diff --git a/temporalio/contrib/opentelemetry.py b/temporalio/contrib/opentelemetry.py
index 380b666dc..04d40d544 100644
--- a/temporalio/contrib/opentelemetry.py
+++ b/temporalio/contrib/opentelemetry.py
@@ -25,6 +25,9 @@
 import opentelemetry.trace
 import opentelemetry.trace.propagation.tracecontext
 import opentelemetry.util.types
+from opentelemetry.context import Context
+from opentelemetry.trace import Span, SpanKind, Status, StatusCode, _Links
+from opentelemetry.util import types
 from typing_extensions import Protocol, TypeAlias, TypedDict
 
 import temporalio.activity
@@ -34,6 +37,7 @@
 import temporalio.exceptions
 import temporalio.worker
 import temporalio.workflow
+from temporalio.exceptions import ApplicationError, ApplicationErrorCategory
 
 # OpenTelemetry dynamically, lazily chooses its context implementation at
 # runtime. When first accessed, they use pkg_resources.iter_entry_points + load.
@@ -167,11 +171,31 @@ def _start_as_current_span(
         attributes: opentelemetry.util.types.Attributes,
         input: Optional[_InputWithHeaders] = None,
         kind: opentelemetry.trace.SpanKind,
+        context: Optional[Context] = None,
     ) -> Iterator[None]:
-        with self.tracer.start_as_current_span(name, attributes=attributes, kind=kind):
+        with self.tracer.start_as_current_span(
+            name,
+            attributes=attributes,
+            kind=kind,
+            context=context,
+            set_status_on_exception=False,
+        ) as span:
             if input:
                 input.headers = self._context_to_headers(input.headers)
-            yield None
+            try:
+                yield None
+            except Exception as exc:
+                if (
+                    not isinstance(exc, ApplicationError)
+                    or exc.category != ApplicationErrorCategory.BENIGN
+                ):
+                    span.set_status(
+                        Status(
+                            status_code=StatusCode.ERROR,
+                            description=f"{type(exc).__name__}: {exc}",
+                        )
+                    )
+                raise
 
     def _completed_workflow_span(
         self, params: _CompletedWorkflowSpanParams
@@ -282,7 +306,7 @@ async def execute_activity(
         self, input: temporalio.worker.ExecuteActivityInput
     ) -> Any:
         info = temporalio.activity.info()
-        with self.root.tracer.start_as_current_span(
+        with self.root._start_as_current_span(
             f"RunActivity:{info.activity_type}",
             context=self.root._context_from_headers(input.headers),
             attributes={
diff --git a/tests/contrib/test_opentelemetry.py b/tests/contrib/test_opentelemetry.py
index e42e6b977..0b797f606 100644
--- a/tests/contrib/test_opentelemetry.py
+++ b/tests/contrib/test_opentelemetry.py
@@ -3,6 +3,7 @@
 import asyncio
 import logging
 import uuid
+from concurrent.futures import ThreadPoolExecutor
 from dataclasses import dataclass
 from datetime import timedelta
 from typing import Iterable, List, Optional
@@ -10,13 +11,14 @@
 from opentelemetry.sdk.trace import ReadableSpan, TracerProvider
 from opentelemetry.sdk.trace.export import SimpleSpanProcessor
 from opentelemetry.sdk.trace.export.in_memory_span_exporter import InMemorySpanExporter
-from opentelemetry.trace import get_tracer
+from opentelemetry.trace import StatusCode, get_tracer
 
 from temporalio import activity, workflow
 from temporalio.client import Client
 from temporalio.common import RetryPolicy
 from temporalio.contrib.opentelemetry import TracingInterceptor
 from temporalio.contrib.opentelemetry import workflow as otel_workflow
+from temporalio.exceptions import ApplicationError, ApplicationErrorCategory
 from temporalio.testing import WorkflowEnvironment
 from temporalio.worker import UnsandboxedWorkflowRunner, Worker
 
@@ -386,6 +388,60 @@ async def test_opentelemetry_always_create_workflow_spans(client: Client):
     assert spans[0].name == "RunWorkflow:SimpleWorkflow"
 
 
+attempted = False
+
+
+@activity.defn
+def benign_activity() -> str:
+    global attempted
+    if attempted:
+        return "done"
+    attempted = True
+    raise ApplicationError(
+        category=ApplicationErrorCategory.BENIGN, message="Benign Error"
+    )
+
+
+@workflow.defn
+class BenignWorkflow:
+    @workflow.run
+    async def run(self) -> str:
+        return await workflow.execute_activity(
+            benign_activity, schedule_to_close_timeout=timedelta(seconds=1)
+        )
+
+
+async def test_opentelemetry_benign_exception(client: Client):
+    # Create a tracer that has an in-memory exporter
+    exporter = InMemorySpanExporter()
+    provider = TracerProvider()
+    provider.add_span_processor(SimpleSpanProcessor(exporter))
+    tracer = get_tracer(__name__, tracer_provider=provider)
+
+    # Create new client with tracer interceptor
+    client_config = client.config()
+    client_config["interceptors"] = [TracingInterceptor(tracer)]
+    client = Client(**client_config)
+
+    async with Worker(
+        client,
+        task_queue=f"task_queue_{uuid.uuid4()}",
+        workflows=[BenignWorkflow],
+        activities=[benign_activity],
+        activity_executor=ThreadPoolExecutor(max_workers=1),
+    ) as worker:
+        assert "done" == await client.execute_workflow(
+            BenignWorkflow.run,
+            id=f"workflow_{uuid.uuid4()}",
+            task_queue=worker.task_queue,
+            retry_policy=RetryPolicy(
+                maximum_attempts=2, initial_interval=timedelta(milliseconds=10)
+            ),
+        )
+    spans = exporter.get_finished_spans()
+    assert all(span.status.status_code == StatusCode.UNSET for span in spans)
+
+
 # TODO(cretz): Additional tests to write
 # * query without interceptor (no headers)
 # * workflow without interceptor (no headers) but query with interceptor (headers)