diff --git a/reactor-core-micrometer/src/main/java/reactor/core/observability/micrometer/MicrometerObservationListener.java b/reactor-core-micrometer/src/main/java/reactor/core/observability/micrometer/MicrometerObservationListener.java
index 29f05e7935..f8d1e5c791 100644
--- a/reactor-core-micrometer/src/main/java/reactor/core/observability/micrometer/MicrometerObservationListener.java
+++ b/reactor-core-micrometer/src/main/java/reactor/core/observability/micrometer/MicrometerObservationListener.java
@@ -97,21 +97,26 @@ final class MicrometerObservationListener<T> implements SignalListener<T> {
 		//while doOnSubscription matches the moment where the Publisher acknowledges said subscription
 		//NOTE: we don't use the `DocumentedObservation` features to create the Observation, even for the ANONYMOUS case,
 		//because the discovered tags could be more than the documented defaults
-		tapObservation = defaultObservation(configuration, observationSupplier)
-				.contextualName(configuration.sequenceName)
+		tapObservation = supplyOrCreateObservation(configuration, observationSupplier)
 				.lowCardinalityKeyValues(configuration.commonKeyValues);
 	}
 
-	private static Observation defaultObservation(
+	private static Observation supplyOrCreateObservation(
 			MicrometerObservationListenerConfiguration configuration,
 			@Nullable Function<ObservationRegistry, Observation> observationSupplier) {
 		if (observationSupplier != null) {
 			final Observation observation = observationSupplier.apply(configuration.registry);
 			if (observation != null) {
-				return observation;
+				if (observation.getContext().getContextualName() != null) {
+					return observation;
+				}
+				else {
+					return observation.contextualName(configuration.sequenceName);
+				}
 			}
 		}
-		return Observation.createNotStarted(configuration.sequenceName, configuration.registry);
+		return Observation.createNotStarted(configuration.sequenceName, configuration.registry)
+		                  .contextualName(configuration.sequenceName);
 	}
 
 	@Override
diff --git a/reactor-core-micrometer/src/test/java/reactor/core/observability/micrometer/MicrometerObservationListenerTest.java b/reactor-core-micrometer/src/test/java/reactor/core/observability/micrometer/MicrometerObservationListenerTest.java
index a0cf2ed107..148be1d3ba 100644
--- a/reactor-core-micrometer/src/test/java/reactor/core/observability/micrometer/MicrometerObservationListenerTest.java
+++ b/reactor-core-micrometer/src/test/java/reactor/core/observability/micrometer/MicrometerObservationListenerTest.java
@@ -68,12 +68,53 @@ public long monotonicTime() {
 		};
 		configuration = new MicrometerObservationListenerConfiguration(
 			"testName",
-			KeyValues.of("testTag1", "testTagValue1","testTag2", "testTagValue2"),
+			KeyValues.of("testTag1", "testTagValue1", "testTag2", "testTagValue2"),
 			registry,
 			false);
 		subscriberContext = Context.of("contextKey", "contextValue");
 	}
 
+	@ParameterizedTestWithName
+	@ValueSource(booleans =  {true, false})
+	void whenStartedFluxWithDefaultNameWithCustomObservationSupplier(boolean automatic) {
+		if (automatic) {
+			Hooks.enableAutomaticContextPropagation();
+		}
+		configuration = new MicrometerObservationListenerConfiguration(
+				MicrometerObservationListenerDocumentation.ANONYMOUS.getName(),
+				//note: "type" key is added by MicrometerObservationListenerConfiguration#fromFlux (which is tested separately)
+				KeyValues.of("testTag1", "testTagValue1", "testTag2", "testTagValue2"),
+				registry,
+				false);
+
+		MicrometerObservationListener<Integer> listener =
+				new MicrometerObservationListener<>(subscriberContext, configuration,
+						or -> Observation.createNotStarted("user.name", or)
+						                 .lowCardinalityKeyValue("userType", "admin")
+						                 .highCardinalityKeyValue("userId", "testId")
+						                 .contextualName("getting-user-name"));
+
+		assertThat(listener.valued).as("valued").isFalse();
+		assertThat(listener.tapObservation)
+				.as("subscribeToTerminalObservation field")
+				.isNotNull();
+		assertThat(registry).as("before start").doesNotHaveAnyObservation();
+
+		listener.doFirst(); // forces observation start
+
+		assertThat(registry)
+				.hasSingleObservationThat()
+				.hasNameEqualTo("user.name")
+				.hasContextualNameEqualTo("getting-user-name")
+				.as("subscribeToTerminalObservation")
+				.hasBeenStarted()
+				.isNotStopped()
+				.hasLowCardinalityKeyValue("testTag1", "testTagValue1")
+				.hasLowCardinalityKeyValue("testTag2", "testTagValue2")
+				.hasLowCardinalityKeyValue("userType", "admin")
+				.hasHighCardinalityKeyValue("userId", "testId");
+	}
+
 	@ParameterizedTestWithName
 	@ValueSource(booleans =  {true, false})
 	void whenStartedFluxWithDefaultName(boolean automatic) {
@@ -83,7 +124,7 @@ void whenStartedFluxWithDefaultName(boolean automatic) {
 		configuration = new MicrometerObservationListenerConfiguration(
 			MicrometerObservationListenerDocumentation.ANONYMOUS.getName(),
 			//note: "type" key is added by MicrometerObservationListenerConfiguration#fromFlux (which is tested separately)
-			KeyValues.of("testTag1", "testTagValue1","testTag2", "testTagValue2"),
+			KeyValues.of("testTag1", "testTagValue1", "testTag2", "testTagValue2"),
 			registry,
 			false);
 
@@ -116,7 +157,7 @@ void whenStartedFluxWithCustomName(boolean automatic) {
 		configuration = new MicrometerObservationListenerConfiguration(
 			"testName",
 			//note: "type" key is added by MicrometerObservationListenerConfiguration#fromFlux (which is tested separately)
-			KeyValues.of("testTag1", "testTagValue1","testTag2", "testTagValue2"),
+			KeyValues.of("testTag1", "testTagValue1", "testTag2", "testTagValue2"),
 			registry,
 			false);
 
@@ -150,7 +191,7 @@ void whenStartedMono(boolean automatic) {
 		configuration = new MicrometerObservationListenerConfiguration(
 			MicrometerObservationListenerDocumentation.ANONYMOUS.getName(),
 			//note: "type" key is added by MicrometerObservationListenerConfiguration#fromMono (which is tested separately)
-			KeyValues.of("testTag1", "testTagValue1","testTag2", "testTagValue2"),
+			KeyValues.of("testTag1", "testTagValue1", "testTag2", "testTagValue2"),
 			registry,
 			true);
 
@@ -644,7 +685,7 @@ void observationWithEmptyContextHasNoParent(boolean automatic) {
 		configuration = new MicrometerObservationListenerConfiguration(
 			MicrometerObservationListenerDocumentation.ANONYMOUS.getName(),
 			//note: "type" key is added by MicrometerObservationListenerConfiguration#fromFlux (which is tested separately)
-			KeyValues.of("testTag1", "testTagValue1","testTag2", "testTagValue2"),
+			KeyValues.of("testTag1", "testTagValue1", "testTag2", "testTagValue2"),
 			registry,
 			false);