diff --git a/dev-packages/e2e-tests/test-applications/tanstackstart-react/package.json b/dev-packages/e2e-tests/test-applications/tanstackstart-react/package.json
index 5df2d237445e..0076ccf22dc8 100644
--- a/dev-packages/e2e-tests/test-applications/tanstackstart-react/package.json
+++ b/dev-packages/e2e-tests/test-applications/tanstackstart-react/package.json
@@ -13,8 +13,8 @@
   },
   "dependencies": {
     "@sentry/tanstackstart-react": "latest || *",
-    "@tanstack/react-start": "^1.139.12",
-    "@tanstack/react-router": "^1.139.12",
+    "@tanstack/react-start": "^1.136.0",
+    "@tanstack/react-router": "^1.136.0",
     "react": "^19.2.0",
     "react-dom": "^19.2.0"
   },
diff --git a/dev-packages/e2e-tests/test-applications/tanstackstart-react/src/routes/test-serverFn.tsx b/dev-packages/e2e-tests/test-applications/tanstackstart-react/src/routes/test-serverFn.tsx
new file mode 100644
index 000000000000..894ff4e85ee3
--- /dev/null
+++ b/dev-packages/e2e-tests/test-applications/tanstackstart-react/src/routes/test-serverFn.tsx
@@ -0,0 +1,45 @@
+import { createFileRoute } from '@tanstack/react-router';
+import { createServerFn } from '@tanstack/react-start';
+import { startSpan } from '@sentry/tanstackstart-react';
+
+const testLog = createServerFn().handler(async () => {
+  console.log('Test log from server function');
+  return { message: 'Log created' };
+});
+
+const testNestedLog = createServerFn().handler(async () => {
+  await startSpan({ name: 'testNestedLog' }, async () => {
+    await testLog();
+  });
+
+  console.log('Outer test log from server function');
+  return { message: 'Nested log created' };
+});
+
+export const Route = createFileRoute('/test-serverFn')({
+  component: TestLog,
+});
+
+function TestLog() {
+  return (
+    <div>
+      <h1>Test Log Page</h1>
+      <button
+        type="button"
+        onClick={async () => {
+          await testLog();
+        }}
+      >
+        Call server function
+      </button>
+      <button
+        type="button"
+        onClick={async () => {
+          await testNestedLog();
+        }}
+      >
+        Call server function nested
+      </button>
+    </div>
+  );
+}
diff --git a/dev-packages/e2e-tests/test-applications/tanstackstart-react/src/server.ts b/dev-packages/e2e-tests/test-applications/tanstackstart-react/src/server.ts
new file mode 100644
index 000000000000..b10a3bc1e37b
--- /dev/null
+++ b/dev-packages/e2e-tests/test-applications/tanstackstart-react/src/server.ts
@@ -0,0 +1,12 @@
+import { wrapFetchWithSentry } from '@sentry/tanstackstart-react';
+
+import handler, { createServerEntry } from '@tanstack/react-start/server-entry';
+import type { ServerEntry } from '@tanstack/react-start/server-entry';
+
+const requestHandler: ServerEntry = wrapFetchWithSentry({
+  fetch(request: Request) {
+    return handler.fetch(request);
+  },
+});
+
+export default createServerEntry(requestHandler);
diff --git a/dev-packages/e2e-tests/test-applications/tanstackstart-react/tests/transaction.test.ts b/dev-packages/e2e-tests/test-applications/tanstackstart-react/tests/transaction.test.ts
new file mode 100644
index 000000000000..d2ebbffb0ec0
--- /dev/null
+++ b/dev-packages/e2e-tests/test-applications/tanstackstart-react/tests/transaction.test.ts
@@ -0,0 +1,100 @@
+import { expect, test } from '@playwright/test';
+import { waitForTransaction } from '@sentry-internal/test-utils';
+
+test('Sends a server function transaction with auto-instrumentation', async ({ page }) => {
+  const transactionEventPromise = waitForTransaction('tanstackstart-react', transactionEvent => {
+    return (
+      transactionEvent?.contexts?.trace?.op === 'http.server' &&
+      !!transactionEvent?.transaction?.startsWith('GET /_serverFn')
+    );
+  });
+
+  await page.goto('/test-serverFn');
+
+  await expect(page.getByText('Call server function', { exact: true })).toBeVisible();
+
+  await page.getByText('Call server function', { exact: true }).click();
+
+  const transactionEvent = await transactionEventPromise;
+
+  // Check for the auto-instrumented server function span
+  expect(Array.isArray(transactionEvent?.spans)).toBe(true);
+  expect(transactionEvent?.spans).toEqual(
+    expect.arrayContaining([
+      expect.objectContaining({
+        description: expect.stringContaining('GET /_serverFn/'),
+        op: 'function.tanstackstart',
+        origin: 'auto.function.tanstackstart.server',
+        data: {
+          'sentry.op': 'function.tanstackstart',
