diff --git a/dsc/locales/en-us.toml b/dsc/locales/en-us.toml
index f1e47d6ec..b7957637d 100644
--- a/dsc/locales/en-us.toml
+++ b/dsc/locales/en-us.toml
@@ -44,6 +44,8 @@ failedReadingParametersFile = "Failed to read parameters file"
 readingParametersFromStdin = "Reading parameters from STDIN"
 generatingCompleter = "Generating completion script for"
 readingParametersFile = "Reading parameters from file"
+mergingParameters = "Merging inline parameters with parameters file (inline takes precedence)"
+failedMergingParameters = "Failed to merge parameters"
 usingDscVersion = "Running DSC version"
 foundProcesses = "Found processes"
 failedToGetPid = "Could not get current process id"
@@ -158,5 +160,4 @@ failedToAbsolutizePath = "Error making config path absolute"
 failedToGetParentPath = "Error reading config path parent"
 dscConfigRootAlreadySet = "The current value of DSC_CONFIG_ROOT env var will be overridden"
 settingDscConfigRoot = "Setting DSC_CONFIG_ROOT env var as"
-stdinNotAllowedForBothParametersAndInput = "Cannot read from STDIN for both parameters and input."
 removingUtf8Bom = "Removing UTF-8 BOM from input"
diff --git a/dsc/src/args.rs b/dsc/src/args.rs
index c3a769cd9..e7e514b7e 100644
--- a/dsc/src/args.rs
+++ b/dsc/src/args.rs
@@ -66,9 +66,9 @@ pub enum SubCommand {
     Config {
         #[clap(subcommand)]
         subcommand: ConfigSubCommand,
-        #[clap(short, long, help = t!("args.parameters").to_string(), conflicts_with = "parameters_file")]
+        #[clap(short, long, help = t!("args.parameters").to_string())]
         parameters: Option<String>,
-        #[clap(short = 'f', long, help = t!("args.parametersFile").to_string(), conflicts_with = "parameters")]
+        #[clap(short = 'f', long, help = t!("args.parametersFile").to_string())]
         parameters_file: Option<String>,
         #[clap(short = 'r', long, help = t!("args.systemRoot").to_string())]
         system_root: Option<String>,
diff --git a/dsc/src/main.rs b/dsc/src/main.rs
index 7a1a7f876..68670e7ed 100644
--- a/dsc/src/main.rs
+++ b/dsc/src/main.rs
@@ -54,16 +54,63 @@ fn main() {
             generate(shell, &mut cmd, "dsc", &mut io::stdout());
         },
         SubCommand::Config { subcommand, parameters, parameters_file, system_root, as_group, as_assert, as_include } => {
-            if let Some(file_name) = parameters_file {
+            let merged_parameters = if parameters_file.is_some() && parameters.is_some() {
+                // Both parameters and parameters_file provided - merge them with inline taking precedence
+                let file_params = if let Some(file_name) = &parameters_file {
+                    if file_name == "-" {
+                        info!("{}", t!("main.readingParametersFromStdin"));
+                        let mut stdin = Vec::<u8>::new();
+                        match io::stdin().read_to_end(&mut stdin) {
+                            Ok(_) => {
+                                match String::from_utf8(stdin) {
+                                    Ok(input) => Some(input),
+                                    Err(err) => {
+                                        error!("{}: {err}", t!("util.invalidUtf8"));
+                                        exit(EXIT_INVALID_INPUT);
+                                    }
+                                }
+                            },
+                            Err(err) => {
+                                error!("{}: {err}", t!("util.failedToReadStdin"));
+                                exit(EXIT_INVALID_INPUT);
+                            }
+                        }
+                    } else {
+                        info!("{}: {file_name}", t!("main.readingParametersFile"));
+                        match std::fs::read_to_string(file_name) {
+                            Ok(content) => Some(content),
+                            Err(err) => {
+                                error!("{} '{file_name}': {err}", t!("main.failedReadingParametersFile"));
+                                exit(util::EXIT_INVALID_INPUT);
+                            }
+                        }
+                    }
+                } else {
+                    None
+                };
+
+                // Parse both and merge
+                if let (Some(file_content), Some(inline_content)) = (file_params, parameters.as_ref()) {
+                    info!("{}", t!("main.mergingParameters"));
