diff --git a/datadog_lambda/tracing.py b/datadog_lambda/tracing.py
index d62cad37..4e875b76 100644
--- a/datadog_lambda/tracing.py
+++ b/datadog_lambda/tracing.py
@@ -234,7 +234,7 @@ def set_dd_trace_py_root(trace_context, merge_xray_traces):
 
 
 def create_function_execution_span(
-    context, function_name, is_cold_start, trace_context
+    context, function_name, is_cold_start, trace_context, merge_xray_traces
 ):
     tags = {}
     if context:
@@ -246,7 +246,7 @@ def create_function_execution_span(
             "resource_names": context.function_name,
         }
     source = trace_context["source"]
-    if source != TraceContextSource.DDTRACE:
+    if source == TraceContextSource.XRAY and merge_xray_traces:
         tags["_dd.parent_source"] = source
 
     args = {
diff --git a/datadog_lambda/wrapper.py b/datadog_lambda/wrapper.py
index cd074ae4..7ddb4340 100644
--- a/datadog_lambda/wrapper.py
+++ b/datadog_lambda/wrapper.py
@@ -122,7 +122,11 @@ def _before(self, event, context):
             if dd_tracing_enabled:
                 set_dd_trace_py_root(dd_context, self.merge_xray_traces)
                 self.span = create_function_execution_span(
-                    context, self.function_name, is_cold_start(), dd_context
+                    context,
+                    self.function_name,
+                    is_cold_start(),
+                    dd_context,
+                    self.merge_xray_traces,
                 )
             else:
                 set_correlation_ids()