+          'sentry.origin': 'auto.function.tanstackstart.server',
+          'tanstackstart.function.hash.sha256': expect.any(String),
+        },
+        status: 'ok',
+      }),
+    ]),
+  );
+});
+
+test('Sends a server function transaction for a nested server function only if it is manually instrumented', async ({
+  page,
+}) => {
+  const transactionEventPromise = waitForTransaction('tanstackstart-react', transactionEvent => {
+    return (
+      transactionEvent?.contexts?.trace?.op === 'http.server' &&
+      !!transactionEvent?.transaction?.startsWith('GET /_serverFn')
+    );
+  });
+
+  await page.goto('/test-serverFn');
+
+  await expect(page.getByText('Call server function nested')).toBeVisible();
+
+  await page.getByText('Call server function nested').click();
+
+  const transactionEvent = await transactionEventPromise;
+
+  expect(Array.isArray(transactionEvent?.spans)).toBe(true);
+
+  // Check for the auto-instrumented server function span
+  expect(transactionEvent?.spans).toEqual(
+    expect.arrayContaining([
+      expect.objectContaining({
+        description: expect.stringContaining('GET /_serverFn/'),
+        op: 'function.tanstackstart',
+        origin: 'auto.function.tanstackstart.server',
+        data: {
+          'sentry.op': 'function.tanstackstart',
+          'sentry.origin': 'auto.function.tanstackstart.server',
+          'tanstackstart.function.hash.sha256': expect.any(String),
+        },
+        status: 'ok',
+      }),
+    ]),
+  );
+
+  // Check for the manually instrumented nested span
+  expect(transactionEvent?.spans).toEqual(
+    expect.arrayContaining([
+      expect.objectContaining({
+        description: 'testNestedLog',
+        origin: 'manual',
+        status: 'ok',
+      }),
+    ]),
+  );
+
+  // Verify that the auto span is the parent of the nested span
+  const autoSpan = transactionEvent?.spans?.find(
+    (span: { op?: string; origin?: string }) =>
+      span.op === 'function.tanstackstart' && span.origin === 'auto.function.tanstackstart.server',
+  );
+  const nestedSpan = transactionEvent?.spans?.find(
+    (span: { description?: string; origin?: string }) =>
+      span.description === 'testNestedLog' && span.origin === 'manual',
+  );
+
+  expect(autoSpan).toBeDefined();
+  expect(nestedSpan).toBeDefined();
+  expect(nestedSpan?.parent_span_id).toBe(autoSpan?.span_id);
+});
diff --git a/packages/tanstackstart-react/src/server/index.ts b/packages/tanstackstart-react/src/server/index.ts
index b91a89ed9482..299f1cd85ea9 100644
--- a/packages/tanstackstart-react/src/server/index.ts
+++ b/packages/tanstackstart-react/src/server/index.ts
@@ -4,6 +4,7 @@
 export * from '@sentry/node';
 
 export { init } from './sdk';
+export { wrapFetchWithSentry } from './wrapFetchWithSentry';
 
 /**
  * A passthrough error boundary for the server that doesn't depend on any react. Error boundaries don't catch SSR errors
diff --git a/packages/tanstackstart-react/src/server/utils.ts b/packages/tanstackstart-react/src/server/utils.ts
new file mode 100644
index 000000000000..a3ebbd118910
--- /dev/null
+++ b/packages/tanstackstart-react/src/server/utils.ts
@@ -0,0 +1,12 @@
+/**
+ * Extracts the SHA-256 hash from a server function pathname.
+ * Server function pathnames are structured as `/_serverFn/<hash>`.
+ * This function matches the pattern and returns the hash if found.
+ *
+ * @param pathname - the pathname of the server function
+ * @returns the sha256 of the server function
+ */
+export function extractServerFunctionSha256(pathname: string): string {
+  const serverFnMatch = pathname.match(/\/_serverFn\/([a-f0-9]{64})/i);
+  return serverFnMatch?.[1] ?? 'unknown';
+}
diff --git a/packages/tanstackstart-react/src/server/wrapFetchWithSentry.ts b/packages/tanstackstart-react/src/server/wrapFetchWithSentry.ts
new file mode 100644
index 000000000000..22d218ef0b48
--- /dev/null
+++ b/packages/tanstackstart-react/src/server/wrapFetchWithSentry.ts
@@ -0,0 +1,68 @@
+import { SEMANTIC_ATTRIBUTE_SENTRY_OP, SEMANTIC_ATTRIBUTE_SENTRY_ORIGIN, startSpan } from '@sentry/node';
+import { extractServerFunctionSha256 } from './utils';
+
+export type ServerEntry = {
+  fetch: (request: Request, opts?: unknown) => Promise<Response> | Response;
+};
+
+/**
+ * This function can be used to wrap the server entry request handler to add tracing to server-side functionality.
+ * You must explicitly define a server entry point in your application for this to work. This is done by passing the request handler to the `createServerEntry` function.
