diff --git a/CHANGELOG.md b/CHANGELOG.md
index fa7d7ed2f37d2..6ce2e0d603521 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -30,6 +30,7 @@
 - `attributesprocessor`: Support filter by severity (#9132)
 - `processor/transform`: Add transformation of logs (#9368)
 - `datadogexporter`: Add `metrics::summaries::mode` to specify export mode for summaries (#8846)
+- `datadogexporter`: Add `api.fail_on_invalid_key` to fail fast if api key is invalid (#9426)
 
 ### 🧰 Bug fixes 🧰
 
diff --git a/exporter/datadogexporter/config/config.go b/exporter/datadogexporter/config/config.go
index 05311097154a8..b19e67cc3a31f 100644
--- a/exporter/datadogexporter/config/config.go
+++ b/exporter/datadogexporter/config/config.go
@@ -21,12 +21,11 @@ import (
 	"regexp"
 	"strings"
 
+	"github.com/open-telemetry/opentelemetry-collector-contrib/exporter/datadogexporter/internal/metadata/valid"
 	"go.opentelemetry.io/collector/config"
 	"go.opentelemetry.io/collector/config/confignet"
 	"go.opentelemetry.io/collector/exporter/exporterhelper"
 	"go.uber.org/zap"
-
-	"github.com/open-telemetry/opentelemetry-collector-contrib/exporter/datadogexporter/internal/metadata/valid"
 )
 
 var (
@@ -58,6 +57,10 @@ type APIConfig struct {
 	// It can also be set through the `DD_SITE` environment variable (Deprecated: [v0.47.0] set environment variable explicitly on configuration instead).
 	// The default value is "datadoghq.com".
 	Site string `mapstructure:"site"`
+
+	// FailOnInvalidKey states whether to exit on invalid api key.
+	// The default value is false.
+	FailOnInvalidKey bool `mapstructure:"fail_on_invalid_key"`
 }
 
 // MetricsConfig defines the metrics exporter specific configuration options
diff --git a/exporter/datadogexporter/example/config.yaml b/exporter/datadogexporter/example/config.yaml
index c3a830e8c5a86..42a579db5c38a 100644
--- a/exporter/datadogexporter/example/config.yaml
+++ b/exporter/datadogexporter/example/config.yaml
@@ -83,6 +83,11 @@ exporters:
       #
       # site: datadoghq.com
 
+      ## @param fail_on_invalid_key - boolean - optional - default: false
+      ## Whether to exit on invalid api key.
+      #
+      # fail_on_invalid_key: false
+
     ## @param tls - custom object - optional
     # TLS settings for HTTPS communications.
     # tls:
diff --git a/exporter/datadogexporter/internal/utils/api.go b/exporter/datadogexporter/internal/utils/api.go
index 02a8296650ba5..b40f4d3ab3f79 100644
--- a/exporter/datadogexporter/internal/utils/api.go
+++ b/exporter/datadogexporter/internal/utils/api.go
@@ -28,16 +28,22 @@ func CreateClient(APIKey string, endpoint string) *datadog.Client {
 }
 
 // ValidateAPIKey checks that the provided client was given a correct API key.
-func ValidateAPIKey(logger *zap.Logger, client *datadog.Client) {
+// If `api.fail_on_invalid_key` is enabled,
+func ValidateAPIKey(logger *zap.Logger, client *datadog.Client, failOnInvalidKey bool) {
 	logger.Info("Validating API key.")
-	res, err := client.Validate()
-	if err != nil {
-		logger.Warn("Error while validating API key.", zap.Error(err))
-	}
-
-	if res {
+	valid, err := client.Validate()
+	if err == nil && valid {
 		logger.Info("API key validation successful.")
-	} else {
-		logger.Warn("API key validation failed.")
+		return
+	}
+	switch {
+	case err != nil && failOnInvalidKey:
+		logger.Fatal("Error while validating API key.", zap.Error(err))
+	case err != nil && !failOnInvalidKey:
+		logger.Warn("Error while validating API key.", zap.Error(err))
+	case !valid && failOnInvalidKey:
+		logger.Fatal("API Key validation failed.")
+	case !valid && !failOnInvalidKey:
+		logger.Warn("API Key validation failed.")
 	}
 }
diff --git a/exporter/datadogexporter/metrics_exporter.go b/exporter/datadogexporter/metrics_exporter.go
index 3dc1976f913de..65981f9a2671d 100644
--- a/exporter/datadogexporter/metrics_exporter.go
+++ b/exporter/datadogexporter/metrics_exporter.go
@@ -105,7 +105,7 @@ func newMetricsExporter(ctx context.Context, params component.ExporterCreateSett
 	client.ExtraHeader["User-Agent"] = utils.UserAgent(params.BuildInfo)
 	client.HttpClient = utils.NewHTTPClient(cfg.TimeoutSettings, cfg.LimitedHTTPClientSettings.TLSSetting.InsecureSkipVerify)
 
-	utils.ValidateAPIKey(params.Logger, client)
+	utils.ValidateAPIKey(params.Logger, client, cfg.API.FailOnInvalidKey)
 
 	tr, err := translatorFromConfig(params.Logger, cfg)
 	if err != nil {
diff --git a/exporter/datadogexporter/traces_exporter.go b/exporter/datadogexporter/traces_exporter.go
index 55c8f6df80e6c..7c907af93972c 100644
--- a/exporter/datadogexporter/traces_exporter.go
+++ b/exporter/datadogexporter/traces_exporter.go
@@ -68,7 +68,7 @@ var (
 func newTracesExporter(ctx context.Context, params component.ExporterCreateSettings, cfg *config.Config, onceMetadata *sync.Once) *traceExporter {
 	// client to send running metric to the backend & perform API key validation
 	client := utils.CreateClient(cfg.API.Key, cfg.Metrics.TCPAddr.Endpoint)
-	utils.ValidateAPIKey(params.Logger, client)
+	utils.ValidateAPIKey(params.Logger, client, cfg.API.FailOnInvalidKey)
 
 	// removes potentially sensitive info and PII, approach taken from serverless approach
 	// https://github.com/DataDog/datadog-serverless-functions/blob/11f170eac105d66be30f18eda09eca791bc0d31b/aws/logs_monitoring/trace_forwarder/cmd/trace/main.go#L43