diff --git a/src/OpenTelemetry.Extensions.AWS/CHANGELOG.md b/src/OpenTelemetry.Extensions.AWS/CHANGELOG.md
index b5bbdab22c..650d066b9e 100644
--- a/src/OpenTelemetry.Extensions.AWS/CHANGELOG.md
+++ b/src/OpenTelemetry.Extensions.AWS/CHANGELOG.md
@@ -2,6 +2,8 @@
 
 ## Unreleased
 
+* Add support for Lambda lineage in X-Ray propagator.
+  ([#2480](https://github.com/open-telemetry/opentelemetry-dotnet-contrib/pull/2480))
 * Updated OpenTelemetry core component version(s) to `1.11.1`.
   ([#2477](https://github.com/open-telemetry/opentelemetry-dotnet-contrib/pull/2477))
 
diff --git a/src/OpenTelemetry.Extensions.AWS/Trace/AWSXRayPropagator.cs b/src/OpenTelemetry.Extensions.AWS/Trace/AWSXRayPropagator.cs
index 2a8d71b6f2..1822a2768c 100644
--- a/src/OpenTelemetry.Extensions.AWS/Trace/AWSXRayPropagator.cs
+++ b/src/OpenTelemetry.Extensions.AWS/Trace/AWSXRayPropagator.cs
@@ -8,6 +8,7 @@
 using System.Globalization;
 using System.Numerics;
 using System.Text;
+using System.Text.RegularExpressions;
 using OpenTelemetry.Context.Propagation;
 
 namespace OpenTelemetry.Extensions.AWS.Trace;
@@ -37,6 +38,12 @@ public class AWSXRayPropagator : TextMapPropagator
     private const char SampledValue = '1';
     private const char NotSampledValue = '0';
 
+    private const string LineageKey = "Lineage";
+    private const char LineageDelimiter = ':';
+    private const int LineageHashLength = 8;
+    private const int LineageMaxCounter1 = 32767;
+    private const int LineageMaxCounter2 = 255;
+
     /// <inheritdoc/>
     public override ISet<string> Fields => new HashSet<string>() { AWSXRayTraceHeaderKey };
 
@@ -71,7 +78,7 @@ public override PropagationContext Extract<T>(PropagationContext context, T carr
 
             var parentHeader = parentTraceHeader.First();
 
-            return !TryParseXRayTraceHeader(parentHeader, out var newActivityContext) ? context : new PropagationContext(newActivityContext, context.Baggage);
+            return !TryParseXRayTraceHeader(context, parentHeader, out var newActivityContext, out var baggage) ? context : new PropagationContext(newActivityContext, baggage);
         }
         catch (Exception ex)
         {
@@ -143,10 +150,21 @@ public override void Inject<T>(PropagationContext context, T carrier, Action<T,
         sb.Append(KeyValueDelimiter);
         sb.Append((context.ActivityContext.TraceFlags & ActivityTraceFlags.Recorded) != 0 ? SampledValue : NotSampledValue);
 
+        Baggage baggage = context.Baggage;
+        string? lineageV2Header = baggage.GetBaggage(LineageKey);
+
+        if (lineageV2Header != null)
+        {
+            sb.Append(TraceHeaderDelimiter);
+            sb.Append(LineageKey);
+            sb.Append(KeyValueDelimiter);
+            sb.Append(lineageV2Header);
+        }
+
         setter(carrier, AWSXRayTraceHeaderKey, sb.ToString());
     }
 
-    internal static bool TryParseXRayTraceHeader(string rawHeader, out ActivityContext activityContext)
+    internal static bool TryParseXRayTraceHeader(PropagationContext context, string rawHeader, out ActivityContext activityContext, out Baggage baggage)
     {
         // from https://docs.aws.amazon.com/xray/latest/devguide/xray-concepts.html#xray-concepts-tracingheader
         // rawHeader format: Root=1-5759e988-bd862e3fe1be46a994272793;Parent=53995c3f42cd8ad8;Sampled=1
@@ -155,6 +173,7 @@ internal static bool TryParseXRayTraceHeader(string rawHeader, out ActivityConte
         ReadOnlySpan<char> traceId = default;
         ReadOnlySpan<char> parentId = default;
         char traceOptions = default;
+        baggage = context.Baggage;
 
         if (string.IsNullOrEmpty(rawHeader))
         {
@@ -212,6 +231,13 @@ internal static bool TryParseXRayTraceHeader(string rawHeader, out ActivityConte
 
                 traceOptions = sampleDecision;
             }
+            else if (trimmedPart.StartsWith(LineageKey.AsSpan()))
+            {
+                if (IsLineageIdValid(value.ToString()))
+                {
+                    baggage = baggage.SetBaggage(LineageKey, value.ToString());
+                }
+            }
         }
 
         if (traceId.IsEmpty || parentId.IsEmpty || traceOptions == default)
@@ -306,6 +332,33 @@ internal static bool TryParseSampleDecision(ReadOnlySpan<char> sampleDecision, o
         return true;
     }
 
