diff --git a/bom/application/pom.xml b/bom/application/pom.xml
index 868756378ef2c..ab07ef6efd5a1 100644
--- a/bom/application/pom.xml
+++ b/bom/application/pom.xml
@@ -47,7 +47,7 @@
         <smallrye-health.version>3.3.1</smallrye-health.version>
         <smallrye-metrics.version>3.0.5</smallrye-metrics.version>
         <smallrye-open-api.version>3.1.1</smallrye-open-api.version>
-        <smallrye-graphql.version>1.9.0</smallrye-graphql.version>
+        <smallrye-graphql.version>1.9.1</smallrye-graphql.version>
         <smallrye-opentracing.version>2.1.1</smallrye-opentracing.version>
         <smallrye-fault-tolerance.version>5.6.0</smallrye-fault-tolerance.version>
         <smallrye-jwt.version>3.6.0</smallrye-jwt.version>
diff --git a/extensions/smallrye-graphql/deployment/src/main/java/io/quarkus/smallrye/graphql/deployment/SmallRyeGraphQLProcessor.java b/extensions/smallrye-graphql/deployment/src/main/java/io/quarkus/smallrye/graphql/deployment/SmallRyeGraphQLProcessor.java
index 0ac3da55c1ebd..3e8ae58571990 100644
--- a/extensions/smallrye-graphql/deployment/src/main/java/io/quarkus/smallrye/graphql/deployment/SmallRyeGraphQLProcessor.java
+++ b/extensions/smallrye-graphql/deployment/src/main/java/io/quarkus/smallrye/graphql/deployment/SmallRyeGraphQLProcessor.java
@@ -20,6 +20,7 @@
 import org.eclipse.microprofile.config.ConfigProvider;
 import org.jboss.jandex.AnnotationInstance;
 import org.jboss.jandex.AnnotationValue;
+import org.jboss.jandex.ClassInfo;
 import org.jboss.jandex.DotName;
 import org.jboss.jandex.IndexView;
 import org.jboss.jandex.Indexer;
@@ -272,8 +273,10 @@ void buildExecutionService(
             SmallRyeGraphQLRecorder recorder,
             SmallRyeGraphQLFinalIndexBuildItem graphQLFinalIndexBuildItem,
             BeanContainerBuildItem beanContainer,
+            BuildProducer<SystemPropertyBuildItem> systemPropertyProducer,
             SmallRyeGraphQLConfig graphQLConfig) {
 
+        activateFederation(graphQLConfig, systemPropertyProducer, graphQLFinalIndexBuildItem);
         Schema schema = SchemaBuilder.build(graphQLFinalIndexBuildItem.getFinalIndex(), graphQLConfig.autoNameStrategy);
 
         RuntimeValue<Boolean> initialized = recorder.createExecutionService(beanContainer.getValue(), schema);
@@ -627,6 +630,43 @@ void activateEventing(SmallRyeGraphQLConfig graphQLConfig, BuildProducer<SystemP
         }
     }
 