+                    match util::merge_parameters(&file_content, inline_content) {
+                        Ok(merged) => Some(merged),
+                        Err(err) => {
+                            error!("{}: {err}", t!("main.failedMergingParameters"));
+                            exit(EXIT_INVALID_INPUT);
+                        }
+                    }
+                } else {
+                    parameters.clone()
+                }
+            } else if let Some(file_name) = parameters_file {
+                // Only parameters_file provided
                 if file_name == "-" {
                     info!("{}", t!("main.readingParametersFromStdin"));
                     let mut stdin = Vec::<u8>::new();
-                    let parameters = match io::stdin().read_to_end(&mut stdin) {
+                    match io::stdin().read_to_end(&mut stdin) {
                         Ok(_) => {
                             match String::from_utf8(stdin) {
-                                Ok(input) => {
-                                    input
-                                },
+                                Ok(input) => Some(input),
                                 Err(err) => {
                                     error!("{}: {err}", t!("util.invalidUtf8"));
                                     exit(EXIT_INVALID_INPUT);
@@ -74,22 +121,22 @@ fn main() {
                             error!("{}: {err}", t!("util.failedToReadStdin"));
                             exit(EXIT_INVALID_INPUT);
                         }
-                    };
-                    subcommand::config(&subcommand, &Some(parameters), true, system_root.as_ref(), &as_group, &as_assert, &as_include, progress_format);
-                    return;
-                }
-                info!("{}: {file_name}", t!("main.readingParametersFile"));
-                match std::fs::read_to_string(&file_name) {
-                    Ok(parameters) => subcommand::config(&subcommand, &Some(parameters), false, system_root.as_ref(), &as_group, &as_assert, &as_include, progress_format),
-                    Err(err) => {
-                        error!("{} '{file_name}': {err}", t!("main.failedReadingParametersFile"));
-                        exit(util::EXIT_INVALID_INPUT);
+                    }
+                } else {
+                    info!("{}: {file_name}", t!("main.readingParametersFile"));
+                    match std::fs::read_to_string(&file_name) {
+                        Ok(content) => Some(content),
+                        Err(err) => {
+                            error!("{} '{file_name}': {err}", t!("main.failedReadingParametersFile"));
+                            exit(util::EXIT_INVALID_INPUT);
+                        }
                     }
                 }
-            }
-            else {
-                subcommand::config(&subcommand, &parameters, false, system_root.as_ref(), &as_group, &as_assert, &as_include, progress_format);
-            }
+            } else {
+                parameters
+            };
+
+            subcommand::config(&subcommand, &merged_parameters, system_root.as_ref(), &as_group, &as_assert, &as_include, progress_format);
         },
         SubCommand::Extension { subcommand } => {
             subcommand::extension(&subcommand, progress_format);
diff --git a/dsc/src/subcommand.rs b/dsc/src/subcommand.rs
index 57d85cdc0..d9ee13090 100644
--- a/dsc/src/subcommand.rs
+++ b/dsc/src/subcommand.rs
@@ -276,7 +276,7 @@ fn initialize_config_root(path: Option<&String>) -> Option<String> {
 
 #[allow(clippy::too_many_lines)]
 #[allow(clippy::too_many_arguments)]
-pub fn config(subcommand: &ConfigSubCommand, parameters: &Option<String>, parameters_from_stdin: bool, mounted_path: Option<&String>, as_group: &bool, as_assert: &bool, as_include: &bool, progress_format: ProgressFormat) {
+pub fn config(subcommand: &ConfigSubCommand, parameters: &Option<String>, mounted_path: Option<&String>, as_group: &bool, as_assert: &bool, as_include: &bool, progress_format: ProgressFormat) {
     let (new_parameters, json_string) = match subcommand {
         ConfigSubCommand::Get { input, file, .. } |
         ConfigSubCommand::Set { input, file, .. } |
@@ -284,7 +284,7 @@ pub fn config(subcommand: &ConfigSubCommand, parameters: &Option<String>, parame
         ConfigSubCommand::Validate { input, file, .. } |
         ConfigSubCommand::Export { input, file, .. } => {
