diff --git a/packages/serverless/src/awslambda.ts b/packages/serverless/src/awslambda.ts
index 92802bf808cd..88af7f66c3b5 100644
--- a/packages/serverless/src/awslambda.ts
+++ b/packages/serverless/src/awslambda.ts
@@ -11,7 +11,7 @@ import {
 } from '@sentry/node';
 import { extractTraceparentData } from '@sentry/tracing';
 import { Integration } from '@sentry/types';
-import { isString, logger } from '@sentry/utils';
+import { extensionRelayDSN, isString, logger } from '@sentry/utils';
 // NOTE: I have no idea how to fix this right now, and don't want to waste more time, as it builds just fine — Kamil
 // eslint-disable-next-line import/no-unresolved
 import { Context, Handler } from 'aws-lambda';
@@ -79,6 +79,8 @@ export function init(options: Sentry.NodeOptions = {}): void {
     version: Sentry.SDK_VERSION,
   };
 
+  options.dsn = extensionRelayDSN(options.dsn)
+
   Sentry.init(options);
   Sentry.addGlobalEventProcessor(serverlessEventProcessor);
 }
diff --git a/packages/utils/src/dsn.ts b/packages/utils/src/dsn.ts
index 56b864e2863b..b99c983aad71 100644
--- a/packages/utils/src/dsn.ts
+++ b/packages/utils/src/dsn.ts
@@ -27,6 +27,12 @@ export function dsnToString(dsn: DsnComponents, withPassword: boolean = false):
   );
 }
 
+/**
+ * Parses a Dsn from a given string.
+ *
+ * @param str A Dsn as string
+ * @returns Dsn as DsnComponents
+ */
 function dsnFromString(str: string): DsnComponents {
   const match = DSN_REGEX.exec(str);
 
@@ -101,3 +107,25 @@ export function makeDsn(from: DsnLike): DsnComponents {
   validateDsn(components);
   return components;
 }
+
+
+/**
+ * Changes a Dsn to point to the `relay` server running in the Lambda Extension.
+ *
+ * This is only used by the serverless integration for AWS Lambda.
+ *
+ * @param originalDsn The original Dsn of the customer.
+ * @returns Dsn pointing to Lambda extension.
+ */
+export function extensionRelayDSN(originalDsn: string | undefined): string | undefined {
+  if (originalDsn === undefined) {
+    return undefined;
+  }
+
+  const dsn = dsnFromString(originalDsn);
+  dsn.host = 'localhost';
+  dsn.port = '3000';
+  dsn.protocol = 'http';
+
+  return dsnToString(dsn);
+}