diff --git a/CHANGELOG.md b/CHANGELOG.md
index e63dbe10c..55d7cf5a7 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -11,6 +11,10 @@ and this project adheres to [Semantic Versioning](http://semver.org/).
 
 - Fixed 3scale Batcher policy unable to handle `app_id`/`access_token` contains special characters [PR #1457](https://github.com/3scale/APIcast/pull/1457) [THREESCALE-10934](https://issues.redhat.com/browse/THREESCALE-10934)
 
+### Added
+
+- Introduce `transaction_id` policy [PR #1460](https://github.com/3scale/APIcast/pull/1460) [THREESCALE-10973](https://issues.redhat.com/browse/THREESCALE-10973)
+
 ## [3.15.0] 2024-04-04
 
 ### Fixed
diff --git a/gateway/src/apicast/policy/transaction_id/README.md b/gateway/src/apicast/policy/transaction_id/README.md
new file mode 100644
index 000000000..dda7697d7
--- /dev/null
+++ b/gateway/src/apicast/policy/transaction_id/README.md
@@ -0,0 +1,65 @@
+# APICast Transaction-ID
+
+## Description
+
+When enabled this policy adds a new header with unique ID to all of the request processed by APIcast. The unique ID header can also be included in the response to the client.
+
+If the header is empty or non-existent, this policy will generate a UUID as the value of the user-defined header name
+
+If a header with the same name is already present in the client request or upstream response, the policy will not modify it.
+
+## Example configuration
+
+* Add request unique ID
+```
+"policy_chain": [
+    {
+        "name": "transaction_id",
+        "configuration": {
+            "header_name": "X-Transaction-ID"
+        },
+        "version": "builtin",
+    },
+    {
+      "name": "apicast.policy.apicast"
+    }
+]
+```
+
+* Include the header in response
+```
+"policy_chain": [
+    {
+        "name": "transaction_id",
+        "configuration": {
+            "header_name": "X-Transaction-ID",
+            "include_in_response": true
+        },
+        "version": "builtin",
+    },
+    {
+      "name": "apicast.policy.apicast"
+    }
+]
+```
+
+* Use with Logging policy
+
+```
+"policy_chain": [
+    {
+        "name": "transaction_id",
+        "configuration": {
+            "header_name": "X-Transaction-ID"
+        },
+        "version": "builtin",
+    },
+    {
+      "name": "apicast.policy.logging",
+      "configuration": {
+        "enable_access_logs": false,
+        "custom_logging": "\"{{request}}\" to service {{service.id}} and {{service.name}} with ID {{req.headers.X-Transaction-ID}}",
+      }
+    }
+]
+```
diff --git a/gateway/src/apicast/policy/transaction_id/apicast-policy.json b/gateway/src/apicast/policy/transaction_id/apicast-policy.json
new file mode 100644
index 000000000..56ba32009
--- /dev/null
+++ b/gateway/src/apicast/policy/transaction_id/apicast-policy.json
@@ -0,0 +1,24 @@
+{
+  "$schema": "http://apicast.io/policy-v1/schema#manifest#",
+  "name": "Transaction ID",
+  "summary": "Add unique ID to the request/response header",
+  "description": ["This policy adds a unique ID to each request and response header proxied through APIcast",
+  "The policy will not add a unique ID if the request/response already has a header with the configured header_name."
