diff --git a/dev-packages/e2e-tests/test-applications/nuxt-3-dynamic-import/tests/tracing.test.ts b/dev-packages/e2e-tests/test-applications/nuxt-3-dynamic-import/tests/tracing.test.ts
index 17c2704279b3..d3b7415e7678 100644
--- a/dev-packages/e2e-tests/test-applications/nuxt-3-dynamic-import/tests/tracing.test.ts
+++ b/dev-packages/e2e-tests/test-applications/nuxt-3-dynamic-import/tests/tracing.test.ts
@@ -10,7 +10,7 @@ test.describe('distributed tracing', () => {
     });
 
     const serverTxnEventPromise = waitForTransaction('nuxt-3-dynamic-import', txnEvent => {
-      return txnEvent.transaction.includes('GET /test-param/');
+      return txnEvent.transaction?.includes('GET /test-param/') || false;
     });
 
     const [_, clientTxnEvent, serverTxnEvent] = await Promise.all([
@@ -47,7 +47,7 @@ test.describe('distributed tracing', () => {
     });
 
     expect(serverTxnEvent).toMatchObject({
-      transaction: `GET /test-param/${PARAM}`, // todo: parametrize (nitro)
+      transaction: `GET /test-param/${PARAM}`, // todo: parametrize
       transaction_info: { source: 'url' },
       type: 'transaction',
       contexts: {
@@ -135,8 +135,8 @@ test.describe('distributed tracing', () => {
     expect(serverReqTxnEvent).toEqual(
       expect.objectContaining({
         type: 'transaction',
-        transaction: `GET /api/user/${PARAM}`,
-        transaction_info: { source: 'url' },
+        transaction: `GET /api/user/:userId`, // parametrized route
+        transaction_info: { source: 'route' },
         contexts: expect.objectContaining({
           trace: expect.objectContaining({
             op: 'http.server',
diff --git a/dev-packages/e2e-tests/test-applications/nuxt-3-min/tests/tracing.test.ts b/dev-packages/e2e-tests/test-applications/nuxt-3-min/tests/tracing.test.ts
index 0daa9a856236..a23b1bb8f35a 100644
--- a/dev-packages/e2e-tests/test-applications/nuxt-3-min/tests/tracing.test.ts
+++ b/dev-packages/e2e-tests/test-applications/nuxt-3-min/tests/tracing.test.ts
@@ -47,7 +47,7 @@ test.describe('distributed tracing', () => {
     });
 
     expect(serverTxnEvent).toMatchObject({
-      transaction: `GET /test-param/${PARAM}`, // todo: parametrize (nitro)
+      transaction: `GET /test-param/${PARAM}`, // todo: parametrize
       transaction_info: { source: 'url' },
       type: 'transaction',
       contexts: {
@@ -135,8 +135,8 @@ test.describe('distributed tracing', () => {
     expect(serverReqTxnEvent).toEqual(
       expect.objectContaining({
         type: 'transaction',
-        transaction: `GET /api/user/${PARAM}`,
-        transaction_info: { source: 'url' },
+        transaction: `GET /api/user/:userId`, // parametrized route
+        transaction_info: { source: 'route' },
         contexts: expect.objectContaining({
           trace: expect.objectContaining({
             op: 'http.server',
diff --git a/dev-packages/e2e-tests/test-applications/nuxt-3-top-level-import/tests/tracing.test.ts b/dev-packages/e2e-tests/test-applications/nuxt-3-top-level-import/tests/tracing.test.ts
index 5248926e30fb..62f8f9ab51e0 100644
--- a/dev-packages/e2e-tests/test-applications/nuxt-3-top-level-import/tests/tracing.test.ts
+++ b/dev-packages/e2e-tests/test-applications/nuxt-3-top-level-import/tests/tracing.test.ts
@@ -47,7 +47,7 @@ test.describe('distributed tracing', () => {
     });
 
