diff --git a/Algorithm/QCAlgorithm.Python.cs b/Algorithm/QCAlgorithm.Python.cs
index a2af01ea34fc..e433603c9074 100644
--- a/Algorithm/QCAlgorithm.Python.cs
+++ b/Algorithm/QCAlgorithm.Python.cs
@@ -109,7 +109,7 @@ public Security AddData(PyObject type, Symbol underlying, Resolution? resolution
         [DocumentationAttribute(AddingData)]
         public Security AddData(PyObject type, string ticker, Resolution? resolution, DateTimeZone timeZone, bool fillForward = false, decimal leverage = 1.0m)
         {
-            return AddData(type.CreateType(), ticker, resolution, timeZone, fillForward, leverage);
+            return AddData(GetCustomDataType(type), ticker, resolution, timeZone, fillForward, leverage);
         }
 
         /// <summary>
@@ -135,7 +135,7 @@ public Security AddData(PyObject type, string ticker, Resolution? resolution, Da
         [DocumentationAttribute(AddingData)]
         public Security AddData(PyObject type, Symbol underlying, Resolution? resolution, DateTimeZone timeZone, bool fillForward = false, decimal leverage = 1.0m)
         {
-            return AddData(type.CreateType(), underlying, resolution, timeZone, fillForward, leverage);
+            return AddData(GetCustomDataType(type), underlying, resolution, timeZone, fillForward, leverage);
         }
 
         /// <summary>
@@ -219,7 +219,7 @@ public Security AddData(Type dataType, Symbol underlying, Resolution? resolution
         public Security AddData(PyObject type, string ticker, SymbolProperties properties, SecurityExchangeHours exchangeHours, Resolution? resolution = null, bool fillForward = false, decimal leverage = 1.0m)
         {
             // Get the right key for storage of base type symbols
-            var dataType = type.CreateType();
+            var dataType = GetCustomDataType(type);
             var key = SecurityIdentifier.GenerateBaseSymbol(dataType, ticker);
 
             // Add entries to our Symbol Properties DB and MarketHours DB
@@ -284,6 +284,21 @@ private Security AddDataImpl(Type dataType, Symbol symbol, Resolution? resolutio
             return AddToUserDefinedUniverse(security, new List<SubscriptionDataConfig> { config });
         }
 
+        /// <summary>
+        /// Resolves the custom data <see cref="Type"/> from the PyObject argument of <see cref="AddData(PyObject, string, Resolution?)"/> and overloads,
+        /// throwing a clear exception if the caller passed something other than a custom data class (e.g. a string ticker).
+        /// </summary>
+        private static Type GetCustomDataType(PyObject type)
+        {
+            if (type.TryCreateType(out var dataType))
+            {
+                return dataType;
+            }
+
+            using var _ = Py.GIL();
+            throw new ArgumentException(Messages.QCAlgorithm.AddDataInvalidPyObjectType(type.Repr()));
+        }
+
         /// <summary>
         /// Creates a new universe and adds it to the algorithm. This is for coarse fundamental US Equity data and
         /// will be executed on day changes in the NewYork time zone (<see cref="TimeZones.NewYork"/>)
diff --git a/Common/Messages/Messages.Algorithm.cs b/Common/Messages/Messages.Algorithm.cs
index 1f4b3e50fb17..288a0197cbcc 100644
--- a/Common/Messages/Messages.Algorithm.cs
+++ b/Common/Messages/Messages.Algorithm.cs
@@ -89,6 +89,16 @@ public static string SetWarmupAlreadyInitialized()
             {
                 return $"{AlgorithmPrefix()}.{FormatCode("SetWarmup")}(): This method cannot be used after algorithm initialized";
             }
+
+            /// <summary>
+            /// Returns a string message saying the first argument to AddData must be a custom data class
+            /// </summary>
+            [MethodImpl(MethodImplOptions.AggressiveInlining)]
+            public static string AddDataInvalidPyObjectType(string repr)
+            {
+                return $"{AlgorithmPrefix()}.{FormatCode("AddData")}(): the first argument must be a custom data type (a Python class deriving from {FormatCode("PythonData")} or a CLR {FormatCode("BaseData")} type), but received {repr}. " +
+                    $"To subscribe to built-in asset classes use, for example, {FormatCode("AddEquity")} or {FormatCode("AddCrypto")}.";
+            }
         }
 
         /// <summary>
diff --git a/Tests/Algorithm/AlgorithmAddDataTests.cs b/Tests/Algorithm/AlgorithmAddDataTests.cs
index 374c654efd26..d4834147b4aa 100644
--- a/Tests/Algorithm/AlgorithmAddDataTests.cs
+++ b/Tests/Algorithm/AlgorithmAddDataTests.cs
@@ -19,6 +19,7 @@
 using Newtonsoft.Json;
 using NodaTime;
 using NUnit.Framework;
+using Python.Runtime;
 using QuantConnect.Algorithm;
 using QuantConnect.Algorithm.Framework.Selection;
 using QuantConnect.Algorithm.Selection;
@@ -637,6 +638,22 @@ public void AddingInvalidDataTypeThrows()
                 DateTimeZone.Utc));
         }
 
+        [Test]
+        public void AddDataWithStringAsTypeArgumentThrowsClearError()
+        {
+            var qcAlgorithm = new QCAlgorithm();
+            qcAlgorithm.SubscriptionManager.SetDataManager(new DataManagerStub(qcAlgorithm));
+
+            using var _ = Py.GIL();
+            using var pyTicker = "VIX".ToPython();
+
+            // Passing a string instead of a custom data class as the first argument used to silently build a
+            // dynamic assembly named after the string and later hang/fail downstream. It must now throw.
+            var ex = Assert.Throws<ArgumentException>(() => qcAlgorithm.AddData(pyTicker, "VIX", Resolution.Daily));
+            StringAssert.Contains("AddData", ex.Message);
+            StringAssert.Contains("AddEquity", ex.Message);
+        }
+
         [Test]
         public void AppendsCustomDataTypeName_ToSecurityIdentifierSymbol()
         {