diff --git a/config/config.example.toml b/config/config.example.toml
index 85b7ad83c8..c5e84d38b3 100644
--- a/config/config.example.toml
+++ b/config/config.example.toml
@@ -92,6 +92,7 @@ ignore_errors = false                                 # boolean [true or false],
 sampling_rate = 0.1                                   # decimal rate between 0.0 - 1.0
 otel_exporter_otlp_endpoint = "http://localhost:4317" # endpoint to send metrics and traces to, can include port number
 otel_exporter_otlp_timeout = 5000                     # timeout (in milliseconds) for sending metrics and traces
+use_xray_generator = false                            # Set this to true for AWS X-ray compatible traces
 
 # This section provides some secret values.
 [secrets]
diff --git a/config/development.toml b/config/development.toml
index 692712b79c..79b760d8ed 100644
--- a/config/development.toml
+++ b/config/development.toml
@@ -9,6 +9,7 @@ log_format = "default"
 [log.telemetry]
 traces_enabled = false
 metrics_enabled = false
+use_xray_generator = false
 
 # TODO: Update database credentials before running application
 [master_database]
diff --git a/config/docker_compose.toml b/config/docker_compose.toml
index 80ede116f5..3efbdcd021 100644
--- a/config/docker_compose.toml
+++ b/config/docker_compose.toml
@@ -18,6 +18,7 @@ traces_enabled = false                                      # Whether traces are
 metrics_enabled = false                                     # Whether metrics are enabled.
 ignore_errors = false                                       # Whether to ignore errors during traces or metrics pipeline setup.
 otel_exporter_otlp_endpoint = "https://otel-collector:4317" # Endpoint to send metrics and traces to.
+use_xray_generator = false
 
 [master_database]
 username = "db_user"
diff --git a/crates/router_env/src/logger/config.rs b/crates/router_env/src/logger/config.rs
index c87a2c8a44..e243742283 100644
--- a/crates/router_env/src/logger/config.rs
+++ b/crates/router_env/src/logger/config.rs
@@ -99,6 +99,8 @@ pub struct LogTelemetry {
     pub otel_exporter_otlp_endpoint: Option<String>,
     /// Timeout (in milliseconds) for sending metrics and traces.
     pub otel_exporter_otlp_timeout: Option<u64>,
+    /// Whether to use xray ID generator, (enable this if you plan to use AWS-XRAY)
+    pub use_xray_generator: bool,
 }
 
 /// Telemetry / tracing.
diff --git a/crates/router_env/src/logger/setup.rs b/crates/router_env/src/logger/setup.rs
index c30eee6270..eb70e58da2 100644
--- a/crates/router_env/src/logger/setup.rs
+++ b/crates/router_env/src/logger/setup.rs
@@ -134,7 +134,7 @@ fn setup_tracing_pipeline(
 {
     global::set_text_map_propagator(TraceContextPropagator::new());
 
-    let trace_config = trace::config()
+    let mut trace_config = trace::config()
         .with_sampler(trace::Sampler::TraceIdRatioBased(
             config.sampling_rate.unwrap_or(1.0),
         ))
@@ -142,6 +142,9 @@ fn setup_tracing_pipeline(
             "service.name",
             service_name,
         )]));
+    if config.use_xray_generator {
+        trace_config = trace_config.with_id_generator(trace::XrayIdGenerator::default());
+    }
     let traces_layer_result = opentelemetry_otlp::new_pipeline()
         .tracing()
         .with_exporter(get_opentelemetry_exporter(config))