diff --git a/test/test_datapipe.py b/test/test_datapipe.py
index 32512fedb..580845245 100644
--- a/test/test_datapipe.py
+++ b/test/test_datapipe.py
@@ -307,9 +307,24 @@ def test_header_iterdatapipe(self) -> None:
         # __len__ Test: returns the limit when it is less than the length of source
         self.assertEqual(5, len(header_dp))
 
-        # TODO(123): __len__ Test: returns the length of source when it is less than the limit
-        # header_dp = source_dp.header(30)
-        # self.assertEqual(20, len(header_dp))
+        # __len__ Test: returns the length of source when it is less than the limit
+        header_dp = source_dp.header(30)
+        self.assertEqual(20, len(header_dp))
+
+        # __len__ Test: returns limit if source doesn't have length
+        source_dp_NoLen = IDP_NoLen(list(range(20)))
+        header_dp = source_dp_NoLen.header(30)
+        with warnings.catch_warnings(record=True) as wa:
+            self.assertEqual(30, len(header_dp))
+            self.assertEqual(len(wa), 1)
+            self.assertRegex(
+                str(wa[0].message), r"length of this HeaderIterDataPipe is inferred to be equal to its limit"
+            )
+
+        # __len__ Test: returns limit if source doesn't have length, but it has been iterated through once
+        for _ in header_dp:
+            pass
+        self.assertEqual(20, len(header_dp))
 
     def test_enumerator_iterdatapipe(self) -> None:
         letters = "abcde"
diff --git a/torchdata/datapipes/iter/util/header.py b/torchdata/datapipes/iter/util/header.py
index affc0f6a5..0262fd06c 100644
--- a/torchdata/datapipes/iter/util/header.py
+++ b/torchdata/datapipes/iter/util/header.py
@@ -1,5 +1,6 @@
 # Copyright (c) Facebook, Inc. and its affiliates.
 from typing import Iterator, TypeVar
+from warnings import warn
 
 from torchdata.datapipes import functional_datapipe
 from torchdata.datapipes.iter import IterDataPipe
@@ -20,14 +21,28 @@ class HeaderIterDataPipe(IterDataPipe[T_co]):
     def __init__(self, source_datapipe: IterDataPipe[T_co], limit: int = 10) -> None:
         self.source_datapipe: IterDataPipe[T_co] = source_datapipe
         self.limit: int = limit
+        self.length: int = -1
 
     def __iter__(self) -> Iterator[T_co]:
-        for i, value in enumerate(self.source_datapipe):
-            if i < self.limit:
+        i: int = 0
+        for value in self.source_datapipe:
+            i += 1
+            if i <= self.limit:
                 yield value
             else:
                 break
+        self.length = min(i, self.limit)  # We know length with certainty when we reach here
 
-    # TODO(134): Fix the case that the length of source_datapipe is shorter than limit
     def __len__(self) -> int:
-        return self.limit
+        if self.length != -1:
+            return self.length
+        try:
+            source_len = len(self.source_datapipe)
+            self.length = min(source_len, self.limit)
+            return self.length
+        except TypeError:
+            warn(
+                "The length of this HeaderIterDataPipe is inferred to be equal to its limit."
+                "The actual value may be smaller if the actual length of source_datapipe is smaller than the limit."
+            )
+            return self.limit