     expect(serverTxnEvent).toMatchObject({
-      transaction: `GET /test-param/${PARAM}`, // todo: parametrize (nitro)
+      transaction: `GET /test-param/${PARAM}`, // todo: parametrize
       transaction_info: { source: 'url' },
       type: 'transaction',
       contexts: {
@@ -135,8 +135,8 @@ test.describe('distributed tracing', () => {
     expect(serverReqTxnEvent).toEqual(
       expect.objectContaining({
         type: 'transaction',
-        transaction: `GET /api/user/${PARAM}`,
-        transaction_info: { source: 'url' },
+        transaction: `GET /api/user/:userId`, // parametrized route
+        transaction_info: { source: 'route' },
         contexts: expect.objectContaining({
           trace: expect.objectContaining({
             op: 'http.server',
diff --git a/dev-packages/e2e-tests/test-applications/nuxt-3/tests/tracing.test.ts b/dev-packages/e2e-tests/test-applications/nuxt-3/tests/tracing.test.ts
index 58eb03eccb88..de19d6d739f9 100644
--- a/dev-packages/e2e-tests/test-applications/nuxt-3/tests/tracing.test.ts
+++ b/dev-packages/e2e-tests/test-applications/nuxt-3/tests/tracing.test.ts
@@ -47,7 +47,7 @@ test.describe('distributed tracing', () => {
     });
 
     expect(serverTxnEvent).toMatchObject({
-      transaction: `GET /test-param/${PARAM}`, // todo: parametrize (nitro)
+      transaction: `GET /test-param/${PARAM}`, // todo: parametrize
       transaction_info: { source: 'url' },
       type: 'transaction',
       contexts: {
@@ -135,8 +135,8 @@ test.describe('distributed tracing', () => {
     expect(serverReqTxnEvent).toEqual(
       expect.objectContaining({
         type: 'transaction',
-        transaction: `GET /api/user/${PARAM}`,
-        transaction_info: { source: 'url' },
+        transaction: `GET /api/user/:userId`, // parametrized route
+        transaction_info: { source: 'route' },
         contexts: expect.objectContaining({
           trace: expect.objectContaining({
             op: 'http.server',
diff --git a/dev-packages/e2e-tests/test-applications/nuxt-4/tests/tracing.test.ts b/dev-packages/e2e-tests/test-applications/nuxt-4/tests/tracing.test.ts
index bb824f60f7d1..3448851dd299 100644
--- a/dev-packages/e2e-tests/test-applications/nuxt-4/tests/tracing.test.ts
+++ b/dev-packages/e2e-tests/test-applications/nuxt-4/tests/tracing.test.ts
@@ -47,7 +47,7 @@ test.describe('distributed tracing', () => {
     });
 
