diff --git a/cmd/ingestor/decoder.go b/cmd/ingestor/decoder.go
index 708d5b40..78cc4f71 100644
--- a/cmd/ingestor/decoder.go
+++ b/cmd/ingestor/decoder.go
@@ -572,6 +572,21 @@ func DecodePacket(hexString string, channelKeys map[string]string) (*DecodedPack
 	payloadBuf := buf[offset:]
 	payload := decodePayload(header.PayloadType, payloadBuf, channelKeys)
 
+	// TRACE packets store hop IDs in the payload (buf[9:]) rather than the header
+	// path field. The header path byte still encodes hashSize in bits 6-7, which
+	// we use to split the payload path data into individual hop prefixes.
+	if header.PayloadType == PayloadTRACE && payload.PathData != "" {
+		pathBytes, err := hex.DecodeString(payload.PathData)
+		if err == nil && path.HashSize > 0 {
+			hops := make([]string, 0, len(pathBytes)/path.HashSize)
+			for i := 0; i+path.HashSize <= len(pathBytes); i += path.HashSize {
+				hops = append(hops, strings.ToUpper(hex.EncodeToString(pathBytes[i:i+path.HashSize])))
+			}
+			path.Hops = hops
+			path.HashCount = len(hops)
+		}
+	}
+
 	return &DecodedPacket{
 		Header:         header,
 		TransportCodes: tc,
diff --git a/cmd/ingestor/decoder_test.go b/cmd/ingestor/decoder_test.go
index 51ae9896..1b60bc94 100644
--- a/cmd/ingestor/decoder_test.go
+++ b/cmd/ingestor/decoder_test.go
@@ -564,6 +564,31 @@ func TestDecodeTraceValid(t *testing.T) {
 	}
 }
 
+func TestDecodeTracePathParsing(t *testing.T) {
+	// Packet from issue #276: 260001807dca00000000007d547d
+	// Path byte 0x00 → hashSize=1, hops in payload at buf[9:] = 7d 54 7d
+	// Expected path: ["7D", "54", "7D"]
+	pkt, err := DecodePacket("260001807dca00000000007d547d", nil)
+	if err != nil {
+		t.Fatalf("DecodePacket error: %v", err)
+	}
+	if pkt.Payload.Type != "TRACE" {
+		t.Errorf("payload type=%s, want TRACE", pkt.Payload.Type)
+	}
+	want := []string{"7D", "54", "7D"}
+	if len(pkt.Path.Hops) != len(want) {
+		t.Fatalf("hops=%v, want %v", pkt.Path.Hops, want)
+	}
+	for i, h := range want {
+		if pkt.Path.Hops[i] != h {
+			t.Errorf("hops[%d]=%s, want %s", i, pkt.Path.Hops[i], h)
+		}
+	}
+	if pkt.Path.HashCount != 3 {
+		t.Errorf("hashCount=%d, want 3", pkt.Path.HashCount)
+	}
+}
+
 func TestDecodeAdvertShort(t *testing.T) {
 	p := decodeAdvert(make([]byte, 50))
 	if p.Error != "too short for advert" {
diff --git a/cmd/server/decoder.go b/cmd/server/decoder.go
index 8058e022..c67fa9e2 100644
--- a/cmd/server/decoder.go
+++ b/cmd/server/decoder.go
@@ -373,6 +373,21 @@ func DecodePacket(hexString string) (*DecodedPacket, error) {
 	payloadBuf := buf[offset:]
 	payload := decodePayload(header.PayloadType, payloadBuf)
 
+	// TRACE packets store hop IDs in the payload (buf[9:]) rather than the header
+	// path field. The header path byte still encodes hashSize in bits 6-7, which
+	// we use to split the payload path data into individual hop prefixes.
+	if header.PayloadType == PayloadTRACE && payload.PathData != "" {
+		pathBytes, err := hex.DecodeString(payload.PathData)
+		if err == nil && path.HashSize > 0 {
+			hops := make([]string, 0, len(pathBytes)/path.HashSize)
+			for i := 0; i+path.HashSize <= len(pathBytes); i += path.HashSize {
+				hops = append(hops, strings.ToUpper(hex.EncodeToString(pathBytes[i:i+path.HashSize])))
+			}
+			path.Hops = hops
+			path.HashCount = len(hops)
+		}
+	}
+
 	return &DecodedPacket{
 		Header:         header,
 		TransportCodes: tc,