diff --git a/gax-java/gax-grpc/clirr-ignored-differences.xml b/gax-java/gax-grpc/clirr-ignored-differences.xml
new file mode 100644
index 0000000000..8b595b0a85
--- /dev/null
+++ b/gax-java/gax-grpc/clirr-ignored-differences.xml
@@ -0,0 +1,10 @@
+<?xml version="1.0" encoding="UTF-8"?>
+<!-- see http://www.mojohaus.org/clirr-maven-plugin/examples/ignored-differences.html -->
+<differences>
+  <!-- Add AutoValue abstract method isDirectPath -->
+  <difference>
+    <differenceType>7013</differenceType>
+    <className>com/google/api/gax/grpc/GrpcTransportChannel</className>
+    <method>boolean isDirectPath()</method>
+  </difference>
+</differences>
diff --git a/gax-java/gax-grpc/src/main/java/com/google/api/gax/grpc/GrpcTransportChannel.java b/gax-java/gax-grpc/src/main/java/com/google/api/gax/grpc/GrpcTransportChannel.java
index 9e63bb2a63..2fa0908f17 100644
--- a/gax-java/gax-grpc/src/main/java/com/google/api/gax/grpc/GrpcTransportChannel.java
+++ b/gax-java/gax-grpc/src/main/java/com/google/api/gax/grpc/GrpcTransportChannel.java
@@ -60,6 +60,8 @@ public GrpcCallContext getEmptyCallContext() {
   /** The channel in use. */
   abstract ManagedChannel getManagedChannel();
 
+  public abstract boolean isDirectPath();
+
   public Channel getChannel() {
     return getManagedChannel();
   }
@@ -100,7 +102,7 @@ public void close() {
   }
 
   public static Builder newBuilder() {
-    return new AutoValue_GrpcTransportChannel.Builder();
+    return new AutoValue_GrpcTransportChannel.Builder().setDirectPath(false);
   }
 
   public static GrpcTransportChannel create(ManagedChannel channel) {
@@ -111,6 +113,8 @@ public static GrpcTransportChannel create(ManagedChannel channel) {
   public abstract static class Builder {
     public abstract Builder setManagedChannel(ManagedChannel value);
 
+    abstract Builder setDirectPath(boolean value);
+
     public abstract GrpcTransportChannel build();
   }
 }
diff --git a/gax-java/gax-grpc/src/main/java/com/google/api/gax/grpc/InstantiatingGrpcChannelProvider.java b/gax-java/gax-grpc/src/main/java/com/google/api/gax/grpc/InstantiatingGrpcChannelProvider.java
index c49d5265f7..5d601e8fa6 100644
--- a/gax-java/gax-grpc/src/main/java/com/google/api/gax/grpc/InstantiatingGrpcChannelProvider.java
+++ b/gax-java/gax-grpc/src/main/java/com/google/api/gax/grpc/InstantiatingGrpcChannelProvider.java
@@ -258,9 +258,12 @@ public TransportChannel getTransportChannel() throws IOException {
   }
 
   private TransportChannel createChannel() throws IOException {
-    return GrpcTransportChannel.create(
-        ChannelPool.create(
-            channelPoolSettings, InstantiatingGrpcChannelProvider.this::createSingleChannel));
+    return GrpcTransportChannel.newBuilder()
+        .setManagedChannel(
+            ChannelPool.create(
+                channelPoolSettings, InstantiatingGrpcChannelProvider.this::createSingleChannel))
+        .setDirectPath(this.canUseDirectPath())
+        .build();
   }
 
