diff --git a/CHANGELOG.md b/CHANGELOG.md
index 34d276e214..e6dd45cffa 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -18,6 +18,9 @@ This component adheres to [Semantic Versioning](https://semver.org/spec/v2.0.0.h
 
 ### Changed
 
+- Fixed `OTEL_EXPORTER_OTLP_TRACES_PROTOCOL`, `OTEL_EXPORTER_OTLP_METRICS_PROTOCOL`
+  `OTEL_EXPORTER_OTLP_LOGS_PROTOCOL` handling. See [#4593](https://github.com/open-telemetry/opentelemetry-dotnet-instrumentation/issues/4593).
+
 #### Dependency updates
 
 - Updated [Core components](https://github.com/open-telemetry/opentelemetry-dotnet/blob/main/VERSIONING.md#core-components):
diff --git a/src/OpenTelemetry.AutoInstrumentation/Configurations/Otlp/OtlpSettings.cs b/src/OpenTelemetry.AutoInstrumentation/Configurations/Otlp/OtlpSettings.cs
index 9d5be2854a..58da8f2f9e 100644
--- a/src/OpenTelemetry.AutoInstrumentation/Configurations/Otlp/OtlpSettings.cs
+++ b/src/OpenTelemetry.AutoInstrumentation/Configurations/Otlp/OtlpSettings.cs
@@ -158,8 +158,44 @@ private static Uri GetOtlpHttpEndpoint(string? endpoint, OtlpSignalType signalTy
     {
         // the default in SDK is grpc. http/protobuf should be default for our purposes
         var priorityVar = OtlpSpecConfigDefinitions.GetProtocolEnvVar(signalType);
-        var exporterOtlpProtocol = configuration.GetString(priorityVar) ??
-            configuration.GetString(OtlpSpecConfigDefinitions.DefaultProtocolEnvVarName);
+        var exporterOtlpProtocol = configuration.GetString(priorityVar);
+
+        // SDK handles only general environment variables.
+        // In case priority env is set, the value must be maually passed.
+        if (!string.IsNullOrEmpty(exporterOtlpProtocol))
+        {
+            switch (exporterOtlpProtocol)
+            {
+                case "grpc":
+#if NETFRAMEWORK
+                    if (configuration.FailFast)
+                    {
+                        throw new ArgumentException(
+                            $"OTLP protocol 'grpc' is not supported on .NET Framework in environment variable '{priorityVar}'. Use 'http/protobuf' instead.");
+                    }
+                    else
+                    {
+                        // null value here means that it will be handled by OTEL .NET SDK
+                        return null;
+                    }
+#else
+                    return OtlpExportProtocol.Grpc;
+#endif
+                case "http/protobuf":
+                    return OtlpExportProtocol.HttpProtobuf;
+                default:
+                    if (configuration.FailFast)
+                    {
+                        throw new ArgumentException(
+                            $"Invalid OTLP protocol value '{exporterOtlpProtocol}' in environment variable '{priorityVar}'. Supported values are 'grpc' and 'http/protobuf'.");
+                    }
+
+                    // null value here means that it will be handled by OTEL .NET SDK
+                    return null;
+            }
+        }
+
+        exporterOtlpProtocol = configuration.GetString(OtlpSpecConfigDefinitions.DefaultProtocolEnvVarName);
 
         if (string.IsNullOrEmpty(exporterOtlpProtocol))
         {
diff --git a/test/OpenTelemetry.AutoInstrumentation.Tests/Configurations/SettingsTests.cs b/test/OpenTelemetry.AutoInstrumentation.Tests/Configurations/SettingsTests.cs
index e9f2e2f330..02d39a206a 100644
--- a/test/OpenTelemetry.AutoInstrumentation.Tests/Configurations/SettingsTests.cs
+++ b/test/OpenTelemetry.AutoInstrumentation.Tests/Configurations/SettingsTests.cs
@@ -1,7 +1,9 @@
 // Copyright The OpenTelemetry Authors
 // SPDX-License-Identifier: Apache-2.0
 
+using System.Reflection;
 using OpenTelemetry.AutoInstrumentation.Configurations;
+using OpenTelemetry.AutoInstrumentation.Configurations.Otlp;
 using OpenTelemetry.Exporter;
 using Xunit;
 
@@ -393,6 +395,48 @@ internal void OtlpExportProtocol_DependsOnCorrespondingEnvVariable(string? otlpP
         Assert.Equal(expectedOtlpExportProtocol, settings.OtlpSettings.Protocol);
     }
 
