diff --git a/docs/file-based-configuration.md b/docs/file-based-configuration.md
index e779ba1e85..847287e155 100644
--- a/docs/file-based-configuration.md
+++ b/docs/file-based-configuration.md
@@ -82,3 +82,24 @@ resource:
       process:         # Detects process-level attributes (process.*)
       processruntime:  # Detects process runtime attributes (process.runtime.*)
 ```  
+
+### Propagator Configuration
+
+You can configure text map context propagators directly in YAML or via the
+`OTEL_PROPAGATORS` environment variable.
+For more details and updates, see: [Propagators list and documentation](config.md/#propagators)
+To disable a propagator, comment out or remove its corresponding entry.
+
+``` yaml
+# If no propagators are specified, none will be added automatically.
+propagator:
+  # Composite propagators are evaluated together. 
+  # Entries from .composite_list are appended here (duplicates are filtered out).
+  composite:
+    tracecontext: # W3C Trace Context propagator
+    baggage:      # W3C Baggage propagator
+    b3:           # B3 single-header propagator
+    b3multi:      # B3 multi-header propagator
+  # Alternatively, configure via a comma-separated list (same format as OTEL_PROPAGATORS).
+  composite_list: ${OTEL_PROPAGATORS}
+```
diff --git a/src/OpenTelemetry.AutoInstrumentation/Configurations/EnvironmentConfigurationSdkHelper.cs b/src/OpenTelemetry.AutoInstrumentation/Configurations/EnvironmentConfigurationSdkHelper.cs
index eb29c16bd5..17c022ca9e 100644
--- a/src/OpenTelemetry.AutoInstrumentation/Configurations/EnvironmentConfigurationSdkHelper.cs
+++ b/src/OpenTelemetry.AutoInstrumentation/Configurations/EnvironmentConfigurationSdkHelper.cs
@@ -12,7 +12,7 @@ public static void UseEnvironmentVariables(SdkSettings settings)
         SetSdkTextMapPropagator(settings.Propagators);
     }
 
-    private static void SetSdkTextMapPropagator(IList<Propagator> settingsPropagators)
+    private static void SetSdkTextMapPropagator(IReadOnlyList<Propagator> settingsPropagators)
     {
         if (settingsPropagators.Count == 0)
         {
@@ -43,18 +43,13 @@ private static void SetSdkTextMapPropagator(IList<Propagator> settingsPropagator
 
     private static TextMapPropagator GetTextMapPropagator(Propagator propagator)
     {
-        switch (propagator)
+        return propagator switch
         {
-            case Propagator.W3CTraceContext:
-                return new TraceContextPropagator();
-            case Propagator.W3CBaggage:
-                return new BaggagePropagator();
-            case Propagator.B3Multi:
-                return new Extensions.Propagators.B3Propagator(singleHeader: false);
-            case Propagator.B3Single:
-                return new Extensions.Propagators.B3Propagator(singleHeader: true);
-        }
-
-        throw new ArgumentOutOfRangeException(nameof(propagator), propagator, "Propagator has an unexpected value.");
+            Propagator.W3CTraceContext => new TraceContextPropagator(),
+            Propagator.W3CBaggage => new BaggagePropagator(),
+            Propagator.B3Multi => new Extensions.Propagators.B3Propagator(singleHeader: false),
+            Propagator.B3Single => new Extensions.Propagators.B3Propagator(singleHeader: true),
+            _ => throw new ArgumentOutOfRangeException(nameof(propagator), propagator, "Propagator has an unexpected value."),
+        };
     }
 }
diff --git a/src/OpenTelemetry.AutoInstrumentation/Configurations/FileBasedConfiguration/PropagatorConfiguration.cs b/src/OpenTelemetry.AutoInstrumentation/Configurations/FileBasedConfiguration/PropagatorConfiguration.cs
new file mode 100644
index 0000000000..afecedab15
--- /dev/null
+++ b/src/OpenTelemetry.AutoInstrumentation/Configurations/FileBasedConfiguration/PropagatorConfiguration.cs
@@ -0,0 +1,49 @@
+// Copyright The OpenTelemetry Authors
+// SPDX-License-Identifier: Apache-2.0
+
+using Vendors.YamlDotNet.Serialization;
+
+namespace OpenTelemetry.AutoInstrumentation.Configurations.FileBasedConfiguration;
+
+internal class PropagatorConfiguration
+{
+    /// <summary>
+    /// Gets or sets the composite propagator configuration.
+    /// </summary>
+    [YamlMember(Alias = "composite")]
+    public Dictionary<string, object>? Composite { get; set; }
+
+    /// <summary>
+    /// Gets or sets the composite list for the propagator.