   private boolean isDirectPathEnabled() {
diff --git a/gax-java/gax-grpc/src/test/java/com/google/api/gax/grpc/GrpcTransportChannelTest.java b/gax-java/gax-grpc/src/test/java/com/google/api/gax/grpc/GrpcTransportChannelTest.java
new file mode 100644
index 0000000000..337f054c42
--- /dev/null
+++ b/gax-java/gax-grpc/src/test/java/com/google/api/gax/grpc/GrpcTransportChannelTest.java
@@ -0,0 +1,48 @@
+/*
+ * Copyright 2024 Google LLC
+ *
+ * Redistribution and use in source and binary forms, with or without
+ * modification, are permitted provided that the following conditions are
+ * met:
+ *
+ *     * Redistributions of source code must retain the above copyright
+ * notice, this list of conditions and the following disclaimer.
+ *     * Redistributions in binary form must reproduce the above
+ * copyright notice, this list of conditions and the following disclaimer
+ * in the documentation and/or other materials provided with the
+ * distribution.
+ *     * Neither the name of Google LLC nor the names of its
+ * contributors may be used to endorse or promote products derived from
+ * this software without specific prior written permission.
+ *
+ * THIS SOFTWARE IS PROVIDED BY THE COPYRIGHT HOLDERS AND CONTRIBUTORS
+ * "AS IS" AND ANY EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT
+ * LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR
+ * A PARTICULAR PURPOSE ARE DISCLAIMED. IN NO EVENT SHALL THE COPYRIGHT
+ * OWNER OR CONTRIBUTORS BE LIABLE FOR ANY DIRECT, INDIRECT, INCIDENTAL,
+ * SPECIAL, EXEMPLARY, OR CONSEQUENTIAL DAMAGES (INCLUDING, BUT NOT
+ * LIMITED TO, PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES; LOSS OF USE,
+ * DATA, OR PROFITS; OR BUSINESS INTERRUPTION) HOWEVER CAUSED AND ON ANY
+ * THEORY OF LIABILITY, WHETHER IN CONTRACT, STRICT LIABILITY, OR TORT
+ * (INCLUDING NEGLIGENCE OR OTHERWISE) ARISING IN ANY WAY OUT OF THE USE
+ * OF THIS SOFTWARE, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.
+ */
+
+package com.google.api.gax.grpc;
+
+import static org.junit.jupiter.api.Assertions.*;
+
+import io.grpc.ManagedChannel;
+import org.junit.jupiter.api.Test;
+import org.mockito.Mockito;
+
+class GrpcTransportChannelTest {
+
+  @Test
+  void testBuilderDefaults() {
+    ManagedChannel channel = Mockito.mock(ManagedChannel.class);
+    GrpcTransportChannel grpcTransportChannel =
+        GrpcTransportChannel.newBuilder().setManagedChannel(channel).build();
+    assertFalse(grpcTransportChannel.isDirectPath());
+  }
+}
diff --git a/gax-java/gax-grpc/src/test/java/com/google/api/gax/grpc/InstantiatingGrpcChannelProviderTest.java b/gax-java/gax-grpc/src/test/java/com/google/api/gax/grpc/InstantiatingGrpcChannelProviderTest.java
index 4de1b8ee11..a4bcb65a1a 100644
--- a/gax-java/gax-grpc/src/test/java/com/google/api/gax/grpc/InstantiatingGrpcChannelProviderTest.java
+++ b/gax-java/gax-grpc/src/test/java/com/google/api/gax/grpc/InstantiatingGrpcChannelProviderTest.java
@@ -706,7 +706,7 @@ void testLogDirectPathMisconfigNotOnGCE() throws Exception {
   }
 
   @Test
-  public void canUseDirectPath_happyPath() {
+  public void canUseDirectPath_happyPath() throws IOException {
     System.setProperty("os.name", "Linux");
     EnvironmentProvider envProvider = Mockito.mock(EnvironmentProvider.class);
     Mockito.when(
@@ -718,14 +718,20 @@ public void canUseDirectPath_happyPath() {
             .setAttemptDirectPath(true)
             .setCredentials(computeEngineCredentials)
             .setEndpoint(DEFAULT_ENDPOINT)
-            .setEnvProvider(envProvider);
+            .setEnvProvider(envProvider)
+            .setHeaderProvider(Mockito.mock(HeaderProvider.class));
     InstantiatingGrpcChannelProvider provider =
         new InstantiatingGrpcChannelProvider(builder, GCE_PRODUCTION_NAME_AFTER_2016);
     Truth.assertThat(provider.canUseDirectPath()).isTrue();
+
+    // verify this info is passed correctly to transport channel
+    TransportChannel transportChannel = provider.getTransportChannel();
+    Truth.assertThat(((GrpcTransportChannel) transportChannel).isDirectPath()).isTrue();
+    transportChannel.shutdownNow();
   }
 
   @Test
-  public void canUseDirectPath_directPathEnvVarDisabled() {
+  public void canUseDirectPath_directPathEnvVarDisabled() throws IOException {
     System.setProperty("os.name", "Linux");
     EnvironmentProvider envProvider = Mockito.mock(EnvironmentProvider.class);
     Mockito.when(
@@ -737,10 +743,16 @@ public void canUseDirectPath_directPathEnvVarDisabled() {
             .setAttemptDirectPath(true)
             .setCredentials(computeEngineCredentials)
             .setEndpoint(DEFAULT_ENDPOINT)
-            .setEnvProvider(envProvider);
+            .setEnvProvider(envProvider)
+            .setHeaderProvider(Mockito.mock(HeaderProvider.class));
     InstantiatingGrpcChannelProvider provider =
         new InstantiatingGrpcChannelProvider(builder, GCE_PRODUCTION_NAME_AFTER_2016);
     Truth.assertThat(provider.canUseDirectPath()).isFalse();
+
+    // verify this info is passed correctly to transport channel
+    TransportChannel transportChannel = provider.getTransportChannel();
+    Truth.assertThat(((GrpcTransportChannel) transportChannel).isDirectPath()).isFalse();
+    transportChannel.shutdownNow();
   }
 
   @Test
diff --git a/gax-java/gax/clirr-ignored-differences.xml b/gax-java/gax/clirr-ignored-differences.xml
index cbaed47eb5..af5c5f26a1 100644
--- a/gax-java/gax/clirr-ignored-differences.xml
+++ b/gax-java/gax/clirr-ignored-differences.xml
@@ -66,11 +66,6 @@
     <className>com/google/api/gax/*/*</className>
     <method>*org.threeten.bp.Duration *()</method>
   </difference>
-  <difference>
-    <differenceType>7002</differenceType>
-    <className>com/google/api/gax/grpc/InstantiatingGrpcChannelProvider$Builder</className>
-    <method>* *</method>
-  </difference>
   <!-- Add a default Endpoint Getter -->
   <difference>
     <differenceType>7012</differenceType>

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