diff --git a/install_script.sh.template b/install_script.sh.template
index 90e5c344..092cec77 100644
--- a/install_script.sh.template
+++ b/install_script.sh.template
@@ -691,6 +691,38 @@ function remove_existing_datadog_installer_package() {
     return "$exit_status"
 }
 
+function remove_existing_datadog_agent_ddot_package() {
+    local sudo_cmd="$1"
+    local os="$2"
+
+    local exit_status=0
+    if [ "$os" == "Debian" ]; then
+        $sudo_cmd apt list --installed "datadog-agent-ddot" 2>/dev/null | grep -q "datadog-agent-ddot" || exit_status=$?
+    elif [ "$os" == "Red Hat" ]; then
+        rpm -q datadog-agent-ddot || exit_status=$?
+    elif [ "$os" == "SUSE" ]; then
+        rpm -q datadog-agent-ddot || exit_status=$?
+    else
+        return 0
+    fi
+
+    if [ "$exit_status" -ne 0 ]; then
+        return 0
+    fi
+
+    echo -e "\033[33mRemoving legacy datadog-agent-ddot package before upgrade...\n\033[0m"
+    exit_status=0
+    if [ "$os" == "Debian" ]; then
+        $sudo_cmd apt-get remove -y --force-yes "datadog-agent-ddot" || exit_status=$?
+    elif [ "$os" == "Red Hat" ]; then
+        $sudo_cmd yum -y remove "datadog-agent-ddot" || exit_status=$?
+    elif [ "$os" == "SUSE" ]; then
+        $sudo_cmd zypper --non-interactive --no-refresh remove "datadog-agent-ddot" || exit_status=$?
+    fi
+
+    return "$exit_status"
+}
+
 function remove_existing_packages_for_fips_flavor() {
     local sudo_cmd="$1"
     local os="$2"
@@ -1241,9 +1273,13 @@ if [ -n "$DD_OTELCOLLECTOR_ENABLED" ]; then
         report_telemetry
         exit 1;
     fi
-    # Starting from 7.78.0, DDOT is installed by the Agent post-install script
-    if [ -n "$agent_minor_version_without_patch" ] && [ "${agent_minor_version_without_patch}" -ge 78 ]; then
-        DD_OTELCOLLECTOR_ENABLED=
+
+    # For version < 7.78, DDOT is not installed by the Agent post-install script
+    ddot_installed_by_agent=
+    # Starting from 7.78.0, DDOT is installed by the Agent post-install script => no need to install it manually after
+    # If the agent version is not set, we consider that this is the latest version, thus >= 78
+    if [ -z "$agent_minor_version_without_patch" ] || [ "${agent_minor_version_without_patch}" -ge 78 ]; then
+        ddot_installed_by_agent=true
     fi
 fi
 
@@ -1335,7 +1371,7 @@ if [ "$OS" == "Red Hat" ]; then
     # if some packages were previously pinned (using excludepkgs)
     # this will unpin them as a side effect
     $sudo_cmd sh -c "echo -e '[datadog]\nname = Datadog, Inc.\nbaseurl = https://${yum_url}/${yum_version_path}/${ARCHI}/\nenabled=1\ngpgcheck=1\nrepo_gpgcheck=${rpm_repo_gpgcheck}\npriority=1\ngpgkey=${gpgkeys}' > /etc/yum.repos.d/datadog.repo"
-    if [ -n "$DD_OTELCOLLECTOR_ENABLED" ]; then
+    if [ -n "$DD_OTELCOLLECTOR_ENABLED" ] && [ -z "$ddot_installed_by_agent" ]; then
       $sudo_cmd sh -c "echo -e '[datadog-ddot]\nname = Datadog, Inc.\nbaseurl = https://${yum_url}/${ddot_yum_version_path}/${ARCHI}/\nenabled=0\ngpgcheck=1\nrepo_gpgcheck=${rpm_repo_gpgcheck}\npriority=1\ngpgkey=${gpgkeys}' > /etc/yum.repos.d/datadog-ddot.repo"
     fi
 
