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 b7f0966027..06d0c18e51 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
@@ -108,6 +108,7 @@ public final class InstantiatingGrpcChannelProvider implements TransportChannelP
   @Nullable private final Credentials credentials;
   @Nullable private final ChannelPrimer channelPrimer;
   @Nullable private final Boolean attemptDirectPath;
+  @Nullable private final Boolean attemptDirectPathXds;
   @Nullable private final Boolean allowNonDefaultServiceAccount;
   @VisibleForTesting final ImmutableMap<String, ?> directPathServiceConfig;
   @Nullable private final MtlsProvider mtlsProvider;
@@ -133,6 +134,7 @@ private InstantiatingGrpcChannelProvider(Builder builder) {
     this.credentials = builder.credentials;
     this.channelPrimer = builder.channelPrimer;
     this.attemptDirectPath = builder.attemptDirectPath;
+    this.attemptDirectPathXds = builder.attemptDirectPathXds;
     this.allowNonDefaultServiceAccount = builder.allowNonDefaultServiceAccount;
     this.directPathServiceConfig =
         builder.directPathServiceConfig == null
@@ -249,6 +251,21 @@ private boolean isDirectPathEnabled() {
     return false;
   }
 
+  @VisibleForTesting
+  boolean isDirectPathXdsEnabled() {
+    // Method 1: Enable DirectPath xDS by option.
+    if (Boolean.TRUE.equals(attemptDirectPathXds)) {
+      return true;
+    }
+    // Method 2: Enable DirectPath xDS by env.
+    String directPathXdsEnv = envProvider.getenv(DIRECT_PATH_ENV_ENABLE_XDS);
+    boolean isDirectPathXdsEnv = Boolean.parseBoolean(directPathXdsEnv);
+    if (isDirectPathXdsEnv) {
+      return true;
+    }
+    return false;
+  }
+
   private boolean isNonDefaultServiceAccountAllowed() {
     if (allowNonDefaultServiceAccount != null && allowNonDefaultServiceAccount) {
       return true;
@@ -304,13 +321,13 @@ private ManagedChannel createSingleChannel() throws IOException {
     ManagedChannelBuilder<?> builder;
 
     // Check DirectPath traffic.
-    boolean isDirectPathXdsEnabled = false;
+    boolean useDirectPathXds = false;
     if (isDirectPathEnabled() && isNonDefaultServiceAccountAllowed() && isOnComputeEngine()) {
       CallCredentials callCreds = MoreCallCredentials.from(credentials);
       ChannelCredentials channelCreds =
           GoogleDefaultChannelCredentials.newBuilder().callCredentials(callCreds).build();
-      isDirectPathXdsEnabled = Boolean.parseBoolean(envProvider.getenv(DIRECT_PATH_ENV_ENABLE_XDS));
-      if (isDirectPathXdsEnabled) {
+      useDirectPathXds = isDirectPathXdsEnabled();
+      if (useDirectPathXds) {
         // google-c2p: CloudToProd(C2P) Directpath. This scheme is defined in
         // io.grpc.googleapis.GoogleCloudToProdNameResolverProvider.
         // This resolver target must not have a port number.
@@ -337,7 +354,7 @@ private ManagedChannel createSingleChannel() throws IOException {
       }
     }
     // google-c2p resolver requires service config lookup
-    if (!isDirectPathXdsEnabled) {
+    if (!useDirectPathXds) {
       // See https://github.com/googleapis/gapic-generator/issues/2816
       builder.disableServiceConfigLookUp();
     }
@@ -435,6 +452,7 @@ public static final class Builder {
     @Nullable private ChannelPrimer channelPrimer;
     private ChannelPoolSettings channelPoolSettings;
     @Nullable private Boolean attemptDirectPath;
+    @Nullable private Boolean attemptDirectPathXds;
     @Nullable private Boolean allowNonDefaultServiceAccount;
     @Nullable private ImmutableMap<String, ?> directPathServiceConfig;
 
@@ -461,6 +479,7 @@ private Builder(InstantiatingGrpcChannelProvider provider) {
       this.channelPrimer = provider.channelPrimer;
       this.channelPoolSettings = provider.channelPoolSettings;
       this.attemptDirectPath = provider.attemptDirectPath;
+      this.attemptDirectPathXds = provider.attemptDirectPathXds;
       this.allowNonDefaultServiceAccount = provider.allowNonDefaultServiceAccount;
       this.directPathServiceConfig = provider.directPathServiceConfig;
       this.mtlsProvider = provider.mtlsProvider;
@@ -669,6 +688,13 @@ public Builder setAllowNonDefaultServiceAccount(boolean allowNonDefaultServiceAc
       return this;
     }
 
+    /** Use DirectPath xDS. Only valid if DirectPath is attempted. */
+    @InternalApi("For internal use by google-cloud-java clients only")
+    public Builder setAttemptDirectPathXds() {
+      this.attemptDirectPathXds = true;
+      return this;
+    }
+
     /**
      * Sets a service config for direct path. If direct path is not enabled, the provided service
      * config will be ignored.
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 654fc57b8e..d58a3b56b6 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
@@ -273,6 +273,25 @@ public void testWithGCECredentials() throws IOException {
     provider.getTransportChannel().shutdownNow();
   }
 
+  @Test
+  public void testDirectPathXdsDisableByDefault() throws IOException {
+    InstantiatingGrpcChannelProvider provider =
+        InstantiatingGrpcChannelProvider.newBuilder().setAttemptDirectPath(true).build();
+
+    assertThat(provider.isDirectPathXdsEnabled()).isFalse();
+  }
+
+  @Test
+  public void testDirectPathXdsEnabled() throws IOException {
+    InstantiatingGrpcChannelProvider provider =
+        InstantiatingGrpcChannelProvider.newBuilder()
+            .setAttemptDirectPath(true)
+            .setAttemptDirectPathXds()
+            .build();
+
+    assertThat(provider.isDirectPathXdsEnabled()).isTrue();
+  }
+
   @Test
   public void testWithNonGCECredentials() throws IOException {
     ScheduledExecutorService executor = new ScheduledThreadPoolExecutor(1);