diff --git a/dev-packages/e2e-tests/test-applications/sveltekit-2/test/errors.server.test.ts b/dev-packages/e2e-tests/test-applications/sveltekit-2/test/errors.server.test.ts
index ffdfad2932c8..51488b103107 100644
--- a/dev-packages/e2e-tests/test-applications/sveltekit-2/test/errors.server.test.ts
+++ b/dev-packages/e2e-tests/test-applications/sveltekit-2/test/errors.server.test.ts
@@ -60,7 +60,6 @@ test.describe('server-side errors', () => {
       }),
     );
 
-    // TODO: Uncomment once we update the scope transaction name on the server side
-    // expect(errorEvent.transaction).toEqual('GET /server-route-error');
+    expect(errorEvent.transaction).toEqual('GET /server-route-error');
   });
 });
diff --git a/dev-packages/e2e-tests/test-applications/sveltekit/test/errors.server.test.ts b/dev-packages/e2e-tests/test-applications/sveltekit/test/errors.server.test.ts
index 6274239a936b..d2215cf8e763 100644
--- a/dev-packages/e2e-tests/test-applications/sveltekit/test/errors.server.test.ts
+++ b/dev-packages/e2e-tests/test-applications/sveltekit/test/errors.server.test.ts
@@ -63,7 +63,6 @@ test.describe('server-side errors', () => {
       }),
     );
 
-    // TODO: Uncomment once we update the scope transaction name on the server side
-    // expect(errorEvent.transaction).toEqual('GET /server-route-error');
+    expect(errorEvent.transaction).toEqual('GET /server-route-error');
   });
 });
diff --git a/packages/sveltekit/src/server/handle.ts b/packages/sveltekit/src/server/handle.ts
index 0bb08be6ce50..ee55ed810e8e 100644
--- a/packages/sveltekit/src/server/handle.ts
+++ b/packages/sveltekit/src/server/handle.ts
@@ -2,6 +2,8 @@ import {
   SEMANTIC_ATTRIBUTE_SENTRY_ORIGIN,
   SEMANTIC_ATTRIBUTE_SENTRY_SOURCE,
   getActiveSpan,
+  getDefaultIsolationScope,
+  getIsolationScope,
   getRootSpan,
   setHttpStatus,
   spanToTraceHeader,
@@ -10,11 +12,12 @@ import {
 import { startSpan } from '@sentry/core';
 import { captureException, continueTrace } from '@sentry/node';
 import type { Span } from '@sentry/types';
-import { dynamicSamplingContextToSentryBaggageHeader, objectify } from '@sentry/utils';
+import { dynamicSamplingContextToSentryBaggageHeader, logger, objectify } from '@sentry/utils';
 import type { Handle, ResolveOptions } from '@sveltejs/kit';
 
 import { getDynamicSamplingContextFromSpan } from '@sentry/opentelemetry';
 
+import { DEBUG_BUILD } from '../common/debug-build';
 import { isHttpError, isRedirect } from '../common/utils';
 import { flushIfServerless, getTracePropagationData } from './utils';
 
@@ -183,6 +186,14 @@ async function instrumentHandle(
     return resolve(event);
   }
 
+  const routeName = `${event.request.method} ${event.route?.id || event.url.pathname}`;
+
+  if (getIsolationScope() !== getDefaultIsolationScope()) {
+    getIsolationScope().setTransactionName(routeName);
+  } else {
+    DEBUG_BUILD && logger.warn('Isolation scope is default isolation scope - skipping setting transactionName');
+  }
+
   try {
     const resolveResult = await startSpan(
       {
@@ -192,7 +203,7 @@ async function instrumentHandle(
           [SEMANTIC_ATTRIBUTE_SENTRY_SOURCE]: event.route?.id ? 'route' : 'url',
           'http.method': event.request.method,
         },
-        name: `${event.request.method} ${event.route?.id || event.url.pathname}`,
+        name: routeName,
       },
       async (span?: Span) => {
         const res = await resolve(event, {