@@ -1373,6 +1409,9 @@ if [ "$OS" == "Red Hat" ]; then
         remove_existing_packages_for_fips_flavor "$sudo_cmd" "$OS"
     fi
     remove_existing_datadog_installer_package "$sudo_cmd" "$OS"
+    if [ -n "$DD_OTELCOLLECTOR_ENABLED" ] && [ -n "$ddot_installed_by_agent" ]; then
+      remove_existing_datadog_agent_ddot_package "$sudo_cmd" "$OS"
+    fi
 
     # Complete package_sources_setup
     end_stage 0 "$(cat <<-END | tr -d '\n'
@@ -1383,15 +1422,15 @@ END
 
     # packages can be empty if no_agent is set
     if [ ${#packages[@]} -ne 0 ]; then
-      if [ -n "$DD_OTELCOLLECTOR_ENABLED" ]; then
+      if [ -n "$DD_OTELCOLLECTOR_ENABLED" ] && [ -z "$ddot_installed_by_agent"  ]; then
         echo -e "  \033[33mInstalling package(s): ${packages[*]} ${ddot_package}\n\033[0m"
       else
         echo -e "  \033[33mInstalling package(s): ${packages[*]}\n\033[0m"
       fi
 
       # yum has a default retry of 10 https://github.com/Distrotech/yum/blob/f4e54aeed297158c563828aa3ebb93d0c8ce7e38/docs/yum.conf.5#L364-L366
-      $sudo_cmd bash -c "SYSTEMD_OFFLINE=${SYSTEMD_OFFLINE:-0} DATADOG_TRACE_ID=${DATADOG_TRACE_ID} DATADOG_PARENT_ID=${DATADOG_PARENT_ID} yum -y --disablerepo='*' --enablerepo='datadog' install $dnf_flag ${packages[*]}" 2> >($sudo_cmd tee /tmp/ddog_install_error_msg >&2) || $sudo_cmd bash -c "SYSTEMD_OFFLINE=${SYSTEMD_OFFLINE:-0} yum -y install $dnf_flag ${packages[*]}" 2> >($sudo_cmd tee /tmp/ddog_install_error_msg >&2)
-      if [ -n "$DD_OTELCOLLECTOR_ENABLED" ]; then
+      $sudo_cmd bash -c "DD_OTELCOLLECTOR_ENABLED='${DD_OTELCOLLECTOR_ENABLED}' DD_API_KEY='${apikey}' DD_SITE='${site}' DD_INSTALLER_REGISTRY_URL='${DD_INSTALLER_REGISTRY_URL}' SYSTEMD_OFFLINE=${SYSTEMD_OFFLINE:-0} DATADOG_TRACE_ID=${DATADOG_TRACE_ID} DATADOG_PARENT_ID=${DATADOG_PARENT_ID} yum -y --disablerepo='*' --enablerepo='datadog' install $dnf_flag ${packages[*]}" 2> >($sudo_cmd tee /tmp/ddog_install_error_msg >&2) || $sudo_cmd bash -c "DD_OTELCOLLECTOR_ENABLED='${DD_OTELCOLLECTOR_ENABLED}' DD_API_KEY='${apikey}' DD_SITE='${site}' DD_INSTALLER_REGISTRY_URL='${DD_INSTALLER_REGISTRY_URL}' SYSTEMD_OFFLINE=${SYSTEMD_OFFLINE:-0} yum -y install $dnf_flag ${packages[*]}" 2> >($sudo_cmd tee /tmp/ddog_install_error_msg >&2)
+      if [ -n "$DD_OTELCOLLECTOR_ENABLED" ] && [ -z "$ddot_installed_by_agent" ]; then
         $sudo_cmd bash -c "SYSTEMD_OFFLINE=${SYSTEMD_OFFLINE:-0} DATADOG_TRACE_ID=${DATADOG_TRACE_ID} DATADOG_PARENT_ID=${DATADOG_PARENT_ID} yum -y --disablerepo='*' --enablerepo='datadog-ddot' install $dnf_flag ${ddot_package}" 2> >($sudo_cmd tee /tmp/ddog_install_error_msg >&2) || $sudo_cmd bash -c "SYSTEMD_OFFLINE=${SYSTEMD_OFFLINE:-0} yum -y install $dnf_flag ${ddot_package}" 2> >($sudo_cmd tee /tmp/ddog_install_error_msg >&2)
       fi
 
