diff --git a/exporters/sender/okhttp/src/main/java/io/opentelemetry/exporter/sender/okhttp/internal/OkHttpUtil.java b/exporters/sender/okhttp/src/main/java/io/opentelemetry/exporter/sender/okhttp/internal/OkHttpUtil.java
index b641d1bad05..1a6202070b6 100644
--- a/exporters/sender/okhttp/src/main/java/io/opentelemetry/exporter/sender/okhttp/internal/OkHttpUtil.java
+++ b/exporters/sender/okhttp/src/main/java/io/opentelemetry/exporter/sender/okhttp/internal/OkHttpUtil.java
@@ -5,7 +5,9 @@
 
 package io.opentelemetry.exporter.sender.okhttp.internal;
 
+import io.opentelemetry.context.Context;
 import io.opentelemetry.sdk.internal.DaemonThreadFactory;
+import java.util.concurrent.Executors;
 import java.util.concurrent.SynchronousQueue;
 import java.util.concurrent.ThreadPoolExecutor;
 import java.util.concurrent.TimeUnit;
@@ -35,7 +37,15 @@ public static Dispatcher newDispatcher() {
             60,
             TimeUnit.SECONDS,
             new SynchronousQueue<>(),
-            new DaemonThreadFactory("okhttp-dispatch", propagateContextForTestingInDispatcher)));
+            createThreadFactory("okhttp-dispatch")));
+  }
+
+  private static DaemonThreadFactory createThreadFactory(String namePrefix) {
+    if (propagateContextForTestingInDispatcher) {
+      return new DaemonThreadFactory(
+          namePrefix, r -> Executors.defaultThreadFactory().newThread(Context.current().wrap(r)));
+    }
+    return new DaemonThreadFactory(namePrefix);
   }
 
   private OkHttpUtil() {}
diff --git a/sdk/common/src/main/java/io/opentelemetry/sdk/internal/DaemonThreadFactory.java b/sdk/common/src/main/java/io/opentelemetry/sdk/internal/DaemonThreadFactory.java
index e8f75abe40f..a4e0fad06a8 100644
--- a/sdk/common/src/main/java/io/opentelemetry/sdk/internal/DaemonThreadFactory.java
+++ b/sdk/common/src/main/java/io/opentelemetry/sdk/internal/DaemonThreadFactory.java
@@ -5,10 +5,10 @@
 
 package io.opentelemetry.sdk.internal;
 
-import io.opentelemetry.context.Context;
 import java.util.concurrent.Executors;
 import java.util.concurrent.ThreadFactory;
 import java.util.concurrent.atomic.AtomicInteger;
+import javax.annotation.Nullable;
 
 /**
  * A {@link ThreadFactory} that delegates to {@code Executors.defaultThreadFactory()} and marks all
@@ -20,31 +20,28 @@
 public final class DaemonThreadFactory implements ThreadFactory {
   private final String namePrefix;
   private final AtomicInteger counter = new AtomicInteger();
-  private final ThreadFactory delegate = Executors.defaultThreadFactory();
-  private final boolean propagateContextForTesting;
+  private final ThreadFactory delegate;
 
   public DaemonThreadFactory(String namePrefix) {
-    this(namePrefix, /* propagateContextForTesting= */ false);
+    this(namePrefix, Executors.defaultThreadFactory());
   }
 
   /**
    * {@link DaemonThreadFactory}'s constructor.
    *
    * @param namePrefix Used when setting the new thread's name.
-   * @param propagateContextForTesting For tests only. When enabled, the current thread's {@link
-   *     Context} will be passed over to the new threads, this is useful for validating scenarios
-   *     where context propagation is available through bytecode instrumentation.
+   * @param delegate Delegate to create threads.
    */
-  public DaemonThreadFactory(String namePrefix, boolean propagateContextForTesting) {
+  public DaemonThreadFactory(String namePrefix, ThreadFactory delegate) {
     this.namePrefix = namePrefix;
-    this.propagateContextForTesting = propagateContextForTesting;
+    this.delegate = delegate;
   }
 
