diff --git a/packages/agents-a365-observability-hosting/src/utils/TurnContextUtils.ts b/packages/agents-a365-observability-hosting/src/utils/TurnContextUtils.ts
index 7781095b..88dcc36b 100644
--- a/packages/agents-a365-observability-hosting/src/utils/TurnContextUtils.ts
+++ b/packages/agents-a365-observability-hosting/src/utils/TurnContextUtils.ts
@@ -99,10 +99,35 @@ export function getTenantIdPair(turnContext: TurnContext): Array<[string, string
 export function getChannelBaggagePairs(turnContext: TurnContext): Array<[string, string]> {
   if (!turnContext) { 
     return [];
-  }  
+  }
+  
+  let subChannel = turnContext.activity?.channelIdSubChannel as string | undefined;
+  
+  // Try to get subChannel from productContext in channelData if subChannel is not set or empty
+  if ((!subChannel || subChannel.trim() === '') && turnContext.activity?.channelData) {
+    try {
+      const channelData = turnContext.activity.channelData;
+      let channelDataObj: Record<string, unknown> | undefined;
+      
+      // Convert channelData to object if it's a string
+      if (typeof channelData === 'string') {
+        channelDataObj = JSON.parse(channelData);
+      } else if (typeof channelData === 'object') {
+        channelDataObj = channelData as Record<string, unknown>;
+      }
+      
+      // Extract productContext if available
+      if (channelDataObj && typeof channelDataObj.productContext === 'string') {
+        subChannel = channelDataObj.productContext;
+      }
+    } catch {
+      // Silently ignore any parsing errors
+    }
+  }
+  
   const pairs: Array<[string, string | undefined]> = [
     [OpenTelemetryConstants.CHANNEL_NAME_KEY, turnContext.activity?.channelId],
-    [OpenTelemetryConstants.CHANNEL_LINK_KEY, turnContext.activity?.channelIdSubChannel as string | undefined]
+    [OpenTelemetryConstants.CHANNEL_LINK_KEY, subChannel]
   ];
   return normalizePairs(pairs);
 }
diff --git a/tests/observability/extension/hosting/baggage-middleware.test.ts b/tests/observability/extension/hosting/baggage-middleware.test.ts
index 4a1fd00c..f1428e79 100644
--- a/tests/observability/extension/hosting/baggage-middleware.test.ts
+++ b/tests/observability/extension/hosting/baggage-middleware.test.ts
@@ -140,4 +140,90 @@ describe('BaggageMiddleware', () => {
 
     expect(nextCalled).toBe(true);
   });
+
+  it('should extract productContext from channelData when channelIdSubChannel is not set', async () => {
+    const middleware = new BaggageMiddleware();
+    const ctx: any = makeMockTurnContext({ channelId: 'msteams' });
+
+    // Add channelData with productContext, no channelIdSubChannel
+    ctx.activity.channelData = { productContext: 'COPILOT' };
+    ctx.activity.channelIdSubChannel = undefined;
+
+    let capturedChannelLink: string | undefined;
+
+    await middleware.onTurn(ctx, async () => {
+      const bag = propagation.getBaggage(otelContext.active());
+      if (bag) {
+        const entry = bag.getEntry(OpenTelemetryConstants.CHANNEL_LINK_KEY);
+        capturedChannelLink = entry?.value;
+      }
+    });
+
+    expect(capturedChannelLink).toBe('COPILOT');
+  });
+
+  it('should use channelIdSubChannel when both channelIdSubChannel and productContext are present', async () => {
+    const middleware = new BaggageMiddleware();
+    const ctx: any = makeMockTurnContext({ channelId: 'msteams' });
+
+    // Set BOTH channelIdSubChannel and productContext in channelData
+    ctx.activity.channelIdSubChannel = 'teams-subchannel';
+    ctx.activity.channelData = { productContext: 'COPILOT' };
+
+    let capturedChannelLink: string | undefined;
+
+    await middleware.onTurn(ctx, async () => {
+      const bag = propagation.getBaggage(otelContext.active());
+      if (bag) {
+        const entry = bag.getEntry(OpenTelemetryConstants.CHANNEL_LINK_KEY);
+        capturedChannelLink = entry?.value;
+      }
+    });
+
+    // channelIdSubChannel should take precedence, productContext should be ignored
+    expect(capturedChannelLink).toBe('teams-subchannel');
+  });
+
+  it('should extract productContext from channelData when it is a JSON string', async () => {
+    const middleware = new BaggageMiddleware();
+    const ctx: any = makeMockTurnContext({ channelId: 'msteams' });
+
+    // Set channelData as a JSON string (simulating wire format)
+    ctx.activity.channelIdSubChannel = undefined;
+    ctx.activity.channelData = JSON.stringify({ productContext: 'COPILOT' });
+
+    let capturedChannelLink: string | undefined;
+
+    await middleware.onTurn(ctx, async () => {
+      const bag = propagation.getBaggage(otelContext.active());
+      if (bag) {
+        const entry = bag.getEntry(OpenTelemetryConstants.CHANNEL_LINK_KEY);
+        capturedChannelLink = entry?.value;
+      }
+    });
+
+    expect(capturedChannelLink).toBe('COPILOT');
+  });
+
+  it('should not set channel link when channelData is invalid JSON', async () => {
+    const middleware = new BaggageMiddleware();
+    const ctx: any = makeMockTurnContext({ channelId: 'msteams' });
+
+    // Set channelData as an invalid JSON string
+    ctx.activity.channelIdSubChannel = undefined;
+    ctx.activity.channelData = 'not valid json';
+
+    let capturedChannelLink: string | undefined;
+
+    await middleware.onTurn(ctx, async () => {
+      const bag = propagation.getBaggage(otelContext.active());
+      if (bag) {
+        const entry = bag.getEntry(OpenTelemetryConstants.CHANNEL_LINK_KEY);
+        capturedChannelLink = entry?.value;
+      }
+    });
+
+    // Channel link should not be set when JSON parsing fails
+    expect(capturedChannelLink).toBeUndefined();
+  });
 });