diff --git a/docs/developers/development/telemetry.md b/docs/developers/development/telemetry.md
index b826d0472f..266ce05cc8 100644
--- a/docs/developers/development/telemetry.md
+++ b/docs/developers/development/telemetry.md
@@ -327,6 +327,24 @@ for cross-process trace stitching — e.g. ARMS Tracing serving DashScope.
 For most operators the value is `false`; cross-vendor trace continuation
 is niche.
 
+**Depends on `telemetry.enabled: true`.** The OTel SDK only initializes
+when telemetry is enabled, so `propagateTraceContext` only takes effect
+in that state. Setting it to `true` while telemetry is disabled is a
+silent no-op — no SDK, no propagator, no `traceparent` on the wire.
+Verify both flags when wiring an ARMS+DashScope correlation setup:
+
+```jsonc
+{
+  "telemetry": {
+    "enabled": true,
+    "otlpTracesEndpoint": "http://tracing-analysis-...",
+  },
+  "outboundCorrelation": {
+    "propagateTraceContext": true,
+  },
+}
+```
+
 ### Other outbound correlation headers
 
 `X-Qwen-Code-Session-Id` and `X-Qwen-Code-Request-Id` are **not part of
diff --git a/packages/cli/src/config/settingsSchema.ts b/packages/cli/src/config/settingsSchema.ts
index 161c4afe5d..a611f091fe 100644
--- a/packages/cli/src/config/settingsSchema.ts
+++ b/packages/cli/src/config/settingsSchema.ts
@@ -1052,7 +1052,7 @@ const SETTINGS_SCHEMA = {
       properties: {
         propagateTraceContext: {
           description:
-            "Inject W3C `traceparent` header on outbound `fetch` requests (LLM SDK calls, MCP StreamableHTTP, WebFetch, ...). Default: false — trace context stays internal to the operator's OTLP collector and is NOT written onto third-party request streams. Set true only when you want cross-process trace stitching with an OTel-aware LLM provider (e.g. ARMS+DashScope). Note: client HTTP spans are still emitted in either case; this flag only governs the wire `traceparent` header.",
+            "Inject W3C `traceparent` header on outbound `fetch` requests (LLM SDK calls, MCP StreamableHTTP, WebFetch, ...). Default: false — trace context stays internal to the operator's OTLP collector and is NOT written onto third-party request streams. Set true only when you want cross-process trace stitching with an OTel-aware LLM provider (e.g. ARMS+DashScope). Note: client HTTP spans are still emitted in either case; this flag only governs the wire `traceparent` header. Depends on `telemetry.enabled: true` — the OTel SDK only initializes when telemetry is enabled, so this flag is a silent no-op without it.",
           type: 'boolean',
           default: false,
         },
diff --git a/packages/core/src/telemetry/sdk.test.ts b/packages/core/src/telemetry/sdk.test.ts
index dc3155fe5e..91a0a35532 100644
--- a/packages/core/src/telemetry/sdk.test.ts
+++ b/packages/core/src/telemetry/sdk.test.ts
@@ -677,9 +677,10 @@ describe('Telemetry SDK', () => {
       ).mockReturnValue(true);
       initializeTelemetry(mockConfig);
       // textMapPropagator is omitted from NodeSDK options → SDK installs
-      // its default W3C composite propagator. Test asserts the absence
-      // because the actual W3CTraceContextPropagator instance is created
-      // inside @opentelemetry/sdk-node which is auto-mocked here.
+      // its default `CompositePropagator` (W3CTraceContextPropagator +
+      // W3CBaggagePropagator). Test asserts the absence at the constructor
+      // boundary because the default composite is constructed inside
+      // @opentelemetry/sdk-node, which is auto-mocked here.
       expect(getTextMapPropagator()).toBeUndefined();
     });
   });
diff --git a/packages/vscode-ide-companion/schemas/settings.schema.json b/packages/vscode-ide-companion/schemas/settings.schema.json
index c86fb1b4ed..5604d7bdba 100644
--- a/packages/vscode-ide-companion/schemas/settings.schema.json
+++ b/packages/vscode-ide-companion/schemas/settings.schema.json
@@ -444,7 +444,7 @@
       "type": "object",
       "properties": {
         "propagateTraceContext": {
-          "description": "Inject W3C `traceparent` header on outbound `fetch` requests (LLM SDK calls, MCP StreamableHTTP, WebFetch, ...). Default: false — trace context stays internal to the operator's OTLP collector and is NOT written onto third-party request streams. Set true only when you want cross-process trace stitching with an OTel-aware LLM provider (e.g. ARMS+DashScope). Note: client HTTP spans are still emitted in either case; this flag only governs the wire `traceparent` header.",
+          "description": "Inject W3C `traceparent` header on outbound `fetch` requests (LLM SDK calls, MCP StreamableHTTP, WebFetch, ...). Default: false — trace context stays internal to the operator's OTLP collector and is NOT written onto third-party request streams. Set true only when you want cross-process trace stitching with an OTel-aware LLM provider (e.g. ARMS+DashScope). Note: client HTTP spans are still emitted in either case; this flag only governs the wire `traceparent` header. Depends on `telemetry.enabled: true` — the OTel SDK only initializes when telemetry is enabled, so this flag is a silent no-op without it.",
           "type": "boolean",
           "default": false
         }