diff --git a/gradle-plugins/src/main/kotlin/io.opentelemetry.instrumentation.muzzle-generation.gradle.kts b/gradle-plugins/src/main/kotlin/io.opentelemetry.instrumentation.muzzle-generation.gradle.kts
index fc5fa78fb3bc..6925bc8d4063 100644
--- a/gradle-plugins/src/main/kotlin/io.opentelemetry.instrumentation.muzzle-generation.gradle.kts
+++ b/gradle-plugins/src/main/kotlin/io.opentelemetry.instrumentation.muzzle-generation.gradle.kts
@@ -1,7 +1,6 @@
 import io.opentelemetry.javaagent.muzzle.generation.ClasspathByteBuddyPlugin
 import io.opentelemetry.javaagent.muzzle.generation.ClasspathTransformation
-import net.bytebuddy.ClassFileVersion
-import net.bytebuddy.build.gradle.ByteBuddySimpleTask
+import io.opentelemetry.javaagent.muzzle.generation.ConfigurationCacheFriendlyByteBuddyTask
 import net.bytebuddy.build.gradle.Transformation
 
 plugins {
@@ -50,7 +49,7 @@ val languageTasks = LANGUAGES.map { language ->
     return@map null
   }
   val compileTask = tasks.named(compileTaskName)
-  createLanguageTask(compileTask, "byteBuddy${language.replaceFirstChar(Char::titlecase)}")
+  createLanguageTask(compileTask, language)
 }.filterNotNull()
 
 tasks {
@@ -60,29 +59,43 @@ tasks {
 }
 
 fun createLanguageTask(
-  compileTaskProvider: TaskProvider<*>, name: String): TaskProvider<*> {
-  return tasks.register<ByteBuddySimpleTask>(name) {
-    setGroup("Byte Buddy")
-    outputs.cacheIf { true }
-    classFileVersion = ClassFileVersion.JAVA_V8
-    var transformationClassPath = inputClasspath
+  compileTaskProvider: TaskProvider<*>, language: String): TaskProvider<*> {
+  val taskName = "byteBuddy${language.replaceFirstChar { it.uppercase() }}"
+  val mainSourceSet = sourceSets.main.get()
+
+  // Create the input classpath from the existing logic in the main part
+  val inputClasspath = (mainSourceSet.output.resourcesDir?.let { codegen.plus(project.files(it)) }
+    ?: codegen)
+    .plus(mainSourceSet.output.dirs) // needed to support embedding shadowed modules into instrumentation
+    .plus(configurations.runtimeClasspath.get())
+
+  val byteBuddyTask = tasks.register(taskName, ConfigurationCacheFriendlyByteBuddyTask::class.java) {
+    dependsOn(compileTaskProvider, mainSourceSet.processResourcesTaskName)
+
+    transformations.add(createTransformation(inputClasspath, pluginName))
+
+    // Configure the ByteBuddy task properties directly during task creation
     val compileTask = compileTaskProvider.get()
     // this does not work for kotlin as compile task does not extend AbstractCompile
     if (compileTask is AbstractCompile) {
       val classesDirectory = compileTask.destinationDirectory.asFile.get()
-      val rawClassesDirectory: File = File(classesDirectory.parent, "${classesDirectory.name}raw")
-        .absoluteFile
-      dependsOn(compileTask)
+      val rawClassesDirectory = File(classesDirectory.parent, "${classesDirectory.name}raw").absoluteFile
+
+      // Configure the compile task to write to rawClassesDirectory
       compileTask.destinationDirectory.set(rawClassesDirectory)
+
+      // Configure ByteBuddy task properties
       source = rawClassesDirectory
       target = classesDirectory
       classPath = compileTask.classpath.plus(rawClassesDirectory)
-      transformationClassPath = transformationClassPath.plus(files(rawClassesDirectory))
-      dependsOn(compileTask, sourceSet.processResourcesTaskName)
-    }
 
-    transformations.add(createTransformation(transformationClassPath, pluginName))
+      // Clear and set transformations with correct classpath
+      transformations.clear()
+      transformations.add(createTransformation(inputClasspath.plus(files(rawClassesDirectory)), pluginName))
+    }
   }
+
+  return byteBuddyTask
 }
 
 fun createTransformation(classPath: FileCollection, pluginClassName: String): Transformation {
diff --git a/gradle-plugins/src/main/kotlin/io/opentelemetry/javaagent/muzzle/generation/ConfigurationCacheFriendlyByteBuddyTask.kt b/gradle-plugins/src/main/kotlin/io/opentelemetry/javaagent/muzzle/generation/ConfigurationCacheFriendlyByteBuddyTask.kt
new file mode 100644
index 000000000000..f0da72984dce
--- /dev/null
+++ b/gradle-plugins/src/main/kotlin/io/opentelemetry/javaagent/muzzle/generation/ConfigurationCacheFriendlyByteBuddyTask.kt
@@ -0,0 +1,29 @@
+package io.opentelemetry.javaagent.muzzle.generation
+
+import net.bytebuddy.build.Plugin
+import net.bytebuddy.build.gradle.ByteBuddySimpleTask
+import org.gradle.api.tasks.TaskAction
+import java.io.IOException
+
+/**
+ * Byte Buddy task variant that avoids touching Gradle's Project API from the task action so the
+ * task remains compatible with Gradle configuration cache.
+ */
+open class ConfigurationCacheFriendlyByteBuddyTask : ByteBuddySimpleTask() {
+
+  @TaskAction
+  @Throws(IOException::class)
+  override fun apply() {
+    val sourceDir = source
+    val targetDir = target
+
+    if (sourceDir != targetDir && deleteRecursively(targetDir)) {
+      logger.debug("Deleted all target files in {}", targetDir)
+    }
+
+    doApply(
+      Plugin.Engine.Source.ForFolder(sourceDir),
+      Plugin.Engine.Target.ForFolder(targetDir)
+    )
+  }
+}
diff --git a/gradle.properties b/gradle.properties
index fef595296b18..bc3c93e2600b 100644
--- a/gradle.properties
+++ b/gradle.properties
@@ -1,5 +1,6 @@
 org.gradle.parallel=true
 org.gradle.caching=true
+org.gradle.configuration-cache=true
 
