diff --git a/logger/level_test.go b/logger/level_test.go
new file mode 100644
index 0000000..fabd746
--- /dev/null
+++ b/logger/level_test.go
@@ -0,0 +1,235 @@
+package logger
+
+import (
+	"context"
+	"log/slog"
+	"os"
+	"testing"
+	"time"
+)
+
+func TestParseLevel(t *testing.T) {
+	tests := []struct {
+		name        string
+		input       string
+		expected    slog.Level
+		expectError bool
+	}{
+		{"empty string", "", slog.LevelInfo, false},
+		{"DEBUG upper", "DEBUG", slog.LevelDebug, false},
+		{"debug lower", "debug", slog.LevelDebug, false},
+		{"INFO upper", "INFO", slog.LevelInfo, false},
+		{"info lower", "info", slog.LevelInfo, false},
+		{"WARN upper", "WARN", slog.LevelWarn, false},
+		{"warn lower", "warn", slog.LevelWarn, false},
+		{"ERROR upper", "ERROR", slog.LevelError, false},
+		{"error lower", "error", slog.LevelError, false},
+		{"invalid level", "invalid", slog.LevelInfo, true},
+	}
+
+	for _, tt := range tests {
+		t.Run(tt.name, func(t *testing.T) {
+			level, err := ParseLevel(tt.input)
+			if tt.expectError {
+				if err == nil {
+					t.Errorf("expected error for input %q, got nil", tt.input)
+				}
+			} else {
+				if err != nil {
+					t.Errorf("unexpected error for input %q: %v", tt.input, err)
+				}
+				if level != tt.expected {
+					t.Errorf("expected level %v for input %q, got %v", tt.expected, tt.input, level)
+				}
+			}
+		})
+	}
+}
+
+func TestSetLevel(t *testing.T) {
+	// Store original level to restore later
+	originalLevel := Level.Level()
+	defer Level.Set(originalLevel)
+
+	SetLevel(slog.LevelDebug)
+	if Level.Level() != slog.LevelDebug {
+		t.Errorf("expected Level to be Debug, got %v", Level.Level())
+	}
+
+	SetLevel(slog.LevelError)
+	if Level.Level() != slog.LevelError {
+		t.Errorf("expected Level to be Error, got %v", Level.Level())
+	}
+}
+
+func TestSetOTLPLevel(t *testing.T) {
+	// Store original level to restore later
+	originalLevel := OTLPLevel.Level()
+	defer OTLPLevel.Set(originalLevel)
+
+	SetOTLPLevel(slog.LevelWarn)
+	if OTLPLevel.Level() != slog.LevelWarn {
+		t.Errorf("expected OTLPLevel to be Warn, got %v", OTLPLevel.Level())
+	}
+
+	SetOTLPLevel(slog.LevelDebug)
+	if OTLPLevel.Level() != slog.LevelDebug {
+		t.Errorf("expected OTLPLevel to be Debug, got %v", OTLPLevel.Level())
+	}
+}
+
+func TestOTLPLevelHandler(t *testing.T) {
+	// Create a mock handler that counts calls
+	callCount := 0
+	mockHandler := &mockHandler{
+		handleFunc: func(ctx context.Context, r slog.Record) error {
+			callCount++
+			return nil
+		},
+	}
+
+	// Set OTLP level to Warn
+	originalLevel := OTLPLevel.Level()
+	defer OTLPLevel.Set(originalLevel)
+	OTLPLevel.Set(slog.LevelWarn)
+
+	// Create OTLP level handler
+	handler := newOTLPLevelHandler(mockHandler)
+
+	ctx := context.Background()
+
+	// Test that Debug and Info are filtered out
+	if handler.Enabled(ctx, slog.LevelDebug) {
+		t.Error("Debug level should be disabled when OTLP level is Warn")
+	}
+	if handler.Enabled(ctx, slog.LevelInfo) {
+		t.Error("Info level should be disabled when OTLP level is Warn")
+	}
+
+	// Test that Warn and Error are enabled
+	if !handler.Enabled(ctx, slog.LevelWarn) {
+		t.Error("Warn level should be enabled when OTLP level is Warn")
+	}
+	if !handler.Enabled(ctx, slog.LevelError) {
+		t.Error("Error level should be enabled when OTLP level is Warn")
+	}
+
+	// Test that Handle respects level filtering
+	now := time.Now()
+	debugRecord := slog.NewRecord(now, slog.LevelDebug, "debug message", 0)
+	warnRecord := slog.NewRecord(now, slog.LevelWarn, "warn message", 0)
+
+	handler.Handle(ctx, debugRecord)