+    /// </summary>
+    [YamlMember(Alias = "composite_list")]
+    public string? CompositeList { get; set; }
+
+    public IReadOnlyList<Propagator> GetEnabledPropagators()
+    {
+        if (Composite is null && string.IsNullOrEmpty(CompositeList))
+        {
+            return [];
+        }
+
+        var propagatorNames = (Composite?.Keys ?? Enumerable.Empty<string>())
+            .Concat(!string.IsNullOrEmpty(CompositeList)
+                    ? CompositeList!.Split(Constants.ConfigurationValues.Separator)
+                    : [])
+            .Distinct();
+
+        var propagators = propagatorNames
+            .Select<string, Propagator?>(name => name switch
+            {
+                Constants.ConfigurationValues.Propagators.W3CTraceContext => Propagator.W3CTraceContext,
+                Constants.ConfigurationValues.Propagators.W3CBaggage => Propagator.W3CBaggage,
+                Constants.ConfigurationValues.Propagators.B3Multi => Propagator.B3Multi,
+                Constants.ConfigurationValues.Propagators.B3Single => Propagator.B3Single,
+                _ => null
+            })
+            .OfType<Propagator>()
+            .ToList();
+
+        return propagators;
+    }
+}
diff --git a/src/OpenTelemetry.AutoInstrumentation/Configurations/FileBasedConfiguration/YamlConfiguration.cs b/src/OpenTelemetry.AutoInstrumentation/Configurations/FileBasedConfiguration/YamlConfiguration.cs
index 62a3b94821..2d072bd787 100644
--- a/src/OpenTelemetry.AutoInstrumentation/Configurations/FileBasedConfiguration/YamlConfiguration.cs
+++ b/src/OpenTelemetry.AutoInstrumentation/Configurations/FileBasedConfiguration/YamlConfiguration.cs
@@ -23,6 +23,13 @@ internal class YamlConfiguration
     [YamlMember(Alias = "resource")]
     public ResourceConfiguration? Resource { get; set; }
 
+    /// <summary>
+    /// Gets or sets the text map context propagator configuration.
+    /// If omitted, a noop propagator is used.
+    /// </summary>
+    [YamlMember(Alias = "propagator")]
+    public PropagatorConfiguration? Propagator { get; set; }
+
     /// <summary>
     /// Gets or sets a value indicating whether the SDK is disabled.
     /// If omitted or null, false is used.
diff --git a/src/OpenTelemetry.AutoInstrumentation/Configurations/SdkSettings.cs b/src/OpenTelemetry.AutoInstrumentation/Configurations/SdkSettings.cs
index 98fdb8c10c..ce6aa61317 100644
--- a/src/OpenTelemetry.AutoInstrumentation/Configurations/SdkSettings.cs
+++ b/src/OpenTelemetry.AutoInstrumentation/Configurations/SdkSettings.cs
@@ -1,6 +1,7 @@
 // Copyright The OpenTelemetry Authors
 // SPDX-License-Identifier: Apache-2.0
 
+using OpenTelemetry.AutoInstrumentation.Configurations.FileBasedConfiguration;
 using OpenTelemetry.AutoInstrumentation.Logging;
 
 namespace OpenTelemetry.AutoInstrumentation.Configurations;
@@ -15,14 +16,19 @@ internal class SdkSettings : Settings
     /// <summary>
     /// Gets the list of propagators to be used.