@@ -1456,7 +1495,7 @@ elif [ "$OS" == "Debian" ]; then
     $sudo_cmd sh -c "echo 'deb [signed-by=${apt_usr_share_keyring}] https://${apt_url}/ ${apt_repo_version}' > /etc/apt/sources.list.d/datadog.list"
     $sudo_cmd sh -c "chmod a+r /etc/apt/sources.list.d/datadog.list"
 
-    if [ -n "$DD_OTELCOLLECTOR_ENABLED" ]; then
+    if [ -n "$DD_OTELCOLLECTOR_ENABLED" ] && [ -z "$ddot_installed_by_agent" ]; then
       printf "\033[34m\n* Installing APT package sources for Datadog DDOT\n\033[0m\n"
       $sudo_cmd sh -c "echo 'deb [signed-by=${apt_usr_share_keyring}] https://${apt_url}/ ${ddot_apt_repo_version}' > /etc/apt/sources.list.d/datadog-ddot.list"
       $sudo_cmd sh -c "chmod a+r /etc/apt/sources.list.d/datadog-ddot.list"
@@ -1507,7 +1546,7 @@ If the failing repository is Datadog, please contact Datadog support.
 *****
 "
     $sudo_cmd apt-get update -o Dir::Etc::sourcelist="sources.list.d/datadog.list" -o Dir::Etc::sourceparts="-" -o APT::Get::List-Cleanup="0"
-    if [ -n "$DD_OTELCOLLECTOR_ENABLED" ]; then
+    if [ -n "$DD_OTELCOLLECTOR_ENABLED" ] && [ -z "$ddot_installed_by_agent" ]; then
       $sudo_cmd apt-get update -o Dir::Etc::sourcelist="sources.list.d/datadog-ddot.list" -o Dir::Etc::sourceparts="-" -o APT::Get::List-Cleanup="0"
       $sudo_cmd mv /etc/apt/sources.list.d/datadog-ddot.list /etc/apt/sources.list.d/datadog-ddot.list.disabled
     fi
@@ -1540,13 +1579,16 @@ If the cause is unclear, please contact Datadog support.
         remove_existing_packages_for_fips_flavor "$sudo_cmd" "$OS"
     fi
     remove_existing_datadog_installer_package "$sudo_cmd" "$OS"
+    if [ -n "$DD_OTELCOLLECTOR_ENABLED" ] && [ -n "$ddot_installed_by_agent" ]; then
+      remove_existing_datadog_agent_ddot_package "$sudo_cmd" "$OS"
+    fi
 
     if [ "$agent_flavor" == "datadog-agent" ]; then
         # Old version of the install scripts created a __pycache__ directory in the python-scripts directory
         $sudo_cmd rm -rf "/opt/datadog-agent/python-scripts/__pycache__"
     fi
 
-    if [ -n "$DD_OTELCOLLECTOR_ENABLED" ]; then
+    if [ -n "$DD_OTELCOLLECTOR_ENABLED" ] && [ -z "$ddot_installed_by_agent" ]; then
       echo -e "  \033[33mInstalling package(s): ${packages[*]} ${ddot_package}\n\033[0m"
     else
       echo -e "  \033[33mInstalling package(s): ${packages[*]}\n\033[0m"
@@ -1567,8 +1609,8 @@ END
 )"
     start_stage "install_agent_packages"
 
