diff --git a/src/Microsoft.OpenApi.Readers/ParsingContext.cs b/src/Microsoft.OpenApi.Readers/ParsingContext.cs
index b7cfb6acb..6c4dece2f 100644
--- a/src/Microsoft.OpenApi.Readers/ParsingContext.cs
+++ b/src/Microsoft.OpenApi.Readers/ParsingContext.cs
@@ -60,13 +60,13 @@ internal OpenApiDocument Parse(YamlDocument yamlDocument)
             switch (inputVersion)
             {
                 case string version when version == "2.0":
-                    VersionService = new OpenApiV2VersionService();
+                    VersionService = new OpenApiV2VersionService(Diagnostic);
                     doc = VersionService.LoadDocument(RootNode);
                     this.Diagnostic.SpecificationVersion = OpenApiSpecVersion.OpenApi2_0;
                     break;
 
                 case string version when version.StartsWith("3.0"):
-                    VersionService = new OpenApiV3VersionService();
+                    VersionService = new OpenApiV3VersionService(Diagnostic);
                     doc = VersionService.LoadDocument(RootNode);
                     this.Diagnostic.SpecificationVersion = OpenApiSpecVersion.OpenApi3_0;
                     break;
@@ -93,12 +93,12 @@ internal T ParseFragment<T>(YamlDocument yamlDocument, OpenApiSpecVersion versio
             switch (version)
             {
                 case OpenApiSpecVersion.OpenApi2_0:
-                    VersionService = new OpenApiV2VersionService();
+                    VersionService = new OpenApiV2VersionService(Diagnostic);
                     element = this.VersionService.LoadElement<T>(node);
                     break;
 
                 case OpenApiSpecVersion.OpenApi3_0:
-                    this.VersionService = new OpenApiV3VersionService();
+                    this.VersionService = new OpenApiV3VersionService(Diagnostic);
                     element = this.VersionService.LoadElement<T>(node);
                     break;
             }
diff --git a/src/Microsoft.OpenApi.Readers/V2/OpenApiV2VersionService.cs b/src/Microsoft.OpenApi.Readers/V2/OpenApiV2VersionService.cs
index 5baa580af..fbd4dbb85 100644
--- a/src/Microsoft.OpenApi.Readers/V2/OpenApiV2VersionService.cs
+++ b/src/Microsoft.OpenApi.Readers/V2/OpenApiV2VersionService.cs
@@ -20,6 +20,17 @@ namespace Microsoft.OpenApi.Readers.V2
     /// </summary>
     internal class OpenApiV2VersionService : IOpenApiVersionService
     {
+        public OpenApiDiagnostic Diagnostic { get; }
+
+        /// <summary>
+        /// Create Parsing Context
+        /// </summary>
+        /// <param name="diagnostic">Provide instance for diagnotic object for collecting and accessing information about the parsing.</param>
+        public OpenApiV2VersionService(OpenApiDiagnostic diagnostic)
+        {
+            Diagnostic = diagnostic;
+        }
+
         private IDictionary<Type, Func<ParseNode, object>> _loaders = new Dictionary<Type, Func<ParseNode, object>>
         {
             [typeof(IOpenApiAny)] = OpenApiV2Deserializer.LoadAny,
@@ -154,7 +165,15 @@ public OpenApiReference ConvertToOpenApiReference(string reference, ReferenceTyp
                     if (reference.StartsWith("#"))
                     {
                         // "$ref": "#/definitions/Pet"
-                        return ParseLocalReference(segments[1]);
+                        try
+                        {
+                            return ParseLocalReference(segments[1]);
+                        }
+                        catch (OpenApiException ex)
+                        {
+                            Diagnostic.Errors.Add(new OpenApiError(ex));
+                            return null;
+                        }
                     }
 
