diff --git a/ddtrace/_trace/apm_filter.py b/ddtrace/_trace/apm_filter.py
new file mode 100644
index 00000000000..89ba4e93dd0
--- /dev/null
+++ b/ddtrace/_trace/apm_filter.py
@@ -0,0 +1,22 @@
+import os
+from typing import List
+from typing import Optional
+
+from ddtrace._trace.processor import TraceProcessor
+from ddtrace._trace.span import Span
+from ddtrace.internal.utils.formats import asbool
+
+
+class APMTracingEnabledFilter(TraceProcessor):
+    """
+    Trace processor that drops all APM traces when DD_APM_TRACING_ENABLED is set to a falsy value.
+    """
+
+    def __init__(self) -> None:
+        super().__init__()
+        self._apm_tracing_enabled = asbool(os.getenv("DD_APM_TRACING_ENABLED", "true"))
+
+    def process_trace(self, trace: List[Span]) -> Optional[List[Span]]:
+        if not self._apm_tracing_enabled:
+            return None
+        return trace
diff --git a/ddtrace/llmobs/_llmobs.py b/ddtrace/llmobs/_llmobs.py
index 9f520e8834f..482defc1095 100644
--- a/ddtrace/llmobs/_llmobs.py
+++ b/ddtrace/llmobs/_llmobs.py
@@ -20,6 +20,7 @@
 import ddtrace
 from ddtrace import config
 from ddtrace import patch
+from ddtrace._trace.apm_filter import APMTracingEnabledFilter
 from ddtrace._trace.context import Context
 from ddtrace._trace.span import Span
 from ddtrace._trace.tracer import Tracer
@@ -603,6 +604,11 @@ def enable(
 
             # override the default _instance with a new tracer
             cls._instance = cls(tracer=_tracer, span_processor=span_processor)
+
+            # Add APM trace filter to drop all APM traces when DD_APM_TRACING_ENABLED is falsy
+            apm_filter = APMTracingEnabledFilter()
+            cls._instance.tracer._span_aggregator.user_processors.append(apm_filter)
+
             cls.enabled = True
             cls._instance.start()
 
diff --git a/releasenotes/notes/llmobs-apm-tracing-8cd612f8a3af4960.yaml b/releasenotes/notes/llmobs-apm-tracing-8cd612f8a3af4960.yaml
new file mode 100644
index 00000000000..bc3abb2f79b
--- /dev/null
+++ b/releasenotes/notes/llmobs-apm-tracing-8cd612f8a3af4960.yaml
@@ -0,0 +1,4 @@
+---
+fixes:
+  - |
+    LLM Observability: ensures APM is disabled when DD_APM_TRACING_ENABLED=0 when using LLM Observability.
\ No newline at end of file
diff --git a/tests/llmobs/test_llmobs.py b/tests/llmobs/test_llmobs.py
index ffbdc7431ed..5e488ee9dc6 100644
--- a/tests/llmobs/test_llmobs.py
+++ b/tests/llmobs/test_llmobs.py
@@ -628,3 +628,27 @@ def test_trace_id_propagation_with_non_llm_parent(llmobs, llmobs_events):
     # LLMObs trace IDs should be different from APM trace ID
     assert first_child_event["trace_id"] != first_child_event["_dd"]["apm_trace_id"]
     assert second_child_event["trace_id"] != second_child_event["_dd"]["apm_trace_id"]
+
+
+@pytest.mark.parametrize("llmobs_env", [{"DD_APM_TRACING_ENABLED": "false"}])
+def test_apm_traces_dropped_when_disabled(llmobs, llmobs_events, tracer, llmobs_env):
+    from tests.utils import DummyWriter
+
+    dummy_writer = DummyWriter()
+    tracer._span_aggregator.writer = dummy_writer
+
+    with tracer.trace("apm_span") as apm_span:
+        apm_span.set_tag("operation", "test")
+
+    # Create an LLMObs span (should be sent to LLMObs but not APM)
+    with llmobs.llm(model_name="test-model") as llm_span:
+        llmobs.annotate(llm_span, input_data="test input", output_data="test output")
+
+    # Check that no APM traces were sent to the writer
+    assert len(dummy_writer.traces) == 0, "APM traces should be dropped when DD_APM_TRACING_ENABLED=false"
+
+    # But LLMObs events should still be sent
+    assert len(llmobs_events) == 1
+    llm_event = llmobs_events[0]
+    assert llm_event["meta"]["span.kind"] == "llm"
+    assert llm_event["meta"]["model_name"] == "test-model"