diff --git a/instrumentation/active_record/lib/opentelemetry/instrumentation/active_record/patches/transactions_class_methods.rb b/instrumentation/active_record/lib/opentelemetry/instrumentation/active_record/patches/transactions_class_methods.rb
index bd6e0b5b64..90036db0e1 100644
--- a/instrumentation/active_record/lib/opentelemetry/instrumentation/active_record/patches/transactions_class_methods.rb
+++ b/instrumentation/active_record/lib/opentelemetry/instrumentation/active_record/patches/transactions_class_methods.rb
@@ -18,9 +18,13 @@ class << base
 
           # Contains ActiveRecord::Transactions::ClassMethods to be patched
           module ClassMethods
-            def transaction(...)
-              tracer.in_span('ActiveRecord.transaction', attributes: { 'code.namespace' => name }) do
-                super
+            def transaction(*args, **kwargs, &block)
+              attributes = { 'code.namespace' => name }
+              if kwargs[:isolation]
+                attributes['db.transaction_isolation'] = kwargs[:isolation].to_s
+              end
+              tracer.in_span('ActiveRecord.transaction', attributes: attributes) do
+                super(*args, **kwargs, &block)
               end
             end
 
diff --git a/instrumentation/active_record/test/instrumentation/active_record/patches/transactions_class_methods_test.rb b/instrumentation/active_record/test/instrumentation/active_record/patches/transactions_class_methods_test.rb
index 8195934912..b8918b857d 100644
--- a/instrumentation/active_record/test/instrumentation/active_record/patches/transactions_class_methods_test.rb
+++ b/instrumentation/active_record/test/instrumentation/active_record/patches/transactions_class_methods_test.rb
@@ -48,5 +48,13 @@ def self.name
       transaction_span = spans.find { |s| s.attributes['code.namespace'] == 'ActiveRecord::Base' }
       _(transaction_span).wont_be_nil
     end
+
+    it 'records transaction isolation level' do
+      ActiveRecord::Base.transaction(isolation: :read_uncommitted) { User.create! }
+
+      transaction_span = spans.find { |s| s.attributes['code.namespace'] == 'ActiveRecord::Base' }
+      _(transaction_span).wont_be_nil
+      _(transaction_span.attributes['db.transaction.isolation']).must_equal 'read_uncommitted'
+    end
   end
 end
diff --git a/instrumentation/active_record/test/test_helper.rb b/instrumentation/active_record/test/test_helper.rb
index 3138f52d8f..d791d56d90 100644
--- a/instrumentation/active_record/test/test_helper.rb
+++ b/instrumentation/active_record/test/test_helper.rb
@@ -32,7 +32,9 @@
 
 ActiveRecord::Base.establish_connection(
   adapter: 'sqlite3',
-  database: 'db/development.sqlite3'
+  database: 'db/development.sqlite3',
+  # allow to manipulate the transaction isolation level
+  flags: ::SQLite3::Constants::Open::READWRITE | SQLite3::Constants::Open::CREATE | ::SQLite3::Constants::Open::SHAREDCACHE
 )
 
 # Create ActiveRecord models