diff --git a/pulsar-functions/instance/src/main/java/org/apache/pulsar/functions/instance/ContextImpl.java b/pulsar-functions/instance/src/main/java/org/apache/pulsar/functions/instance/ContextImpl.java
index 957cc448108ec..a57d53ba08aa8 100644
--- a/pulsar-functions/instance/src/main/java/org/apache/pulsar/functions/instance/ContextImpl.java
+++ b/pulsar-functions/instance/src/main/java/org/apache/pulsar/functions/instance/ContextImpl.java
@@ -39,6 +39,7 @@
 import lombok.ToString;
 import org.apache.commons.lang3.StringUtils;
 import org.apache.pulsar.client.admin.PulsarAdmin;
+import org.apache.pulsar.client.api.BatcherBuilder;
 import org.apache.pulsar.client.api.ClientBuilder;
 import org.apache.pulsar.client.api.CompressionType;
 import org.apache.pulsar.client.api.Consumer;
@@ -146,14 +147,22 @@ public ContextImpl(InstanceConfig config, Logger logger, PulsarClient client,
         this.producerBuilder = (ProducerBuilderImpl<?>) client.newProducer().blockIfQueueFull(true).enableBatching(true)
                 .batchingMaxPublishDelay(1, TimeUnit.MILLISECONDS);
         boolean useThreadLocalProducers = false;
-        if (config.getFunctionDetails().getSink().getProducerSpec() != null) {
-            if (config.getFunctionDetails().getSink().getProducerSpec().getMaxPendingMessages() != 0) {
-                this.producerBuilder.maxPendingMessages(config.getFunctionDetails().getSink().getProducerSpec().getMaxPendingMessages());
+        Function.ProducerSpec producerSpec = config.getFunctionDetails().getSink().getProducerSpec();
+        if (producerSpec != null) {
+            if (producerSpec.getMaxPendingMessages() != 0) {
+                this.producerBuilder.maxPendingMessages(producerSpec.getMaxPendingMessages());
             }
-            if (config.getFunctionDetails().getSink().getProducerSpec().getMaxPendingMessagesAcrossPartitions() != 0) {
-                this.producerBuilder.maxPendingMessagesAcrossPartitions(config.getFunctionDetails().getSink().getProducerSpec().getMaxPendingMessagesAcrossPartitions());
+            if (producerSpec.getMaxPendingMessagesAcrossPartitions() != 0) {
+                this.producerBuilder.maxPendingMessagesAcrossPartitions(producerSpec.getMaxPendingMessagesAcrossPartitions());
             }
-            useThreadLocalProducers = config.getFunctionDetails().getSink().getProducerSpec().getUseThreadLocalProducers();
+            if (producerSpec.getBatchBuilder() != null) {
+                if (producerSpec.getBatchBuilder().equals("KEY_BASED")) {
+                    this.producerBuilder.batcherBuilder(BatcherBuilder.KEY_BASED);
+                } else {
+                    this.producerBuilder.batcherBuilder(BatcherBuilder.DEFAULT);
+                }
+            }
+            useThreadLocalProducers = producerSpec.getUseThreadLocalProducers();
         }
         if (useThreadLocalProducers) {
             tlPublishProducers = new ThreadLocal<>();
diff --git a/pulsar-functions/instance/src/main/java/org/apache/pulsar/functions/instance/JavaInstanceRunnable.java b/pulsar-functions/instance/src/main/java/org/apache/pulsar/functions/instance/JavaInstanceRunnable.java
index 705b92033fd30..614b7a4c82d65 100644
--- a/pulsar-functions/instance/src/main/java/org/apache/pulsar/functions/instance/JavaInstanceRunnable.java
+++ b/pulsar-functions/instance/src/main/java/org/apache/pulsar/functions/instance/JavaInstanceRunnable.java
@@ -782,6 +782,7 @@ private void setupOutput(ContextImpl contextImpl) throws Exception {
                     ProducerConfig.ProducerConfigBuilder builder = ProducerConfig.builder()
                             .maxPendingMessages(conf.getMaxPendingMessages())
                             .maxPendingMessagesAcrossPartitions(conf.getMaxPendingMessagesAcrossPartitions())
+                            .batchBuilder(conf.getBatchBuilder())
                             .useThreadLocalProducers(conf.getUseThreadLocalProducers())
                             .cryptoConfig(CryptoUtils.convertFromSpec(conf.getCryptoSpec()));
                     pulsarSinkConfig.setProducerConfig(builder.build());
diff --git a/pulsar-functions/utils/src/main/java/org/apache/pulsar/functions/utils/SourceConfigUtils.java b/pulsar-functions/utils/src/main/java/org/apache/pulsar/functions/utils/SourceConfigUtils.java
index 9049eb6f8ce9a..6450d6e8ec4bb 100644
--- a/pulsar-functions/utils/src/main/java/org/apache/pulsar/functions/utils/SourceConfigUtils.java
+++ b/pulsar-functions/utils/src/main/java/org/apache/pulsar/functions/utils/SourceConfigUtils.java
@@ -167,6 +167,13 @@ public static FunctionDetails convert(SourceConfig sourceConfig, ExtractedSource
             sinkSpecBuilder.setProducerSpec(pbldr.build());
         }
 
