diff --git a/api/all/src/main/java/io/opentelemetry/api/baggage/propagation/Parser.java b/api/all/src/main/java/io/opentelemetry/api/baggage/propagation/Parser.java
index dfd6977a42d..65dae9efdf0 100644
--- a/api/all/src/main/java/io/opentelemetry/api/baggage/propagation/Parser.java
+++ b/api/all/src/main/java/io/opentelemetry/api/baggage/propagation/Parser.java
@@ -8,6 +8,7 @@
 import io.opentelemetry.api.baggage.BaggageBuilder;
 import io.opentelemetry.api.baggage.BaggageEntryMetadata;
 import java.nio.charset.StandardCharsets;
+import java.util.logging.Logger;
 import javax.annotation.Nullable;
 
 /**
@@ -20,6 +21,8 @@
  */
 class Parser {
 
+  private static final Logger LOGGER = Logger.getLogger(Parser.class.getName());
+
   private enum State {
     KEY,
     VALUE,
@@ -140,8 +143,14 @@ private void putBaggage(
     if (entriesAdded >= maxEntries) {
       return;
     }
-    String decodedValue = decodeValue(value);
-    metadataValue = decodeValue(metadataValue);
+    String decodedValue;
+    try {
+      decodedValue = decodeValue(value);
+      metadataValue = decodeValue(metadataValue);
+    } catch (IllegalArgumentException e) {
+      LOGGER.warning("Invalid baggage member. Skipping member.");
+      return;
+    }
     BaggageEntryMetadata baggageEntryMetadata =
         metadataValue != null
             ? BaggageEntryMetadata.create(metadataValue)
diff --git a/api/all/src/test/java/io/opentelemetry/api/baggage/propagation/W3CBaggagePropagatorTest.java b/api/all/src/test/java/io/opentelemetry/api/baggage/propagation/W3CBaggagePropagatorTest.java
index b7b0b59cc1d..0ab33e81844 100644
--- a/api/all/src/test/java/io/opentelemetry/api/baggage/propagation/W3CBaggagePropagatorTest.java
+++ b/api/all/src/test/java/io/opentelemetry/api/baggage/propagation/W3CBaggagePropagatorTest.java
@@ -439,6 +439,40 @@ void extract_member_someInvalid() {
     assertThat(Baggage.fromContext(result)).isEqualTo(expectedBaggage);
   }
 
+  @ParameterizedTest
+  @MethodSource
+  void extract_member_invalidPercentEncoding_preservesValidMembers(
+      String header, Baggage expectedBaggage) {
+    W3CBaggagePropagator propagator = W3CBaggagePropagator.getInstance();
+
+    Context result = propagator.extract(Context.root(), ImmutableMap.of("baggage", header), getter);
+    assertThat(Baggage.fromContext(result)).isEqualTo(expectedBaggage);
+  }
+
+  static Stream<Arguments> extract_member_invalidPercentEncoding_preservesValidMembers() {
+    return Stream.of(
+        Arguments.argumentSet(
+            "invalid entry at beginning",
+            "bad=va%lue,key1=value1,encoded=value%202",
+            Baggage.builder().put("key1", "value1").put("encoded", "value 2").build()),
+        Arguments.argumentSet(
+            "invalid entry in middle",
+            "key1=value1,bad=va%lue,encoded=value%202,key2=value2",
+            Baggage.builder()
+                .put("key1", "value1")
+                .put("encoded", "value 2")
+                .put("key2", "value2")
+                .build()),
+        Arguments.argumentSet(
+            "invalid entry at end",
+            "key1=value1,encoded=value%202,bad=va%lue",
+            Baggage.builder().put("key1", "value1").put("encoded", "value 2").build()),
+        Arguments.argumentSet(
+            "multiple invalid entries",
+            "bad1=va%lue,key1=value1,bad2=value%GG,encoded=value%202,bad3=value;meta=%GG",
+            Baggage.builder().put("key1", "value1").put("encoded", "value 2").build()));
+  }
+
   @Test
   void extract_nullContext() {
     assertThat(W3CBaggagePropagator.getInstance().extract(null, Collections.emptyMap(), getter))