diff --git a/dd-java-agent/instrumentation/netty-4.1/src/main/java/datadog/trace/instrumentation/netty41/NettyChannelPipelineInstrumentation.java b/dd-java-agent/instrumentation/netty-4.1/src/main/java/datadog/trace/instrumentation/netty41/NettyChannelPipelineInstrumentation.java
index c36d6d7f54..2ca857f9fb 100644
--- a/dd-java-agent/instrumentation/netty-4.1/src/main/java/datadog/trace/instrumentation/netty41/NettyChannelPipelineInstrumentation.java
+++ b/dd-java-agent/instrumentation/netty-4.1/src/main/java/datadog/trace/instrumentation/netty41/NettyChannelPipelineInstrumentation.java
@@ -97,8 +97,17 @@ public class NettyChannelPipelineInstrumentation extends Instrumenter.Default {
    */
   public static class ChannelPipelineAddAdvice {
     @Advice.OnMethodEnter
-    public static int checkDepth() {
-      return CallDepthThreadLocalMap.incrementCallDepth(ChannelPipeline.class);
+    public static int checkDepth(@Advice.Argument(2) final ChannelHandler handler) {
+      // Previously we used one unique call depth tracker for all handlers, using
+      // ChannelPipeline.class as a key.
+      // The problem with this approach is that it does not work with netty's
+      // io.netty.channel.ChannelInitializer which provides an `initChannel` that can be used to
+      // `addLast` other handlers. In that case the depth would exceed 0 and handlers added from
+      // initializers would not be considered.
+      // Using the specific handler key instead of the generic ChannelPipeline.class will help us
+      // both to handle such cases and avoid adding our additional handlers in case of internal
+      // calls of `addLast` to other method overloads with a compatible signature.
+      return CallDepthThreadLocalMap.incrementCallDepth(handler.getClass());
     }
 
     @Advice.OnMethodExit(suppress = Throwable.class)
@@ -140,7 +149,7 @@ public class NettyChannelPipelineInstrumentation extends Instrumenter.Default {
       } catch (final IllegalArgumentException e) {
         // Prevented adding duplicate handlers.
       } finally {
-        CallDepthThreadLocalMap.reset(ChannelPipeline.class);
+        CallDepthThreadLocalMap.reset(handler.getClass());
       }
     }
   }
diff --git a/dd-java-agent/instrumentation/netty-4.1/src/test/groovy/Netty41ClientTest.groovy b/dd-java-agent/instrumentation/netty-4.1/src/test/groovy/Netty41ClientTest.groovy
index 0a76910b66..99ccbe3fd5 100644
--- a/dd-java-agent/instrumentation/netty-4.1/src/test/groovy/Netty41ClientTest.groovy
+++ b/dd-java-agent/instrumentation/netty-4.1/src/test/groovy/Netty41ClientTest.groovy
@@ -1,6 +1,13 @@
 import datadog.trace.agent.test.base.HttpClientTest
+import datadog.trace.instrumentation.netty41.client.HttpClientTracingHandler
 import datadog.trace.instrumentation.netty41.client.NettyHttpClientDecorator
 import io.netty.channel.AbstractChannel
+import io.netty.channel.Channel
+import io.netty.channel.ChannelHandler
+import io.netty.channel.ChannelHandlerContext
+import io.netty.channel.ChannelInitializer
+import io.netty.channel.embedded.EmbeddedChannel
+import io.netty.handler.codec.http.HttpClientCodec
 import io.opentracing.tag.Tags
 import org.asynchttpclient.AsyncHttpClient
 import org.asynchttpclient.DefaultAsyncHttpClientConfig
@@ -87,4 +94,102 @@ class Netty41ClientTest extends HttpClientTest<NettyHttpClientDecorator> {
     where:
     method = "GET"
   }
+
+  def "when a handler is added to the netty pipeline we add our tracing handler"() {
+    setup:
+    def channel = new EmbeddedChannel()
+    def pipeline = channel.pipeline()
+
+    when:
+    pipeline.addLast("name", new HttpClientCodec())
+
+    then:
+    // The first one returns the removed tracing handler
+    pipeline.remove(HttpClientTracingHandler.getName()) != null
+  }
+
+  def "when a handler is added to the netty pipeline we add ONLY ONE tracing handler"() {
+    setup:
+    def channel = new EmbeddedChannel()
+    def pipeline = channel.pipeline()
+
+    when:
+    pipeline.addLast("name", new HttpClientCodec())
+    // The first one returns the removed tracing handler
+    pipeline.remove(HttpClientTracingHandler.getName())
+    // There is only one
+    pipeline.remove(HttpClientTracingHandler.getName()) == null
+
+    then:
+    thrown NoSuchElementException
+  }
+
+  def "handlers of different types can be added"() {
+    setup:
+    def channel = new EmbeddedChannel()
+    def pipeline = channel.pipeline()
+
+    when:
+    pipeline.addLast("some_handler", new SimpleHandler())
+    pipeline.addLast("a_traced_handler", new HttpClientCodec())
+
+    then:
+    // The first one returns the removed tracing handler
+    null != pipeline.remove(HttpClientTracingHandler.getName())
+    null != pipeline.remove("some_handler")
+    null != pipeline.remove("a_traced_handler")
+  }
+
+  def "calling pipeline.addLast methods that use overloaded methods does not cause infinite loop"() {
+    setup:
+    def channel = new EmbeddedChannel()
+
+    when:
+    channel.pipeline().addLast(new SimpleHandler(), new OtherSimpleHandler())
+
+    then:
+    null != channel.pipeline().remove('Netty41ClientTest$SimpleHandler#0')
+    null != channel.pipeline().remove('Netty41ClientTest$OtherSimpleHandler#0')
+  }
+
+  def "when a traced handler is added from an initializer we still detect it and add our channel handlers"() {
+    // This test method replicates a scenario similar to how reactor 0.8.x register the `HttpClientCodec` handler
+    // into the pipeline.
+
+    setup:
+    def channel = new EmbeddedChannel()
+
+    when:
+    channel.pipeline().addLast(new TracedHandlerFromInitializerHandler())
+
+    then:
+    null != channel.pipeline().remove("added_in_initializer")
+    null != channel.pipeline().remove(HttpClientTracingHandler.getName())
+  }
+
+  class SimpleHandler implements ChannelHandler {
+    @Override
+    void handlerAdded(ChannelHandlerContext ctx) throws Exception {}
+    @Override
+    void handlerRemoved(ChannelHandlerContext ctx) throws Exception {}
+    @Override
+    void exceptionCaught(ChannelHandlerContext ctx, Throwable cause) throws Exception {}
+  }
+
+  class OtherSimpleHandler implements ChannelHandler {
+    @Override
+    void handlerAdded(ChannelHandlerContext ctx) throws Exception {}
+    @Override
+    void handlerRemoved(ChannelHandlerContext ctx) throws Exception {}
+    @Override
+    void exceptionCaught(ChannelHandlerContext ctx, Throwable cause) throws Exception {}
+  }
+
+  class TracedHandlerFromInitializerHandler extends ChannelInitializer<Channel> implements ChannelHandler {
+    @Override
+    protected void initChannel(Channel ch) throws Exception {
+      // This replicates how reactor 0.8.x add the HttpClientCodec
+      ch.pipeline().addLast("added_in_initializer", new HttpClientCodec())
+    }
+  }
 }