diff --git a/.craft.yml b/.craft.yml
index a6444038bb8d..0b7e5e83be39 100644
--- a/.craft.yml
+++ b/.craft.yml
@@ -2,20 +2,16 @@ minVersion: '0.23.1'
 changelogPolicy: simple
 preReleaseCommand: bash scripts/craft-pre-release.sh
 targets:
-  #
-  # Deactivated for now. This needs to be reactivated if the new Sentry Lambda Extension is deployed to production.
-  # (ask Anton Pirker if you have questions.)
-  #
-  # - name: aws-lambda-layer
-  #   includeNames: /^sentry-node-serverless-\d+.\d+.\d+(-(beta|alpha)\.\d+)?\.zip$/
-  #   layerName: SentryNodeServerlessSDK
-  #   compatibleRuntimes:
-  #     - name: node
-  #       versions:
-  #         - nodejs10.x
-  #         - nodejs12.x
-  #         - nodejs14.x
-  #   license: MIT
+  - name: aws-lambda-layer
+    includeNames: /^sentry-node-serverless-\d+.\d+.\d+(-(beta|alpha)\.\d+)?\.zip$/
+    layerName: SentryNodeServerlessSDK
+    compatibleRuntimes:
+      - name: node
+        versions:
+          - nodejs10.x
+          - nodejs12.x
+          - nodejs14.x
+    license: MIT
   - name: gcs
     includeNames: /.*\.js.*$/
     bucket: sentry-js-sdk
diff --git a/packages/serverless/README.md b/packages/serverless/README.md
index c0ac6f7659aa..0f61fae3afb9 100644
--- a/packages/serverless/README.md
+++ b/packages/serverless/README.md
@@ -63,7 +63,6 @@ Another and much simpler way to integrate Sentry to your AWS Lambda function is
    - `SENTRY_DSN`: `your dsn`.
    - `SENTRY_TRACES_SAMPLE_RATE`: a number between 0 and 1 representing the chance a transaction is sent to Sentry. For more information, see [docs](https://docs.sentry.io/platforms/node/guides/aws-lambda/configuration/options/#tracesSampleRate).
 
-
 ### Google Cloud Functions
 
 To use this SDK, call `Sentry.GCPFunction.init(options)` at the very beginning of your JavaScript file.
diff --git a/packages/serverless/src/awslambda-auto.ts b/packages/serverless/src/awslambda-auto.ts
index ac63f117063f..ac048cde5aed 100644
--- a/packages/serverless/src/awslambda-auto.ts
+++ b/packages/serverless/src/awslambda-auto.ts
@@ -6,7 +6,11 @@ if (lambdaTaskRoot) {
   if (!handlerString) {
     throw Error(`LAMBDA_TASK_ROOT is non-empty(${lambdaTaskRoot}) but _HANDLER is not set`);
   }
-  Sentry.AWSLambda.init();
+
+  Sentry.AWSLambda.init({
+    _invokedByLambdaLayer: true,
+  });
+
   Sentry.AWSLambda.tryPatchHandler(lambdaTaskRoot, handlerString);
 } else {
   throw Error('LAMBDA_TASK_ROOT environment variable is not set');
diff --git a/packages/serverless/src/awslambda.ts b/packages/serverless/src/awslambda.ts
index fe785e061b9e..bd5c8ced25af 100644
--- a/packages/serverless/src/awslambda.ts
+++ b/packages/serverless/src/awslambda.ts
@@ -11,7 +11,7 @@ import {
 } from '@sentry/node';
 import { extractTraceparentData } from '@sentry/tracing';
 import { Integration } from '@sentry/types';
-import { isString, logger, parseBaggageSetMutability } from '@sentry/utils';
+import { dsnFromString, dsnToString, isString, logger, parseBaggageSetMutability } from '@sentry/utils';
 // NOTE: I have no idea how to fix this right now, and don't want to waste more time, as it builds just fine — Kamil
 // eslint-disable-next-line import/no-unresolved
 import { Context, Handler } from 'aws-lambda';
@@ -57,10 +57,39 @@ export interface WrapperOptions {
 
 export const defaultIntegrations: Integration[] = [...Sentry.defaultIntegrations, new AWSServices({ optional: true })];
 
+/**
+ * Changes a Dsn to point to the `relay` server running in the Lambda Extension.
+ *
+ * This is only used by the serverless integration for AWS Lambda.
+ *
+ * @param originalDsn The original Dsn of the customer.
+ * @returns Dsn pointing to Lambda extension.
+ */
+function extensionRelayDSN(originalDsn: string | undefined): string | undefined {
+  if (originalDsn === undefined) {
+    return undefined;
+  }
+
+  const dsn = dsnFromString(originalDsn);
+  dsn.host = 'localhost';
+  dsn.port = '3000';
+  dsn.protocol = 'http';
+
+  return dsnToString(dsn);
+}
+
+interface AWSLambdaOptions extends Sentry.NodeOptions {
+  /**
+   * Internal field that is set to `true` when init() is called by the Sentry AWS Lambda layer.
+   *
+   */
+  _invokedByLambdaLayer?: boolean;
+}
+
 /**
  * @see {@link Sentry.init}
  */
-export function init(options: Sentry.NodeOptions = {}): void {
+export function init(options: AWSLambdaOptions = {}): void {
   if (options.defaultIntegrations === undefined) {
     options.defaultIntegrations = defaultIntegrations;
   }
@@ -78,6 +107,12 @@ export function init(options: Sentry.NodeOptions = {}): void {
     version: Sentry.SDK_VERSION,
   };
 