     expect(serverTxnEvent).toMatchObject({
-      transaction: `GET /test-param/${PARAM}`, // todo: parametrize (nitro)
+      transaction: `GET /test-param/${PARAM}`, // todo: parametrize
       transaction_info: { source: 'url' },
       type: 'transaction',
       contexts: {
@@ -135,8 +135,8 @@ test.describe('distributed tracing', () => {
     expect(serverReqTxnEvent).toEqual(
       expect.objectContaining({
         type: 'transaction',
-        transaction: `GET /api/user/${PARAM}`,
-        transaction_info: { source: 'url' },
+        transaction: `GET /api/user/:userId`, // parametrized route
+        transaction_info: { source: 'route' },
         contexts: expect.objectContaining({
           trace: expect.objectContaining({
             op: 'http.server',
diff --git a/packages/nuxt/src/runtime/hooks/updateRouteBeforeResponse.ts b/packages/nuxt/src/runtime/hooks/updateRouteBeforeResponse.ts
new file mode 100644
index 000000000000..28854a320bc0
--- /dev/null
+++ b/packages/nuxt/src/runtime/hooks/updateRouteBeforeResponse.ts
@@ -0,0 +1,57 @@
+import { getActiveSpan, getCurrentScope, getRootSpan, logger, SEMANTIC_ATTRIBUTE_SENTRY_SOURCE } from '@sentry/core';
+import type { H3Event } from 'h3';
+
+/**
+ * Update the root span (transaction) name for routes with parameters based on the matched route.
+ */
+export function updateRouteBeforeResponse(event: H3Event): void {
+  if (!event.context.matchedRoute) {
+    return;
+  }
+
+  const matchedRoutePath = event.context.matchedRoute.path;
+
+  // If the matched route path is defined and differs from the event's path, it indicates a parametrized route
+  // Example: Matched route is "/users/:id" and the event's path is "/users/123",
+  if (matchedRoutePath && matchedRoutePath !== event._path) {
+    if (matchedRoutePath === '/**') {
+      // todo: support parametrized SSR pageload spans
+      // If page is server-side rendered, the whole path gets transformed to `/**` (Example : `/users/123` becomes `/**` instead of `/users/:id`).
+      return; // Skip if the matched route is a catch-all route.
+    }
+
+    const method = event._method || 'GET';
+
+    const parametrizedTransactionName = `${method.toUpperCase()} ${matchedRoutePath}`;
+    getCurrentScope().setTransactionName(parametrizedTransactionName);
+
+    const activeSpan = getActiveSpan(); // In development mode, getActiveSpan() is always undefined
+    if (!activeSpan) {
+      return;
+    }
+
+    const rootSpan = getRootSpan(activeSpan);
+    if (!rootSpan) {
+      return;
+    }
+
+    rootSpan.setAttributes({
+      [SEMANTIC_ATTRIBUTE_SENTRY_SOURCE]: 'route',
+      'http.route': matchedRoutePath,
+    });
+
+    const params = event.context?.params;
+
+    if (params && typeof params === 'object') {
+      Object.entries(params).forEach(([key, value]) => {
+        // Based on this convention: https://getsentry.github.io/sentry-conventions/generated/attributes/url.html#urlpathparameterkey
+        rootSpan.setAttributes({
+          [`url.path.parameter.${key}`]: String(value),
+          [`params.${key}`]: String(value),
+        });
+      });
+    }
+
+    logger.log(`Updated transaction name for parametrized route: ${parametrizedTransactionName}`);
+  }
+}
diff --git a/packages/nuxt/src/runtime/plugins/sentry-cloudflare.server.ts b/packages/nuxt/src/runtime/plugins/sentry-cloudflare.server.ts
index 9d10e9bd86d0..96fa59a4c643 100644
--- a/packages/nuxt/src/runtime/plugins/sentry-cloudflare.server.ts
+++ b/packages/nuxt/src/runtime/plugins/sentry-cloudflare.server.ts
@@ -6,6 +6,7 @@ import type { H3Event } from 'h3';
 import type { NitroApp, NitroAppPlugin } from 'nitropack';
 import type { NuxtRenderHTMLContext } from 'nuxt/app';
 import { sentryCaptureErrorHook } from '../hooks/captureErrorHook';
+import { updateRouteBeforeResponse } from '../hooks/updateRouteBeforeResponse';
 import { addSentryTracingMetaTags } from '../utils';
 
 interface CfEventType {
@@ -139,6 +140,8 @@ export const sentryCloudflareNitroPlugin =
       },
     });
 
+    nitroApp.hooks.hook('beforeResponse', updateRouteBeforeResponse);
+
     // @ts-expect-error - 'render:html' is a valid hook name in the Nuxt context
     nitroApp.hooks.hook('render:html', (html: NuxtRenderHTMLContext, { event }: { event: H3Event }) => {
       const storedTraceData = event?.context?.cf ? traceDataMap.get(event.context.cf) : undefined;
diff --git a/packages/nuxt/src/runtime/plugins/sentry.server.ts b/packages/nuxt/src/runtime/plugins/sentry.server.ts
index baf9f2029051..0f13fbec0fd3 100644
--- a/packages/nuxt/src/runtime/plugins/sentry.server.ts
+++ b/packages/nuxt/src/runtime/plugins/sentry.server.ts
@@ -5,11 +5,14 @@ import { type EventHandler } from 'h3';
 import { defineNitroPlugin } from 'nitropack/runtime';
 import type { NuxtRenderHTMLContext } from 'nuxt/app';
 import { sentryCaptureErrorHook } from '../hooks/captureErrorHook';
+import { updateRouteBeforeResponse } from '../hooks/updateRouteBeforeResponse';
 import { addSentryTracingMetaTags, flushIfServerless } from '../utils';
 
 export default defineNitroPlugin(nitroApp => {
   nitroApp.h3App.handler = patchEventHandler(nitroApp.h3App.handler);
 
+  nitroApp.hooks.hook('beforeResponse', updateRouteBeforeResponse);
+
   nitroApp.hooks.hook('error', sentryCaptureErrorHook);
 
   // @ts-expect-error - 'render:html' is a valid hook name in the Nuxt context