+	if callCount != 0 {
+		t.Error("Debug record should not be passed to underlying handler")
+	}
+
+	handler.Handle(ctx, warnRecord)
+	if callCount != 1 {
+		t.Error("Warn record should be passed to underlying handler")
+	}
+}
+
+func TestEnvironmentVariables(t *testing.T) {
+	tests := []struct {
+		name         string
+		envVar       string
+		envValue     string
+		configPrefix string
+		testFunc     func(t *testing.T)
+	}{
+		{
+			name:     "LOG_LEVEL sets stderr level",
+			envVar:   "LOG_LEVEL",
+			envValue: "ERROR",
+			testFunc: func(t *testing.T) {
+				// Reset the setup state
+				resetLoggerSetup()
+
+				// Call setupStdErrHandler which should read the env var
+				handler := setupStdErrHandler()
+				if handler == nil {
+					t.Fatal("setupStdErrHandler returned nil")
+				}
+
+				if Level.Level() != slog.LevelError {
+					t.Errorf("expected Level to be Error after setting LOG_LEVEL=ERROR, got %v", Level.Level())
+				}
+			},
+		},
+		{
+			name:         "Prefixed LOG_LEVEL",
+			envVar:       "TEST_LOG_LEVEL",
+			envValue:     "DEBUG",
+			configPrefix: "TEST",
+			testFunc: func(t *testing.T) {
+				ConfigPrefix = "TEST"
+				defer func() { ConfigPrefix = "" }()
+
+				resetLoggerSetup()
+				handler := setupStdErrHandler()
+				if handler == nil {
+					t.Fatal("setupStdErrHandler returned nil")
+				}
+
+				if Level.Level() != slog.LevelDebug {
+					t.Errorf("expected Level to be Debug after setting TEST_LOG_LEVEL=DEBUG, got %v", Level.Level())
+				}
+			},
+		},
+	}
+
+	for _, tt := range tests {
+		t.Run(tt.name, func(t *testing.T) {
+			// Store original env value and level
+			originalEnv := os.Getenv(tt.envVar)
+			originalLevel := Level.Level()
+			defer func() {
+				os.Setenv(tt.envVar, originalEnv)
+				Level.Set(originalLevel)
+			}()
+
+			// Set test environment variable
+			os.Setenv(tt.envVar, tt.envValue)
+
+			// Run the test
+			tt.testFunc(t)
+		})
+	}
+}
+
+// mockHandler is a simple mock implementation of slog.Handler for testing
+type mockHandler struct {
+	handleFunc func(ctx context.Context, r slog.Record) error
+}
+
+func (m *mockHandler) Enabled(ctx context.Context, level slog.Level) bool {
+	return true
+}
+
+func (m *mockHandler) Handle(ctx context.Context, r slog.Record) error {
+	if m.handleFunc != nil {
+		return m.handleFunc(ctx, r)
+	}
+	return nil
+}
+
+func (m *mockHandler) WithAttrs(attrs []slog.Attr) slog.Handler {
+	return m
+}
+
+func (m *mockHandler) WithGroup(name string) slog.Handler {
+	return m
+}
+
+// resetLoggerSetup resets the sync.Once instances for testing
+func resetLoggerSetup() {
+	// Reset package-level variables
+	textLogger = nil
+	otlpLogger = nil
+	multiLogger = nil
+
+	// Note: We can't easily reset sync.Once instances in tests,
+	// but for the specific test we're doing (environment variable parsing)
+	// we can test the setupStdErrHandler function directly
+}
diff --git a/logger/logger.go b/logger/logger.go
index 99961dd..9955b18 100644
--- a/logger/logger.go
+++ b/logger/logger.go
@@ -18,12 +18,15 @@
 //   - Context propagation for request-scoped logging
 //
 // Environment variables:
-//   - DEBUG: Enable debug level logging (configurable prefix via ConfigPrefix)
+//   - LOG_LEVEL: Set stderr log level (DEBUG, INFO, WARN, ERROR) (configurable prefix via ConfigPrefix)
+//   - OTLP_LOG_LEVEL: Set OTLP log level independently (configurable prefix via ConfigPrefix)
+//   - DEBUG: Enable debug level logging for backward compatibility (configurable prefix via ConfigPrefix)
 //   - INVOCATION_ID: Systemd detection for timestamp handling
 package logger
 
