diff --git a/azure_functions_worker/dispatcher.py b/azure_functions_worker/dispatcher.py
index 84bf79f3..3692a206 100644
--- a/azure_functions_worker/dispatcher.py
+++ b/azure_functions_worker/dispatcher.py
@@ -32,6 +32,8 @@
     PYTHON_ENABLE_INIT_INDEXING,
     PYTHON_APPLICATIONINSIGHTS_ENABLE_TELEMETRY,
     PYTHON_APPLICATIONINSIGHTS_ENABLE_TELEMETRY_DEFAULT,
+    PYTHON_ENABLE_OPENTELEMETRY,
+    PYTHON_ENABLE_OPENTELEMETRY_DEFAULT,
     PYTHON_LANGUAGE_RUNTIME,
     PYTHON_ROLLBACK_CWD_PATH,
     PYTHON_SCRIPT_FILE_NAME,
@@ -385,11 +387,19 @@ async def _handle__worker_init_request(self, request):
         }
 
         opentelemetry_app_setting = get_app_setting(
+            setting=PYTHON_ENABLE_OPENTELEMETRY,
+            default_value=PYTHON_ENABLE_OPENTELEMETRY_DEFAULT,
+        )
+
+        appinsights_app_setting = get_app_setting(
             setting=PYTHON_APPLICATIONINSIGHTS_ENABLE_TELEMETRY,
             default_value=PYTHON_APPLICATIONINSIGHTS_ENABLE_TELEMETRY_DEFAULT,
         )
-        if opentelemetry_app_setting and  opentelemetry_app_setting.lower() == "true":
+        if appinsights_app_setting and appinsights_app_setting.lower() == "true":
             self.initialize_azure_monitor()
+        
+        if opentelemetry_app_setting and opentelemetry_app_setting.lower() == "true":
+            self._otel_libs_available = True
 
         if self._azure_monitor_available or self._otel_libs_available:
             capabilities[constants.WORKER_OPEN_TELEMETRY_ENABLED] = _TRUE
@@ -785,6 +795,10 @@ async def _handle__function_environment_reload_request(self, request):
             bindings.load_binding_registry()
 
             capabilities = {}
+            if get_app_setting(
+                    setting=PYTHON_ENABLE_OPENTELEMETRY,
+                    default_value=PYTHON_ENABLE_OPENTELEMETRY_DEFAULT):
+                self._otel_libs_available = True
             if get_app_setting(
                     setting=PYTHON_APPLICATIONINSIGHTS_ENABLE_TELEMETRY,
                     default_value=PYTHON_APPLICATIONINSIGHTS_ENABLE_TELEMETRY_DEFAULT):
diff --git a/tests/unittests/test_opentelemetry.py b/tests/unittests/test_opentelemetry.py
index 883406ea..b7fd318a 100644
--- a/tests/unittests/test_opentelemetry.py
+++ b/tests/unittests/test_opentelemetry.py
@@ -143,3 +143,76 @@ def test_init_request_initialize_azure_monitor_disabled_app_setting(
         # Verify that WorkerOpenTelemetryEnabled capability is not set
         capabilities = init_response.worker_init_response.capabilities
         self.assertNotIn("WorkerOpenTelemetryEnabled", capabilities)
+
+    @patch.dict(os.environ, {'PYTHON_ENABLE_OPENTELEMETRY': 'true'})
+    def test_init_request_enable_opentelemetry_enabled_app_setting(
+        self,
+    ):
+
+        init_request = protos.StreamingMessage(
+            worker_init_request=protos.WorkerInitRequest(
+                host_version="2.3.4",
+                function_app_directory=str(FUNCTION_APP_DIRECTORY)
+            )
+        )
+
+        init_response = self.loop.run_until_complete(
+            self.dispatcher._handle__worker_init_request(init_request))
+
+        self.assertEqual(init_response.worker_init_response.result.status,
+                         protos.StatusResult.Success)
+
+        # Verify otel_libs_available is set to True
+        self.assertTrue(self.dispatcher._otel_libs_available)
+        # Verify that WorkerOpenTelemetryEnabled capability is set to _TRUE
+        capabilities = init_response.worker_init_response.capabilities
+        self.assertIn("WorkerOpenTelemetryEnabled", capabilities)
+        self.assertEqual(capabilities["WorkerOpenTelemetryEnabled"], "true")
+
+    @patch.dict(os.environ, {})
+    def test_init_request_enable_opentelemetry_default_app_setting(
+        self,
+    ):
+
+        init_request = protos.StreamingMessage(
+            worker_init_request=protos.WorkerInitRequest(
+                host_version="2.3.4",
+                function_app_directory=str(FUNCTION_APP_DIRECTORY)
+            )
+        )
+
+        init_response = self.loop.run_until_complete(
+            self.dispatcher._handle__worker_init_request(init_request))
+
+        self.assertEqual(init_response.worker_init_response.result.status,
+                         protos.StatusResult.Success)
+
+        # Verify otel_libs_available is set to False by default
+        self.assertFalse(self.dispatcher._otel_libs_available)
+        # Verify that WorkerOpenTelemetryEnabled capability is not set
+        capabilities = init_response.worker_init_response.capabilities
+        self.assertNotIn("WorkerOpenTelemetryEnabled", capabilities)
+
+    @patch.dict(os.environ, {'PYTHON_APPLICATIONINSIGHTS_ENABLE_TELEMETRY': 'false'})
+    def test_init_request_initialize_azure_monitor_disabled_app_setting(
+        self,
+    ):
+
+        init_request = protos.StreamingMessage(
+            worker_init_request=protos.WorkerInitRequest(
+                host_version="2.3.4",
+                function_app_directory=str(FUNCTION_APP_DIRECTORY)
+            )
+        )
+
+        init_response = self.loop.run_until_complete(
+            self.dispatcher._handle__worker_init_request(init_request))
+
+        self.assertEqual(init_response.worker_init_response.result.status,
+                         protos.StatusResult.Success)
+
+        # Verify otel_libs_available is set to False by default
+        self.assertFalse(self.dispatcher._otel_libs_available)
+        # Verify that WorkerOpenTelemetryEnabled capability is not set
+        capabilities = init_response.worker_init_response.capabilities
+        self.assertNotIn("WorkerOpenTelemetryEnabled", capabilities)