     /// </summary>
-    public IList<Propagator> Propagators { get; private set; } = new List<Propagator>();
+    public IReadOnlyList<Propagator> Propagators { get; private set; } = [];
 
     protected override void OnLoadEnvVar(Configuration configuration)
     {
         Propagators = ParsePropagator(configuration);
     }
 
-    private static IList<Propagator> ParsePropagator(Configuration configuration)
+    protected override void OnLoadFile(YamlConfiguration configuration)
+    {
+        Propagators = configuration.Propagator?.GetEnabledPropagators() ?? [];
+    }
+
+    private static List<Propagator> ParsePropagator(Configuration configuration)
     {
         var propagatorEnvVar = configuration.GetString(ConfigurationKeys.Sdk.Propagators);
         var propagators = new List<Propagator>();
diff --git a/test/OpenTelemetry.AutoInstrumentation.Tests/Configurations/FileBased/FilebasedSdkSettingsTests.cs b/test/OpenTelemetry.AutoInstrumentation.Tests/Configurations/FileBased/FilebasedSdkSettingsTests.cs
new file mode 100644
index 0000000000..7b272bad9f
--- /dev/null
+++ b/test/OpenTelemetry.AutoInstrumentation.Tests/Configurations/FileBased/FilebasedSdkSettingsTests.cs
@@ -0,0 +1,105 @@
+// Copyright The OpenTelemetry Authors
+// SPDX-License-Identifier: Apache-2.0
+
+using OpenTelemetry.AutoInstrumentation.Configurations;
+using OpenTelemetry.AutoInstrumentation.Configurations.FileBasedConfiguration;
+using Xunit;
+
+namespace OpenTelemetry.AutoInstrumentation.Tests.Configurations.FileBased;
+
+public class FilebasedSdkSettingsTests
+{
+    [Fact]
+    public void LoadFile_CompositeOnlyPropagators()
+    {
+        var propagator = new PropagatorConfiguration
+        {
+            Composite = new Dictionary<string, object>
+            {
+                { "tracecontext", new object() },
+                { "baggage", new object() }
+            }
+        };
+
+        var conf = new YamlConfiguration { Propagator = propagator };
+        var settings = new SdkSettings();
+
+        settings.LoadFile(conf);
+
+        Assert.Equal(2, settings.Propagators.Count);
+        Assert.Contains(Propagator.W3CTraceContext, settings.Propagators);
+        Assert.Contains(Propagator.W3CBaggage, settings.Propagators);
+    }
+
+    [Fact]
+    public void LoadFile_CompositeListOnlyPropagators()
+    {
+        var propagator = new PropagatorConfiguration
+        {
+            CompositeList = "b3multi,b3"
+        };
+
+        var conf = new YamlConfiguration { Propagator = propagator };
+        var settings = new SdkSettings();
+
+        settings.LoadFile(conf);
+
+        Assert.Equal(2, settings.Propagators.Count);
+        Assert.Contains(Propagator.B3Multi, settings.Propagators);
+        Assert.Contains(Propagator.B3Single, settings.Propagators);
+    }
+
+    [Fact]
+    public void LoadFile_CompositeAndCompositeList_AreMergedWithoutDuplicates()
+    {
+        var propagator = new PropagatorConfiguration
+        {
+            Composite = new Dictionary<string, object>
+            {
+                { "tracecontext", new object() },
+                { "baggage", new object() }
+            },
+            CompositeList = "tracecontext,b3"
+        };
+
+        var conf = new YamlConfiguration { Propagator = propagator };
+        var settings = new SdkSettings();
+
+        settings.LoadFile(conf);
+
+        Assert.Equal(3, settings.Propagators.Count);
+        Assert.Contains(Propagator.W3CTraceContext, settings.Propagators);
+        Assert.Contains(Propagator.W3CBaggage, settings.Propagators);
+        Assert.Contains(Propagator.B3Single, settings.Propagators);
+    }
+
+    [Fact]
+    public void LoadFile_GetEnabledPropagators_Empty()
+    {
+        var propagator = new PropagatorConfiguration();
+
+        var conf = new YamlConfiguration { Propagator = propagator };
+        var settings = new SdkSettings();
+
+        settings.LoadFile(conf);
+
+        Assert.Empty(settings.Propagators);
+    }
+
+    [Fact]
+    public void LoadFile_GetEnabledPropagators_UnknownValues_AreIgnored()
+    {
+        var propagator = new PropagatorConfiguration
+        {
+            CompositeList = "invalid,b3multi"
+        };
+
+        var conf = new YamlConfiguration { Propagator = propagator };
+        var settings = new SdkSettings();
+
+        settings.LoadFile(conf);
+
+        Assert.Single(settings.Propagators);
+        Assert.Equal(Propagator.B3Multi, settings.Propagators[0]);
