diff --git a/internal/xds/balancer/clusterimpl/clusterimpl.go b/internal/xds/balancer/clusterimpl/clusterimpl.go
index 72d143a3586b..cdc7bf2eb579 100644
--- a/internal/xds/balancer/clusterimpl/clusterimpl.go
+++ b/internal/xds/balancer/clusterimpl/clusterimpl.go
@@ -163,6 +163,7 @@ func (b *clusterImplBalancer) newPickerLocked() *picker {
 		counter:         b.requestCounter,
 		countMax:        b.requestCountMax,
 		telemetryLabels: b.telemetryLabels,
+		clusterName:     b.clusterName,
 	}
 }
 
@@ -414,6 +415,7 @@ func (b *clusterImplBalancer) getClusterName() string {
 // SubConn to the wrapper for this purpose.
 type scWrapper struct {
 	balancer.SubConn
+
 	// locality needs to be atomic because it can be updated while being read by
 	// the picker.
 	locality atomic.Pointer[clients.Locality]
diff --git a/internal/xds/balancer/clusterimpl/picker.go b/internal/xds/balancer/clusterimpl/picker.go
index fab09fa0978b..0c03326178c3 100644
--- a/internal/xds/balancer/clusterimpl/picker.go
+++ b/internal/xds/balancer/clusterimpl/picker.go
@@ -20,6 +20,7 @@ package clusterimpl
 
 import (
 	"context"
+	"maps"
 
 	v3orcapb "github.com/cncf/xds/go/xds/data/orca/v3"
 	"google.golang.org/grpc/balancer"
@@ -87,6 +88,7 @@ type picker struct {
 	counter         *xdsclient.ClusterRequestsCounter
 	countMax        uint32
 	telemetryLabels map[string]string
+	clusterName     string
 }
 
 func telemetryLabels(ctx context.Context) map[string]string {
@@ -103,10 +105,9 @@ func telemetryLabels(ctx context.Context) map[string]string {
 func (d *picker) Pick(info balancer.PickInfo) (balancer.PickResult, error) {
 	// Unconditionally set labels if present, even dropped or queued RPC's can
 	// use these labels.
-	if labels := telemetryLabels(info.Ctx); labels != nil {
-		for key, value := range d.telemetryLabels {
-			labels[key] = value
-		}
+	labels := telemetryLabels(info.Ctx)
+	if labels != nil {
+		maps.Copy(labels, d.telemetryLabels)
 	}
 
 	// Don't drop unless the inner picker is READY. Similar to
@@ -154,8 +155,9 @@ func (d *picker) Pick(info balancer.PickInfo) (balancer.PickResult, error) {
 		return pr, err
 	}
 
-	if labels := telemetryLabels(info.Ctx); labels != nil {
+	if labels != nil {
 		labels["grpc.lb.locality"] = xdsinternal.LocalityString(lID)
+		labels["grpc.lb.backend_service"] = d.clusterName
 	}
 
 	if d.loadStore != nil {
diff --git a/stats/opentelemetry/client_metrics.go b/stats/opentelemetry/client_metrics.go
index d2d80494d4ea..c3b77da5bf76 100644
--- a/stats/opentelemetry/client_metrics.go
+++ b/stats/opentelemetry/client_metrics.go
@@ -174,7 +174,8 @@ func (h *clientMetricsHandler) TagRPC(ctx context.Context, info *stats.RPCTagInf
 			// executes on the callpath that this OpenTelemetry component
 			// currently supports.
 			TelemetryLabels: map[string]string{
-				"grpc.lb.locality": "",
+				"grpc.lb.locality":        "",
+				"grpc.lb.backend_service": "",
 			},
 		}
 		ctx = istats.SetLabels(ctx, labels)
diff --git a/test/xds/xds_telemetry_labels_test.go b/test/xds/xds_telemetry_labels_test.go
index 3ed589e5e5b6..36187419b850 100644
--- a/test/xds/xds_telemetry_labels_test.go
+++ b/test/xds/xds_telemetry_labels_test.go
@@ -44,7 +44,8 @@ const serviceNamespaceKey = "service_namespace"
 const serviceNamespaceKeyCSM = "csm.service_namespace_name"
 const serviceNameValue = "grpc-service"
 const serviceNamespaceValue = "grpc-service-namespace"
-
+const backendServiceKey = "grpc.lb.backend_service"
+const backendServiceValue = "cluster-my-service-client-side-xds"
 const localityKey = "grpc.lb.locality"
 const localityValue = `{region="region-1", zone="zone-1", sub_zone="subzone-1"}`
 
@@ -124,23 +125,23 @@ func (fsh *fakeStatsHandler) TagRPC(ctx context.Context, _ *stats.RPCTagInfo) co
 
 func (fsh *fakeStatsHandler) HandleRPC(_ context.Context, rs stats.RPCStats) {
 	switch rs.(type) {
-	// stats.Begin won't get Telemetry Labels because happens after picker
-	// picks.
-
-	// These three stats callouts trigger all metrics for OpenTelemetry that
-	// aren't started. All of these should have access to the desired telemetry
+	// stats.Begin is called before the picker runs, so it won't have telemetry
 	// labels.
+	// The following three stats callouts trigger OpenTelemetry metrics and are
+	// guaranteed to run after the picker has selected a subchannel. Therefore,
+	// they should have access to the desired telemetry labels.
 	case *stats.OutPayload, *stats.InPayload, *stats.End:
 		want := map[string]string{
 			serviceNameKeyCSM:      serviceNameValue,
 			serviceNamespaceKeyCSM: serviceNamespaceValue,
 			localityKey:            localityValue,
+			backendServiceKey:      backendServiceValue,
 		}
 		if diff := cmp.Diff(fsh.labels.TelemetryLabels, want); diff != "" {
 			fsh.t.Fatalf("fsh.labels.TelemetryLabels (-got +want): %v", diff)
 		}
 	default:
 		// Nothing to assert for the other stats.Handler callouts.
-	}
 
+	}
 }