+  ],
+  "version": "builtin",
+  "configuration": {
+    "type": "object",
+    "properties": {
+      "header_name": {
+        "type": "string",
+        "description": "The HTTP header name to use for the transaction IDs",
+        "default": "X-Transaction-ID"
+      },
+      "include_in_response": {
+        "type": "boolean",
+        "description": "Whether to include the header to the response",
+        "default": false
+      }
+    }
+  }
+}
diff --git a/gateway/src/apicast/policy/transaction_id/init.lua b/gateway/src/apicast/policy/transaction_id/init.lua
new file mode 100644
index 000000000..80700fe47
--- /dev/null
+++ b/gateway/src/apicast/policy/transaction_id/init.lua
@@ -0,0 +1 @@
+return require('transaction_id')
diff --git a/gateway/src/apicast/policy/transaction_id/transaction_id.lua b/gateway/src/apicast/policy/transaction_id/transaction_id.lua
new file mode 100644
index 000000000..0048ac831
--- /dev/null
+++ b/gateway/src/apicast/policy/transaction_id/transaction_id.lua
@@ -0,0 +1,46 @@
+--- Transaction ID policy
+-- This policy add a uniqud ID to the user defined header. This can help to identify
+-- request from access log or the trace
+
+local policy = require('apicast.policy')
+local _M = policy.new('Transaction ID', 'builtin')
+
+local uuid = require 'resty.jit-uuid'
+
+local new = _M.new
+
+function _M.new(config)
+  local self = new(config)
+  local conf = config or {}
+  self.header_name = conf.header_name
+  self.include_in_response = conf.include_in_response or false
+
+  return self
+end
+
+function _M:rewrite(context)
+  local transaction_id = ngx.req.get_headers()[self.header_name]
+
+  if not transaction_id or transaction_id == "" then
+    transaction_id = uuid.generate_v4()
+    ngx.req.set_header(self.header_name, transaction_id)
+  end
+
+  if self.include_in_response then
+    context.transaction_id = transaction_id
+  end
+end
+
+function _M:header_filter(context)
+  if not self.include_in_response then
+    return
+  end
+
+  local transaction_id = ngx.resp.get_headers()[self.header_name]
+  if not transaction_id or transaction_id == "" then
+    transaction_id = context.transaction_id
+  end
+  ngx.header[self.header_name] = transaction_id
+end
+
+return _M
diff --git a/spec/policy/transaction_id/transaction_id_spec.lua b/spec/policy/transaction_id/transaction_id_spec.lua
new file mode 100644
index 000000000..a10b8bfee
--- /dev/null
+++ b/spec/policy/transaction_id/transaction_id_spec.lua
@@ -0,0 +1,80 @@
+local TransactionIDPolicy = require('apicast.policy.transaction_id')
+local uuid = require('resty.jit-uuid')
+
+describe('fapi_1_baseline_profile policy', function()
+    local ngx_req_headers = {}
+    local ngx_resp_headers = {}
+    local context = {}
+    before_each(function()
+        ngx.header = {}
+        ngx_req_headers = {}
+        ngx_resp_headers = {}
+        context = {}
+        stub(ngx.req, 'get_headers', function() return ngx_req_headers end)
+        stub(ngx.req, 'set_header', function(name, value) ngx_req_headers[name] = value end)
+        stub(ngx.resp, 'get_headers', function() return ngx_resp_headers end)
+        stub(ngx.resp, 'set_header', function(name, value) ngx_resp_headers[name] = value end)
+    end)
+
+  describe('.new', function()
+    it('works without configuration', function()
+      assert(TransactionIDPolicy.new())
+    end)
+  end)
+
+  describe('.rewrite', function()
+    it('do not overwrite existing header', function()
+        ngx_req_headers['transaction-id'] = 'abc'
+        local config = {header_name='transaction-id'}
+        local transaction_id_policy = TransactionIDPolicy.new(config)
+        transaction_id_policy:rewrite()
+        assert.same('abc', ngx.req.get_headers()['transaction-id'])
+    end)
+
+    it('generate uuid if header does not exist', function()
+        local config = {header_name='transaction-id'}
+        local transaction_id_policy = TransactionIDPolicy.new(config)
+        transaction_id_policy:rewrite()
+        assert.is_true(uuid.is_valid(ngx.req.get_headers()['transaction-id']))
+    end)
+
+    it('generate uuid if header is empty', function()
+        ngx_req_headers['transaction-id'] = ''
+        local config = {header_name='transaction-id'}
+        local transaction_id_policy = TransactionIDPolicy.new(config)