                     // $ref: externalSource.yaml#/Pet
diff --git a/src/Microsoft.OpenApi.Readers/V3/OpenApiV3VersionService.cs b/src/Microsoft.OpenApi.Readers/V3/OpenApiV3VersionService.cs
index 2663b6a3b..bdaedf560 100644
--- a/src/Microsoft.OpenApi.Readers/V3/OpenApiV3VersionService.cs
+++ b/src/Microsoft.OpenApi.Readers/V3/OpenApiV3VersionService.cs
@@ -1,4 +1,4 @@
-// Copyright (c) Microsoft Corporation. All rights reserved.
+// Copyright (c) Microsoft Corporation. All rights reserved.
 // Licensed under the MIT license. 
 
 using System;
@@ -19,6 +19,17 @@ namespace Microsoft.OpenApi.Readers.V3
     /// </summary>
     internal class OpenApiV3VersionService : IOpenApiVersionService
     {
+        public OpenApiDiagnostic Diagnostic { get; }
+
+        /// <summary>
+        /// Create Parsing Context
+        /// </summary>
+        /// <param name="diagnostic">Provide instance for diagnotic object for collecting and accessing information about the parsing.</param>
+        public OpenApiV3VersionService(OpenApiDiagnostic diagnostic)
+        {
+            Diagnostic = diagnostic;
+        }
+
         private IDictionary<Type, Func<ParseNode, object>> _loaders = new Dictionary<Type, Func<ParseNode, object>>
         {
             [typeof(IOpenApiAny)] = OpenApiV3Deserializer.LoadAny,
@@ -88,7 +99,15 @@ public OpenApiReference ConvertToOpenApiReference(
                     if (reference.StartsWith("#"))
                     {
                         // "$ref": "#/components/schemas/Pet"
-                        return ParseLocalReference(segments[1]);
+                        try
+                        {
+                            return ParseLocalReference(segments[1]);
+                        }
+                        catch (OpenApiException ex)
+                        {
+                            Diagnostic.Errors.Add(new OpenApiError(ex));
+                            return null;
+                        }
                     }
                     // Where fragments point into a non-OpenAPI document, the id will be the complete fragment identifier
                     string id = segments[1];
diff --git a/test/Microsoft.OpenApi.Readers.Tests/ReferenceService/ConvertToOpenApiReferenceV2Tests.cs b/test/Microsoft.OpenApi.Readers.Tests/ReferenceService/ConvertToOpenApiReferenceV2Tests.cs
index e374dc205..ff6641f88 100644
--- a/test/Microsoft.OpenApi.Readers.Tests/ReferenceService/ConvertToOpenApiReferenceV2Tests.cs
+++ b/test/Microsoft.OpenApi.Readers.Tests/ReferenceService/ConvertToOpenApiReferenceV2Tests.cs
@@ -10,12 +10,18 @@ namespace Microsoft.OpenApi.Readers.Tests
 {
     public class ConvertToOpenApiReferenceV2Tests
     {
+        public OpenApiDiagnostic Diagnostic{get;}
+
+        public ConvertToOpenApiReferenceV2Tests()
+        {
+            Diagnostic = new OpenApiDiagnostic();
+        }
 