             let new_path = initialize_config_root(file.as_ref());
-            let document = get_input(input.as_ref(), new_path.as_ref(), parameters_from_stdin);
+            let document = get_input(input.as_ref(), new_path.as_ref());
             if *as_include {
                 let (new_parameters, config_json) = match get_contents(&document) {
                     Ok((parameters, config_json)) => (parameters, config_json),
@@ -300,7 +300,7 @@ pub fn config(subcommand: &ConfigSubCommand, parameters: &Option<String>, parame
         },
         ConfigSubCommand::Resolve { input, file, .. } => {
             let new_path = initialize_config_root(file.as_ref());
-            let document = get_input(input.as_ref(), new_path.as_ref(), parameters_from_stdin);
+            let document = get_input(input.as_ref(), new_path.as_ref());
             let (new_parameters, config_json) = match get_contents(&document) {
                 Ok((parameters, config_json)) => (parameters, config_json),
                 Err(err) => {
@@ -398,7 +398,7 @@ pub fn config(subcommand: &ConfigSubCommand, parameters: &Option<String>, parame
             };
             if *as_include {
                 let new_path = initialize_config_root(file.as_ref());
-                let input = get_input(input.as_ref(), new_path.as_ref(), parameters_from_stdin);
+                let input = get_input(input.as_ref(), new_path.as_ref());
                 match serde_json::from_str::<Include>(&input) {
                     Ok(_) => {
                         // valid, so do nothing
@@ -554,7 +554,7 @@ pub fn resource(subcommand: &ResourceSubCommand, progress_format: ProgressFormat
         },
         ResourceSubCommand::Export { resource, version, input, file, output_format } => {
             dsc.find_resources(&[DiscoveryFilter::new(resource, version.clone())], progress_format);
-            let parsed_input = get_input(input.as_ref(), file.as_ref(), false);
+            let parsed_input = get_input(input.as_ref(), file.as_ref());
             resource_command::export(&mut dsc, resource, version.as_deref(), &parsed_input, output_format.as_ref());
         },
         ResourceSubCommand::Get { resource, version, input, file: path, all, output_format } => {
@@ -567,23 +567,23 @@ pub fn resource(subcommand: &ResourceSubCommand, progress_format: ProgressFormat
                     error!("{}", t!("subcommand.jsonArrayNotSupported"));
                     exit(EXIT_INVALID_ARGS);
                 }
-                let parsed_input = get_input(input.as_ref(), path.as_ref(), false);
+                let parsed_input = get_input(input.as_ref(), path.as_ref());
                 resource_command::get(&mut dsc, resource, version.as_deref(), &parsed_input, output_format.as_ref());
             }
         },
         ResourceSubCommand::Set { resource, version, input, file: path, output_format } => {
             dsc.find_resources(&[DiscoveryFilter::new(resource, version.clone())], progress_format);
-            let parsed_input = get_input(input.as_ref(), path.as_ref(), false);
+            let parsed_input = get_input(input.as_ref(), path.as_ref());
             resource_command::set(&mut dsc, resource, version.as_deref(), &parsed_input, output_format.as_ref());
         },
         ResourceSubCommand::Test { resource, version, input, file: path, output_format } => {
             dsc.find_resources(&[DiscoveryFilter::new(resource, version.clone())], progress_format);
-            let parsed_input = get_input(input.as_ref(), path.as_ref(), false);
+            let parsed_input = get_input(input.as_ref(), path.as_ref());
             resource_command::test(&mut dsc, resource, version.as_deref(), &parsed_input, output_format.as_ref());
         },
         ResourceSubCommand::Delete { resource, version, input, file: path } => {
             dsc.find_resources(&[DiscoveryFilter::new(resource, version.clone())], progress_format);
-            let parsed_input = get_input(input.as_ref(), path.as_ref(), false);
+            let parsed_input = get_input(input.as_ref(), path.as_ref());
             resource_command::delete(&mut dsc, resource, version.as_deref(), &parsed_input);
         },
     }
diff --git a/dsc/src/util.rs b/dsc/src/util.rs
index 7d2d07d1e..625fbb33f 100644
--- a/dsc/src/util.rs
+++ b/dsc/src/util.rs
@@ -432,7 +432,7 @@ pub fn enable_tracing(trace_level_arg: Option<&TraceLevel>, trace_format_arg: Op
