diff --git a/releasenotes/notes/fix-pytest-inferred-service-naming-5ba12e991d040a1b.yaml b/releasenotes/notes/fix-pytest-inferred-service-naming-5ba12e991d040a1b.yaml
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+---
+fixes:
+  - |
+    Updates the inferred base service name algorithm to ensure that arguments following ``--ddtrace`` are no 
+    longer skipped when executing tests with pytest. Previously, the algorithm misinterpreted these arguments 
+    as standard flags, overlooking possible test paths that may contribute to the inferred service name.