+  // If invoked by the Sentry Lambda Layer point the SDK to the Lambda Extension (inside the layer) instead of the host
+  // specified in the DSN
+  if (options._invokedByLambdaLayer) {
+    options.dsn = extensionRelayDSN(options.dsn);
+  }
+
   Sentry.init(options);
   Sentry.addGlobalEventProcessor(serverlessEventProcessor);
 }
diff --git a/packages/serverless/tsconfig.json b/packages/serverless/tsconfig.json
index 7fccf7258ead..05c709778aa0 100644
--- a/packages/serverless/tsconfig.json
+++ b/packages/serverless/tsconfig.json
@@ -5,6 +5,6 @@
 
   "compilerOptions": {
     // package-specific options
-    "target": "ES2018",
+    "target": "ES2018"
   }
 }
diff --git a/packages/utils/src/dsn.ts b/packages/utils/src/dsn.ts
index 35c3f0d5d141..a364c47d5d6b 100644
--- a/packages/utils/src/dsn.ts
+++ b/packages/utils/src/dsn.ts
@@ -32,7 +32,7 @@ export function dsnToString(dsn: DsnComponents, withPassword: boolean = false):
  * @param str A Dsn as string
  * @returns Dsn as DsnComponents
  */
-function dsnFromString(str: string): DsnComponents {
+export function dsnFromString(str: string): DsnComponents {
   const match = DSN_REGEX.exec(str);
 
   if (!match) {
@@ -106,24 +106,3 @@ export function makeDsn(from: DsnLike): DsnComponents {
   validateDsn(components);
   return components;
 }
-
-/**
- * Changes a Dsn to point to the `relay` server running in the Lambda Extension.
- *
- * This is only used by the serverless integration for AWS Lambda.
- *
- * @param originalDsn The original Dsn of the customer.
- * @returns Dsn pointing to Lambda extension.
- */
-export function extensionRelayDSN(originalDsn: string | undefined): string | undefined {
-  if (originalDsn === undefined) {
-    return undefined;
-  }
-
-  const dsn = dsnFromString(originalDsn);
-  dsn.host = 'localhost';
-  dsn.port = '3000';
-  dsn.protocol = 'http';
-
-  return dsnToString(dsn);
-}
diff --git a/scripts/aws-deploy-local-layer.sh b/scripts/aws-deploy-local-layer.sh
index b86dcd344d78..a979ddbbdcbe 100755
--- a/scripts/aws-deploy-local-layer.sh
+++ b/scripts/aws-deploy-local-layer.sh
@@ -10,7 +10,7 @@
 
 set -euo pipefail
 
-# Cleanup
+# Remove old distribution directories and zip files.
 echo "Preparing local directories for new build..."
 rm -rf dist-serverless/
 rm -rf ./packages/serverless/build
@@ -37,12 +37,36 @@ echo "Done copying Lambda layer in ./packages/serverless/build/aws/dist-serverle
 # is building the Lambda layer in production!
 # see: https://github.com/getsentry/action-build-aws-lambda-extension/blob/main/action.yml#L23-L40
 
-# Adding Sentry Lambda extension to Lambda layer
-echo "Adding Sentry Lambda extension to Lambda layer in ./dist-serverless..."
+echo "Downloading relay..."
+# Make directory (if not existing)
+mkdir -p dist-serverless/relay
+# Download releay from release registry to dist-serverless/relay/relay
+curl -0 --silent \
+    --output dist-serverless/relay/relay \
+    "$(curl -s https://release-registry.services.sentry.io/apps/relay/latest | jq -r .files.\"relay-Linux-x86_64\".url)"
+# Make file executable
+chmod +x dist-serverless/relay/relay
+echo "Done downloading relay."
+
+echo "Creating start script..."
+# Make directory (if not existing)
 mkdir -p dist-serverless/extensions
-curl -0 --silent --output dist-serverless/extensions/sentry-lambda-extension $(curl -s https://release-registry.services.sentry.io/apps/sentry-lambda-extension/latest | jq -r .files.\"sentry-lambda-extension\".url)
+# Create 'sentry-lambda-extension' script that starts relay.
+# The file has to have exactly this name, because the executable files of
+# Lambda extensions need to have same file name as the name that they use
+# to register with AWS Lambda environment
+cat > dist-serverless/extensions/sentry-lambda-extension << EOT
+#!/bin/bash
+set -euo pipefail
+exec /opt/relay/relay run \
+    --mode=proxy \
+    --shutdown-timeout=2 \
+    --upstream-dsn="\$SENTRY_DSN" \
+    --aws-runtime-api="\$AWS_LAMBDA_RUNTIME_API"
+EOT
+# Make script executable
 chmod +x dist-serverless/extensions/sentry-lambda-extension
-echo "Done adding Sentry Lambda extension to Lambda layer in ./dist-serverless."
+echo "Done creating start script."
 
 # Zip Lambda layer and included Lambda extension
 echo "Zipping Lambda layer and included Lambda extension..."