+    internal static bool IsLineageIdValid(string lineageId)
+    {
+        var lineageSubstrings = lineageId.Split(LineageDelimiter);
+        if (lineageSubstrings.Length != 3)
+        {
+            return false;
+        }
+
+        if (!int.TryParse(lineageSubstrings[0], out var lineageCounter1))
+        {
+            return false;
+        }
+
+        var hashedString = lineageSubstrings[1];
+
+        if (!int.TryParse(lineageSubstrings[2], out var lineageCounter2))
+        {
+            return false;
+        }
+
+        var isValidHash = hashedString.Length == LineageHashLength && Regex.IsMatch(hashedString, "^[0-9a-fA-F]+$");
+        var isValidCounter1 = lineageCounter1 >= 0 && lineageCounter1 <= LineageMaxCounter1;
+        var isValidCounter2 = lineageCounter2 >= 0 && lineageCounter2 <= LineageMaxCounter2;
+
+        return isValidHash && isValidCounter1 && isValidCounter2;
+    }
+
     internal static string ToXRayTraceIdFormat(string traceId)
     {
         var sb = new StringBuilder();
diff --git a/test/OpenTelemetry.Extensions.AWS.Tests/Trace/AWSXRayPropagatorTests.cs b/test/OpenTelemetry.Extensions.AWS.Tests/Trace/AWSXRayPropagatorTests.cs
index cd036b27ba..70ad46ff90 100644
--- a/test/OpenTelemetry.Extensions.AWS.Tests/Trace/AWSXRayPropagatorTests.cs
+++ b/test/OpenTelemetry.Extensions.AWS.Tests/Trace/AWSXRayPropagatorTests.cs
@@ -16,6 +16,7 @@ public class AWSXRayPropagatorTests
     private const string AWSXRayTraceHeaderKey = "X-Amzn-Trace-Id";
     private const string TraceId = "5759e988bd862e3fe1be46a994272793";
     private const string ParentId = "53995c3f42cd8ad8";
+    private const string LineageId = "100:e3b0c442:11";
 
     private static readonly string[] Empty = [];
 
@@ -114,6 +115,21 @@ public void TestInjectTraceHeaderAlreadyExistsButNotHttpRequestMessage()
         Assert.Equal("Root=1-5759e988-bd862e3fe1be46a994272793;Parent=53995c3f42cd8ad8;Sampled=0", carrier[AWSXRayTraceHeaderKey]);
     }
 
+    [Fact]
+    public void TestInjectTraceHeaderWithLineage()
+    {
+        var carrier = new Dictionary<string, string>();
+        var traceId = ActivityTraceId.CreateFromString(TraceId.AsSpan());
+        var parentId = ActivitySpanId.CreateFromString(ParentId.AsSpan());
+        var traceFlags = ActivityTraceFlags.Recorded;
+        var activityContext = new ActivityContext(traceId, parentId, traceFlags);
+        var baggage = Baggage.Create(new Dictionary<string, string> { { "Lineage", LineageId } });
+        this.awsXRayPropagator.Inject(new PropagationContext(activityContext, baggage), carrier, Setter);
+
+        Assert.True(carrier.ContainsKey(AWSXRayTraceHeaderKey));
+        Assert.Equal("Root=1-5759e988-bd862e3fe1be46a994272793;Parent=53995c3f42cd8ad8;Sampled=1;Lineage=100:e3b0c442:11", carrier[AWSXRayTraceHeaderKey]);
+    }
+
     [Fact]
     public void TestExtractTraceHeader()
     {
@@ -159,6 +175,53 @@ public void TestExtractTraceHeaderDifferentOrder()
         Assert.Equal(new PropagationContext(activityContext, default), this.awsXRayPropagator.Extract(default, carrier, Getter));
     }
 
+    [Fact]
+    public void TestExtractTraceHeaderWithLineage()
+    {
+        var carrier = new Dictionary<string, string>()
+        {
+            { AWSXRayTraceHeaderKey, "Root=1-5759e988-bd862e3fe1be46a994272793;Parent=53995c3f42cd8ad8;Sampled=1;Lineage=100:e3b0c442:11" },
+        };
+        var traceId = ActivityTraceId.CreateFromString(TraceId.AsSpan());
+        var parentId = ActivitySpanId.CreateFromString(ParentId.AsSpan());
+        var traceFlags = ActivityTraceFlags.Recorded;
+        var activityContext = new ActivityContext(traceId, parentId, traceFlags, isRemote: true);
+        var baggage = Baggage.Create(new Dictionary<string, string> { { "Lineage", LineageId } });
+
+        Assert.Equal(new PropagationContext(activityContext, baggage), this.awsXRayPropagator.Extract(default, carrier, Getter));
+    }
+
+    [Fact]
+    public void TestExtractTraceHeaderWithInvalidLineage()
+    {
+        var invalidLineages = new List<string>
+        {
+            string.Empty,
+            "::",
+            "1::",
+            "1::1",
+            "1:badc0de:13",
+            ":fbadc0de:13",
+            "32768:fbadc0de:1",
+            "1:fbadc0de:256",
+        };
+
+        foreach (var invalidLineage in invalidLineages)
+        {
+            var carrier = new Dictionary<string, string>()
+            {
+                { AWSXRayTraceHeaderKey, $"Root=1-5759e988-bd862e3fe1be46a994272793;Parent=53995c3f42cd8ad8;Sampled=1;Lineage={invalidLineage}" },
+            };
+
+            var traceId = ActivityTraceId.CreateFromString(TraceId.AsSpan());
+            var parentId = ActivitySpanId.CreateFromString(ParentId.AsSpan());
+            var traceFlags = ActivityTraceFlags.Recorded;
+            var activityContext = new ActivityContext(traceId, parentId, traceFlags, isRemote: true);
+
+            Assert.Equal(new PropagationContext(activityContext, default), this.awsXRayPropagator.Extract(default, carrier, Getter));
+        }
+    }
+
     [Fact]
     public void TestExtractTraceHeaderWithEmptyValue()
     {