I am trying to develop a custom radio button that looks like a two-option button control that looks somewhat as shown below with toggling of highlighted state. Not sure where to start.

Is there any such controls already available that I can use.
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OK, here is a brief overview of what you will need to do …
ControlTemplatefor the existingRadioButtoncontrol. There are lots of tutorials available that describe this,, for example this one.Grid?Gridcell add a Rectangle, one behind Option1, and the other behind Option2Fillproperty of eachRectanglebased on the controls currentVisualState. i.e. whenPressedtoggle the background colours.The steps above should help you achieve your goal. Please read the linked web pages and the Silverlight documentation. If you are still struggling after that,, come back and ask another question.