-    $sudo_cmd bash -c "POLICYRCD='${POLICYRCD}' apt-get install -o Acquire::Retries='5' -y --force-yes ${packages[*]} 2> >($sudo_cmd tee /tmp/ddog_install_error_msg >&2)"
-    if [ -n "$DD_OTELCOLLECTOR_ENABLED" ]; then
+    $sudo_cmd bash -c "DD_OTELCOLLECTOR_ENABLED='${DD_OTELCOLLECTOR_ENABLED}' DD_API_KEY='${apikey}' DD_SITE='${site}' DD_INSTALLER_REGISTRY_URL='${DD_INSTALLER_REGISTRY_URL}' POLICYRCD='${POLICYRCD}' apt-get install -o Acquire::Retries='5' -y --force-yes ${packages[*]} 2> >($sudo_cmd tee /tmp/ddog_install_error_msg >&2)"
+    if [ -n "$DD_OTELCOLLECTOR_ENABLED" ] && [ -z "$ddot_installed_by_agent" ]; then
       $sudo_cmd mv /etc/apt/sources.list.d/datadog-ddot.list.disabled /etc/apt/sources.list.d/datadog-ddot.list
       $sudo_cmd bash -c "POLICYRCD='${POLICYRCD}' apt-get install -o Acquire::Retries='5' -y --force-yes ${ddot_package} 2> >($sudo_cmd tee /tmp/ddog_install_error_msg >&2)"
       $sudo_cmd mv /etc/apt/sources.list.d/datadog-ddot.list /etc/apt/sources.list.d/datadog-ddot.list.disabled
@@ -1653,7 +1695,7 @@ elif [ "$OS" == "SUSE" ]; then
 
   echo -e "\033[34m\n* Installing YUM Repository for Datadog\n\033[0m"
   $sudo_cmd sh -c "echo -e '[datadog]\nname=datadog\nenabled=1\nbaseurl=https://${yum_url}/suse/${yum_version_path}/${ARCHI}\ntype=rpm-md\ngpgcheck=1\nrepo_gpgcheck=${rpm_repo_gpgcheck}\ngpgkey=${gpgkeys}' > /etc/zypp/repos.d/datadog.repo"
-  if [ -n "$DD_OTELCOLLECTOR_ENABLED" ]; then
+  if [ -n "$DD_OTELCOLLECTOR_ENABLED" ] && [ -z "$ddot_installed_by_agent" ]; then
     echo -e "\033[34m\n* Installing YUM Repository for DDOT\n\033[0m"
     $sudo_cmd sh -c "echo -e '[datadog-ddot]\nname=datadog-ddot\nenabled=0\nbaseurl=https://${yum_url}/suse/${ddot_yum_version_path}/${ARCHI}\ntype=rpm-md\ngpgcheck=1\nrepo_gpgcheck=${rpm_repo_gpgcheck}\ngpgkey=${gpgkeys}' > /etc/zypp/repos.d/datadog-ddot.repo"
   fi
@@ -1661,7 +1703,7 @@ elif [ "$OS" == "SUSE" ]; then
 
   echo -e "\033[34m\n* Refreshing repositories\n\033[0m"
   $sudo_cmd zypper --non-interactive --no-gpg-checks refresh datadog
-  if [ -n "$DD_OTELCOLLECTOR_ENABLED" ]; then
+  if [ -n "$DD_OTELCOLLECTOR_ENABLED" ] && [ -z "$ddot_installed_by_agent" ]; then
     $sudo_cmd zypper --non-interactive --no-gpg-checks refresh datadog-ddot
   fi
 
@@ -1723,6 +1765,9 @@ elif [ "$OS" == "SUSE" ]; then
         remove_existing_packages_for_fips_flavor "$sudo_cmd" "$OS"
     fi
     remove_existing_datadog_installer_package "$sudo_cmd" "$OS"
+    if [ -n "$DD_OTELCOLLECTOR_ENABLED" ] && [ -n "$ddot_installed_by_agent" ]; then
+      remove_existing_datadog_agent_ddot_package "$sudo_cmd" "$OS"
+    fi
 