+ * For more information about the server entry point, see the [TanStack Start documentation](https://tanstack.com/start/docs/server-entry).
+ *
+ * @example
+ * ```ts
+ * import { wrapFetchWithSentry } from '@sentry/tanstackstart-react';
+ *
+ * import handler, { createServerEntry } from '@tanstack/react-start/server-entry';
+ * import type { ServerEntry } from '@tanstack/react-start/server-entry';
+ *
+ * const requestHandler: ServerEntry = wrapFetchWithSentry({
+ *  fetch(request: Request) {
+ *    return handler.fetch(request);
+ *  },
+ * });
+ *
+ * export default serverEntry = createServerEntry(requestHandler);
+ * ```
+ *
+ * @param serverEntry - request handler to wrap
+ * @returns - wrapped request handler
+ */
+export function wrapFetchWithSentry(serverEntry: ServerEntry): ServerEntry {
+  if (serverEntry.fetch) {
+    serverEntry.fetch = new Proxy<typeof serverEntry.fetch>(serverEntry.fetch, {
+      apply: (target, thisArg, args) => {
+        const request: Request = args[0];
+        const url = new URL(request.url);
+        const method = request.method || 'GET';
+
+        // instrument server functions
+        if (url.pathname.includes('_serverFn') || url.pathname.includes('createServerFn')) {
+          const functionSha256 = extractServerFunctionSha256(url.pathname);
+          const op = 'function.tanstackstart';
+
+          const serverFunctionSpanAttributes = {
+            [SEMANTIC_ATTRIBUTE_SENTRY_ORIGIN]: 'auto.function.tanstackstart.server',
+            [SEMANTIC_ATTRIBUTE_SENTRY_OP]: op,
+            'tanstackstart.function.hash.sha256': functionSha256,
+          };
+
+          return startSpan(
+            {
+              op: op,
+              name: `${method} ${url.pathname}`,
+              attributes: serverFunctionSpanAttributes,
+            },
+            () => {
+              return target.apply(thisArg, args);
+            },
+          );
+        }
+
+        return target.apply(thisArg, args);
+      },
+    });
+  }
+  return serverEntry;
+}
diff --git a/packages/tanstackstart-react/test/server/utils.test.ts b/packages/tanstackstart-react/test/server/utils.test.ts
new file mode 100644
index 000000000000..f9dd652bd9b1
--- /dev/null
+++ b/packages/tanstackstart-react/test/server/utils.test.ts
@@ -0,0 +1,41 @@
+import { describe, expect, it } from 'vitest';
+import { extractServerFunctionSha256 } from '../../src/server/utils';
+
+describe('extractServerFunctionSha256', () => {
+  it('extracts SHA256 hash from valid server function pathname', () => {
+    const pathname = '/_serverFn/1ac31c23f613ec7e58631cf789642e2feb86c58e3128324cf00d746474a044bf';
+    const result = extractServerFunctionSha256(pathname);
+    expect(result).toBe('1ac31c23f613ec7e58631cf789642e2feb86c58e3128324cf00d746474a044bf');
+  });
+
+  it('extracts SHA256 hash from valid server function pathname that is a subpath', () => {
+    const pathname = '/api/_serverFn/1ac31c23f613ec7e58631cf789642e2feb86c58e3128324cf00d746474a044bf';
+    const result = extractServerFunctionSha256(pathname);
+    expect(result).toBe('1ac31c23f613ec7e58631cf789642e2feb86c58e3128324cf00d746474a044bf');
+  });
+
+  it('extracts SHA256 hash from valid server function pathname with query parameters', () => {
+    const pathname = '/_serverFn/1ac31c23f613ec7e58631cf789642e2feb86c58e3128324cf00d746474a044bf?param=value';
+    const result = extractServerFunctionSha256(pathname);
+    expect(result).toBe('1ac31c23f613ec7e58631cf789642e2feb86c58e3128324cf00d746474a044bf');
+  });
+
+  it('extracts SHA256 hash with uppercase hex characters', () => {
+    const pathname = '/_serverFn/1AC31C23F613EC7E58631CF789642E2FEB86C58E3128324CF00D746474A044BF';
+    const result = extractServerFunctionSha256(pathname);
+    expect(result).toBe('1AC31C23F613EC7E58631CF789642E2FEB86C58E3128324CF00D746474A044BF');
+  });
+
+  it('returns unknown for pathname without server function pattern', () => {
+    const pathname = '/api/users/123';
+    const result = extractServerFunctionSha256(pathname);
+    expect(result).toBe('unknown');
+  });
+
+  it('returns unknown for pathname with incomplete hash', () => {
+    // Hash is too short (only 32 chars instead of 64)
+    const pathname = '/_serverFn/1ac31c23f613ec7e58631cf789642e2f';
+    const result = extractServerFunctionSha256(pathname);
+    expect(result).toBe('unknown');
+  });
+});