     info!("Trace-level is {:?}", tracing_setting.level);
 }
 
-pub fn get_input(input: Option<&String>, file: Option<&String>, parameters_from_stdin: bool) -> String {
+pub fn get_input(input: Option<&String>, file: Option<&String>) -> String {
     trace!("Input: {input:?}, File: {file:?}");
     let value = if let Some(input) = input {
         debug!("{}", t!("util.readingInput"));
@@ -448,10 +448,6 @@ pub fn get_input(input: Option<&String>, file: Option<&String>, parameters_from_
         // check if need to read from STDIN
         if path == "-" {
             info!("{}", t!("util.readingInputFromStdin"));
-            if parameters_from_stdin {
-                error!("{}", t!("util.stdinNotAllowedForBothParametersAndInput"));
-                exit(EXIT_INVALID_INPUT);
-            }
             let mut stdin = Vec::<u8>::new();
             match std::io::stdin().read_to_end(&mut stdin) {
                 Ok(_) => {
@@ -582,3 +578,87 @@ pub fn in_desired_state(test_result: &ResourceTestResult) -> bool {
         }
     }
 }
+
+/// Merge two parameter sets, with inline parameters taking precedence over file parameters.
+///
+/// # Arguments
+///
+/// * `file_params` - Parameters from file (JSON or YAML format)
+/// * `inline_params` - Inline parameters (JSON or YAML format) that take precedence
+///
+/// # Returns
+///
+/// * `Result<String, DscError>` - Merged parameters as JSON string
+///
+/// # Errors
+///
+/// This function will return an error if:
+/// - Either parameter set cannot be parsed as valid JSON or YAML
+/// - The merged result cannot be serialized to JSON
+pub fn merge_parameters(file_params: &str, inline_params: &str) -> Result<String, DscError> {
+    use serde_json::Value;
+    
+    // Parse file parameters
+    let file_value: Value = match serde_json::from_str(file_params) {
+        Ok(json) => json,
+        Err(_) => {
+            // YAML
+            match serde_yaml::from_str::<serde_yaml::Value>(file_params) {
+                Ok(yaml) => serde_json::to_value(yaml)?,
+                Err(err) => {
+                    return Err(DscError::Parser(format!("Failed to parse file parameters: {err}")));
+                }
+            }
+        }
+    };
+
+    // Parse inline parameters
+    let inline_value: Value = match serde_json::from_str(inline_params) {
+        Ok(json) => json,
+        Err(_) => {
+            // YAML
+            match serde_yaml::from_str::<serde_yaml::Value>(inline_params) {
+                Ok(yaml) => serde_json::to_value(yaml)?,
+                Err(err) => {
+                    return Err(DscError::Parser(format!("Failed to parse inline parameters: {err}")));
+                }
+            }
+        }
+    };
+
+    // Both must be objects to merge
+    let Some(mut file_obj) = file_value.as_object().cloned() else {
+        return Err(DscError::Parser("File parameters must be a JSON object".to_string()));
+    };
+    
+    let Some(inline_obj) = inline_value.as_object() else {
+        return Err(DscError::Parser("Inline parameters must be a JSON object".to_string()));
+    };
+
+    // Special handling for the "parameters" key - merge nested objects
+    if let (Some(file_params_value), Some(inline_params_value)) = (file_obj.get("parameters"), inline_obj.get("parameters")) {
+        if let (Some(mut file_params_obj), Some(inline_params_obj)) = (file_params_value.as_object().cloned(), inline_params_value.as_object()) {
+            // Merge the nested parameters objects
+            for (key, value) in inline_params_obj {
+                file_params_obj.insert(key.clone(), value.clone());
+            }
+            file_obj.insert("parameters".to_string(), Value::Object(file_params_obj));
+        } else {
+            // If one is not an object, inline takes precedence
+            file_obj.insert("parameters".to_string(), inline_params_value.clone());
+        }
+    } else if let Some(inline_params_value) = inline_obj.get("parameters") {
+        // Only inline has parameters
+        file_obj.insert("parameters".to_string(), inline_params_value.clone());
+    }
+
+    // Merge other top-level keys: inline parameters override file parameters
+    for (key, value) in inline_obj {
+        if key != "parameters" {
+            file_obj.insert(key.clone(), value.clone());
+        }
+    }
+
+    let merged = Value::Object(file_obj);
+    Ok(serde_json::to_string(&merged)?)