+    /*
+     * Decides whether we want to activate GraphQL federation and updates system properties accordingly.
+     * If quarkus.smallrye-graphql.federation.enabled is unspecified, enable federation automatically if we see
+     * any Federation annotations in the app.
+     * If it is specified, always respect that setting.
+     *
+     * This would normally be a separate step like other similar activations, but it updates
+     * system properties and needs to run before generating the schema, so it is called
+     * by the build step that generates the schema.
+     *
+     * Apart from generating a SystemPropertyBuildItem, it's necessary to also call
+     * System.setProperty to make sure that the SchemaBuilder, called at build time, sees the correct value.
+     */
+    void activateFederation(SmallRyeGraphQLConfig config,
+            BuildProducer<SystemPropertyBuildItem> systemProperties,
+            SmallRyeGraphQLFinalIndexBuildItem index) {
+        if (config.federationEnabled.isPresent()) {
+            String value = config.federationEnabled.get().toString();
+            systemProperties.produce(new SystemPropertyBuildItem(ConfigKey.ENABLE_FEDERATION, value));
+            System.setProperty(ConfigKey.ENABLE_FEDERATION, value);
+        } else {
+            //
+            boolean foundAnyFederationAnnotation = false;
+            for (ClassInfo federationAnnotationType : index.getFinalIndex()
+                    .getClassesInPackage("io.smallrye.graphql.api.federation")) {
+                if (federationAnnotationType.isAnnotation()) {
+                    if (!index.getFinalIndex().getAnnotations(federationAnnotationType.name()).isEmpty()) {
+                        foundAnyFederationAnnotation = true;
+                    }
+                }
+            }
+            String value = Boolean.toString(foundAnyFederationAnnotation);
+            systemProperties.produce(new SystemPropertyBuildItem(ConfigKey.ENABLE_FEDERATION, value));
+            System.setProperty(ConfigKey.ENABLE_FEDERATION, value);
+        }
+    }
+
     private boolean shouldActivateService(Optional<Boolean> serviceEnabled,
             boolean linkedCapabilityIsPresent,
             String linkedExtensionName,
diff --git a/extensions/smallrye-graphql/deployment/src/test/java/io/quarkus/smallrye/graphql/deployment/GraphQLFederationDisabledTest.java b/extensions/smallrye-graphql/deployment/src/test/java/io/quarkus/smallrye/graphql/deployment/GraphQLFederationDisabledTest.java
new file mode 100644
index 0000000000000..8c6e5b49f73ad
--- /dev/null
+++ b/extensions/smallrye-graphql/deployment/src/test/java/io/quarkus/smallrye/graphql/deployment/GraphQLFederationDisabledTest.java
@@ -0,0 +1,51 @@
+package io.quarkus.smallrye.graphql.deployment;
+
+import static org.hamcrest.Matchers.*;
+import static org.hamcrest.Matchers.containsString;
+
+import org.eclipse.microprofile.graphql.GraphQLApi;
+import org.eclipse.microprofile.graphql.Query;
+import org.jboss.shrinkwrap.api.asset.EmptyAsset;
+import org.junit.jupiter.api.Test;
+import org.junit.jupiter.api.extension.RegisterExtension;
+
+import io.quarkus.test.QuarkusUnitTest;
+import io.restassured.RestAssured;
+
+/**
+ * Make sure that if no Federation related annotations are in the application, then Federation is
+ * disabled (unless explicitly enabled in the config).
+ */
+public class GraphQLFederationDisabledTest extends AbstractGraphQLTest {
+
+    @RegisterExtension
+    static QuarkusUnitTest test = new QuarkusUnitTest()
+            .withApplicationRoot((jar) -> jar
+                    .addClasses(FooApi.class, Foo.class)
+                    .addAsManifestResource(EmptyAsset.INSTANCE, "beans.xml"));
+
+    @Test
+    public void checkSchemaDoesNotIncludeServiceDeclaration() {
+        RestAssured.given()
+                .get("/graphql/schema.graphql")
+                .then()
+                .body(not(containsString("type _Service {")));
+    }
+
+    @GraphQLApi
+    static class FooApi {
+
+        @Query
+        public Foo foo() {
+            return new Foo();
+        }
+
+    }
+
+    static class Foo {
+
+        public String name;
+
+    }
+
+}
diff --git a/extensions/smallrye-graphql/runtime/src/main/java/io/quarkus/smallrye/graphql/runtime/SmallRyeGraphQLConfig.java b/extensions/smallrye-graphql/runtime/src/main/java/io/quarkus/smallrye/graphql/runtime/SmallRyeGraphQLConfig.java
index fa340d09cf5a2..84a9c90c7ce49 100644
--- a/extensions/smallrye-graphql/runtime/src/main/java/io/quarkus/smallrye/graphql/runtime/SmallRyeGraphQLConfig.java
+++ b/extensions/smallrye-graphql/runtime/src/main/java/io/quarkus/smallrye/graphql/runtime/SmallRyeGraphQLConfig.java
@@ -20,6 +20,13 @@ public class SmallRyeGraphQLConfig {
     @ConfigItem(defaultValue = "graphql")
     public String rootPath;
 
+    /**
+     * Enable Apollo Federation. If this value is unspecified, then federation will be enabled
+     * automatically if any GraphQL Federation annotations are detected in the application.
+     */
+    @ConfigItem(name = "federation.enabled")
+    public Optional<Boolean> federationEnabled;
+
     /**
      * Enable metrics. By default, this is false. If set to true, a metrics extension is required.
      */
diff --git a/jakarta/rewrite.yml b/jakarta/rewrite.yml
index 6c7d255d15bc6..ec7dfd509d99e 100644
--- a/jakarta/rewrite.yml
+++ b/jakarta/rewrite.yml
@@ -573,7 +573,7 @@ recipeList:
       newValue: '6.1.0'
   - org.openrewrite.maven.ChangePropertyValue:
       key: smallrye-graphql.version
-      newValue: '2.0.0'
+      newValue: '2.0.1'
   - org.openrewrite.maven.ChangePropertyValue:
       key: smallrye-health.version
       newValue: '4.0.1'