diff --git a/litellm/proxy/health_endpoints/_health_endpoints.py b/litellm/proxy/health_endpoints/_health_endpoints.py
index d27e0036235..eddd64c36c7 100644
--- a/litellm/proxy/health_endpoints/_health_endpoints.py
+++ b/litellm/proxy/health_endpoints/_health_endpoints.py
@@ -118,6 +118,7 @@ def _resolve_os_environ_variables(params: dict) -> dict:
         "email",
         "braintrust",
         "datadog",
+        "datadog_llm_observability",
         "generic_api",
         "arize",
         "sqs"
@@ -190,6 +191,7 @@ async def health_services_endpoint(  # noqa: PLR0915
             "custom_callback_api",
             "langsmith",
             "datadog",
+            "datadog_llm_observability",
             "generic_api",
             "arize",
             "sqs"
diff --git a/tests/test_litellm/proxy/health_endpoints/test_health_endpoints.py b/tests/test_litellm/proxy/health_endpoints/test_health_endpoints.py
index edfdd9e4065..d6393bc6414 100644
--- a/tests/test_litellm/proxy/health_endpoints/test_health_endpoints.py
+++ b/tests/test_litellm/proxy/health_endpoints/test_health_endpoints.py
@@ -312,6 +312,43 @@ def mock_resolve_os_environ(params):
         assert "result" in result
 
 
+@pytest.mark.asyncio
+async def test_health_services_endpoint_datadog_llm_observability():
+    """
+    Verify that 'datadog_llm_observability' is accepted as a valid service
+    by the /health/services endpoint and does not raise a 400 error.
+
+    Regression test for: https://github.com/BerriAI/litellm/issues/XXXX
+    The service was missing from the allowed services validation list.
+    """
+    from litellm.proxy.health_endpoints._health_endpoints import (
+        health_services_endpoint,
+    )
+
+    # Mock datadog_llm_observability to be in success_callback so the generic branch handles it
+    with patch("litellm.success_callback", ["datadog_llm_observability"]):
+        result = await health_services_endpoint(
+            service="datadog_llm_observability"
+        )
+
+    # Should not raise HTTPException(400) and should return success
+    assert result["status"] == "success"
+    assert "datadog_llm_observability" in result["message"]
+
+
+@pytest.mark.asyncio
+async def test_health_services_endpoint_rejects_unknown_service():
+    """
+    Verify that an unknown service name is rejected with a 400 error.
+    """
+    from litellm.proxy._types import ProxyException
+
+    with pytest.raises(ProxyException):
+        await health_services_endpoint(
+            service="totally_unknown_service_xyz"
+        )
+
+
 @pytest.fixture(scope="function")
 def proxy_client(monkeypatch):
     """