   # Complete package_sources_setup
   end_stage 0 "$(cat <<-END | tr -d '\n'
@@ -1731,19 +1776,19 @@ END
 )"
   start_stage "install_agent_packages"
   if [ ${#packages[@]} -ne 0 ]; then
-    if [ -n "$DD_OTELCOLLECTOR_ENABLED" ]; then
+    if [ -n "$DD_OTELCOLLECTOR_ENABLED" ] && [ -z "$ddot_installed_by_agent" ]; then
       echo -e "  \033[33mInstalling package(s): ${packages[*]} ${ddot_package}\n\033[0m"
     else
       echo -e "  \033[33mInstalling package(s): ${packages[*]}\n\033[0m"
     fi
     # Not yet retry mechanism in zypper, see https://github.com/openSUSE/zypper/issues/420
     if [ -z "$sudo_cmd" ]; then
-      ZYPP_RPM_DEBUG="${ZYPP_RPM_DEBUG:-0}" SYSTEMD_OFFLINE=${SYSTEMD_OFFLINE:-0} zypper --non-interactive --no-refresh install "${packages[@]}" 2> >($sudo_cmd tee /tmp/ddog_install_error_msg >&2) ||:
+      DD_OTELCOLLECTOR_ENABLED="${DD_OTELCOLLECTOR_ENABLED}" DD_API_KEY="${apikey}" DD_SITE="${site}" DD_INSTALLER_REGISTRY_URL="${DD_INSTALLER_REGISTRY_URL}" ZYPP_RPM_DEBUG="${ZYPP_RPM_DEBUG:-0}" SYSTEMD_OFFLINE=${SYSTEMD_OFFLINE:-0} zypper --non-interactive --no-refresh install "${packages[@]}" 2> >($sudo_cmd tee /tmp/ddog_install_error_msg >&2) ||:
     else
-      $sudo_cmd ZYPP_RPM_DEBUG="${ZYPP_RPM_DEBUG:-0}" SYSTEMD_OFFLINE="${SYSTEMD_OFFLINE:-0}" zypper --non-interactive --no-refresh install "${packages[@]}" 2> >($sudo_cmd tee /tmp/ddog_install_error_msg >&2) ||:
+      $sudo_cmd DD_OTELCOLLECTOR_ENABLED="${DD_OTELCOLLECTOR_ENABLED}" DD_API_KEY="${apikey}" DD_SITE="${site}" DD_INSTALLER_REGISTRY_URL="${DD_INSTALLER_REGISTRY_URL}" ZYPP_RPM_DEBUG="${ZYPP_RPM_DEBUG:-0}" SYSTEMD_OFFLINE="${SYSTEMD_OFFLINE:-0}" zypper --non-interactive --no-refresh install "${packages[@]}" 2> >($sudo_cmd tee /tmp/ddog_install_error_msg >&2) ||:
     fi
 
-    if [ -n "$DD_OTELCOLLECTOR_ENABLED" ]; then
+    if [ -n "$DD_OTELCOLLECTOR_ENABLED" ] && [ -z "$ddot_installed_by_agent" ]; then
       if [ -z "$sudo_cmd" ]; then
         ZYPP_RPM_DEBUG="${ZYPP_RPM_DEBUG:-0}" SYSTEMD_OFFLINE=${SYSTEMD_OFFLINE:-0} zypper --non-interactive --no-refresh install "${ddot_package}" 2> >($sudo_cmd tee /tmp/ddog_install_error_msg >&2) ||:
       else
@@ -2222,6 +2267,8 @@ elif [ ! "$no_agent" ]; then
 fi
 
 # DDOT configuration update
+# Even if DDOT is installed by the agent, update_ddot still needs to run
+# to enable otelcollector in datadog.yaml after datadog.yaml is written.
 if [ -n "$DD_OTELCOLLECTOR_ENABLED" ]; then
   update_ddot "$sudo_cmd" "$config_file"
   manage_otel_config "$sudo_cmd" "$otel_config_file" "$apikey" "$site"
diff --git a/test/dockertest.sh b/test/dockertest.sh
index 7632ba34..fdb26af0 100755
--- a/test/dockertest.sh
+++ b/test/dockertest.sh
@@ -84,6 +84,7 @@ docker run --rm --platform "$PLATFORM" \
   -e DD_COMPLIANCE_CONFIG_ENABLED="${DD_COMPLIANCE_CONFIG_ENABLED}" \
   -e DD_RUNTIME_SECURITY_CONFIG_ENABLED="${DD_RUNTIME_SECURITY_CONFIG_ENABLED}" \
   -e DD_SYSTEM_PROBE_SERVICE_MONITORING_ENABLED="${DD_SYSTEM_PROBE_SERVICE_MONITORING_ENABLED}" \
+  -e DD_OTELCOLLECTOR_ENABLED="${DD_OTELCOLLECTOR_ENABLED}" \
   -e DD_INSTALL_ONLY=true \
   -e DD_AGENT_MINOR_VERSION="${MINOR_VERSION}" \
   -e DD_AGENT_FLAVOR="${FLAVOR}" \