>If both classes are in the same project, there is no circular reference. If they're in different projects, then you won't be able to do it because then it *would* be a circular reference and Visual Studio won't allow that.
>

I didn't think he was asking about project references but actual live object references where each object holds a reference to the other object.

Object 1
-> Reference to Object 2

Object 2
-> Reference to Object 1

>>In C# do I need to worry about the circular reference I've just created?

I haven't had any problems with this (AFAIK the garbage collector handles them just fine since it's not doing straight reference counting). But things like some types of serialization may be a potential problem (if you have that need).