+        transaction_id_policy:rewrite()
+        assert.is_true(uuid.is_valid(ngx.req.get_headers()['transaction-id']))
+    end)
+  end)
+
+  describe('.header_filter', function()
+    it('set response transaction-id if configured', function()
+        ngx_req_headers['transaction-id'] = 'abc'
+        local config = {header_name='transaction-id', include_in_response=true}
+        local transaction_id_policy = TransactionIDPolicy.new(config)
+        transaction_id_policy:rewrite(context)
+        transaction_id_policy:header_filter(context)
+        assert.same('abc', ngx.header['transaction-id'])
+    end)
+
+    it('set response transaction-id if configured - uuid', function()
+        ngx_req_headers['transaction-id'] = ''
+        local config = {header_name='transaction-id', include_in_response=true}
+        local transaction_id_policy = TransactionIDPolicy.new(config)
+        transaction_id_policy:rewrite(context)
+        local id = ngx.req.get_headers()['transaction-id']
+        transaction_id_policy:header_filter(context)
+        assert.same(id, ngx.header['transaction-id'])
+    end)
+
+    it('do not override if response contain the exisitng header', function()
+        ngx_req_headers['transaction-id'] = 'abc'
+        ngx_resp_headers['transaction-id'] = 'edf'
+        local config = {header_name='transaction-id', include_in_response=true}
+        local transaction_id_policy = TransactionIDPolicy.new(config)
+        transaction_id_policy:rewrite(context)
+        transaction_id_policy:header_filter(context)
+        assert.same('edf', ngx.header['transaction-id'])
+    end)
+  end)
+end)
diff --git a/t/apicast-policy-transaction-id.t b/t/apicast-policy-transaction-id.t
new file mode 100644
index 000000000..1fed4fa5c
--- /dev/null
+++ b/t/apicast-policy-transaction-id.t
@@ -0,0 +1,285 @@
+use lib 't';
+use Test::APIcast::Blackbox 'no_plan';
+
+# Test::Nginx does not allow to grep access logs, so we redirect them to
+# stderr to be able to use "grep_error_log" by setting APICAST_ACCESS_LOG_FILE
+$ENV{APICAST_ACCESS_LOG_FILE} = "$Test::Nginx::Util::ErrLogFile";
+
+run_tests();
+
+__DATA__
+
+=== TEST 1: Enables transaction-id policy and generate uuid if the header is not
+present in the client request
+--- configuration
+{
+  "services": [
+    {
+      "id": 42,
+      "backend_version":  1,
+      "backend_authentication_type": "service_token",
+      "backend_authentication_value": "token-value",
+      "proxy": {
+        "api_backend": "http://test:$TEST_NGINX_SERVER_PORT/",
+        "proxy_rules": [
+          { "pattern": "/", "http_method": "GET", "metric_system_name": "hits", "delta": 1 }
+        ],
+        "policy_chain": [
+          {
+            "name": "apicast.policy.transaction_id",
+            "configuration": {
+                "header_name": "X-Transaction-ID"
+            }
+          },
+          {
+            "name": "apicast.policy.apicast"
+          }
+        ]
+      }
+    }
+  ]
+}
+
+--- backend
+  location /transactions/authrep.xml {
+    content_by_lua_block {
+        ngx.exit(200)
+    }
+  }
+--- upstream
+  location / {
+     content_by_lua_block {
+       local assert = require('luassert')
+       local uuid = require('resty.jit-uuid')
+       assert.is_true(uuid.is_valid(ngx.req.get_headers()['X-Transaction-ID']))
+     }
+  }
+--- request
+GET /?user_key=value
+--- error_code: 200
+--- no_error_log
+[error]
+
+
+
+=== TEST 2: Respect header from the original request
+--- configuration
+{
+  "services": [
+    {
+      "id": 42,
+      "backend_version":  1,
+      "backend_authentication_type": "service_token",
+      "backend_authentication_value": "token-value",
+      "proxy": {
+        "api_backend": "http://test:$TEST_NGINX_SERVER_PORT/",
+        "proxy_rules": [
+          { "pattern": "/", "http_method": "GET", "metric_system_name": "hits", "delta": 1 }
+        ],
+        "policy_chain": [
+          {
+            "name": "apicast.policy.transaction_id",
+            "configuration": {
+                "header_name": "x-transaction-id"
+            }
+          },
+          {
+            "name": "apicast.policy.apicast"
+          }
+        ]
+      }
+    }
+  ]
+}
+
+--- backend
+  location /transactions/authrep.xml {
+    content_by_lua_block {
+        ngx.exit(200)
+    }
+  }
+--- upstream
+  location / {
