diff --git a/CHANGELOG.md b/CHANGELOG.md
index 7d2a3e831..3bcc845bc 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -37,6 +37,8 @@ and this project adheres to [Semantic Versioning](https://semver.org/spec/v2.0.0
   ([#2363](https://github.com/open-telemetry/opentelemetry-python-contrib/pull/2363))
 - `opentelemetry-instrumentation-boto3sqs` Instrument Session and resource
   ([#2161](https://github.com/open-telemetry/opentelemetry-python-contrib/pull/2161))
+- `opentelemetry-instrumentation-aws-lambda` Fix exception handling for events with requestContext
+  ([#2418](https://github.com/open-telemetry/opentelemetry-python-contrib/pull/2418))
 - Use sqlalchemy version in sqlalchemy commenter instead of opentelemetry library version
   ([#2404](https://github.com/open-telemetry/opentelemetry-python-contrib/pull/2404))
 
diff --git a/instrumentation/opentelemetry-instrumentation-aws-lambda/src/opentelemetry/instrumentation/aws_lambda/__init__.py b/instrumentation/opentelemetry-instrumentation-aws-lambda/src/opentelemetry/instrumentation/aws_lambda/__init__.py
index 8f29a0ec3..7614ba981 100644
--- a/instrumentation/opentelemetry-instrumentation-aws-lambda/src/opentelemetry/instrumentation/aws_lambda/__init__.py
+++ b/instrumentation/opentelemetry-instrumentation-aws-lambda/src/opentelemetry/instrumentation/aws_lambda/__init__.py
@@ -365,6 +365,7 @@ def _instrument(
                 )
 
             exception = None
+            result = None
             try:
                 result = call_wrapped(*args, **kwargs)
             except Exception as exc:  # pylint: disable=W0703
diff --git a/instrumentation/opentelemetry-instrumentation-aws-lambda/tests/test_aws_lambda_instrumentation_manual.py b/instrumentation/opentelemetry-instrumentation-aws-lambda/tests/test_aws_lambda_instrumentation_manual.py
index 51ebb67eb..a2730028e 100644
--- a/instrumentation/opentelemetry-instrumentation-aws-lambda/tests/test_aws_lambda_instrumentation_manual.py
+++ b/instrumentation/opentelemetry-instrumentation-aws-lambda/tests/test_aws_lambda_instrumentation_manual.py
@@ -436,6 +436,31 @@ class TestAwsLambdaInstrumentor(TestBase):
 
         exc_env_patch.stop()
 
+    def test_lambda_handles_handler_exception_with_api_gateway_proxy_event(
+        self,
+    ):
+        exc_env_patch = mock.patch.dict(
+            "os.environ",
+            {_HANDLER: "tests.mocks.lambda_function.handler_exc"},
+        )
+        exc_env_patch.start()
+        AwsLambdaInstrumentor().instrument()
+        # instrumentor re-raises the exception
+        with self.assertRaises(Exception):
+            mock_execute_lambda(
+                {"requestContext": {"http": {"method": "GET"}}}
+            )
+
+        spans = self.memory_exporter.get_finished_spans()
+        self.assertEqual(len(spans), 1)
+        span = spans[0]
+        self.assertEqual(span.status.status_code, StatusCode.ERROR)
+        self.assertEqual(len(span.events), 1)
+        event = span.events[0]
+        self.assertEqual(event.name, "exception")
+
+        exc_env_patch.stop()
+
     def test_uninstrument(self):
         AwsLambdaInstrumentor().instrument()