diff --git a/litellm/integrations/datadog/datadog.py b/litellm/integrations/datadog/datadog.py
index c5454a273..527b6f87d 100644
--- a/litellm/integrations/datadog/datadog.py
+++ b/litellm/integrations/datadog/datadog.py
@@ -269,7 +269,7 @@ class DataDogLogger(CustomBatchLogger):
 
         status = DataDogStatus.INFO
         if standard_logging_object.get("status") == "failure":
-            status = DataDogStatus.WARN
+            status = DataDogStatus.ERROR
 
         # Build the initial payload
         make_json_serializable(standard_logging_object)
diff --git a/tests/logging_callback_tests/test_datadog.py b/tests/logging_callback_tests/test_datadog.py
new file mode 100644
index 000000000..8e3ff0de6
--- /dev/null
+++ b/tests/logging_callback_tests/test_datadog.py
@@ -0,0 +1,138 @@
+import io
+import os
+import sys
+
+
+sys.path.insert(0, os.path.abspath("../.."))
+
+import asyncio
+import gzip
+import json
+import logging
+import time
+from unittest.mock import AsyncMock, patch
+
+import pytest
+
+import litellm
+from litellm import completion
+from litellm._logging import verbose_logger
+from litellm.integrations.datadog.datadog import DataDogLogger, DataDogStatus
+from datetime import datetime, timedelta
+from litellm.types.integrations.datadog_llm_obs import *
+from litellm.types.utils import (
+    StandardLoggingPayload,
+    StandardLoggingModelInformation,
+    StandardLoggingMetadata,
+    StandardLoggingHiddenParams,
+)
+
+verbose_logger.setLevel(logging.DEBUG)
+
+
+def create_standard_logging_payload() -> StandardLoggingPayload:
+    return StandardLoggingPayload(
+        id="test_id",
+        call_type="completion",
+        response_cost=0.1,
+        response_cost_failure_debug_info=None,
+        status="success",
+        total_tokens=30,
+        prompt_tokens=20,
+        completion_tokens=10,
+        startTime=1234567890.0,
+        endTime=1234567891.0,
+        completionStartTime=1234567890.5,
+        model_map_information=StandardLoggingModelInformation(
+            model_map_key="gpt-3.5-turbo", model_map_value=None
+        ),
+        model="gpt-3.5-turbo",
+        model_id="model-123",
+        model_group="openai-gpt",
+        api_base="https://api.openai.com",
+        metadata=StandardLoggingMetadata(
+            user_api_key_hash="test_hash",
+            user_api_key_org_id=None,
+            user_api_key_alias="test_alias",
+            user_api_key_team_id="test_team",
+            user_api_key_user_id="test_user",
+            user_api_key_team_alias="test_team_alias",
+            spend_logs_metadata=None,
+            requester_ip_address="127.0.0.1",
+            requester_metadata=None,
+        ),
+        cache_hit=False,
+        cache_key=None,
+        saved_cache_cost=0.0,
+        request_tags=[],
+        end_user=None,
+        requester_ip_address="127.0.0.1",
+        messages=[{"role": "user", "content": "Hello, world!"}],
+        response={"choices": [{"message": {"content": "Hi there!"}}]},
+        error_str=None,
+        model_parameters={"stream": True},
+        hidden_params=StandardLoggingHiddenParams(
+            model_id="model-123",
+            cache_key=None,
+            api_base="https://api.openai.com",
+            response_cost="0.1",
+            additional_headers=None,
+        ),
+    )
+
+
+@pytest.mark.asyncio
+async def test_create_datadog_logging_payload():
+    """Test creating a DataDog logging payload from a standard logging object"""
+    dd_logger = DataDogLogger()
+    standard_payload = create_standard_logging_payload()
+
+    # Create mock kwargs with the standard logging object
+    kwargs = {"standard_logging_object": standard_payload}
+
+    # Test payload creation
+    dd_payload = dd_logger.create_datadog_logging_payload(
+        kwargs=kwargs,
+        response_obj=None,
+        start_time=datetime.now(),
+        end_time=datetime.now(),
+    )
+
+    # Verify payload structure
+    assert dd_payload["ddsource"] == os.getenv("DD_SOURCE", "litellm")
+    assert dd_payload["service"] == "litellm-server"
+    assert dd_payload["status"] == DataDogStatus.INFO
+
+    # verify the message field == standard_payload
+    dict_payload = json.loads(dd_payload["message"])
+    assert dict_payload == standard_payload
+
+
+@pytest.mark.asyncio
+async def test_datadog_failure_logging():
+    """Test logging a failure event to DataDog"""
+    dd_logger = DataDogLogger()
+    standard_payload = create_standard_logging_payload()
+    standard_payload["status"] = "failure"  # Set status to failure
+    standard_payload["error_str"] = "Test error"
+
+    kwargs = {"standard_logging_object": standard_payload}
+
+    dd_payload = dd_logger.create_datadog_logging_payload(
+        kwargs=kwargs,
+        response_obj=None,
+        start_time=datetime.now(),
+        end_time=datetime.now(),
+    )
+
+    assert (
+        dd_payload["status"] == DataDogStatus.ERROR
+    )  # Verify failure maps to warning status
+
+    # verify the message field == standard_payload
+    dict_payload = json.loads(dd_payload["message"])
+    assert dict_payload == standard_payload
+
+    # verify error_str is in the message field
+    assert "error_str" in dict_payload
+    assert dict_payload["error_str"] == "Test error"