diff --git a/CHANGELOG.md b/CHANGELOG.md
index 530484b..867700f 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -1,5 +1,12 @@
 ## CHANGELOG
 
+### `v1.40.0`
+
+#### Features
+* Improve Distributed Tracing error reporting [#545](https://github.com/newrelic/elixir_agent/pull/545)
+
+------
+
 ### `v1.39.0`
 
 #### Fixes
diff --git a/VERSION b/VERSION
index 5edffce..32b7211 100644
--- a/VERSION
+++ b/VERSION
@@ -1 +1 @@
-1.39.0
+1.40.0