diff --git a/spring-graphql/src/main/java/org/springframework/graphql/observation/GraphQlObservationInstrumentation.java b/spring-graphql/src/main/java/org/springframework/graphql/observation/GraphQlObservationInstrumentation.java
index b3b115a8..1fee0bd6 100644
--- a/spring-graphql/src/main/java/org/springframework/graphql/observation/GraphQlObservationInstrumentation.java
+++ b/spring-graphql/src/main/java/org/springframework/graphql/observation/GraphQlObservationInstrumentation.java
@@ -190,15 +190,19 @@ private static Observation getCurrentObservation(DataFetchingEnvironment environ
 	}
 
 	private static DataFetchingEnvironment wrapDataFetchingEnvironment(DataFetchingEnvironment environment, Observation dataFetcherObservation) {
-		GraphQLContext.Builder localContextBuilder = GraphQLContext.newContext();
-		if (environment.getLocalContext() instanceof GraphQLContext localContext) {
-			localContextBuilder.of(localContext);
+		if (environment.getLocalContext() == null || environment.getLocalContext() instanceof GraphQLContext) {
+			GraphQLContext.Builder localContextBuilder = GraphQLContext.newContext();
+			if (environment.getLocalContext() instanceof GraphQLContext localContext) {
+				localContextBuilder.of(localContext);
+			}
+			localContextBuilder.of(ObservationThreadLocalAccessor.KEY, dataFetcherObservation);
+			return DataFetchingEnvironmentImpl
+					.newDataFetchingEnvironment(environment)
+					.localContext(localContextBuilder.build())
+					.build();
 		}
-		localContextBuilder.of(ObservationThreadLocalAccessor.KEY, dataFetcherObservation);
-		return DataFetchingEnvironmentImpl
-				.newDataFetchingEnvironment(environment)
-				.localContext(localContextBuilder.build())
-				.build();
+		// do not wrap environment, there is an existing custom context
+		return environment;
 	}
 
 
diff --git a/spring-graphql/src/test/java/org/springframework/graphql/observation/GraphQlObservationInstrumentationTests.java b/spring-graphql/src/test/java/org/springframework/graphql/observation/GraphQlObservationInstrumentationTests.java
index a2dd367a..8d6ad88a 100644
--- a/spring-graphql/src/test/java/org/springframework/graphql/observation/GraphQlObservationInstrumentationTests.java
+++ b/spring-graphql/src/test/java/org/springframework/graphql/observation/GraphQlObservationInstrumentationTests.java
@@ -1,5 +1,5 @@
 /*
- * Copyright 2020-2023 the original author or authors.
+ * Copyright 2020-2024 the original author or authors.
  *
  * Licensed under the Apache License, Version 2.0 (the "License");
  * you may not use this file except in compliance with the License.
@@ -31,7 +31,15 @@
 import org.junit.jupiter.params.ParameterizedTest;
 import org.junit.jupiter.params.provider.Arguments;
 import org.junit.jupiter.params.provider.MethodSource;
-import org.springframework.graphql.*;
+
+import org.springframework.graphql.Author;
+import org.springframework.graphql.Book;
+import org.springframework.graphql.BookSource;
+import org.springframework.graphql.ExecutionGraphQlRequest;
+import org.springframework.graphql.ExecutionGraphQlResponse;
+import org.springframework.graphql.GraphQlSetup;
+import org.springframework.graphql.ResponseHelper;
+import org.springframework.graphql.TestExecutionRequest;
 import org.springframework.graphql.execution.DataFetcherExceptionResolver;
 import org.springframework.graphql.execution.ErrorType;
 import reactor.core.publisher.Mono;
@@ -319,4 +327,42 @@ void shouldNotOverrideExistingLocalContext() {
 		ResponseHelper.forResponse(responseMono);
 	}
 
+	@Test
+	void shouldNotOverrideCustomLocalContext() {
+
+		String document = """
+				{
+					bookById(id: 1) {
+						author {
+							firstName,
+							lastName
+						}
+					}
+				}
+				""";
+		DataFetcher<DataFetcherResult<Object>> bookDataFetcher = environment -> DataFetcherResult.newResult()
+				.data(BookSource.getBook(1L))
+				.localContext(new CustomLocalContext())
+				.build();
+		DataFetcher<Author> authorDataFetcher = environment -> BookSource.getAuthor(101L);
+		DataFetcher<String> authorFirstNameDataFetcher = environment -> {
+			Object context = environment.getLocalContext();
+			assertThat(context).isInstanceOf(CustomLocalContext.class);
+			return BookSource.getAuthor(101L).getFirstName();
+		};
+
+		ExecutionGraphQlRequest request = TestExecutionRequest.forDocument(document);
+		Mono<ExecutionGraphQlResponse> responseMono = graphQlSetup
+				.queryFetcher("bookById", bookDataFetcher)
+				.dataFetcher("Book", "author", authorDataFetcher)
+				.dataFetcher("Author", "firstName", authorFirstNameDataFetcher)
+				.toGraphQlService()
+				.execute(request);
+		ResponseHelper.forResponse(responseMono);
+	}
+
+	static class CustomLocalContext {
+
+	}
+
 }