         [Fact]
         public void ParseExternalReference()
         {
             // Arrange
-            var versionService = new OpenApiV2VersionService();
+            var versionService = new OpenApiV2VersionService(Diagnostic);
             var externalResource = "externalSchema.json";
             var id = "externalPathSegment1/externalPathSegment2/externalPathSegment3";
             var input = $"{externalResource}#/{id}";
@@ -33,7 +39,7 @@ public void ParseExternalReference()
         public void ParseLocalParameterReference()
         {
             // Arrange
-            var versionService = new OpenApiV2VersionService();
+            var versionService = new OpenApiV2VersionService(Diagnostic);
             var referenceType = ReferenceType.Parameter;
             var id = "parameterId";
             var input = $"#/parameters/{id}";
@@ -51,7 +57,7 @@ public void ParseLocalParameterReference()
         public void ParseLocalSchemaReference()
         {
             // Arrange
-            var versionService = new OpenApiV2VersionService();
+            var versionService = new OpenApiV2VersionService(Diagnostic);
             var referenceType = ReferenceType.Schema;
             var id = "parameterId";
             var input = $"#/definitions/{id}";
@@ -69,7 +75,7 @@ public void ParseLocalSchemaReference()
         public void ParseTagReference()
         {
             // Arrange
-            var versionService = new OpenApiV2VersionService();
+            var versionService = new OpenApiV2VersionService(Diagnostic);
             var referenceType = ReferenceType.Tag;
             var id = "tagId";
             var input = $"{id}";
@@ -87,7 +93,7 @@ public void ParseTagReference()
         public void ParseSecuritySchemeReference()
         {
             // Arrange
-            var versionService = new OpenApiV2VersionService();
+            var versionService = new OpenApiV2VersionService(Diagnostic);
             var referenceType = ReferenceType.SecurityScheme;
             var id = "securitySchemeId";
             var input = $"{id}";
diff --git a/test/Microsoft.OpenApi.Readers.Tests/ReferenceService/ConvertToOpenApiReferenceV3Tests.cs b/test/Microsoft.OpenApi.Readers.Tests/ReferenceService/ConvertToOpenApiReferenceV3Tests.cs
index 04debfd7d..c4e88998e 100644
--- a/test/Microsoft.OpenApi.Readers.Tests/ReferenceService/ConvertToOpenApiReferenceV3Tests.cs
+++ b/test/Microsoft.OpenApi.Readers.Tests/ReferenceService/ConvertToOpenApiReferenceV3Tests.cs
@@ -10,12 +10,20 @@ namespace Microsoft.OpenApi.Readers.Tests
 {
     public class ConvertToOpenApiReferenceV3Tests
     {
+        public OpenApiDiagnostic Diagnostic { get; }
+
+        public ConvertToOpenApiReferenceV3Tests()
+        {
+            Diagnostic = new OpenApiDiagnostic();
+        }
+
+
 
         [Fact]
         public void ParseExternalReference()
         {
             // Arrange
-            var versionService = new OpenApiV3VersionService();
+            var versionService = new OpenApiV3VersionService(Diagnostic);
             var externalResource = "externalSchema.json";
             var id = "/externalPathSegment1/externalPathSegment2/externalPathSegment3";
             var input = $"{externalResource}#{id}";
@@ -33,7 +41,7 @@ public void ParseExternalReference()
         public void ParseLocalParameterReference()
         {
             // Arrange
-            var versionService = new OpenApiV3VersionService();
+            var versionService = new OpenApiV3VersionService(Diagnostic);
             var referenceType = ReferenceType.Parameter;
             var id = "parameterId";
             var input = $"#/components/parameters/{id}";
@@ -51,7 +59,7 @@ public void ParseLocalParameterReference()
         public void ParseLocalSchemaReference()
         {
             // Arrange
-            var versionService = new OpenApiV3VersionService();
+            var versionService = new OpenApiV3VersionService(Diagnostic);
             var referenceType = ReferenceType.Schema;
             var id = "schemaId";
             var input = $"#/components/schemas/{id}";
@@ -69,7 +77,7 @@ public void ParseLocalSchemaReference()
         public void ParseTagReference()
         {
             // Arrange
-            var versionService = new OpenApiV3VersionService();
+            var versionService = new OpenApiV3VersionService(Diagnostic);
             var referenceType = ReferenceType.Tag;
             var id = "tagId";
             var input = $"{id}";
@@ -87,7 +95,7 @@ public void ParseTagReference()
         public void ParseSecuritySchemeReference()
         {
             // Arrange
-            var versionService = new OpenApiV3VersionService();
+            var versionService = new OpenApiV3VersionService(Diagnostic);
             var referenceType = ReferenceType.SecurityScheme;
             var id = "securitySchemeId";
             var input = $"{id}";