diff --git a/components/src/dynamo/vllm/handlers.py b/components/src/dynamo/vllm/handlers.py
index 55ee6ffcf31..32fed9afc07 100644
--- a/components/src/dynamo/vllm/handlers.py
+++ b/components/src/dynamo/vllm/handlers.py
@@ -12,7 +12,7 @@
 from vllm.inputs import TokensPrompt
 from vllm.lora.request import LoRARequest
 from vllm.outputs import RequestOutput
-from vllm.sampling_params import SamplingParams
+from vllm.sampling_params import SamplingParams, StructuredOutputsParams
 from vllm.v1.engine.exceptions import EngineDeadError
 
 from dynamo.llm import (
@@ -82,8 +82,22 @@ def build_sampling_params(
     sampling_params = SamplingParams(**default_sampling_params)
     sampling_params.detokenize = False
 
-    # Apply sampling_options
+    # Handle guided_decoding - convert to StructuredOutputsParams
+    guided_decoding = request["sampling_options"].get("guided_decoding")
+    if guided_decoding is not None and isinstance(guided_decoding, dict):
+        sampling_params.structured_outputs = StructuredOutputsParams(
+            json=guided_decoding.get("json"),
+            regex=guided_decoding.get("regex"),
+            choice=guided_decoding.get("choice"),
+            grammar=guided_decoding.get("grammar"),
+            whitespace_pattern=guided_decoding.get("whitespace_pattern"),
+        )
+
+    # Apply remaining sampling_options
     for key, value in request["sampling_options"].items():
+        # Skip guided_decoding - already handled above
+        if key == "guided_decoding":
+            continue
         if value is not None and hasattr(sampling_params, key):
             setattr(sampling_params, key, value)
 
diff --git a/tests/serve/test_vllm.py b/tests/serve/test_vllm.py
index 91f5e588e30..55873d07d0f 100644
--- a/tests/serve/test_vllm.py
+++ b/tests/serve/test_vllm.py
@@ -454,6 +454,66 @@ class VLLMConfig(EngineConfig):
             completion_payload_default(),
         ],
     ),
+    "guided_decoding_json": VLLMConfig(
+        name="guided_decoding_json",
+        directory=vllm_dir,
+        script_name="agg.sh",
+        marks=[pytest.mark.gpu_1, pytest.mark.pre_merge],
+        model="Qwen/Qwen3-0.6B",
+        request_payloads=[
+            chat_payload(
+                "Generate a person with name and age",
+                repeat_count=1,
+                expected_response=['"name"', '"age"'],
+                temperature=0.0,
+                max_tokens=100,
+                extra_body={
+                    "guided_json": {
+                        "type": "object",
+                        "properties": {
+                            "name": {"type": "string"},
+                            "age": {"type": "integer"},
+                        },
+                        "required": ["name", "age"],
+                    }
+                },
+            )
+        ],
+    ),
+    "guided_decoding_regex": VLLMConfig(
+        name="guided_decoding_regex",
+        directory=vllm_dir,
+        script_name="agg.sh",
+        marks=[pytest.mark.gpu_1, pytest.mark.pre_merge],
+        model="Qwen/Qwen3-0.6B",
+        request_payloads=[
+            chat_payload(
+                "Generate a color name (red, blue, or green)",
+                repeat_count=1,
+                expected_response=["red", "blue", "green"],
+                temperature=0.0,
+                max_tokens=20,
+                extra_body={"guided_regex": r"(red|blue|green)"},
+            )
+        ],
+    ),
+    "guided_decoding_choice": VLLMConfig(
+        name="guided_decoding_choice",
+        directory=vllm_dir,
+        script_name="agg.sh",
+        marks=[pytest.mark.gpu_1, pytest.mark.pre_merge],
+        model="Qwen/Qwen3-0.6B",
+        request_payloads=[
+            chat_payload(
+                "Generate a color name (red, blue, or green)",
+                repeat_count=1,
+                expected_response=["red", "blue", "green"],
+                temperature=0.0,
+                max_tokens=20,
+                extra_body={"guided_choice": ["red", "blue", "green"]},
+            )
+        ],
+    ),
 }
 
 
diff --git a/tests/utils/payload_builder.py b/tests/utils/payload_builder.py
index 1b2e8bf9631..e0bf978b997 100644
--- a/tests/utils/payload_builder.py
+++ b/tests/utils/payload_builder.py
@@ -134,6 +134,7 @@ def chat_payload(
     max_tokens: int = 300,
     temperature: Optional[float] = None,
     stream: bool = False,
+    extra_body: Optional[Dict[str, Any]] = None,
 ) -> ChatPayload:
     body: Dict[str, Any] = {
         "messages": [
@@ -148,6 +149,9 @@ def chat_payload(
     if temperature is not None:
         body["temperature"] = temperature
 
+    if extra_body:
+        body.update(extra_body)
+
     return ChatPayload(
         body=body,
         repeat_count=repeat_count,