diff --git a/packages/serverless/src/awslambda.ts b/packages/serverless/src/awslambda.ts
index b26203bce4db..e29f77aaf879 100644
--- a/packages/serverless/src/awslambda.ts
+++ b/packages/serverless/src/awslambda.ts
@@ -47,6 +47,12 @@ export interface WrapperOptions {
    * @default false
    */
   captureAllSettledReasons: boolean;
+  /**
+   * Automatically trace all handler invocations.
+   * You may want to disable this if you use express within Lambda (use tracingHandler instead).
+   * @default true
+   */
+  startTrace: boolean;
 }
 
 export const defaultIntegrations: Integration[] = [...Sentry.defaultIntegrations, new AWSServices({ optional: true })];
@@ -178,11 +184,6 @@ function tryGetRemainingTimeInMillis(context: Context): number {
  * @param startTime performance.now() when wrapHandler was invoked
  */
 function enhanceScopeWithEnvironmentData(scope: Scope, context: Context, startTime: number): void {
-  scope.setTransactionName(context.functionName);
-
-  scope.setTag('server_name', process.env._AWS_XRAY_DAEMON_ADDRESS || process.env.SENTRY_NAME || hostname());
-  scope.setTag('url', `awslambda:///${context.functionName}`);
-
   scope.setContext('aws.lambda', {
     aws_request_id: context.awsRequestId,
     function_name: context.functionName,
@@ -204,6 +205,18 @@ function enhanceScopeWithEnvironmentData(scope: Scope, context: Context, startTi
   });
 }
 
+/**
+ * Adds additional transaction-related information from the environment and AWS Context to the Sentry Scope.
+ *
+ * @param scope Scope that should be enhanced
+ * @param context AWS Lambda context that will be used to extract some part of the data
+ */
+function enhanceScopeWithTransactionData(scope: Scope, context: Context): void {
+  scope.setTransactionName(context.functionName);
+  scope.setTag('server_name', process.env._AWS_XRAY_DAEMON_ADDRESS || process.env.SENTRY_NAME || hostname());
+  scope.setTag('url', `awslambda:///${context.functionName}`);
+}
+
 /**
  * Wraps a lambda handler adding it error capture and tracing capabilities.
  *
@@ -222,6 +235,7 @@ export function wrapHandler<TEvent, TResult>(
     captureTimeoutWarning: true,
     timeoutWarningLimit: 500,
     captureAllSettledReasons: false,
+    startTrace: true,
     ...wrapOptions,
   };
   let timeoutWarningTimer: NodeJS.Timeout;
@@ -279,36 +293,42 @@ export function wrapHandler<TEvent, TResult>(
 
     const hub = getCurrentHub();
 
-    const eventWithHeaders = event as { headers?: { [key: string]: string } };
-
-    const sentryTrace =
-      eventWithHeaders.headers && isString(eventWithHeaders.headers['sentry-trace'])
-        ? eventWithHeaders.headers['sentry-trace']
-        : undefined;
-    const baggage = eventWithHeaders.headers?.baggage;
-    const { traceparentData, dynamicSamplingContext, propagationContext } = tracingContextFromHeaders(
-      sentryTrace,
-      baggage,
-    );
-    hub.getScope().setPropagationContext(propagationContext);
-
-    const transaction = hub.startTransaction({
-      name: context.functionName,
-      op: 'function.aws.lambda',
-      origin: 'auto.function.serverless',
-      ...traceparentData,
-      metadata: {
-        dynamicSamplingContext: traceparentData && !dynamicSamplingContext ? {} : dynamicSamplingContext,
-        source: 'component',
-      },
-    }) as Sentry.Transaction | undefined;
+    let transaction: Sentry.Transaction | undefined;
+    if (options.startTrace) {
+      const eventWithHeaders = event as { headers?: { [key: string]: string } };
+
+      const sentryTrace =
+        eventWithHeaders.headers && isString(eventWithHeaders.headers['sentry-trace'])
+          ? eventWithHeaders.headers['sentry-trace']
+          : undefined;
+      const baggage = eventWithHeaders.headers?.baggage;
+      const { traceparentData, dynamicSamplingContext, propagationContext } = tracingContextFromHeaders(
+        sentryTrace,
+        baggage,
+      );
+      hub.getScope().setPropagationContext(propagationContext);
+
+      transaction = hub.startTransaction({
+        name: context.functionName,
+        op: 'function.aws.lambda',
+        origin: 'auto.function.serverless',
+        ...traceparentData,
+        metadata: {
+          dynamicSamplingContext: traceparentData && !dynamicSamplingContext ? {} : dynamicSamplingContext,
+          source: 'component',
+        },
+      });
+    }
 
     const scope = hub.pushScope();
     let rv: TResult;
     try {
       enhanceScopeWithEnvironmentData(scope, context, START_TIME);
-      // We put the transaction on the scope so users can attach children to it
-      scope.setSpan(transaction);
+      if (options.startTrace) {
+        enhanceScopeWithTransactionData(scope, context);
+        // We put the transaction on the scope so users can attach children to it
+        scope.setSpan(transaction);
+      }
       rv = await asyncHandler(event, context);
 
       // We manage lambdas that use Promise.allSettled by capturing the errors of failed promises
diff --git a/packages/serverless/test/__mocks__/@sentry/node.ts b/packages/serverless/test/__mocks__/@sentry/node.ts
index 6da20c091780..c29f8f78dd0a 100644
--- a/packages/serverless/test/__mocks__/@sentry/node.ts
+++ b/packages/serverless/test/__mocks__/@sentry/node.ts
@@ -50,6 +50,7 @@ export const resetMocks = (): void => {
   fakeHub.pushScope.mockClear();
   fakeHub.popScope.mockClear();
   fakeHub.getScope.mockClear();
+  fakeHub.startTransaction.mockClear();
 
   fakeScope.addEventProcessor.mockClear();
   fakeScope.setTransactionName.mockClear();
diff --git a/packages/serverless/test/awslambda.test.ts b/packages/serverless/test/awslambda.test.ts
index 454b36296adb..199d0ac295ab 100644
--- a/packages/serverless/test/awslambda.test.ts
+++ b/packages/serverless/test/awslambda.test.ts
@@ -45,6 +45,8 @@ function expectScopeSettings(fakeTransactionContext: any) {
   // @ts-expect-error see "Why @ts-expect-error" note
   const fakeTransaction = { ...SentryNode.fakeTransaction, ...fakeTransactionContext };
   // @ts-expect-error see "Why @ts-expect-error" note
+  expect(SentryNode.fakeScope.setTransactionName).toBeCalledWith('functionName');
+  // @ts-expect-error see "Why @ts-expect-error" note
   expect(SentryNode.fakeScope.setSpan).toBeCalledWith(fakeTransaction);
   // @ts-expect-error see "Why @ts-expect-error" note
   expect(SentryNode.fakeScope.setTag).toBeCalledWith('server_name', expect.anything());
@@ -180,11 +182,27 @@ describe('AWSLambda', () => {
       expect(SentryNode.captureException).toHaveBeenNthCalledWith(2, error2, expect.any(Function));
       expect(SentryNode.captureException).toBeCalledTimes(2);
     });
+
+    // "wrapHandler() ... successful execution" tests the default of startTrace enabled
+    test('startTrace disabled', async () => {
+      expect.assertions(3);
+
+      const handler: Handler = async (_event, _context) => 42;
+      const wrappedHandler = wrapHandler(handler, { startTrace: false });
+      await wrappedHandler(fakeEvent, fakeContext, fakeCallback);
+
+      // @ts-expect-error see "Why @ts-expect-error" note
+      expect(SentryNode.fakeScope.setTransactionName).toBeCalledTimes(0);
+      // @ts-expect-error see "Why @ts-expect-error" note
+      expect(SentryNode.fakeScope.setTag).toBeCalledTimes(0);
+      // @ts-expect-error see "Why @ts-expect-error" note
+      expect(SentryNode.fakeHub.startTransaction).toBeCalledTimes(0);
+    });
   });
 
   describe('wrapHandler() on sync handler', () => {
     test('successful execution', async () => {
-      expect.assertions(9);
+      expect.assertions(10);
 
       const handler: Handler = (_event, _context, callback) => {
         callback(null, 42);
@@ -209,7 +227,7 @@ describe('AWSLambda', () => {
     });
 
     test('unsuccessful execution', async () => {
-      expect.assertions(9);
+      expect.assertions(10);
 
       const error = new Error('sorry');
       const handler: Handler = (_event, _context, callback) => {
@@ -284,7 +302,7 @@ describe('AWSLambda', () => {
     });
 
     test('capture error', async () => {
-      expect.assertions(9);
+      expect.assertions(10);
 
       const error = new Error('wat');
       const handler: Handler = (_event, _context, _callback) => {
@@ -319,7 +337,7 @@ describe('AWSLambda', () => {
 
   describe('wrapHandler() on async handler', () => {
     test('successful execution', async () => {
-      expect.assertions(9);
+      expect.assertions(10);
 
       const handler: Handler = async (_event, _context) => {
         return 42;
@@ -355,7 +373,7 @@ describe('AWSLambda', () => {
     });
 
     test('capture error', async () => {
-      expect.assertions(9);
+      expect.assertions(10);
 
       const error = new Error('wat');
       const handler: Handler = async (_event, _context) => {
@@ -401,7 +419,7 @@ describe('AWSLambda', () => {
 
   describe('wrapHandler() on async handler with a callback method (aka incorrect usage)', () => {
     test('successful execution', async () => {
-      expect.assertions(9);
+      expect.assertions(10);
 
       const handler: Handler = async (_event, _context, _callback) => {
         return 42;
@@ -437,7 +455,7 @@ describe('AWSLambda', () => {
     });
 
     test('capture error', async () => {
-      expect.assertions(9);
+      expect.assertions(10);
 
       const error = new Error('wat');
       const handler: Handler = async (_event, _context, _callback) => {