diff --git a/subsys/trace/src/main/java/org/commonjava/indy/subsys/trace/TraceManagerProducer.java b/subsys/trace/src/main/java/org/commonjava/indy/subsys/trace/TraceManagerProducer.java
index 354d75371f..6b35144178 100644
--- a/subsys/trace/src/main/java/org/commonjava/indy/subsys/trace/TraceManagerProducer.java
+++ b/subsys/trace/src/main/java/org/commonjava/indy/subsys/trace/TraceManagerProducer.java
@@ -56,8 +56,23 @@ public class TraceManagerProducer
     @PostConstruct
     public void init()
     {
-        logger.info( "Initializing Opentelemetry trace plugin" );
-        O11yphantTracePlugin plugin = new OtelTracePlugin( config, config );
+        logger.info( "Initializing OpenTelemetry trace plugin" );
+        O11yphantTracePlugin plugin;
+
+        try
+        {
+            plugin = new OtelTracePlugin( config, config );
+        }
+        catch ( Exception | Error e )
+        {
+            logger.warn( "Failed to initialize OpenTelemetry trace plugin. " +
+                        "This is likely due to OpenTelemetry collector being unavailable or a library version mismatch. " +
+                        "Tracing will be disabled. Error: {}", e.getMessage(), e );
+
+            // Disable tracing and recreate plugin in disabled mode
+            config.setEnabled( false );
+            plugin = new OtelTracePlugin( config, config );
+        }
 
         traceManager = new TraceManager( plugin, new SpanFieldsDecorator( getRootSpanFields() ), config );
         traceThreadContextualizer = traceManager.getTraceThreadContextualizer();
diff --git a/subsys/trace/src/main/java/org/commonjava/indy/subsys/trace/config/IndyTraceConfiguration.java b/subsys/trace/src/main/java/org/commonjava/indy/subsys/trace/config/IndyTraceConfiguration.java
index 8083b1f609..621c481b0d 100644
--- a/subsys/trace/src/main/java/org/commonjava/indy/subsys/trace/config/IndyTraceConfiguration.java
+++ b/subsys/trace/src/main/java/org/commonjava/indy/subsys/trace/config/IndyTraceConfiguration.java
@@ -108,6 +108,11 @@ public boolean isEnabled()
         return enabled;
     }
 
+    public void setEnabled( boolean enabled )
+    {
+        this.enabled = enabled;
+    }
+
     @Override
     public boolean isConsoleTransport()
     {