diff --git a/auth/shibboleth/README.txt b/auth/shibboleth/README.txt
index d1adb680aee..eaaddacb7c4 100644
--- a/auth/shibboleth/README.txt
+++ b/auth/shibboleth/README.txt
@@ -182,7 +182,8 @@ How to customize the way the Shibboleth user data is used in Moodle
 Among the Shibboleth settings in Moodle there is a field that should contain a
 path to a php file that can be used as data manipulation hook.
 You can use this if you want to further process the way your Shibboleth
-attributes are used in Moodle.
+attributes are used in Moodle. Due to security reasons this file cannot be
+located within the current site data directory ($CFG->dataroot).
 
 Example 1: Your Shibboleth federation uses an attribute that specifies the
            user's preferred language, but the content of this attribute is not
diff --git a/auth/shibboleth/classes/admin_setting_special_convert_data_configfile.php b/auth/shibboleth/classes/admin_setting_special_convert_data_configfile.php
new file mode 100644
index 00000000000..a11ff42579f
--- /dev/null
+++ b/auth/shibboleth/classes/admin_setting_special_convert_data_configfile.php
@@ -0,0 +1,75 @@
+<?php
+// This file is part of Moodle - http://moodle.org/
+//
+// Moodle is free software: you can redistribute it and/or modify
+// it under the terms of the GNU General Public License as published by
+// the Free Software Foundation, either version 3 of the License, or
+// (at your option) any later version.
+//
+// Moodle is distributed in the hope that it will be useful,
+// but WITHOUT ANY WARRANTY; without even the implied warranty of
+// MERCHANTABILITY or FITNESS FOR A PARTICULAR PURPOSE.  See the
+// GNU General Public License for more details.
+//
+// You should have received a copy of the GNU General Public License
+// along with Moodle.  If not, see <http://www.gnu.org/licenses/>.
+
+/**
+ * Special setting for auth_shibboleth convert_data.
+ *
+ * @package    auth_shibboleth
+ * @copyright  2020 Mihail Geshoski
+ * @license    http://www.gnu.org/copyleft/gpl.html GNU GPL v3 or later
+ */
+
+/**
+ * Admin settings class for the convert_data option.
+ *
+ * @package    auth_shibboleth
+ * @copyright  2020 Mihail Geshoski
+ * @license    http://www.gnu.org/copyleft/gpl.html GNU GPL v3 or later
+ */
+class auth_shibboleth_admin_setting_convert_data extends admin_setting_configfile {
+
+    /**
+     * Constructor.
+     *
+     * @param string $name
+     * @param string $visiblename
+     * @param string $description
+     * @param mixed $defaultdirectory
+     */
+    public function __construct($name, $visiblename, $description, $defaultdirectory) {
+        parent::__construct($name, $visiblename, $description, $defaultdirectory);
+    }
+
+    /**
+     * Validate the file path (location).
+     *
+     * This method ensures that the file defined as a data modification API exists and is not located in the site
+     * data directory ($CFG->dataroot). We should prohibit using files from the site data directory as this introduces
+     * security vulnerabilities.
+     *
+     * @param string $filepath The path to the file.
+     * @return mixed bool true for success or string:error on failure.
+     */
+    public function validate($filepath) {
+        global $CFG;
+
+        if (empty($filepath)) {
+            return true;
+        }
+
+        // Fail if the file does not exist or it is not readable by the webserver process.
+        if (!is_readable($filepath)) {
+            return get_string('auth_shib_convert_data_warning', 'auth_shibboleth');
+        }
+
+        // Fail if the absolute file path matches the currently defined dataroot path.
+        if (preg_match('/' . preg_quote($CFG->dataroot, '/') . '/', realpath($filepath))) {
+            return get_string('auth_shib_convert_data_filepath_warning', 'auth_shibboleth');
+        }
+
+        return true;
+    }
+}
diff --git a/auth/shibboleth/lang/en/auth_shibboleth.php b/auth/shibboleth/lang/en/auth_shibboleth.php
index ca9b65b81ad..931d2f39151 100644
--- a/auth/shibboleth/lang/en/auth_shibboleth.php
+++ b/auth/shibboleth/lang/en/auth_shibboleth.php
@@ -38,6 +38,7 @@ $string['auth_shibboleth_select_organization'] = 'For authentication via Shibbol
 $string['auth_shib_convert_data'] = 'Data modification API';
 $string['auth_shib_convert_data_description'] = 'You can use this API to further modify the data provided by Shibboleth. Read the <a href="{$a}">README</a> for further instructions.';
 $string['auth_shib_convert_data_warning'] = 'The file does not exist or is not readable by the webserver process!';
+$string['auth_shib_convert_data_filepath_warning'] = 'You cannot use a file that is located within the current site data directory ($CFG->dataroot) as the data modification API.';
 $string['auth_shib_changepasswordurl'] = 'Password-change URL';
 $string['auth_shib_idp_list'] = 'Identity providers';
 $string['auth_shib_idp_list_description'] = 'Provide a list of Identity Provider entityIDs to let the user choose from on the login page.<br />On each line there must be a comma-separated tuple for entityID of the IdP (see the Shibboleth metadata file) and Name of IdP as it shall be displayed in the drop-down list.<br />As an optional third parameter you can add the location of a Shibboleth session initiator that shall be used in case your Moodle installation is part of a multi federation setup.';
diff --git a/auth/shibboleth/settings.php b/auth/shibboleth/settings.php
index 86dce35a927..7c2117ec824 100644
--- a/auth/shibboleth/settings.php
+++ b/auth/shibboleth/settings.php
@@ -28,6 +28,7 @@ if ($ADMIN->fulltree) {
     // We use a couple of custom admin settings since we need to massage the data before it is inserted into the DB.
     require_once($CFG->dirroot.'/auth/shibboleth/classes/admin_setting_special_wayf_select.php');
     require_once($CFG->dirroot.'/auth/shibboleth/classes/admin_setting_special_idp_configtextarea.php');
+    require_once($CFG->dirroot.'/auth/shibboleth/classes/admin_setting_special_convert_data_configfile.php');
 
     // Introductory explanation.
     $readmeurl = (new moodle_url('/auth/shibboleth/README.txt'))->out();
@@ -38,8 +39,8 @@ if ($ADMIN->fulltree) {
     $settings->add(new admin_setting_configtext('auth_shibboleth/user_attribute', get_string('username'),
             get_string('auth_shib_username_description', 'auth_shibboleth'), '', PARAM_RAW));
 
-    // COnvert Data configuration file.
-    $settings->add(new admin_setting_configfile('auth_shibboleth/convert_data',
+    // Convert Data configuration file.
+    $settings->add(new auth_shibboleth_admin_setting_convert_data('auth_shibboleth/convert_data',
             get_string('auth_shib_convert_data', 'auth_shibboleth'),
             get_string('auth_shib_convert_data_description', 'auth_shibboleth', $readmeurl), ''));
 
diff --git a/auth/shibboleth/upgrade.txt b/auth/shibboleth/upgrade.txt
index 9083025cd42..0acea5de397 100644
--- a/auth/shibboleth/upgrade.txt
+++ b/auth/shibboleth/upgrade.txt
@@ -1,6 +1,11 @@
 This files describes API changes in /auth/shibboleth/*,
 information provided here is intended especially for developers.
 
+=== 3.11 ===
+
+* The 'Data modification API' (convert_data) setting can no longer be configured to use files located within the
+  current site data directory ($CFG->dataroot), as it exposes the site to security risks.
+
 === 3.5.2 ===
 
 * Moved the public function unserializesession in auth/shibboleth/logout.php to auth/shibboleth/classes/helper.php and