(
+    ({ labelKey, value }) => ({
+      label: t(labelKey),
+      value,
+    })
+  );
 
   const fields: FieldProp[] = [
     {
@@ -55,6 +79,22 @@ export const ContractDetailFormTab: React.FC<{
         'data-testid': 'contract-name',
       },
     },
+    {
+      label: t('label.status'),
+      id: 'entityStatus',
+      name: 'entityStatus',
+      type: FieldTypes.SELECT,
+      required: false,
+      placeholder: t('label.select-field', { field: t('label.status') }),
+      props: {
+        'data-testid': 'contract-status',
+        options: dataContractStatusOptions,
+        popupClassName: 'contract-status-dropdown',
+      },
+      formItemProps: {
+        initialValue: initialValues?.entityStatus ?? EntityStatus.Draft,
+      },
+    },
     {
       label: t('label.owner-plural'),
       name: 'owners',
@@ -95,6 +135,7 @@ export const ContractDetailFormTab: React.FC<{
       form.setFieldsValue({
         name: getEntityName(initialValues),
         description: initialValues.description,
+        entityStatus: initialValues.entityStatus ?? EntityStatus.Draft,
         owners: initialValues.owners,
       });
     }