diff --git a/providers/microsoft/azure/src/airflow/providers/microsoft/azure/operators/container_instances.py b/providers/microsoft/azure/src/airflow/providers/microsoft/azure/operators/container_instances.py
index 05ec32e032082..0be1ccc484dc7 100644
--- a/providers/microsoft/azure/src/airflow/providers/microsoft/azure/operators/container_instances.py
+++ b/providers/microsoft/azure/src/airflow/providers/microsoft/azure/operators/container_instances.py
@@ -21,7 +21,7 @@
 import time
 from collections import namedtuple
 from collections.abc import Sequence
-from typing import TYPE_CHECKING, Any
+from typing import TYPE_CHECKING, Any, cast
 
 from azure.mgmt.containerinstance.models import (
     Container,
@@ -33,8 +33,10 @@
     DnsConfiguration,
     EnvironmentVariable,
     IpAddress,
+    ResourceIdentityType,
     ResourceRequests,
     ResourceRequirements,
+    UserAssignedIdentities,
     Volume as _AzureVolume,
     VolumeMount,
 )
@@ -147,10 +149,13 @@ class AzureContainerInstancesOperator(BaseOperator):
             },
             priority="Regular",
             identity = {
-                {
-                    "type": "UserAssigned",
-                    "resource_ids": ["/subscriptions/00000000-0000-0000-0000-00000000000/resourceGroups/my_rg/providers/Microsoft.ManagedIdentity/userAssignedIdentities/my_identity"],
-                },
+                "type": "UserAssigned" | "SystemAssigned" | "SystemAssigned,UserAssigned",
+                "resource_ids": [
+                  "/subscriptions/<sub>/resourceGroups/<rg>/providers/Microsoft.ManagedIdentity/userAssignedIdentities/<id>"
+                ]
+                "user_assigned_identities": {
+                  "/subscriptions/.../userAssignedIdentities/<id>": {}
+                }
             }
             command=["/bin/echo", "world"],
             task_id="start_container",
@@ -188,7 +193,7 @@ def __init__(
         dns_config: DnsConfiguration | None = None,
         diagnostics: ContainerGroupDiagnostics | None = None,
         priority: str | None = "Regular",
-        identity: ContainerGroupIdentity | None = None,
+        identity: ContainerGroupIdentity | dict | None = None,
         **kwargs,
     ) -> None:
         super().__init__(**kwargs)
@@ -231,7 +236,7 @@ def __init__(
         self.dns_config = dns_config
         self.diagnostics = diagnostics
         self.priority = priority
-        self.identity = identity
+        self.identity = self._ensure_identity(identity)
         if self.priority not in ["Regular", "Spot"]:
             raise AirflowException(
                 "Invalid value for the priority argument. "
@@ -239,6 +244,66 @@ def __init__(
                 f"Found `{self.priority}`."
             )
 
+    # helper to accept dict (user-friendly) or ContainerGroupIdentity (SDK object)
+    @staticmethod
+    def _ensure_identity(identity: ContainerGroupIdentity | dict | None) -> ContainerGroupIdentity | None:
+        """
+        Normalize identity input into a ContainerGroupIdentity instance.
+
+        Accepts:
+         - None -> returns None
+         - ContainerGroupIdentity -> returned as-is
+         - dict -> converted to ContainerGroupIdentity
+         - any other object -> returned as-is (pass-through) to preserve backwards compatibility
+
+        Expected dict shapes:
+          {"type": "UserAssigned", "resource_ids": ["/.../userAssignedIdentities/id1", ...]}
+        or
+          {"type": "SystemAssigned"}
+        or
+          {"type": "SystemAssigned,UserAssigned", "resource_ids": [...]}
+        """
+        if identity is None:
+            return None
+
+        if isinstance(identity, ContainerGroupIdentity):
+            return identity
+
+        if isinstance(identity, dict):
+            # require type
+            id_type = identity.get("type")
+            if not id_type:
+                raise AirflowException(
+                    "identity dict must include 'type' key with value 'UserAssigned' or 'SystemAssigned'"
+                )
+
+            # map common string type names to ResourceIdentityType enum values if available
+            type_map = {
+                "SystemAssigned": ResourceIdentityType.system_assigned,
+                "UserAssigned": ResourceIdentityType.user_assigned,
+                "SystemAssigned,UserAssigned": ResourceIdentityType.system_assigned_user_assigned,
+                "SystemAssigned, UserAssigned": ResourceIdentityType.system_assigned_user_assigned,
+            }
+            cg_type = type_map.get(id_type, id_type)
+
+            # build user_assigned_identities mapping if resource_ids provided
+            resource_ids = identity.get("resource_ids")
+            if resource_ids:
+                if not isinstance(resource_ids, (list, tuple)):
+                    raise AirflowException("identity['resource_ids'] must be a list of resource id strings")
+                user_assigned_identities: dict[str, Any] = {rid: {} for rid in resource_ids}
+            else:
+                # accept a pre-built mapping if given
+                user_assigned_identities = identity.get("user_assigned_identities") or {}
+
+            return ContainerGroupIdentity(
+                type=cg_type,
+                user_assigned_identities=cast(
+                    "dict[str, UserAssignedIdentities] | None", user_assigned_identities
+                ),
+            )
+        return identity
+
     def execute(self, context: Context) -> int:
         # Check name again in case it was templated.
         self._check_name(self.name)
diff --git a/providers/microsoft/azure/tests/unit/microsoft/azure/operators/test_container_instances.py b/providers/microsoft/azure/tests/unit/microsoft/azure/operators/test_container_instances.py
index 39756cab09523..b8653fc6d6287 100644
--- a/providers/microsoft/azure/tests/unit/microsoft/azure/operators/test_container_instances.py
+++ b/providers/microsoft/azure/tests/unit/microsoft/azure/operators/test_container_instances.py
@@ -611,6 +611,41 @@ def test_execute_with_identity(self, aci_mock):
 
         assert called_cg.identity == identity
 
+    @mock.patch("airflow.providers.microsoft.azure.operators.container_instances.AzureContainerInstanceHook")
+    def test_execute_with_identity_dict(self, aci_mock):
+        # New test: pass a dict and verify operator converts it to ContainerGroupIdentity
+        resource_id = "/subscriptions/00000000-0000-0000-0000-00000000000/resourceGroups/my_rg/providers/Microsoft.ManagedIdentity/userAssignedIdentities/my_identity"
+        identity_dict = {
+            "type": "UserAssigned",
+            "resource_ids": [resource_id],
+        }
+
+        aci_mock.return_value.get_state.return_value = make_mock_container(
+            state="Terminated", exit_code=0, detail_status="test"
+        )
+
+        aci_mock.return_value.exists.return_value = False
+
+        aci = AzureContainerInstancesOperator(
+            ci_conn_id=None,
+            registry_conn_id=None,
+            resource_group="resource-group",
+            name="container-name",
+            image="container-image",
+            region="region",
+            task_id="task",
+            identity=identity_dict,
+        )
+        aci.execute(None)
+        assert aci_mock.return_value.create_or_update.call_count == 1
+        (_, _, called_cg), _ = aci_mock.return_value.create_or_update.call_args
+
+        # verify the operator converted dict -> ContainerGroupIdentity with proper mapping
+        assert hasattr(called_cg, "identity")
+        assert called_cg.identity is not None
+        # user_assigned_identities should contain the resource id as a key
+        assert resource_id in (called_cg.identity.user_assigned_identities or {})
+
 
 class XcomMock:
     def __init__(self) -> None:
