diff --git a/lib/datadog/tracing/distributed/propagation.rb b/lib/datadog/tracing/distributed/propagation.rb
index 1cc8959b5de..b18de48809a 100644
--- a/lib/datadog/tracing/distributed/propagation.rb
+++ b/lib/datadog/tracing/distributed/propagation.rb
@@ -101,10 +101,22 @@ def extract(data)
               # Only parse if it represent the same trace as the successfully extracted one
               next unless tracecontext_digest.trace_id == extracted_trace_digest.trace_id
 
-              # Preserve the `tracestate`
+              parent_id = extracted_trace_digest.span_id
+              distributed_tags = extracted_trace_digest.trace_distributed_tags
+              unless extracted_trace_digest.span_id == tracecontext_digest.span_id
+                # span_id in the tracecontext header takes precedence over the value in all conflicting headers
+                parent_id = tracecontext_digest.span_id
+                if (lp_id = last_datadog_parent_id(data, tracecontext_digest.trace_distributed_tags))
+                  distributed_tags = extracted_trace_digest.trace_distributed_tags&.dup || {}
+                  distributed_tags[Tracing::Metadata::Ext::Distributed::TAG_DD_PARENT_ID] = lp_id
+                end
+              end
+              # Preserve the trace state and last datadog span id
               extracted_trace_digest = extracted_trace_digest.merge(
+                span_id: parent_id,
                 trace_state: tracecontext_digest.trace_state,
-                trace_state_unknown_fields: tracecontext_digest.trace_state_unknown_fields
+                trace_state_unknown_fields: tracecontext_digest.trace_state_unknown_fields,
+                trace_distributed_tags: distributed_tags
               )
             end
           rescue => e
@@ -115,6 +127,22 @@ def extract(data)
 
           extracted_trace_digest
         end
+
+        private
+
+        def last_datadog_parent_id(headers, tracecontext_tags)
+          dd_propagator = @propagation_style_extract.find { |propagator| propagator.is_a?(Datadog) }
+          if tracecontext_tags&.fetch(
+            Tracing::Metadata::Ext::Distributed::TAG_DD_PARENT_ID,
+            Tracing::Metadata::Ext::Distributed::DD_PARENT_ID_DEFAULT
+          ) != Tracing::Metadata::Ext::Distributed::DD_PARENT_ID_DEFAULT
+            # tracecontext headers contain a p value, ensure this value is sent to backend
+            tracecontext_tags[Tracing::Metadata::Ext::Distributed::TAG_DD_PARENT_ID]
+          elsif dd_propagator && (dd_digest = dd_propagator.extract(headers))
+            # if p value is not present in tracestate, use the parent id from the datadog headers
+            format('%016x', dd_digest.span_id)
+          end
+        end
       end
     end
   end
diff --git a/lib/datadog/tracing/distributed/trace_context.rb b/lib/datadog/tracing/distributed/trace_context.rb
index 44c716711ff..c5871f03175 100644
--- a/lib/datadog/tracing/distributed/trace_context.rb
+++ b/lib/datadog/tracing/distributed/trace_context.rb
@@ -57,7 +57,8 @@ def extract(data)
           end
 
           tags ||= {}
-          tags[Tracing::Metadata::Ext::Distributed::TAG_DD_PARENT_ID] = ts_parent_id || '0000000000000000'
+          tags[Tracing::Metadata::Ext::Distributed::TAG_DD_PARENT_ID] =
+            ts_parent_id || Tracing::Metadata::Ext::Distributed::DD_PARENT_ID_DEFAULT
 
           TraceDigest.new(
             span_id: parent_id,
diff --git a/lib/datadog/tracing/metadata/ext.rb b/lib/datadog/tracing/metadata/ext.rb
index 1f31cb63cbb..0034cd77a46 100644
--- a/lib/datadog/tracing/metadata/ext.rb
+++ b/lib/datadog/tracing/metadata/ext.rb
@@ -55,6 +55,7 @@ module Distributed
           TAG_SAMPLING_PRIORITY = '_sampling_priority_v1'
 
           TAG_DD_PARENT_ID = '_dd.parent_id'
+          DD_PARENT_ID_DEFAULT = '0000000000000000'
 
           # Trace tags with this prefix will propagate from a trace through distributed tracing.
           # Distributed headers tags with this prefix will be injected into the active trace.
diff --git a/spec/datadog/tracing/distributed/propagation_spec.rb b/spec/datadog/tracing/distributed/propagation_spec.rb
index 313a4cfb910..68297248d9d 100644
--- a/spec/datadog/tracing/distributed/propagation_spec.rb
+++ b/spec/datadog/tracing/distributed/propagation_spec.rb
@@ -334,6 +334,30 @@
               end
             end
           end
+
+          context 'and span_id is not matching' do
+            let(:data) { super().merge(prepare_key['x-datadog-parent-id'] => '15') }
+
+            context 'without tracestate' do
+              it 'extracts span_id from traceparent and stores x-datadog-parent-id in trace_distributed_tags' do
+                expect(trace_digest).to be_a_kind_of(Datadog::Tracing::TraceDigest)
+                expect(trace_digest.span_id).to eq(73456)
+                expect(trace_digest.trace_id).to eq(61185)
+                expect(trace_digest.trace_distributed_tags).to include('_dd.parent_id' => '000000000000000f')
+              end
+            end
+
+            context 'with tracestate' do
+              let(:data) { super().merge(prepare_key['tracestate'] => 'other=gg,dd=s:1;p:000000000000000a') }
+
+              it 'extracts span_id from traceparent and stores tracestate p value in trace_distributed_tags' do
+                expect(trace_digest).to be_a_kind_of(Datadog::Tracing::TraceDigest)
+                expect(trace_digest.span_id).to eq(73456)
+                expect(trace_digest.trace_id).to eq(61185)
+                expect(trace_digest.trace_distributed_tags).to eq({ '_dd.parent_id' => '000000000000000a' })
+              end
+            end
+          end
         end
       end