 import (
 	"context"
+	"fmt"
 	"log"
 	"log/slog"
 	"os"
@@ -43,6 +46,16 @@ import (
 // This enables multiple services to have independent logging configuration.
 var ConfigPrefix = ""
 
+var (
+	// Level controls the log level for the default stderr logger.
+	// Can be changed at runtime to adjust logging verbosity.
+	Level = new(slog.LevelVar) // Info by default
+
+	// OTLPLevel controls the log level for OTLP output.
+	// Can be changed independently from the stderr logger level.
+	OTLPLevel = new(slog.LevelVar) // Info by default
+)
+
 var (
 	textLogger  *slog.Logger
 	otlpLogger  *slog.Logger
@@ -56,21 +69,64 @@ var (
 	mu         sync.Mutex
 )
 
-func setupStdErrHandler() slog.Handler {
-	programLevel := new(slog.LevelVar) // Info by default
+// SetLevel sets the log level for the default stderr logger.
+// This affects the primary application logger returned by Setup().
+func SetLevel(level slog.Level) {
+	Level.Set(level)
+}
 
-	envVar := "DEBUG"
+// SetOTLPLevel sets the log level for OTLP output.
+// This affects the logger returned by SetupOLTP() and the OTLP portion of SetupMultiLogger().
+func SetOTLPLevel(level slog.Level) {
+	OTLPLevel.Set(level)
+}
+
+// ParseLevel converts a string log level to slog.Level.
+// Supported levels: "DEBUG", "INFO", "WARN", "ERROR" (case insensitive).
+// Returns an error for unrecognized level strings.
+func ParseLevel(level string) (slog.Level, error) {
+	switch {
+	case level == "":
+		return slog.LevelInfo, nil
+	case level == "DEBUG" || level == "debug":
+		return slog.LevelDebug, nil
+	case level == "INFO" || level == "info":
+		return slog.LevelInfo, nil
+	case level == "WARN" || level == "warn":
+		return slog.LevelWarn, nil
+	case level == "ERROR" || level == "error":
+		return slog.LevelError, nil
+	default:
+		return slog.LevelInfo, fmt.Errorf("unknown log level: %s", level)
+	}
+}
+
+func setupStdErrHandler() slog.Handler {
+	// Parse LOG_LEVEL environment variable
+	logLevelVar := "LOG_LEVEL"
 	if len(ConfigPrefix) > 0 {
-		envVar = ConfigPrefix + "_" + envVar
+		logLevelVar = ConfigPrefix + "_" + logLevelVar
 	}
 
-	if opt := os.Getenv(envVar); len(opt) > 0 {
-		if debug, _ := strconv.ParseBool(opt); debug {
-			programLevel.Set(slog.LevelDebug)
+	if levelStr := os.Getenv(logLevelVar); levelStr != "" {
+		if level, err := ParseLevel(levelStr); err == nil {
+			Level.Set(level)
 		}
 	}
 
