diff --git a/src/OpenTelemetry.Instrumentation.AWSLambda/AWSLambdaWrapper.cs b/src/OpenTelemetry.Instrumentation.AWSLambda/AWSLambdaWrapper.cs
index 4695c10460..9ba0410d08 100644
--- a/src/OpenTelemetry.Instrumentation.AWSLambda/AWSLambdaWrapper.cs
+++ b/src/OpenTelemetry.Instrumentation.AWSLambda/AWSLambdaWrapper.cs
@@ -162,14 +162,9 @@ public static Task<TResult> TraceAsync<TInput, TResult>(
             }
         }
 
-        // No parallel invocation of the same lambda handler.
-        bool faasColdStart = isColdStart;
-        if (faasColdStart)
-        {
-            isColdStart = false;
-        }
-
-        var functionTags = AWSLambdaUtils.GetFunctionTags(input, context, faasColdStart);
+        // No parallel invocation of the same lambda handler expected.
+        var functionTags = AWSLambdaUtils.GetFunctionTags(input, context, isColdStart);
+        isColdStart = false;
         var httpTags = AWSLambdaHttpUtils.GetHttpTags(input);
 
         // We assume that functionTags and httpTags have no intersection.
@@ -179,6 +174,9 @@ public static Task<TResult> TraceAsync<TInput, TResult>(
         return activity;
     }
 
+    // Use only for testing.
+    internal static void ResetColdStart() => isColdStart = true;
+
     private static void OnFunctionStop(Activity? activity, TracerProvider? tracerProvider)
     {
         activity?.Stop();
diff --git a/test/OpenTelemetry.Instrumentation.AWSLambda.Tests/AWSLambdaWrapperTests.cs b/test/OpenTelemetry.Instrumentation.AWSLambda.Tests/AWSLambdaWrapperTests.cs
index 6262c29baa..a7d617bc70 100644
--- a/test/OpenTelemetry.Instrumentation.AWSLambda.Tests/AWSLambdaWrapperTests.cs
+++ b/test/OpenTelemetry.Instrumentation.AWSLambda.Tests/AWSLambdaWrapperTests.cs
@@ -213,6 +213,30 @@ public void OnFunctionStart_NoSampledAndAwsXRayContextExtractionDisabled_Activit
         Assert.NotNull(activity);
     }
 
+    [Theory]
+    [InlineData(1)]
+    [InlineData(2)]
+    public void OnFunctionStart_ColdStart_ColdStartTagHasCorrectValue(int invocationsCount)
+    {
+        AWSLambdaWrapper.ResetColdStart();
+        Activity? activity = null;
+
+        using (var tracerProvider = Sdk.CreateTracerProviderBuilder()
+                   .AddAWSLambdaConfigurations(c => c.DisableAwsXRayContextExtraction = true)
+                   .Build())
+        {
+            for (int i = 1; i <= invocationsCount; i++)
+            {
+                activity = AWSLambdaWrapper.OnFunctionStart("test-input", new SampleLambdaContext());
+            }
+        }
+
+        Assert.NotNull(activity);
+        Assert.NotNull(activity.TagObjects);
+        var expectedColdStartValue = invocationsCount == 1 ? true : false;
+        Assert.Contains(activity.TagObjects, x => x.Key == AWSLambdaSemanticConventions.AttributeFaasColdStart && expectedColdStartValue.Equals(x.Value));
+    }
+
     private static ActivityContext CreateParentContext()
     {
         var traceId = ActivityTraceId.CreateFromString(TraceId.AsSpan());