   @Override
   public Thread newThread(Runnable runnable) {
-    Thread t =
-        delegate.newThread(
-            propagateContextForTesting ? Context.current().wrap(runnable) : runnable);
+    Thread t = delegate.newThread(runnable);
+    t.setUncaughtExceptionHandler(
+        new ManagedUncaughtExceptionHandler(t.getUncaughtExceptionHandler()));
     try {
       t.setDaemon(true);
       t.setName(namePrefix + "-" + counter.incrementAndGet());
@@ -53,4 +50,22 @@ public Thread newThread(Runnable runnable) {
     }
     return t;
   }
+
+  static class ManagedUncaughtExceptionHandler implements Thread.UncaughtExceptionHandler {
+    @Nullable private final Thread.UncaughtExceptionHandler delegate;
+
+    private ManagedUncaughtExceptionHandler(@Nullable Thread.UncaughtExceptionHandler delegate) {
+      this.delegate = delegate;
+    }
+
+    @SuppressWarnings("Interruption")
+    @Override
+    public void uncaughtException(Thread t, Throwable e) {
+      if (e instanceof InterruptedException) {
+        t.interrupt();
+      } else if (delegate != null) {
+        delegate.uncaughtException(t, e);
+      }
+    }
+  }
 }
diff --git a/sdk/common/src/test/java/io/opentelemetry/sdk/internal/DaemonThreadFactoryTest.java b/sdk/common/src/test/java/io/opentelemetry/sdk/internal/DaemonThreadFactoryTest.java
new file mode 100644
index 00000000000..d73c8211d99
--- /dev/null
+++ b/sdk/common/src/test/java/io/opentelemetry/sdk/internal/DaemonThreadFactoryTest.java
@@ -0,0 +1,62 @@
+/*
+ * Copyright The OpenTelemetry Authors
+ * SPDX-License-Identifier: Apache-2.0
+ */
+
+package io.opentelemetry.sdk.internal;
+
+import static org.assertj.core.api.Assertions.assertThat;
+import static org.mockito.Mockito.clearInvocations;
+import static org.mockito.Mockito.mock;
+import static org.mockito.Mockito.verify;
+import static org.mockito.Mockito.verifyNoInteractions;
+
+import java.util.concurrent.Callable;
+import java.util.concurrent.ExecutionException;
+import java.util.concurrent.ExecutorService;
+import java.util.concurrent.Executors;
+import java.util.concurrent.ThreadFactory;
+import java.util.concurrent.TimeUnit;
+import java.util.concurrent.TimeoutException;
+import org.junit.jupiter.api.Test;
+
+class DaemonThreadFactoryTest {
+
+  @Test
+  void verifyUncaughtExceptions()
+      throws ExecutionException, InterruptedException, TimeoutException {
+    Thread.UncaughtExceptionHandler defaultHandler = mock();
+    ThreadFactory delegateFactory =
+        r -> {
+          Thread thread = Executors.defaultThreadFactory().newThread(r);
+          thread.setUncaughtExceptionHandler(defaultHandler);
+          return thread;
+        };
+    ExecutorService service =
+        Executors.newSingleThreadExecutor(new DaemonThreadFactory("test", delegateFactory));
+    Callable<Boolean> callable =
+        () -> {
+          Thread.UncaughtExceptionHandler uncaughtExceptionHandler =
+              Thread.currentThread().getUncaughtExceptionHandler();
+
+          assertThat(uncaughtExceptionHandler)
+              .isInstanceOf(DaemonThreadFactory.ManagedUncaughtExceptionHandler.class);
+
+          Thread threadMock = mock();
+
+          // Verify interrupted exception
+          uncaughtExceptionHandler.uncaughtException(threadMock, new InterruptedException());
+          verify(threadMock).interrupt();
+          verifyNoInteractions(defaultHandler);
+
+          // Verify delegate exception
+          clearInvocations(threadMock, defaultHandler);
+          IllegalStateException e = new IllegalStateException();
+          uncaughtExceptionHandler.uncaughtException(threadMock, e);
+          verify(defaultHandler).uncaughtException(threadMock, e);
+          return true;
+        };
+
+    assertThat(service.submit(callable).get(5, TimeUnit.SECONDS)).isTrue();
+  }
+}