diff --git a/CHANGELOG.md b/CHANGELOG.md
index a9bfdfb6b90..1962da5af57 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -136,6 +136,8 @@ Updates:
 - SDK: Specify known values, as well as basic error handling for OTEL_PROPAGATORS.
   ([#962](https://github.com/open-telemetry/opentelemetry-specification/pull/962))
   ([#995](https://github.com/open-telemetry/opentelemetry-specification/pull/995))
+- SDK: Specify when to generate new IDs with sampling
+  ([#998](https://github.com/open-telemetry/opentelemetry-specification/pull/998))
 - Remove custom header name for Baggage, use official header
   ([#993](https://github.com/open-telemetry/opentelemetry-specification/pull/993))
 - Trace API: Clarifications for `Span.End`, e.g. IsRecording becomes false after End
diff --git a/spec-compliance-matrix.md b/spec-compliance-matrix.md
index dc9b5534fc1..ab7a564182f 100644
--- a/spec-compliance-matrix.md
+++ b/spec-compliance-matrix.md
@@ -68,6 +68,7 @@ status of the feature is not known.
 |[Sampling](specification/trace/sdk.md#sampling)|
 |Allow samplers to modify tracestate           |   | +  |   | [-](https://github.com/open-telemetry/opentelemetry-python/issues/1220)    |    | +    |   | +  |   |    |
 |ShouldSample gets full parent Context         |   | +  | + | +    |    | +    |   |    |   |    |
+|[Span/Trace ID creation wrt. sampling is compliant](specification/trace/sdk.md#sdk-span-creation) |   |    |   |      |    |      |   |    |   |    |
 
 ## Baggage
 
diff --git a/specification/trace/sdk.md b/specification/trace/sdk.md
index 4f69378fcb3..830e422044c 100644
--- a/specification/trace/sdk.md
+++ b/specification/trace/sdk.md
@@ -61,11 +61,28 @@ The following table summarizes the expected behavior for each combination of
 The SDK defines the interface [`Sampler`](#sampler) as well as a set of
 [built-in samplers](#built-in-samplers) and associates a `Sampler` with each [`TracerProvider`].
 
-When asked to create a Span, the SDK MUST query the `Sampler`'s [`ShouldSample`](#shouldsample) method before actually creating the span, and act accordingly:
-see description of [`ShouldSample`'s](#shouldsample) return value below for how to set `IsRecording` and `Sampled` on the Span,
-and the [table above](#recording-sampled-reaction-table) on whether to pass the `Span` to `SpanProcessor`s.
-A non-recording span MAY be implemented using the same mechanism as when a `Span` is created with no API-implementation installed
-(sometimes called a `NoOpSpan` or `DefaultSpan`).
+### SDK Span creation
+
+When asked to create a Span, the SDK MUST act as if doing the following in order:
+
+1. If there is a valid parent trace ID, use it. Otherwise generate a new trace ID
+   (note: this must be done before calling `ShouldSample`, because it expects
+   a valid trace ID as input).
+2. Query the `Sampler`'s [`ShouldSample`](#shouldsample) method
+   (Note that the [built-in `ParentBasedSampler`](#parentbased) can be used to
+   use the sampling decision of the parent,
+   translating a set SampledFlag to RECORD and an unset one to DROP).
+3. If the decision is `DROP` and there is a valid parent span ID, reuse it as the new `Span`'s span ID.
+   Otherwise (if the decision is not `DROP` or there was no valid parent span ID)
+   a new span ID MUST be generated.
+4. Create a span depending on the decision returned by `ShouldSample`:
+   see description of [`ShouldSample`'s](#shouldsample) return value below
+   for how to set `IsRecording` and `Sampled` on the Span,
+   and the [table above](#recording-sampled-reaction-table) on whether
+   to pass the `Span` to `SpanProcessor`s.
+   A non-recording span MAY be implemented using the same mechanism as when a
+   `Span` is created with no API-implementation installed or as described in
+   [wrapping a SpanContext in a Span](api.md#wrapping-a-spancontext-in-a-span).
 
 ### Sampler