diff --git a/cdm/core/src/main/java/ucar/nc2/dataset/VariableDS.java b/cdm/core/src/main/java/ucar/nc2/dataset/VariableDS.java
index a57ece8994..dc82c774f5 100644
--- a/cdm/core/src/main/java/ucar/nc2/dataset/VariableDS.java
+++ b/cdm/core/src/main/java/ucar/nc2/dataset/VariableDS.java
@@ -1,7 +1,8 @@
 /*
- * Copyright (c) 1998-2025 John Caron and University Corporation for Atmospheric Research/Unidata
+ * Copyright (c) 1998-2026 John Caron and University Corporation for Atmospheric Research/Unidata
  * See LICENSE for license information.
  */
+
 package ucar.nc2.dataset;
 
 import com.google.common.collect.ImmutableList;
@@ -239,7 +240,11 @@ public void enhance(Set<Enhance> enhancements) {
     // So, we need to reset to default before we process this new set.
     // LOOK this seems bogus
     if (orgDataType != null) {
-      setDataType(orgDataType);
+      // only reset if original DataType and current DataType are compatible (both
+      // are numeric or both are not numeric).
+      if (orgDataType.isNumeric() == dataType.isNumeric()) {
+        setDataType(orgDataType);
+      }
     }
 
     createEnhancements();
diff --git a/cdm/core/src/test/data/ncml/coords/nc/string_coord.nc b/cdm/core/src/test/data/ncml/coords/nc/string_coord.nc
new file mode 100644
index 0000000000..56d8e8d299
Binary files /dev/null and b/cdm/core/src/test/data/ncml/coords/nc/string_coord.nc differ
diff --git a/cdm/core/src/test/data/ncml/coords/string_coord.ncml b/cdm/core/src/test/data/ncml/coords/string_coord.ncml
new file mode 100644
index 0000000000..9d9662b335
--- /dev/null
+++ b/cdm/core/src/test/data/ncml/coords/string_coord.ncml
@@ -0,0 +1,8 @@
+<netcdf xmlns="https://www.unidata.ucar.edu/namespaces/netcdf/ncml-2.2"
+  location="./nc/string_coord.nc">
+  <!-- https://github.com/Unidata/netcdf-java/issues/1540 -->
+  <!-- CoordinateAxis1D should be of type String in both old and new API  -->
+  <variable name="var" type="String" shape="dim">
+    <values>0 1</values>
+  </variable>
+</netcdf>
\ No newline at end of file
diff --git a/cdm/core/src/test/java/ucar/nc2/dataset/TestCoordinateAxisDataType.java b/cdm/core/src/test/java/ucar/nc2/dataset/TestCoordinateAxisDataType.java
new file mode 100644
index 0000000000..d78a07f630
--- /dev/null
+++ b/cdm/core/src/test/java/ucar/nc2/dataset/TestCoordinateAxisDataType.java
@@ -0,0 +1,45 @@
+/*
+ * Copyright (c) 2026 University Corporation for Atmospheric Research/Unidata
+ * See LICENSE for license information.
+ */
+
+package ucar.nc2.dataset;
+
+import static com.google.common.truth.Truth.assertThat;
+
+import java.io.IOException;
+
+import org.junit.Test;
+import ucar.ma2.DataType;
+import ucar.nc2.Variable;
+import ucar.unidata.util.test.TestDir;
+
+public class TestCoordinateAxisDataType {
+
+  String testFile = TestDir.cdmLocalTestDataDir + "/ncml/coords/string_coord.ncml";
+
+  @Test
+  public void testDataTypeChangeOldApi() throws IOException {
+    try (NetcdfDataset ncdOld = NetcdfDataset.openDataset(testFile)) {
+      checkDataType(ncdOld);
+    }
+  }
+
+  @Test
+  public void testDataTypeChangeNewApi() throws IOException {
+    String testFile = TestDir.cdmLocalTestDataDir + "/ncml/coords/string_coord.ncml";
+    try (NetcdfDataset ncdNew = NetcdfDatasets.openDataset(testFile)) {
+      checkDataType(ncdNew);
+    }
+  }
+
+  private void checkDataType(NetcdfDataset ncd) {
+    Variable var = ncd.findVariable("var");
+    assertThat(var != null).isTrue();
+    CoordinateAxis1D axis = (CoordinateAxis1D) var;
+    assertThat(axis.getOriginalDataType()).isEqualTo(DataType.INT);
+    assertThat(axis.getDataType()).isEqualTo(DataType.STRING);
+    assertThat(axis.isNumeric()).isFalse();
+  }
+
+}