diff --git a/src/runtime/module_importer.js b/src/runtime/module_importer.js
index 0ee71f47..9732e022 100644
--- a/src/runtime/module_importer.js
+++ b/src/runtime/module_importer.js
@@ -1,5 +1,5 @@
 
-const { logDebug } = require("../utils");
+const { logDebug, updateDDTags } = require("../utils");
 
 // Currently no way to prevent typescript from auto-transpiling import into require,
 // so we expose a wrapper in js
@@ -12,11 +12,9 @@ exports.initTracer = function () {
     // the version provided by the layer
     const path = require.resolve("dd-trace", { paths: ["/var/task/node_modules", ...module.paths] });
     // tslint:disable-next-line:no-var-requires
-    const tracer = require(path).init({
-        tags: {
-            "_dd.origin": "lambda",
-        },
-    });
+    // add lambda tags to DD_TAGS environment variable
+    const ddtags = updateDDTags({"_dd.origin": "lambda"})
+    const tracer = require(path).init({tags: ddtags});
     logDebug("automatically initialized dd-trace");
 
     // Configure the tracer to ignore HTTP calls made from the Lambda Library to the Extension
diff --git a/src/utils/dd_tags.spec.ts b/src/utils/dd_tags.spec.ts
new file mode 100644
index 00000000..8b13ff73
--- /dev/null
+++ b/src/utils/dd_tags.spec.ts
@@ -0,0 +1,21 @@
+import { updateDDTags } from "./dd_tags";
+
+describe("updateDDTags", () => {
+  it("should work when updating an unset DD_TAGS", async () => {
+    expect(process.env.DD_TAGS).toBeUndefined();
+    const tags = updateDDTags({ hello: "world" });
+    expect(tags).toEqual({ hello: "world" });
+  });
+
+  it("should work when updating a valid DD_TAGS", async () => {
+    process.env.DD_TAGS = "datadog:bits";
+    const tags = updateDDTags({ hello: "world" });
+    expect(tags).toEqual({ datadog: "bits", hello: "world" });
+  });
+
+  it("should work when updating a valid DD_TAGS and comma at the end", async () => {
+    process.env.DD_TAGS = "datadog:bits,";
+    const tags = updateDDTags({ hello: "world" });
+    expect(tags).toEqual({ datadog: "bits", hello: "world" });
+  });
+});
diff --git a/src/utils/dd_tags.ts b/src/utils/dd_tags.ts
new file mode 100644
index 00000000..7a80e318
--- /dev/null
+++ b/src/utils/dd_tags.ts
@@ -0,0 +1,12 @@
+export function updateDDTags(newTags: Record<string, any> = {}): Record<string, any> {
+  const envTags = (process.env.DD_TAGS ?? "")
+    .split(",")
+    .filter((pair) => pair.includes(":"))
+    .reduce((acc: Record<string, any>, pair: string) => {
+      const [key, value] = pair.split(":");
+      if (key && value) acc[key] = value;
+      return acc;
+    }, {});
+
+  return { ...envTags, ...newTags };
+}
diff --git a/src/utils/index.ts b/src/utils/index.ts
index 58d6629e..2fde12fb 100644
--- a/src/utils/index.ts
+++ b/src/utils/index.ts
@@ -3,4 +3,5 @@ export { wrap, promisifiedHandler } from "./handler";
 export { Timer } from "./timer";
 export { logWarning, logError, logDebug, Logger, setLogLevel, setLogger, LogLevel } from "./log";
 export { tagObject } from "./tag-object";
+export { updateDDTags } from "./dd_tags";
 export { batchItemFailureCount, isBatchItemFailure } from "./batch-item-failures";