diff --git a/environment.yml b/environment.yml
index c05f1d8e9..f2f4dc85a 100644
--- a/environment.yml
+++ b/environment.yml
@@ -42,6 +42,11 @@ dependencies:
   - urllib3 >=1.26
   - xarray >=2022.6, <=2024.6
   - zarr >=2.11
+  # Observability
+  - opentelemetry-api
+  - opentelemetry-sdk
+  - opentelemetry-instrumentation-tornado
+  - opentelemetry-exporter-otlp-proto-grpc
   # Testing
   - flake8 >=3.7
   - kerchunk
diff --git a/xcube/cli/serve.py b/xcube/cli/serve.py
index d0c132058..740ce2cee 100644
--- a/xcube/cli/serve.py
+++ b/xcube/cli/serve.py
@@ -18,6 +18,7 @@
     DEFAULT_SERVER_PORT,
     DEFAULT_SERVER_ADDRESS,
 )
+from xcube.webapi.common.telemetry import tracer
 
 assets_to_show = ["apis", "endpoints", "openapi", "config", "configschema"]
 
@@ -134,6 +135,7 @@
 @cli_option_quiet
 @cli_option_verbosity
 @click.argument("paths", metavar="[PATHS...]", nargs=-1)
+@tracer.start_as_current_span("serve")
 def serve(
     framework_name: str,
     port: int,
diff --git a/xcube/server/webservers/tornado.py b/xcube/server/webservers/tornado.py
index 9f143e9e0..9d03cfb01 100644
--- a/xcube/server/webservers/tornado.py
+++ b/xcube/server/webservers/tornado.py
@@ -15,6 +15,7 @@
 import tornado.httputil
 import tornado.ioloop
 import tornado.web
+from opentelemetry.instrumentation.tornado import TornadoInstrumentor
 
 from xcube.constants import LOG
 from xcube.constants import LOG_LEVEL_DETAIL
@@ -39,6 +40,7 @@
 from xcube.version import version
 
 SERVER_CTX_ATTR_NAME = "__xcube_server_ctx"
+TornadoInstrumentor().instrument()
 
 
 class TornadoFramework(Framework):
@@ -124,16 +126,18 @@ def add_routes(self, api_routes: Sequence[ApiRoute], url_prefix: str):
         handlers = []
 
         for api_route in api_routes:
-            handlers.append((
-                url_prefix + self.path_to_pattern(api_route.path)
-                + ("/?" if api_route.slash else ""),
-                TornadoRequestHandler,
-                {"api_route": api_route},
-            ))
+            handlers.append(
+                (
+                    url_prefix
+                    + self.path_to_pattern(api_route.path)
+                    + ("/?" if api_route.slash else ""),
+                    TornadoRequestHandler,
+                    {"api_route": api_route},
+                )
+            )
             LOG.log(
                 LOG_LEVEL_DETAIL,
-                f"Added route {api_route.path!r}"
-                f" from API {api_route.api_name!r}",
+                f"Added route {api_route.path!r}" f" from API {api_route.api_name!r}",
             )
 
         if handlers:
diff --git a/xcube/webapi/common/telemetry.py b/xcube/webapi/common/telemetry.py
new file mode 100644
index 000000000..b3a174662
--- /dev/null
+++ b/xcube/webapi/common/telemetry.py
@@ -0,0 +1,32 @@
+import os
+
+from opentelemetry import trace
+from opentelemetry.exporter.otlp.proto.grpc.trace_exporter import OTLPSpanExporter
+from opentelemetry.sdk.trace import TracerProvider
+from opentelemetry.sdk.trace.export import BatchSpanProcessor
+
+
+otel_config = {
+    "exporter_otlp_endpoint": os.getenv("OTLP_ENDPOINT"),
+    "exporter_otlp_insecure": True,
+}
+
+otlp_trace_exporter = OTLPSpanExporter(
+    endpoint=otel_config["exporter_otlp_endpoint"],
+    insecure=otel_config["exporter_otlp_insecure"],
+)
+
+# Observability Initialization
+provider = TracerProvider()
+processor = BatchSpanProcessor(otlp_trace_exporter)
+provider.add_span_processor(processor)
+trace.set_tracer_provider(provider)
+tracer = trace.get_tracer("xcube.observability")
+
+
+def set_attributes(*attrs):
+    span = trace.get_current_span()
+    combined = {}
+    for attr in attrs:
+        combined.update(attr)
+    span.set_attributes(combined)
diff --git a/xcube/webapi/datasets/controllers.py b/xcube/webapi/datasets/controllers.py
index becdfadbb..41f736768 100644
--- a/xcube/webapi/datasets/controllers.py
+++ b/xcube/webapi/datasets/controllers.py
@@ -30,6 +30,7 @@
 from .authutil import check_scopes
 from .context import DatasetConfig
 from .context import DatasetsContext
+from ..common.telemetry import tracer
 from ..places.controllers import GeoJsonFeatureCollection
 from ..places.controllers import find_places
 