-	logOptions := &slog.HandlerOptions{Level: programLevel}
+	// Maintain backward compatibility with DEBUG environment variable
+	debugVar := "DEBUG"
+	if len(ConfigPrefix) > 0 {
+		debugVar = ConfigPrefix + "_" + debugVar
+	}
+
+	if opt := os.Getenv(debugVar); len(opt) > 0 {
+		if debug, _ := strconv.ParseBool(opt); debug {
+			Level.Set(slog.LevelDebug)
+		}
+	}
+
+	logOptions := &slog.HandlerOptions{Level: Level}
 
 	if len(os.Getenv("INVOCATION_ID")) > 0 {
 		// don't add timestamps when running under systemd
@@ -88,6 +144,18 @@ func setupStdErrHandler() slog.Handler {
 
 func setupOtlpLogger() *slog.Logger {
 	setupOtlp.Do(func() {
+		// Parse OTLP_LOG_LEVEL environment variable
+		otlpLevelVar := "OTLP_LOG_LEVEL"
+		if len(ConfigPrefix) > 0 {
+			otlpLevelVar = ConfigPrefix + "_" + otlpLevelVar
+		}
+
+		if levelStr := os.Getenv(otlpLevelVar); levelStr != "" {
+			if level, err := ParseLevel(levelStr); err == nil {
+				OTLPLevel.Set(level)
+			}
+		}
+
 		// Create our buffering exporter
 		// It will buffer until tracing is configured
 		bufferingExp := newBufferingExporter()
@@ -107,8 +175,9 @@ func setupOtlpLogger() *slog.Logger {
 		// Set global provider
 		global.SetLoggerProvider(provider)
 
-		// Create slog handler
-		handler := newLogFmtHandler(otelslog.NewHandler("common"))
+		// Create slog handler with level control
+		baseHandler := newLogFmtHandler(otelslog.NewHandler("common"))
+		handler := newOTLPLevelHandler(baseHandler)
 		otlpLogger = slog.New(handler)
 	})
 	return otlpLogger
diff --git a/logger/otlp_handler.go b/logger/otlp_handler.go
new file mode 100644
index 0000000..d31e0db
--- /dev/null
+++ b/logger/otlp_handler.go
@@ -0,0 +1,48 @@
+package logger
+
+import (
+	"context"
+	"log/slog"
+)
+
+// otlpLevelHandler is a wrapper that enforces level checking for OTLP handlers.
+// This allows independent level control for OTLP output separate from stderr logging.
+type otlpLevelHandler struct {
+	next slog.Handler
+}
+
+// newOTLPLevelHandler creates a new OTLP level wrapper handler.
+func newOTLPLevelHandler(next slog.Handler) slog.Handler {
+	return &otlpLevelHandler{
+		next: next,
+	}
+}
+
+// Enabled checks if the log level should be processed by the OTLP handler.
+// It uses the OTLPLevel variable to determine if the record should be processed.
+func (h *otlpLevelHandler) Enabled(ctx context.Context, level slog.Level) bool {
+	return level >= OTLPLevel.Level()
+}
+
+// Handle processes the log record if the level is enabled.
+// If disabled by level checking, the record is silently dropped.
+func (h *otlpLevelHandler) Handle(ctx context.Context, r slog.Record) error {
+	if !h.Enabled(ctx, r.Level) {
+		return nil
+	}
+	return h.next.Handle(ctx, r)
+}
+
+// WithAttrs returns a new handler with the specified attributes added.
+func (h *otlpLevelHandler) WithAttrs(attrs []slog.Attr) slog.Handler {
+	return &otlpLevelHandler{
+		next: h.next.WithAttrs(attrs),
+	}
+}
+
+// WithGroup returns a new handler with the specified group name.
+func (h *otlpLevelHandler) WithGroup(name string) slog.Handler {
+	return &otlpLevelHandler{
+		next: h.next.WithGroup(name),
+	}
+}