+}
diff --git a/dsc/tests/dsc_parameters.tests.ps1 b/dsc/tests/dsc_parameters.tests.ps1
index d8b48b018..e44db6455 100644
--- a/dsc/tests/dsc_parameters.tests.ps1
+++ b/dsc/tests/dsc_parameters.tests.ps1
@@ -380,20 +380,6 @@ Describe 'Parameters tests' {
       $out.results[0].result.inDesiredState | Should -Be $IsWindows
     }
 
-    It 'Parameters and input cannot both be from STDIN' {
-      $params = @{
-        parameters = @{
-          osFamily = 'Windows'
-        }
-      } | ConvertTo-Json -Compress
-
-      $out = $params | dsc config -f - test -f - 2> $TestDrive/error.log
-      $LASTEXITCODE | Should -Be 4
-      $out | Should -BeNullOrEmpty
-      $errorMessage = Get-Content -Path $TestDrive/error.log -Raw
-      $errorMessage | Should -BeLike "*ERROR*Cannot read from STDIN for both parameters and input*"
-    }
-
     It 'Invalid parameters read from STDIN result in error' {
       $params = @{
         osFamily = 'Windows'
@@ -577,4 +563,295 @@ Describe 'Parameters tests' {
         $LASTEXITCODE | Should -Be 4
         $testError | Should -Match 'Circular dependency or unresolvable parameter references detected in parameters'
     }
+
+    It 'Inline parameters and parameters file can be used together' {
+        $config_yaml = @"
+            `$schema: https://aka.ms/dsc/schemas/v3/bundled/config/document.json
+            parameters:
+              message:
+                type: string
+              environment:
+                type: string
+              port:
+                type: int
+            resources:
+            - name: Echo
+              type: Microsoft.DSC.Debug/Echo
+              properties:
+                output: "[concat('Message: ', parameters('message'), ', Environment: ', parameters('environment'), ', Port: ', string(parameters('port')))]"
+"@
+        $paramsFile = @{
+            parameters = @{
+                message = 'Hello from file'
+                environment = 'production'
+                port = 8080
+            }
+        } | ConvertTo-Json
+
+        $inlineParams = @{
+            parameters = @{
+                message = 'Hello from inline'
+                port = 3000
+            }
+        } | ConvertTo-Json
+
+        $file_path = "$TestDrive/test.parameters.json"
+        Set-Content -Path $file_path -Value $paramsFile
+
+        $out = dsc config --parameters-file $file_path --parameters $inlineParams get -i $config_yaml | ConvertFrom-Json
+        $LASTEXITCODE | Should -Be 0
+        $out.results[0].result.actualState.output | Should -BeExactly 'Message: Hello from inline, Environment: production, Port: 3000'
+    }
+
+    It 'Inline parameters take precedence over parameters file' {
+        $config_yaml = @"
+            `$schema: https://aka.ms/dsc/schemas/v3/bundled/config/document.json
+            parameters:
+              value1:
+                type: string
+              value2:
+                type: string
+            resources:
+            - name: Echo
+              type: Microsoft.DSC.Debug/Echo
+              properties:
+                output: "[concat(parameters('value1'), '-', parameters('value2'))]"
+"@
+        $paramsFile = @{
+            parameters = @{
+                value1 = 'file1'
+                value2 = 'file2'
+            }
+        } | ConvertTo-Json
+
+        $inlineParams = @{
+            parameters = @{
+                value1 = 'inline1'
+            }
+        } | ConvertTo-Json
+
+        $file_path = "$TestDrive/test.parameters.json"
+        Set-Content -Path $file_path -Value $paramsFile
+
+        $out = dsc config --parameters-file $file_path --parameters $inlineParams get -i $config_yaml | ConvertFrom-Json
+        $LASTEXITCODE | Should -Be 0
+        $out.results[0].result.actualState.output | Should -BeExactly 'inline1-file2'
+    }
+
+    It 'Parameters file from stdin can be merged with inline parameters' {
