diff --git a/xarray/core/dataset.py b/xarray/core/dataset.py
index 01baa9aed3d..77a5c9ee130 100644
--- a/xarray/core/dataset.py
+++ b/xarray/core/dataset.py
@@ -4613,20 +4613,17 @@ def expand_dims(
         # or iterables.
         for k, v in dim.items():
             if hasattr(v, "__iter__"):
-                # If the value for the new dimension is an iterable, then
-                # save the coordinates to the variables dict, and set the
-                # value within the dim dict to the length of the iterable
-                # for later use.
-
                 if create_index_for_new_dim:
                     index = PandasIndex(v, k)
                     indexes[k] = index
                     name_and_new_1d_var = index.create_variables()
                 else:
                     name_and_new_1d_var = {k: Variable(data=v, dims=k)}
+
                 variables.update(name_and_new_1d_var)
                 coord_names.add(k)
                 dim[k] = variables[k].size
+
             elif isinstance(v, int):
                 pass  # Do nothing if the dimensions value is just an int
             else:
diff --git a/xarray/core/indexes.py b/xarray/core/indexes.py
index 078fb7b7d79..387e528f999 100644
--- a/xarray/core/indexes.py
+++ b/xarray/core/indexes.py
@@ -673,6 +673,16 @@ def __init__(
                 coord_dtype = index.dtype
             else:
                 coord_dtype = get_valid_numpy_dtype(index)
+                if coord_dtype == object and index.dtype == object:
+                    inferred = getattr(index, "inferred_type", None)
+                    if inferred in ("string", "unicode"):
+                        coord_dtype = np.dtype(str)
+                    else:
+                        data = index.to_numpy(dtype=object, copy=False)
+                        if data.size and all(
+                            isinstance(x, (str, np.str_)) for x in data.ravel()
+                        ):
+                            coord_dtype = np.asarray(data, dtype=str).dtype
         self.coord_dtype = coord_dtype
 
     def _replace(self, index, dim=None, coord_dtype=None):
diff --git a/xarray/tests/test_dataarray.py b/xarray/tests/test_dataarray.py
index e61ea9e7fe8..be908ecd8cc 100644
--- a/xarray/tests/test_dataarray.py
+++ b/xarray/tests/test_dataarray.py
@@ -2310,6 +2310,17 @@ def test_expand_dims_with_greater_dim_size(self) -> None:
         ).drop_vars("dim_0")
         assert_identical(other_way_expected, other_way)
 
+    def test_expand_dims_infers_string_dtype_for_new_dim_coords(self) -> None:
+        da = xr.DataArray(10).expand_dims({"band": ["b1", "b2", "b3"]})
+        assert da.coords["band"].dtype.kind == "U"
+
+    def test_expand_dims_string_coord_does_not_poison_concat(self) -> None:
+        da_string = xr.DataArray([1, 2, 3], dims=["x"], coords={"x": ["a", "b", "c"]})
+        da_from_expand_dims = xr.DataArray(10).expand_dims({"x": ["d", "e", "f"]})
+
+        result = xr.concat([da_string, da_from_expand_dims], dim="x")
+        assert result.coords["x"].dtype.kind == "U"
+
     def test_set_index(self) -> None:
         indexes = [self.mindex.get_level_values(n) for n in self.mindex.names]  # type: ignore[arg-type,unused-ignore]  # pandas-stubs varies
         coords = {idx.name: ("x", idx) for idx in indexes}