 org.gradle.priority=low
 
diff --git a/instrumentation-api-incubator/build.gradle.kts b/instrumentation-api-incubator/build.gradle.kts
index cf8224b99cdd..d4621a5ea05b 100644
--- a/instrumentation-api-incubator/build.gradle.kts
+++ b/instrumentation-api-incubator/build.gradle.kts
@@ -1,6 +1,4 @@
 plugins {
-  id("org.xbib.gradle.plugin.jflex")
-
   id("otel.java-conventions")
   id("otel.animalsniffer-conventions")
   id("otel.jacoco-conventions")
@@ -10,7 +8,17 @@ plugins {
 
 group = "io.opentelemetry.instrumentation"
 
+// JFlex configuration - manual integration for configuration cache compatibility
+configurations {
+  val jflex by creating {
+    isTransitive = true
+  }
+}
+
 dependencies {
+  "jflex"("de.jflex:jflex:1.9.1")
+  "jflex"("com.github.vbmacher:java-cup-runtime:11b-20160615")
+
   api("io.opentelemetry.semconv:opentelemetry-semconv")
   api(project(":instrumentation-api"))
   api("io.opentelemetry:opentelemetry-api-incubator")
@@ -24,6 +32,41 @@ dependencies {
   testImplementation("io.opentelemetry.semconv:opentelemetry-semconv-incubating")
 }
 
+// Manual JFlex task - configuration cache compatible
+val generateJflex by tasks.registering(JavaExec::class) {
+  description = "Generate Java code from JFlex files"
+  group = "build"
+
+  classpath = configurations.getByName("jflex")
+  mainClass.set("jflex.Main")
+
+  val jflexSourceDir = file("src/main/jflex")
+  val jflexOutputDir = file("build/generated/sources/jflex")
+
+  inputs.dir(jflexSourceDir)
+  outputs.dir(jflexOutputDir)
+
+  doFirst {
+    jflexOutputDir.mkdirs()
+  }
+
+  args(
+    "-d", jflexOutputDir,
+    "--nobak",
+    "$jflexSourceDir/SqlSanitizer.jflex"
+  )
+}
+
+sourceSets {
+  main {
+    java.srcDir(generateJflex.map { it.outputs.files.singleFile })
+  }
+}
+
+tasks.compileJava {
+  dependsOn(generateJflex)
+}
+
 tasks {
   // exclude auto-generated code
   named<Checkstyle>("checkstyleMain") {
@@ -38,7 +81,11 @@ tasks {
   }
 
   sourcesJar {
-    dependsOn("generateJflex")
+    dependsOn(generateJflex)
+    // Avoid configuration cache issue by not capturing task reference
+    from("src/main/jflex") {
+      include("**/*.java")
+    }
   }
 
   val testStableSemconv by registering(Test::class) {
diff --git a/settings.gradle.kts b/settings.gradle.kts
index 4488c3620b13..7d7486b7e8d9 100644
--- a/settings.gradle.kts
+++ b/settings.gradle.kts
@@ -5,7 +5,6 @@ pluginManagement {
     id("com.gradle.plugin-publish") version "2.0.0"
     id("io.github.gradle-nexus.publish-plugin") version "2.0.0"
     id("org.jetbrains.kotlin.jvm") version "2.2.21"
-    id("org.xbib.gradle.plugin.jflex") version "3.0.2"
     id("com.github.bjornvester.xjc") version "1.8.2"
     id("org.graalvm.buildtools.native") version "0.11.2"
     id("com.google.osdetector") version "1.7.3"
diff --git a/testing/agent-for-testing/build.gradle.kts b/testing/agent-for-testing/build.gradle.kts
index d8c83986af5b..790d33203593 100644
--- a/testing/agent-for-testing/build.gradle.kts
+++ b/testing/agent-for-testing/build.gradle.kts
@@ -1,3 +1,5 @@
+import java.io.File
+
 plugins {
   id("otel.java-conventions")
   id("otel.publish-conventions")
@@ -16,6 +18,14 @@ val extensionLibs by configurations.creating {
   isCanBeConsumed = false
 }
 
+val agentJarFile = providers.provider { agent.singleFile }
+
+val agentManifestFile = agentJarFile.map { jarFile: File ->
+  zipTree(jarFile).matching {
+    include("META-INF/MANIFEST.MF")
+  }.singleFile
+}
+
 dependencies {
   extensionLibs(project(":testing:agent-exporter", configuration = "shadow"))
   agent(project(":javaagent", configuration = "baseJar"))
@@ -27,18 +37,12 @@ dependencies {
 tasks {
   jar {
     dependsOn(agent)
-    from(zipTree(agent.singleFile))
+  from(agentJarFile.map { jarFile: File -> zipTree(jarFile) })
     from(extensionLibs) {
       into("extensions")
     }
 
-    doFirst {
-      manifest.from(
-        zipTree(agent.singleFile).matching {
-          include("META-INF/MANIFEST.MF")
-        }.singleFile,
-      )
-    }
+    manifest.from(agentManifestFile)
   }
 
   afterEvaluate {