+        $config_yaml = @"
+            `$schema: https://aka.ms/dsc/schemas/v3/bundled/config/document.json
+            parameters:
+              param1:
+                type: string
+              param2:
+                type: string
+            resources:
+            - name: Echo
+              type: Microsoft.DSC.Debug/Echo
+              properties:
+                output: "[concat(parameters('param1'), '-', parameters('param2'))]"
+"@
+        $paramsFile = @{
+            parameters = @{
+                param1 = 'fromStdin'
+                param2 = 'alsoFromStdin'
+            }
+        } | ConvertTo-Json
+
+        $inlineParams = @{
+            parameters = @{
+                param2 = 'fromInline'
+            }
+        } | ConvertTo-Json
+
+        $out = $paramsFile | dsc config --parameters-file - --parameters $inlineParams get -i $config_yaml | ConvertFrom-Json
+        $LASTEXITCODE | Should -Be 0
+        $out.results[0].result.actualState.output | Should -BeExactly 'fromStdin-fromInline'
+    }
+
+    It 'Parameters file in YAML format can be merged with inline JSON parameters' {
+        $config_yaml = @"
+            `$schema: https://aka.ms/dsc/schemas/v3/bundled/config/document.json
+            parameters:
+              name:
+                type: string
+              age:
+                type: int
+            resources:
+            - name: Echo
+              type: Microsoft.DSC.Debug/Echo
+              properties:
+                output: "[concat(parameters('name'), ' is ', string(parameters('age')))]"
+"@
+        $paramsFileYaml = @"
+parameters:
+  name: John
+  age: 30
+"@
+        $inlineParams = @{
+            parameters = @{
+                age = 25
+            }
+        } | ConvertTo-Json
+
+        $file_path = "$TestDrive/test.parameters.yaml"
+        Set-Content -Path $file_path -Value $paramsFileYaml
+
+        $out = dsc config --parameters-file $file_path --parameters $inlineParams get -i $config_yaml | ConvertFrom-Json
+        $LASTEXITCODE | Should -Be 0
+        $out.results[0].result.actualState.output | Should -BeExactly 'John is 25'
+    }
+
+    It 'Merged parameters work with default values' {
+        $config_yaml = @"
+            `$schema: https://aka.ms/dsc/schemas/v3/bundled/config/document.json
+            parameters:
+              param1:
+                type: string
+                defaultValue: default1
+              param2:
+                type: string
+                defaultValue: default2
+              param3:
+                type: string
+                defaultValue: default3
+            resources:
+            - name: Echo
+              type: Microsoft.DSC.Debug/Echo
+              properties:
+                output: "[concat(parameters('param1'), '-', parameters('param2'), '-', parameters('param3'))]"
+"@
+        $paramsFile = @{
+            parameters = @{
+                param2 = 'fromFile'
+            }
+        } | ConvertTo-Json
+
+        $inlineParams = @{
+            parameters = @{
+                param3 = 'fromInline'
+            }
+        } | ConvertTo-Json
+
+        $file_path = "$TestDrive/test.parameters.json"
+        Set-Content -Path $file_path -Value $paramsFile
+
+        $out = dsc config --parameters-file $file_path --parameters $inlineParams get -i $config_yaml | ConvertFrom-Json
+        $LASTEXITCODE | Should -Be 0
+        $out.results[0].result.actualState.output | Should -BeExactly 'default1-fromFile-fromInline'
+    }
+
+    It 'Merged parameters support all data types: <type>' -TestCases @(
+        @{ type = 'string'; fileValue = 'file'; inlineValue = 'inline' }
+        @{ type = 'int'; fileValue = 100; inlineValue = 200 }
+        @{ type = 'bool'; fileValue = $false; inlineValue = $true }
+        @{ type = 'array'; fileValue = @('a', 'b'); inlineValue = @('x', 'y', 'z') }
