diff --git a/action.yml b/action.yml
index f75a575a6..f596655c5 100644
--- a/action.yml
+++ b/action.yml
@@ -312,6 +312,17 @@ runs:
         ANTHROPIC_DEFAULT_HAIKU_MODEL: ${{ env.ANTHROPIC_DEFAULT_HAIKU_MODEL }}
         ANTHROPIC_DEFAULT_OPUS_MODEL: ${{ env.ANTHROPIC_DEFAULT_OPUS_MODEL }}
 
+        # Telemetry configuration
+        CLAUDE_CODE_ENABLE_TELEMETRY: ${{ env.CLAUDE_CODE_ENABLE_TELEMETRY }}
+        OTEL_METRICS_EXPORTER: ${{ env.OTEL_METRICS_EXPORTER }}
+        OTEL_LOGS_EXPORTER: ${{ env.OTEL_LOGS_EXPORTER }}
+        OTEL_EXPORTER_OTLP_PROTOCOL: ${{ env.OTEL_EXPORTER_OTLP_PROTOCOL }}
+        OTEL_EXPORTER_OTLP_ENDPOINT: ${{ env.OTEL_EXPORTER_OTLP_ENDPOINT }}
+        OTEL_EXPORTER_OTLP_HEADERS: ${{ env.OTEL_EXPORTER_OTLP_HEADERS }}
+        OTEL_METRIC_EXPORT_INTERVAL: ${{ env.OTEL_METRIC_EXPORT_INTERVAL }}
+        OTEL_LOGS_EXPORT_INTERVAL: ${{ env.OTEL_LOGS_EXPORT_INTERVAL }}
+        OTEL_RESOURCE_ATTRIBUTES: ${{ env.OTEL_RESOURCE_ATTRIBUTES }}
+
     - name: Update comment with job link
       if: steps.prepare.outputs.contains_trigger == 'true' && steps.prepare.outputs.claude_comment_id && always()
       shell: bash
diff --git a/base-action/action.yml b/base-action/action.yml
index 34f5d9ae3..29b7c8b56 100644
--- a/base-action/action.yml
+++ b/base-action/action.yml
@@ -202,3 +202,14 @@ runs:
         ANTHROPIC_DEFAULT_SONNET_MODEL: ${{ env.ANTHROPIC_DEFAULT_SONNET_MODEL }}
         ANTHROPIC_DEFAULT_HAIKU_MODEL: ${{ env.ANTHROPIC_DEFAULT_HAIKU_MODEL }}
         ANTHROPIC_DEFAULT_OPUS_MODEL: ${{ env.ANTHROPIC_DEFAULT_OPUS_MODEL }}
+
+        # Telemetry configuration
+        CLAUDE_CODE_ENABLE_TELEMETRY: ${{ env.CLAUDE_CODE_ENABLE_TELEMETRY }}
+        OTEL_METRICS_EXPORTER: ${{ env.OTEL_METRICS_EXPORTER }}
+        OTEL_LOGS_EXPORTER: ${{ env.OTEL_LOGS_EXPORTER }}
+        OTEL_EXPORTER_OTLP_PROTOCOL: ${{ env.OTEL_EXPORTER_OTLP_PROTOCOL }}
+        OTEL_EXPORTER_OTLP_ENDPOINT: ${{ env.OTEL_EXPORTER_OTLP_ENDPOINT }}
+        OTEL_EXPORTER_OTLP_HEADERS: ${{ env.OTEL_EXPORTER_OTLP_HEADERS }}
+        OTEL_METRIC_EXPORT_INTERVAL: ${{ env.OTEL_METRIC_EXPORT_INTERVAL }}
+        OTEL_LOGS_EXPORT_INTERVAL: ${{ env.OTEL_LOGS_EXPORT_INTERVAL }}
+        OTEL_RESOURCE_ATTRIBUTES: ${{ env.OTEL_RESOURCE_ATTRIBUTES }}
diff --git a/base-action/test/parse-sdk-options.test.ts b/base-action/test/parse-sdk-options.test.ts
index 175508af3..9c1095cef 100644
--- a/base-action/test/parse-sdk-options.test.ts
+++ b/base-action/test/parse-sdk-options.test.ts
@@ -312,4 +312,59 @@ describe("parseSdkOptions", () => {
       expect(result.hasJsonSchema).toBe(true);
     });
   });
+
+  describe("environment variables passthrough", () => {
+    test("should include OTEL environment variables in sdkOptions.env", () => {
+      // Set up test environment variables
+      const originalEnv = { ...process.env };
+      process.env.CLAUDE_CODE_ENABLE_TELEMETRY = "1";
+      process.env.OTEL_METRICS_EXPORTER = "otlp";
+      process.env.OTEL_LOGS_EXPORTER = "otlp";
+      process.env.OTEL_EXPORTER_OTLP_PROTOCOL = "http/json";
+      process.env.OTEL_EXPORTER_OTLP_ENDPOINT = "https://example.com";
+      process.env.OTEL_EXPORTER_OTLP_HEADERS =
+        "Authorization=Bearer test-token";
+      process.env.OTEL_METRIC_EXPORT_INTERVAL = "10000";
+      process.env.OTEL_LOGS_EXPORT_INTERVAL = "5000";
+      process.env.OTEL_RESOURCE_ATTRIBUTES = "department=test";
+
+      try {
+        const options: ClaudeOptions = {};
+        const result = parseSdkOptions(options);
+
+        // Verify OTEL env vars are passed through to sdkOptions.env
+        expect(result.sdkOptions.env?.CLAUDE_CODE_ENABLE_TELEMETRY).toBe("1");
+        expect(result.sdkOptions.env?.OTEL_METRICS_EXPORTER).toBe("otlp");
+        expect(result.sdkOptions.env?.OTEL_LOGS_EXPORTER).toBe("otlp");
+        expect(result.sdkOptions.env?.OTEL_EXPORTER_OTLP_PROTOCOL).toBe(
+          "http/json",
+        );
+        expect(result.sdkOptions.env?.OTEL_EXPORTER_OTLP_ENDPOINT).toBe(
+          "https://example.com",
+        );
+        expect(result.sdkOptions.env?.OTEL_EXPORTER_OTLP_HEADERS).toBe(
+          "Authorization=Bearer test-token",
+        );
+        expect(result.sdkOptions.env?.OTEL_METRIC_EXPORT_INTERVAL).toBe(
+          "10000",
+        );
+        expect(result.sdkOptions.env?.OTEL_LOGS_EXPORT_INTERVAL).toBe("5000");
+        expect(result.sdkOptions.env?.OTEL_RESOURCE_ATTRIBUTES).toBe(
+          "department=test",
+        );
+      } finally {
+        // Restore original environment
+        process.env = originalEnv;
+      }
+    });
+
+    test("should set CLAUDE_CODE_ENTRYPOINT in sdkOptions.env", () => {
+      const options: ClaudeOptions = {};
+      const result = parseSdkOptions(options);
+
+      expect(result.sdkOptions.env?.CLAUDE_CODE_ENTRYPOINT).toBe(
+        "claude-code-github-action",
+      );
+    });
+  });
 });