diff --git a/pkg/config/resource.go b/pkg/config/resource.go
index e7002629..ab0c6d64 100644
--- a/pkg/config/resource.go
+++ b/pkg/config/resource.go
@@ -12,6 +12,7 @@ import (
 
 	xpv1 "github.com/crossplane/crossplane-runtime/apis/common/v1"
 	"github.com/crossplane/crossplane-runtime/pkg/fieldpath"
+	"github.com/crossplane/crossplane-runtime/pkg/meta"
 	"github.com/crossplane/crossplane-runtime/pkg/reconciler/managed"
 	xpresource "github.com/crossplane/crossplane-runtime/pkg/resource"
 	fwresource "github.com/hashicorp/terraform-plugin-framework/resource"
@@ -315,7 +316,7 @@ func (t *Tagger) Initialize(ctx context.Context, mg xpresource.Managed) error {
 	if err != nil {
 		return err
 	}
-	pavedByte, err := setExternalTagsWithPaved(xpresource.GetExternalTags(mg), paved, t.fieldName)
+	pavedByte, err := setExternalTagsWithPaved(getExternalTags(mg), paved, t.fieldName)
 	if err != nil {
 		return err
 	}
@@ -328,11 +329,20 @@ func (t *Tagger) Initialize(ctx context.Context, mg xpresource.Managed) error {
 	return nil
 }
 
+const externalResourceTagKeyExternalName = "crossplane-external-name"
+
+func getExternalTags(mg xpresource.Managed) map[string]string {
+	externalTags := xpresource.GetExternalTags(mg)
+	externalTags[externalResourceTagKeyExternalName] = mg.GetAnnotations()[meta.AnnotationKeyExternalName]
+	return externalTags
+}
+
 func setExternalTagsWithPaved(externalTags map[string]string, paved *fieldpath.Paved, fieldName string) ([]byte, error) {
 	tags := map[string]*string{
 		xpresource.ExternalResourceTagKeyKind:     ptr.To(externalTags[xpresource.ExternalResourceTagKeyKind]),
 		xpresource.ExternalResourceTagKeyName:     ptr.To(externalTags[xpresource.ExternalResourceTagKeyName]),
 		xpresource.ExternalResourceTagKeyProvider: ptr.To(externalTags[xpresource.ExternalResourceTagKeyProvider]),
+		externalResourceTagKeyExternalName:        ptr.To(externalTags[externalResourceTagKeyExternalName]),
 	}
 
 	if err := paved.SetValue(fmt.Sprintf("spec.forProvider.%s", fieldName), tags); err != nil {
diff --git a/pkg/config/resource_test.go b/pkg/config/resource_test.go
index a94366c7..d496c509 100644
--- a/pkg/config/resource_test.go
+++ b/pkg/config/resource_test.go
@@ -11,17 +11,20 @@ import (
 
 	"github.com/crossplane/crossplane-runtime/pkg/errors"
 	"github.com/crossplane/crossplane-runtime/pkg/fieldpath"
+	"github.com/crossplane/crossplane-runtime/pkg/meta"
 	xpresource "github.com/crossplane/crossplane-runtime/pkg/resource"
 	"github.com/crossplane/crossplane-runtime/pkg/resource/fake"
 	"github.com/crossplane/crossplane-runtime/pkg/test"
 	"github.com/google/go-cmp/cmp"
+	metav1 "k8s.io/apimachinery/pkg/apis/meta/v1"
 	"sigs.k8s.io/controller-runtime/pkg/client"
 )
 
 const (
-	kind     = "ACoolService"
-	name     = "example-service"
-	provider = "ACoolProvider"
+	kind         = "ACoolService"
+	name         = "example-service"
+	provider     = "ACoolProvider"
+	externalName = "anExternalName"
 )
 
 func TestTagger_Initialize(t *testing.T) {
@@ -82,18 +85,38 @@ func TestSetExternalTagsWithPaved(t *testing.T) {
 		args
 		want
 	}{
-		"Successful": {
+		"Successful without external-name": {
+			args: args{
+				externalTags: map[string]string{
+					xpresource.ExternalResourceTagKeyKind:     kind,
+					xpresource.ExternalResourceTagKeyName:     name,
+					xpresource.ExternalResourceTagKeyProvider: provider,
+				},
+				paved:     fieldpath.Pave(map[string]any{}),
+				fieldName: "tags",
+			},
+			want: want{
+				pavedString: fmt.Sprintf(`{"spec":{"forProvider":{"tags":{"%s":"%s","%s":"%s","%s":"%s","%s":"%s"}}}}`,
+					externalResourceTagKeyExternalName, "",
+					xpresource.ExternalResourceTagKeyKind, kind,
+					xpresource.ExternalResourceTagKeyName, name,
+					xpresource.ExternalResourceTagKeyProvider, provider),
+			},
+		},
+		"Successful with external-name": {
 			args: args{
 				externalTags: map[string]string{
 					xpresource.ExternalResourceTagKeyKind:     kind,
 					xpresource.ExternalResourceTagKeyName:     name,
 					xpresource.ExternalResourceTagKeyProvider: provider,
+					externalResourceTagKeyExternalName:        externalName,
 				},
 				paved:     fieldpath.Pave(map[string]any{}),
 				fieldName: "tags",
 			},
 			want: want{
-				pavedString: fmt.Sprintf(`{"spec":{"forProvider":{"tags":{"%s":"%s","%s":"%s","%s":"%s"}}}}`,
+				pavedString: fmt.Sprintf(`{"spec":{"forProvider":{"tags":{"%s":"%s","%s":"%s","%s":"%s","%s":"%s"}}}}`,
+					externalResourceTagKeyExternalName, externalName,
 					xpresource.ExternalResourceTagKeyKind, kind,
 					xpresource.ExternalResourceTagKeyName, name,
 					xpresource.ExternalResourceTagKeyProvider, provider),
@@ -112,3 +135,47 @@ func TestSetExternalTagsWithPaved(t *testing.T) {
 		})
 	}
 }
+
+func TestGetExternalTags(t *testing.T) {
+	cases := map[string]struct {
+		mg   xpresource.Managed
+		want map[string]string
+	}{
+		"Without external-name": {
+			mg: &fake.Managed{
+				ObjectMeta: metav1.ObjectMeta{
+					Name: name,
+				},
+			},
+			want: map[string]string{
+				xpresource.ExternalResourceTagKeyKind: "",
+				xpresource.ExternalResourceTagKeyName: name,
+				externalResourceTagKeyExternalName:    "",
+			},
+		},
+		"With external-name": {
+			mg: &fake.Managed{
+				ObjectMeta: metav1.ObjectMeta{
+					Name: name,
+					Annotations: map[string]string{
+						meta.AnnotationKeyExternalName: externalName,
+					},
+				},
+			},
+			want: map[string]string{
+				xpresource.ExternalResourceTagKeyKind: "",
+				xpresource.ExternalResourceTagKeyName: name,
+				externalResourceTagKeyExternalName:    externalName,
+			},
+		},
+	}
+
+	for n, tc := range cases {
+		t.Run(n, func(t *testing.T) {
+			got := getExternalTags(tc.mg)
+			if diff := cmp.Diff(tc.want, got, test.EquateErrors()); diff != "" {
+				t.Fatalf("generateTypeName(...): -want, +got: %s", diff)
+			}
+		})
+	}
+}