@@ -494,6 +495,7 @@ def get_dataset_coordinates(ctx: DatasetsContext, ds_id: str, dim_name: str) ->
 
 
 # noinspection PyUnusedLocal
+@tracer.start_as_current_span("get_color_bars.test")
 def get_color_bars(ctx: DatasetsContext, mime_type: str) -> str:
     cmaps = ctx.colormap_registry.to_json()
     if mime_type == "application/json":
diff --git a/xcube/webapi/tiles/controllers.py b/xcube/webapi/tiles/controllers.py
index ffa328446..5f68d5da1 100644
--- a/xcube/webapi/tiles/controllers.py
+++ b/xcube/webapi/tiles/controllers.py
@@ -5,6 +5,9 @@
 from typing import Optional, Dict
 from collections.abc import Mapping
 
+from opentelemetry.context import attach
+from opentelemetry.context import detach
+
 from xcube.constants import LOG
 from xcube.core.tile import DEFAULT_CRS_NAME
 from xcube.core.tile import DEFAULT_FORMAT
@@ -15,6 +18,7 @@
 from xcube.server.api import ApiError
 from xcube.util.perf import measure_time_cm
 from .context import TilesContext
+from ..common.telemetry import tracer, set_attributes
 
 
 def compute_ml_dataset_tile(
@@ -26,16 +30,25 @@ def compute_ml_dataset_tile(
     y: str,
     z: str,
     params: Mapping[str, str],
+    current_context,
 ):
-    params = dict(params)
-    trace_perf = params.pop("debug", "1" if ctx.datasets_ctx.trace_perf else "0") == "1"
-    measure_time = measure_time_cm(logger=LOG, disabled=not trace_perf)
-    with measure_time("Computing RGBA tile"):
-        return _compute_ml_dataset_tile(
-            ctx, ds_id, var_name, crs_name, x, y, z, params, trace_perf
-        )
+    token = attach(current_context)
+    try:
+        with tracer.start_as_current_span("tiles.compute_ml_dataset_tile"):
+            params = dict(params)
+            trace_perf = (
+                params.pop("debug", "1" if ctx.datasets_ctx.trace_perf else "0") == "1"
+            )
+            measure_time = measure_time_cm(logger=LOG, disabled=not trace_perf)
+            with measure_time("Computing RGBA tile"):
+                return _compute_ml_dataset_tile(
+                    ctx, ds_id, var_name, crs_name, x, y, z, params, trace_perf
+                )
+    finally:
+        detach(token)
 
 
+@tracer.start_as_current_span("tiles._compute_ml_dataset_tile.test")
 def _compute_ml_dataset_tile(
     ctx: TilesContext,
     ds_id: str,
@@ -47,6 +60,7 @@ def _compute_ml_dataset_tile(
     args: dict[str, str],
     trace_perf: bool,
 ):
+    set_attributes({"x": x}, {"y": y}, {"z": z})
     try:
         x, y, z = (int(c) for c in (x, y, z))
     except ValueError:
diff --git a/xcube/webapi/tiles/routes.py b/xcube/webapi/tiles/routes.py
index 518c46160..c999c75b6 100644
--- a/xcube/webapi/tiles/routes.py
+++ b/xcube/webapi/tiles/routes.py
@@ -14,6 +14,8 @@
 from ..datasets import QUERY_PARAM_VMAX
 from ..datasets import QUERY_PARAM_VMIN
 
+import opentelemetry.context as context
+
 PATH_PARAM_X = {
     "name": "x",
     "in": "path",
@@ -88,6 +90,7 @@ class TilesHandler(ApiHandler[TilesContext]):
         parameters=TILE_PARAMETERS,
     )
     async def get(self, datasetId: str, varName: str, z: str, y: str, x: str):
+        current_context = context.get_current()
         tile = await self.ctx.run_in_executor(
             None,
             compute_ml_dataset_tile,
@@ -99,6 +102,7 @@ async def get(self, datasetId: str, varName: str, z: str, y: str, x: str):
             y,
             z,
             {k: v[0] for k, v in self.request.query.items()},
+            current_context,
         )
         self.response.set_header("Content-Type", "image/png")
         await self.response.finish(tile)