+        if (sourceConfig.getBatchBuilder() != null) {
+            Function.ProducerSpec.Builder builder = sinkSpecBuilder.getProducerSpec() != null
+                    ? sinkSpecBuilder.getProducerSpec().toBuilder()
+                    : Function.ProducerSpec.newBuilder();
+            sinkSpecBuilder.setProducerSpec(builder.setBatchBuilder(sourceConfig.getBatchBuilder()).build());
+        }
+
         sinkSpecBuilder.setForwardSourceMessageProperty(true);
 
         functionDetailsBuilder.setSink(sinkSpecBuilder);
diff --git a/pulsar-functions/utils/src/test/java/org/apache/pulsar/functions/utils/SourceConfigUtilsTest.java b/pulsar-functions/utils/src/test/java/org/apache/pulsar/functions/utils/SourceConfigUtilsTest.java
index 20a64f86b9ebd..22b5afa452c99 100644
--- a/pulsar-functions/utils/src/test/java/org/apache/pulsar/functions/utils/SourceConfigUtilsTest.java
+++ b/pulsar-functions/utils/src/test/java/org/apache/pulsar/functions/utils/SourceConfigUtilsTest.java
@@ -331,6 +331,37 @@ public void testValidateConfig() throws IOException {
         assertTrue(e.getMessage().contains("Could not validate source config: Field 'configParameter' cannot be null!"));
     }
 
+    @Test
+    public void testSupportsBatchBuilderWhenProducerConfigIsNull() {
+        SourceConfig sourceConfig = createSourceConfig();
+        sourceConfig.setProducerConfig(null);
+        sourceConfig.setBatchBuilder("KEY_BASED");
+        Function.FunctionDetails functionDetails =
+                SourceConfigUtils.convert(sourceConfig, new SourceConfigUtils.ExtractedSourceDetails(null, null));
+        assertEquals(functionDetails.getSink().getProducerSpec().getBatchBuilder(), "KEY_BASED");
+    }
+
+    @Test
+    public void testSupportsBatchBuilderWhenProducerConfigExists() {
+        SourceConfig sourceConfig = createSourceConfig();
+        sourceConfig.setBatchBuilder("KEY_BASED");
+        sourceConfig.getProducerConfig().setMaxPendingMessages(123456);
+        Function.FunctionDetails functionDetails =
+                SourceConfigUtils.convert(sourceConfig, new SourceConfigUtils.ExtractedSourceDetails(null, null));
+        assertEquals(functionDetails.getSink().getProducerSpec().getBatchBuilder(), "KEY_BASED");
+        assertEquals(functionDetails.getSink().getProducerSpec().getMaxPendingMessages(), 123456);
+    }
+
+    @Test
+    public void testSupportsBatchBuilderDefinedInProducerConfigWhenTopLevelBatchBuilderIsUndefined() {
+        SourceConfig sourceConfig = createSourceConfig();
+        sourceConfig.setBatchBuilder(null);
+        sourceConfig.getProducerConfig().setBatchBuilder("KEY_BASED");
+        Function.FunctionDetails functionDetails =
+                SourceConfigUtils.convert(sourceConfig, new SourceConfigUtils.ExtractedSourceDetails(null, null));
+        assertEquals(functionDetails.getSink().getProducerSpec().getBatchBuilder(), "KEY_BASED");
+    }
+
     private SourceConfig createSourceConfigWithBatch() {
         SourceConfig sourceConfig = createSourceConfig();
         BatchSourceConfig batchSourceConfig = createBatchSourceConfig();