+     content_by_lua_block {
+       local assert = require('luassert')
+       local id = ngx.req.get_headers()['X-Transaction-ID']
+       assert.equal('blah', id)
+     }
+  }
+--- more_headers
+X-Transaction-ID: blah
+--- request
+GET /?user_key=value
+--- error_code: 200
+--- no_error_log
+[error]
+
+
+
+=== TEST 3: Also set the response header
+--- configuration
+{
+  "services": [
+    {
+      "id": 42,
+      "backend_version":  1,
+      "backend_authentication_type": "service_token",
+      "backend_authentication_value": "token-value",
+      "proxy": {
+        "api_backend": "http://test:$TEST_NGINX_SERVER_PORT/",
+        "proxy_rules": [
+          { "pattern": "/", "http_method": "GET", "metric_system_name": "hits", "delta": 1 }
+        ],
+        "policy_chain": [
+          {
+            "name": "apicast.policy.transaction_id",
+            "configuration": {
+                "header_name": "x-transaction-id",
+                "include_in_response": true
+            }
+          },
+          {
+            "name": "apicast.policy.apicast"
+          }
+        ]
+      }
+    }
+  ]
+}
+
+--- backend
+  location /transactions/authrep.xml {
+    content_by_lua_block {
+        ngx.exit(200)
+    }
+  }
+--- upstream
+  location / {
+     content_by_lua_block {
+       local assert = require('luassert')
+       local id = ngx.req.get_headers()['X-Transaction-ID']
+       assert.equal('blah', id)
+     }
+  }
+--- more_headers
+X-Transaction-ID: blah
+--- request
+GET /?user_key=value
+--- response_headers
+X-Transaction-ID: blah
+--- error_code: 200
+--- no_error_log
+[error]
+
+
+
+=== TEST 4: respect the response header from upstream
+--- configuration
+{
+  "services": [
+    {
+      "id": 42,
+      "backend_version":  1,
+      "backend_authentication_type": "service_token",
+      "backend_authentication_value": "token-value",
+      "proxy": {
+        "api_backend": "http://test:$TEST_NGINX_SERVER_PORT/",
+        "proxy_rules": [
+          { "pattern": "/", "http_method": "GET", "metric_system_name": "hits", "delta": 1 }
+        ],
+        "policy_chain": [
+          {
+            "name": "apicast.policy.transaction_id",
+            "configuration": {
+                "header_name": "x-transaction-id",
+                "include_in_response": true
+            }
+          },
+          {
+            "name": "apicast.policy.apicast"
+          }
+        ]
+      }
+    }
+  ]
+}
+
+--- backend
+  location /transactions/authrep.xml {
+    content_by_lua_block {
+        ngx.exit(200)
+    }
+  }
+--- upstream
+  location / {
+     content_by_lua_block {
+       local assert = require('luassert')
+       ngx.header['X-Transaction-ID'] = "foo"
+     }
+  }
+--- more_headers
+X-Transaction-ID: blah
+--- request
+GET /?user_key=value
+--- response_headers
+X-Transaction-ID: foo
+--- error_code: 200
+--- no_error_log
+[error]
+
+
+
+=== TEST 5: work with Logging policy and custom access log format
+--- configuration
+{
+  "services": [
+    {
+      "id": 42,
+      "proxy": {
+        "policy_chain": [
+          {
+            "name": "apicast.policy.transaction_id",
+            "configuration": {
+                "header_name": "x-transaction-id",
+                "include_in_response": true
+            }
+          },
+          {
+            "name": "apicast.policy.logging",
+            "configuration": {
+                "custom_logging": "Status::{{ status }} Request-Transaction-ID::{{ req.headers.X-Transaction-ID }} Response-Transaction-ID::{{ resp.headers.X-Transaction-ID }}"
+            }
+          },
+          {
+            "name": "apicast.policy.upstream",
+            "configuration":
+              {
+                "rules": [ { "regex": "/", "url": "http://echo" } ]
+              }
+          }
+        ]
+      }
+    }
+  ]
+}
+--- backend
+  location /transactions/authrep.xml {
+    content_by_lua_block {
+        ngx.exit(200)
+    }
+  }
+--- upstream
+  location / {
+     content_by_lua_block {
+        ngx.say("yay")
+     }
+  }
+--- more_headers
+X-Transaction-ID: blah
+--- request
+GET /?user_key=value
+--- error_code: 200
+--- error_log eval
+[ qr/^Status\:\:200 Request-Transaction-ID\:\:blah Response-Transaction-ID\:\:blah/ ]
+--- no_error_log eval
+[qr/\[error/, qr/GET \/ HTTP\/1.1\" 200/]