diff --git a/implementations/micrometer-registry-otlp/src/main/java/io/micrometer/registry/otlp/OtlpConfig.java b/implementations/micrometer-registry-otlp/src/main/java/io/micrometer/registry/otlp/OtlpConfig.java
index 302b753f85..4f5586a8bc 100644
--- a/implementations/micrometer-registry-otlp/src/main/java/io/micrometer/registry/otlp/OtlpConfig.java
+++ b/implementations/micrometer-registry-otlp/src/main/java/io/micrometer/registry/otlp/OtlpConfig.java
@@ -18,6 +18,8 @@
 import io.micrometer.core.instrument.config.validate.Validated;
 import io.micrometer.core.instrument.push.PushRegistryConfig;
 
+import java.io.UnsupportedEncodingException;
+import java.net.URLDecoder;
 import java.time.Duration;
 import java.util.Arrays;
 import java.util.Map;
@@ -161,6 +163,13 @@ default Map<String, String> headers() {
             headersString = env.getOrDefault("OTEL_EXPORTER_OTLP_HEADERS", "").trim();
             String metricsHeaders = env.getOrDefault("OTEL_EXPORTER_OTLP_METRICS_HEADERS", "").trim();
             headersString = Objects.equals(headersString, "") ? metricsHeaders : headersString + "," + metricsHeaders;
+            try {
+                // headers are encoded as URL - see
+                // https://github.com/open-telemetry/opentelemetry-specification/blob/main/specification/protocol/exporter.md#specifying-headers-via-environment-variables
+                headersString = URLDecoder.decode(headersString, "UTF-8");
+            } catch (UnsupportedEncodingException e) {
+                throw new IllegalArgumentException("cannot decode header value: " + headersString, e);
+            }
         }
 
         String[] keyValues = Objects.equals(headersString, "") ? new String[] {} : headersString.split(",");
diff --git a/implementations/micrometer-registry-otlp/src/test/java/io/micrometer/registry/otlp/OtlpConfigTest.java b/implementations/micrometer-registry-otlp/src/test/java/io/micrometer/registry/otlp/OtlpConfigTest.java
index da5b206831..0d990acf00 100644
--- a/implementations/micrometer-registry-otlp/src/test/java/io/micrometer/registry/otlp/OtlpConfigTest.java
+++ b/implementations/micrometer-registry-otlp/src/test/java/io/micrometer/registry/otlp/OtlpConfigTest.java
@@ -100,8 +100,8 @@ void headersConfigTakesPrecedenceOverEnvVars() throws Exception {
     @Test
     void headersUseEnvVarWhenConfigNotSet() throws Exception {
         OtlpConfig config = k -> null;
-        withEnvironmentVariable("OTEL_EXPORTER_OTLP_HEADERS", "header2=value")
-            .execute(() -> assertThat(config.headers()).containsEntry("header2", "value").hasSize(1));
+        withEnvironmentVariable("OTEL_EXPORTER_OTLP_HEADERS", "header2=va%20lue")
+            .execute(() -> assertThat(config.headers()).containsEntry("header2", "va lue").hasSize(1));
     }
 
     @Test