API versioning allows you to manage different versions of your API to handle changes and maintain backward compatibility. In ASP.NET Core, you can implement API versioning using the Microsoft.AspNetCore.Mvc.Versioning package. You can configure versioning options in the ConfigureServices method of the Startup class and apply versioning annotations to controllers or actions. Versioning can be based on URL path, query parameters, headers, or media types. This enables clients to specify the desired API version they want to interact with and ensures a smooth transition when introducing breaking changes.