diff --git a/src/OpenTelemetry/CHANGELOG.md b/src/OpenTelemetry/CHANGELOG.md
index 4945b0eaaff..48f07ef1d72 100644
--- a/src/OpenTelemetry/CHANGELOG.md
+++ b/src/OpenTelemetry/CHANGELOG.md
@@ -22,6 +22,9 @@ Notes](../../RELEASENOTES.md).
 * Improve performance and reduce memory consumption for metrics histograms.
   ([#6715](https://github.com/open-telemetry/opentelemetry-dotnet/pull/6715))
 
+* Decode `value` in OTEL_RESOURCE_ATTRIBUTES environment variable.
+  ([#6737](https://github.com/open-telemetry/opentelemetry-dotnet/pull/6737))
+
 ## 1.14.0
 
 Released 2025-Nov-12
diff --git a/src/OpenTelemetry/Resources/OtelEnvResourceDetector.cs b/src/OpenTelemetry/Resources/OtelEnvResourceDetector.cs
index 468b37ca1a9..15440aa4831 100644
--- a/src/OpenTelemetry/Resources/OtelEnvResourceDetector.cs
+++ b/src/OpenTelemetry/Resources/OtelEnvResourceDetector.cs
@@ -1,6 +1,7 @@
 // Copyright The OpenTelemetry Authors
 // SPDX-License-Identifier: Apache-2.0
 
+using System.Net;
 using Microsoft.Extensions.Configuration;
 
 namespace OpenTelemetry.Resources;
@@ -9,7 +10,7 @@ internal sealed class OtelEnvResourceDetector : IResourceDetector
 {
     public const string EnvVarKey = "OTEL_RESOURCE_ATTRIBUTES";
     private const char AttributeListSplitter = ',';
-    private const char AttributeKeyValueSplitter = '=';
+    private static readonly char[] AttributeKeyValueSplitter = ['='];
 
     private readonly IConfiguration configuration;
 
@@ -38,13 +39,14 @@ private static List<KeyValuePair<string, object>> ParseResourceAttributes(string
         string[] rawAttributes = resourceAttributes.Split(AttributeListSplitter);
         foreach (string rawKeyValuePair in rawAttributes)
         {
-            string[] keyValuePair = rawKeyValuePair.Split(AttributeKeyValueSplitter);
+            string[] keyValuePair = rawKeyValuePair.Split(AttributeKeyValueSplitter, 2);
             if (keyValuePair.Length != 2)
             {
                 continue;
             }
 
-            attributes.Add(new KeyValuePair<string, object>(keyValuePair[0].Trim(), keyValuePair[1].Trim()));
+            var value = WebUtility.UrlDecode(keyValuePair[1].Trim());
+            attributes.Add(new KeyValuePair<string, object>(keyValuePair[0].Trim(), value));
         }
 
         return attributes;
diff --git a/test/OpenTelemetry.Tests/Resources/OtelEnvResourceDetectorTests.cs b/test/OpenTelemetry.Tests/Resources/OtelEnvResourceDetectorTests.cs
index 2f2c337d67e..c47bc6ea517 100644
--- a/test/OpenTelemetry.Tests/Resources/OtelEnvResourceDetectorTests.cs
+++ b/test/OpenTelemetry.Tests/Resources/OtelEnvResourceDetectorTests.cs
@@ -68,6 +68,27 @@ public void OtelEnvResource_WithEnvVar_2()
         Assert.Contains(new KeyValuePair<string, object>("Key2", "Val2"), resource.Attributes);
     }
 
+    [Theory]
+    [InlineData("Key1=Val1%20With%20Spaces", "Key1", "Val1 With Spaces")]
+    [InlineData(" query= select%20*%20from%20foo ", "query", "select * from foo")]
+    [InlineData("raw=100%25%", "raw", "100%%")]
+    [InlineData("bad=%G1value", "bad", "%G1value")]
+    [InlineData("a=%2C%3B%3D", "a", ",;=")]
+    [InlineData("url=https://x.com?a=1", "url", "https://x.com?a=1")]
+    public void OtelEnvResource_WithEnvVar_Decoding(string envVarValue, string key, string value)
+    {
+        // Arrange
+        Environment.SetEnvironmentVariable(OtelEnvResourceDetector.EnvVarKey, envVarValue);
+        var resource = new OtelEnvResourceDetector(
+            new ConfigurationBuilder().AddEnvironmentVariables().Build())
+            .Detect();
+
+        // Assert
+        Assert.NotEqual(Resource.Empty, resource);
+        Assert.Single(resource.Attributes);
+        Assert.Contains(new KeyValuePair<string, object>(key, value), resource.Attributes);
+    }
+
     [Fact]
     public void OtelEnvResource_UsingIConfiguration()
     {