diff --git a/.github/workflows/release.yaml b/.github/workflows/release.yaml
index f49ba62..b544851 100644
--- a/.github/workflows/release.yaml
+++ b/.github/workflows/release.yaml
@@ -772,6 +772,10 @@ jobs:
           mkdir -p "${GENERATED_DIR}"
           envsubst '$REPO_NAME' < templates/.Dockerfile-lambda-template.tmpl | tee "${GENERATED_DIR}/Dockerfile.lambda"
           envsubst < templates/.goreleaser-docker-lambda-template.yaml.tmpl | tee "${GENERATED_DIR}/.goreleaser.lambda.yaml"
+          # Copy collector config into caller repo for GoReleaser extra_files.
+          # Exclude from git to avoid dirty working tree detection.
+          cp collector.yaml ../_caller/collector.yaml
+          echo "collector.yaml" >> ../_caller/.git/info/exclude
 
       - name: Docker Login
         if: inputs.docker == true
diff --git a/collector.yaml b/collector.yaml
new file mode 100644
index 0000000..256b6e1
--- /dev/null
+++ b/collector.yaml
@@ -0,0 +1,29 @@
+# OpenTelemetry Collector configuration for Lambda connector extensions.
+# The collector runs as a Lambda extension process, receiving telemetry from
+# the connector via OTLP on localhost and forwarding it to the central
+# collector before Lambda freezes or shuts down the execution environment.
+receivers:
+  otlp:
+    protocols:
+      grpc:
+        endpoint: localhost:4317
+      http:
+        endpoint: localhost:4318
+
+exporters:
+  otlp:
+    endpoint: otel-collector:4317
+    tls:
+      insecure_skip_verify: true
+
+service:
+  pipelines:
+    traces:
+      receivers: [otlp]
+      exporters: [otlp]
+    metrics:
+      receivers: [otlp]
+      exporters: [otlp]
+    logs:
+      receivers: [otlp]
+      exporters: [otlp]
diff --git a/templates/.Dockerfile-lambda-template.tmpl b/templates/.Dockerfile-lambda-template.tmpl
index 241fe5d..1f5faa9 100644
--- a/templates/.Dockerfile-lambda-template.tmpl
+++ b/templates/.Dockerfile-lambda-template.tmpl
@@ -1,3 +1,16 @@
+# Stage 1: Download and unpack the OpenTelemetry Collector Lambda extension
+# https://github.com/open-telemetry/opentelemetry-lambda/tree/main/collector
+FROM amazonlinux:2023 AS otel-layer
+RUN yum install -y unzip && yum clean all
+ADD https://github.com/open-telemetry/opentelemetry-lambda/releases/download/layer-collector%2F0.20.0/opentelemetry-collector-layer-arm64.zip /tmp/otel-layer.zip
+RUN unzip /tmp/otel-layer.zip -d /otel && \
+    chmod +x /otel/extensions/collector && \
+    rm -f /tmp/otel-layer.zip
+
+# Stage 2: Final Lambda image with connector binary + OTel collector extension
 FROM public.ecr.aws/lambda/provided:al2023
+COPY ${REPO_NAME} /${REPO_NAME}
+COPY --from=otel-layer /otel/extensions/collector /opt/extensions/collector
+COPY collector.yaml /var/task/collector.yaml
+ENV OPENTELEMETRY_COLLECTOR_CONFIG_URI=/var/task/collector.yaml
 ENTRYPOINT ["/${REPO_NAME}", "lambda"]
-COPY ${REPO_NAME} /${REPO_NAME}
\ No newline at end of file
diff --git a/templates/.goreleaser-docker-lambda-template.yaml.tmpl b/templates/.goreleaser-docker-lambda-template.yaml.tmpl
index 9376a81..091d17c 100644
--- a/templates/.goreleaser-docker-lambda-template.yaml.tmpl
+++ b/templates/.goreleaser-docker-lambda-template.yaml.tmpl
@@ -25,6 +25,8 @@ dockers:
     dockerfile: ${DOCKERFILE_LAMBDA_PATH}
     image_templates:
       - "168442440833.dkr.ecr.us-west-2.amazonaws.com/${REPO_NAME}:{{ .Version }}-arm64"
+    extra_files:
+      - collector.yaml
     build_flag_templates:
       - "--platform=linux/arm64"
       - "--label=org.opencontainers.image.created={{.Date}}"