+        @{ type = 'object'; fileValue = @{key1='value1'}; inlineValue = @{key2='value2'} }
+    ) {
+        param($type, $fileValue, $inlineValue)
+
+        $config_yaml = @"
+            `$schema: https://aka.ms/dsc/schemas/v3/bundled/config/document.json
+            parameters:
+              fileParam:
+                type: $type
+              inlineParam:
+                type: $type
+            resources:
+            - name: Echo
+              type: Microsoft.DSC.Debug/Echo
+              properties:
+                output: "[concat(string(parameters('fileParam')), '-', string(parameters('inlineParam')))]"
+"@
+        $paramsFile = @{
+            parameters = @{
+                fileParam = $fileValue
+                inlineParam = $fileValue
+            }
+        } | ConvertTo-Json
+
+        $inlineParams = @{
+            parameters = @{
+                inlineParam = $inlineValue
+            }
+        } | ConvertTo-Json
+
+        $file_path = "$TestDrive/test.parameters.json"
+        Set-Content -Path $file_path -Value $paramsFile
+
+        $out = dsc config --parameters-file $file_path --parameters $inlineParams get -i $config_yaml | ConvertFrom-Json
+        $LASTEXITCODE | Should -Be 0
+        if ($type -eq 'bool') {
+            $expectedOutput = "{0}-{1}" -f $fileValue.ToString().ToLower(), $inlineValue.ToString().ToLower()
+        }
+        elseif ($type -eq 'array') {
+            $fileJson = $fileValue | ConvertTo-Json -Compress
+            $inlineJson = $inlineValue | ConvertTo-Json -Compress
+            $expectedOutput = "{0}-{1}" -f $fileJson, $inlineJson
+        }
+        elseif ($type -eq 'object') {
+            $fileJson = $fileValue | ConvertTo-Json -Compress
+            $inlineJson = $inlineValue | ConvertTo-Json -Compress
+            $expectedOutput = "{0}-{1}" -f $fileJson, $inlineJson
+        }
+        else {
+            $expectedOutput = "{0}-{1}" -f $fileValue, $inlineValue
+        } 
+        $out.results[0].result.actualState.output | Should -BeExactly $expectedOutput
+    }
+
+    It 'Invalid inline parameters format returns error when merging' {
+        $config_yaml = @"
+            `$schema: https://aka.ms/dsc/schemas/v3/bundled/config/document.json
+            parameters:
+              param1:
+                type: string
+            resources:
+            - name: Echo
+              type: Microsoft.DSC.Debug/Echo
+              properties:
+                output: "[parameters('param1')]"
+"@
+        $paramsFile = @{
+            parameters = @{
+                param1 = 'valid'
+            }
+        } | ConvertTo-Json
+
+        $file_path = "$TestDrive/test.parameters.json"
+        Set-Content -Path $file_path -Value $paramsFile
+
+        $invalidInlineParams = 'not valid json'
+
+        $out = & {$config_yaml | dsc config --parameters-file $file_path --parameters $invalidInlineParams get -f - 2>&1}
+        $LASTEXITCODE | Should -Be 4
+        $out | Should -Match 'Failed to merge parameters'
+    }
+
+    It 'Invalid parameters file format returns error when merging' {
+        $config_yaml = @"
+            `$schema: https://aka.ms/dsc/schemas/v3/bundled/config/document.json
+            parameters:
+              param1:
+                type: string
+            resources:
+            - name: Echo
+              type: Microsoft.DSC.Debug/Echo
+              properties:
+                output: "[parameters('param1')]"
+"@
+        $inlineParams = @{
+            parameters = @{
+                param1 = 'valid'
+            }
+        } | ConvertTo-Json
+
+        $file_path = "$TestDrive/test.parameters.json"
+        Set-Content -Path $file_path -Value 'not valid json'
+
+        $out = & {$config_yaml | dsc config --parameters-file $file_path --parameters $inlineParams get -f - 2>&1}
+        $LASTEXITCODE | Should -Be 4
+        $out | Should -Match 'Failed to merge parameters'
+    }
 }