+    [Fact]
+    internal void OtlpExportProtocol_CheckPriorityEnvIsSet_Traces()
+    {
+        VerifyOtlpPrioritySettings(((string Endpoint, string Protocol, string Timeout, string Headers) values) =>
+        {
+            Environment.SetEnvironmentVariable(AutoOtlpDefinitions.TracesEndpointEnvVarName, values.Endpoint);
+            Environment.SetEnvironmentVariable(AutoOtlpDefinitions.TracesProtocolEnvVarName, values.Protocol);
+            Environment.SetEnvironmentVariable(AutoOtlpDefinitions.TracesTimeoutEnvVarName, values.Timeout);
+            Environment.SetEnvironmentVariable(AutoOtlpDefinitions.TracesHeadersEnvVarName, values.Headers);
+
+            return Settings.FromDefaultSources<TracerSettings>(false).OtlpSettings;
+        });
+    }
+
+    [Fact]
+    internal void OtlpExportProtocol_CheckPriorityEnvIsSet_Metrics()
+    {
+        VerifyOtlpPrioritySettings(((string Endpoint, string Protocol, string Timeout, string Headers) values) =>
+        {
+            Environment.SetEnvironmentVariable(AutoOtlpDefinitions.MetricsEndpointEnvVarName, values.Endpoint);
+            Environment.SetEnvironmentVariable(AutoOtlpDefinitions.MetricsProtocolEnvVarName, values.Protocol);
+            Environment.SetEnvironmentVariable(AutoOtlpDefinitions.MetricsTimeoutEnvVarName, values.Timeout);
+            Environment.SetEnvironmentVariable(AutoOtlpDefinitions.MetricsHeadersEnvVarName, values.Headers);
+
+            return Settings.FromDefaultSources<MetricSettings>(false).OtlpSettings;
+        });
+    }
+
+    [Fact]
+    internal void OtlpExportProtocol_CheckPriorityEnvIsSet_Logs()
+    {
+        VerifyOtlpPrioritySettings(((string Endpoint, string Protocol, string Timeout, string Headers) values) =>
+        {
+            Environment.SetEnvironmentVariable(AutoOtlpDefinitions.LogsEndpointEnvVarName, values.Endpoint);
+            Environment.SetEnvironmentVariable(AutoOtlpDefinitions.LogsProtocolEnvVarName, values.Protocol);
+            Environment.SetEnvironmentVariable(AutoOtlpDefinitions.LogsTimeoutEnvVarName, values.Timeout);
+            Environment.SetEnvironmentVariable(AutoOtlpDefinitions.LogsHeadersEnvVarName, values.Headers);
+
+            return Settings.FromDefaultSources<LogSettings>(false).OtlpSettings;
+        });
+    }
+
     [Theory]
     [InlineData("true", true)]
     [InlineData("false", false)]
@@ -477,5 +521,39 @@ private static void ClearEnvVars()
         Environment.SetEnvironmentVariable(ConfigurationKeys.Traces.InstrumentationOptions.HttpInstrumentationCaptureRequestHeaders, null);
         Environment.SetEnvironmentVariable(ConfigurationKeys.Traces.InstrumentationOptions.HttpInstrumentationCaptureResponseHeaders, null);
         Environment.SetEnvironmentVariable(ConfigurationKeys.Traces.InstrumentationOptions.OracleMdaSetDbStatementForText, null);
+
+        // Cleanup OTLP env vars
+        foreach (var envVar in GetAllOtlpEnvVarNames())
+        {
+            Environment.SetEnvironmentVariable(envVar, null);
+        }
+    }
+
+    private static IEnumerable<string> GetAllOtlpEnvVarNames()
+    {
+        return typeof(AutoOtlpDefinitions)
+            .GetFields(BindingFlags.Public | BindingFlags.Static)
+            .Where(f => f.FieldType == typeof(string))
+            .Select(f => (string)f.GetValue(null)!)
+            .ToList() ?? Enumerable.Empty<string>();
+    }
+
+    private static void VerifyOtlpPrioritySettings(Func<(string Endpoint, string Protocol, string Timeout, string Headers), OtlpSettings?> setup)
+    {
+        var endpoint = "http://example.org/traces/v1";
+        var endpointValue = new Uri(endpoint);
+        var protocol = "http/protobuf";
+        var protocolValue = OtlpExportProtocol.HttpProtobuf;
+        var timeout = "1";
+        var timeoutValue = 1;
+        var headers = "key1=value1,key2=value2";
+
+        var settings = setup((endpoint, protocol, timeout, headers));
+
+        Assert.NotNull(settings);
+        Assert.Equal(endpointValue, settings.Endpoint);
+        Assert.Equal(protocolValue, settings.Protocol);
+        Assert.Equal(timeoutValue, settings.TimeoutMilliseconds);
+        Assert.Equal(headers, settings.Headers);
     }
 }