+    }
+}
diff --git a/test/OpenTelemetry.AutoInstrumentation.Tests/Configurations/FileBased/Files/TestPropagatorFile.yaml b/test/OpenTelemetry.AutoInstrumentation.Tests/Configurations/FileBased/Files/TestPropagatorFile.yaml
new file mode 100644
index 0000000000..67f0b924c1
--- /dev/null
+++ b/test/OpenTelemetry.AutoInstrumentation.Tests/Configurations/FileBased/Files/TestPropagatorFile.yaml
@@ -0,0 +1,9 @@
+file_format: "1.0-rc.1"
+
+propagator:
+  composite:
+    tracecontext:
+    baggage:
+    b3:
+    b3multi:
+
diff --git a/test/OpenTelemetry.AutoInstrumentation.Tests/Configurations/FileBased/Files/TestPropagatorFileEnvVars.yaml b/test/OpenTelemetry.AutoInstrumentation.Tests/Configurations/FileBased/Files/TestPropagatorFileEnvVars.yaml
new file mode 100644
index 0000000000..813611f2d6
--- /dev/null
+++ b/test/OpenTelemetry.AutoInstrumentation.Tests/Configurations/FileBased/Files/TestPropagatorFileEnvVars.yaml
@@ -0,0 +1,4 @@
+file_format: "1.0-rc.1"
+
+propagator:
+  composite_list: ${OTEL_PROPAGATORS}
diff --git a/test/OpenTelemetry.AutoInstrumentation.Tests/Configurations/FileBased/Parser/ParserPropagatorTests.cs b/test/OpenTelemetry.AutoInstrumentation.Tests/Configurations/FileBased/Parser/ParserPropagatorTests.cs
new file mode 100644
index 0000000000..06eed5b1d5
--- /dev/null
+++ b/test/OpenTelemetry.AutoInstrumentation.Tests/Configurations/FileBased/Parser/ParserPropagatorTests.cs
@@ -0,0 +1,46 @@
+// Copyright The OpenTelemetry Authors
+// SPDX-License-Identifier: Apache-2.0
+
+using Xunit;
+using YamlParser = OpenTelemetry.AutoInstrumentation.Configurations.FileBasedConfiguration.Parser.Parser;
+
+namespace OpenTelemetry.AutoInstrumentation.Tests.Configurations.FileBased.Parser;
+
+[Collection("Non-Parallel Collection")]
+public class ParserPropagatorTests
+{
+    [Fact]
+    public void Parse_FullConfigYaml_ShouldPopulateModelCorrectly()
+    {
+        var config = YamlParser.ParseYaml("Configurations/FileBased/Files/TestPropagatorFile.yaml");
+
+        Assert.NotNull(config);
+        Assert.NotNull(config.Propagator);
+        Assert.NotNull(config.Propagator.Composite);
+        var composite = config.Propagator.Composite;
+        Assert.Null(config.Propagator.CompositeList);
+
+        string[] expectedPropagators = [
+            "tracecontext", "baggage", "b3", "b3multi",
+                ];
+
+        foreach (var expected in expectedPropagators)
+        {
+            Assert.Contains(expected, composite.Keys);
+        }
+    }
+
+    [Fact]
+    public void Parse_EnvVarYaml_ShouldPopulateModelCompletely()
+    {
+        Environment.SetEnvironmentVariable("OTEL_PROPAGATORS", "tracecontext,baggage,b3,b3multi");
+
+        var config = YamlParser.ParseYaml("Configurations/FileBased/Files/TestPropagatorFileEnvVars.yaml");
+
+        Assert.NotNull(config);
+        Assert.NotNull(config.Propagator);
+        Assert.NotNull(config.Propagator.CompositeList);
+        Assert.Null(config.Propagator.Composite);
+        Assert.Equal("tracecontext,baggage,b3,b3multi", config.Propagator.CompositeList);
+    }
+}
diff --git a/test/OpenTelemetry.AutoInstrumentation.Tests/OpenTelemetry.AutoInstrumentation.Tests.csproj b/test/OpenTelemetry.AutoInstrumentation.Tests/OpenTelemetry.AutoInstrumentation.Tests.csproj
index e34a9eb301..73965ceaf8 100644
--- a/test/OpenTelemetry.AutoInstrumentation.Tests/OpenTelemetry.AutoInstrumentation.Tests.csproj
+++ b/test/OpenTelemetry.AutoInstrumentation.Tests/OpenTelemetry.AutoInstrumentation.Tests.csproj
@@ -15,12 +15,18 @@
     <None Update="Configurations\FileBased\Files\NoCodeFile.yaml">
       <CopyToOutputDirectory>PreserveNewest</CopyToOutputDirectory>
     </None>
+    <None Update="Configurations\FileBased\Files\TestPropagatorFile.yaml">
+      <CopyToOutputDirectory>PreserveNewest</CopyToOutputDirectory>
+    </None>
     <None Update="Configurations\FileBased\Files\TestGeneralFile.yaml">
       <CopyToOutputDirectory>PreserveNewest</CopyToOutputDirectory>
     </None>
     <None Update="Configurations\FileBased\Files\TestResourceFile.yaml">
       <CopyToOutputDirectory>PreserveNewest</CopyToOutputDirectory>
     </None>
+    <None Update="Configurations\FileBased\Files\TestPropagatorFileEnvVars.yaml">
+      <CopyToOutputDirectory>PreserveNewest</CopyToOutputDirectory>
+    </None>
     <None Update="Configurations\FileBased\Files\TestGeneralFileEnvVars.yaml">
       <CopyToOutputDirectory>PreserveNewest</CopyToOutputDirectory>
     </None>