diff --git a/backend/api/core/config.py b/backend/api/core/config.py
index 0e0d010f..87160760 100644
--- a/backend/api/core/config.py
+++ b/backend/api/core/config.py
@@ -168,6 +168,10 @@ def has_local_fallback(self) -> bool:
     # Entra
     USE_ENTRA_AUTH: bool = os.getenv("USE_ENTRA_AUTH", "false").lower() == "true"
 
+    # Azure App Insights
+    USE_APP_INSIGHTS: bool = os.getenv("USE_APP_INSIGHTS", "false").lower() == "true"
+    APP_INSIGHTS_CONNECTION_STRING: Optional[str] = os.getenv("APP_INSIGHTS_CONNECTION_STRING")
+
     class Config:
         case_sensitive = True
         # Resolve to backend/.env regardless of current working directory.
diff --git a/backend/api/services/app_insights_service.py b/backend/api/services/app_insights_service.py
new file mode 100644
index 00000000..7a9261e7
--- /dev/null
+++ b/backend/api/services/app_insights_service.py
@@ -0,0 +1,29 @@
+from api.core.config import settings
+from azure.identity import DefaultAzureCredential
+from azure.monitor.opentelemetry import configure_azure_monitor
+import logging
+
+def configure_azure_app_insights():
+    if settings.USE_APP_INSIGHTS and not settings.APP_INSIGHTS_CONNECTION_STRING:
+        raise ValueError("APP_INSIGHTS_CONNECTION_STRING must be set if USE_APP_INSIGHTS is true")
+    
+    if settings.USE_APP_INSIGHTS and settings.APP_INSIGHTS_CONNECTION_STRING:
+        credential = DefaultAzureCredential()
+        configure_azure_monitor(connection_string=settings.APP_INSIGHTS_CONNECTION_STRING, credential=credential)
+        # Suppress noisy Azure SDK internal logs from terminal and App Insights traces
+        for noisy_logger in [
+            "azure.core.pipeline.policies.http_logging_policy",
+            "azure.monitor.opentelemetry.exporter",
+        ]:
+            logging.getLogger(noisy_logger).setLevel(logging.WARNING)
+        print("📈 Application Insights enabled", flush=True)
+
+
+def log_action(s, user=None):
+    logger = logging.getLogger("actions_of_interest")
+    logger.setLevel(logging.INFO)
+    if user:
+        extra = {"custom_dimensions": {"user": user.name}}
+        logger.info(s, extra=extra)
+    else:
+        logger.info(s)
\ No newline at end of file
diff --git a/backend/main.py b/backend/main.py
index 2b610d25..bbff5b14 100644
--- a/backend/main.py
+++ b/backend/main.py
@@ -1,4 +1,5 @@
 import os
+from api.services.app_insights_service import log_action
 import uvicorn
 from fastapi import FastAPI
 from fastapi.middleware.cors import CORSMiddleware
@@ -44,6 +45,15 @@ async def startup_event():
             print("✓ Users table initialized", flush=True)
     except Exception as e:
         print(f"⚠️ Failed to ensure users table exists: {e}", flush=True)
+
+    # Configure Azure Application Insights if enabled
+    if settings.USE_APP_INSIGHTS:
+        try:
+            from api.services.app_insights_service import configure_azure_app_insights
+            configure_azure_app_insights()
+            log_action("Application Insights configured")
+        except Exception as e:
+            print(f"⚠️ Failed to configure Azure Application Insights: {e}", flush=True)
     print("🎯 CAN-SR Backend ready!", flush=True)
 
     
diff --git a/backend/requirements.txt b/backend/requirements.txt
index 8e33d34a..7541714b 100644
--- a/backend/requirements.txt
+++ b/backend/requirements.txt
@@ -41,4 +41,6 @@ langchain-google-genai==4.2.0
 
 # OAuth
 Authlib==1.6.6
-itsdangerous==2.2.0
\ No newline at end of file
+itsdangerous==2.2.0
+
+azure-monitor-opentelemetry==1.8.6
\ No newline at end of file