how to create ssrs report that shows database names as a dropdown filter and user can select the database name and connect dynamically and run the report.

The Server name is same, just the databases must by dynamic.

Please let me know.

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You need to create a datasource in your report, this will not work on a shared datasource.

Create a new datasource and then next to the connection string field, click the fx button. You can build your connection string using parameter values to change the database. The expression might look something like this..

="Data Source=MyServerName;Initial Catalog=" & Parameters!myDatabaseParameter.Value & ";Connect Timeout=30;Encrypt=False;TrustServerCertificate=False;ApplicationIntent=ReadWrite;MultiSubnetFailover=False"