diff --git a/.changeset/pr-192.md b/.changeset/pr-192.md
new file mode 100644
index 0000000..387b643
--- /dev/null
+++ b/.changeset/pr-192.md
@@ -0,0 +1,5 @@
+---
+"@wdio/browserstack-service": patch
+---
+
+- Fixed `buildIdentifier` being ignored when the `BROWSERSTACK_BUILD_NAME` environment variable is set. Successive runs that share a build name are now reported as separate builds (`my-build #1`, `my-build #2`) instead of merging into one.
diff --git a/packages/browserstack-service/src/launcher.ts b/packages/browserstack-service/src/launcher.ts
index 390e4e8..5f327bd 100644
--- a/packages/browserstack-service/src/launcher.ts
+++ b/packages/browserstack-service/src/launcher.ts
@@ -1154,8 +1154,11 @@ export default class BrowserstackLauncherService implements Services.ServiceInst
             return
         }
 
-        if ((!this._buildName || process.env.BROWSERSTACK_BUILD_NAME) && this._buildIdentifier) {
+        if (!this._buildName) {
             this._updateCaps(capabilities, 'buildIdentifier')
+            // drop it here too: the raw '${BUILD_NUMBER}'/'${DATE_TIME}' template is never a
+            // usable value, and onPrepare forwards this field to TestHub as build_identifier
+            this._buildIdentifier = undefined
             BStackLogger.warn('Skipping buildIdentifier as buildName is not passed.')
             return
         }
diff --git a/packages/browserstack-service/tests/launcher.test.ts b/packages/browserstack-service/tests/launcher.test.ts
index 292cae4..4cf314e 100644
--- a/packages/browserstack-service/tests/launcher.test.ts
+++ b/packages/browserstack-service/tests/launcher.test.ts
@@ -1329,7 +1329,7 @@ describe('_handleBuildIdentifier', () => {
         expect(caps[0]).toMatchObject(updatedcaps[0])
     })
 
-    it('should delete buildIdentifier if BROWSERSTACK_BUILD_NAME is defined as env var', async() => {
+    it('should delete buildIdentifier if buildName is absent from caps even when BROWSERSTACK_BUILD_NAME is set', async() => {
         process.env.BROWSERSTACK_BUILD_NAME = 'browserstack wdio build'
         const caps: any = [{
             'bstack:options': {
@@ -1348,6 +1348,39 @@ describe('_handleBuildIdentifier', () => {
         delete process.env.BROWSERSTACK_BUILD_NAME
     })
 
+    it('should still resolve buildIdentifier when buildName is in caps and BROWSERSTACK_BUILD_NAME is set', async() => {
+        process.env.BROWSERSTACK_BUILD_NAME = 'browserstack wdio build'
+        const caps: any = [{
+            'bstack:options': {
+                buildName: 'browserstack wdio build',
+                buildIdentifier: '#${BUILD_NUMBER}'
+            }
+        }]
+        const service = new BrowserstackLauncher(options as any, caps, config)
+
+        vi.spyOn(utils, 'getCiInfo').mockReturnValueOnce(null)
+        vi.spyOn(service, '_getLocalBuildNumber').mockReturnValueOnce('3')
+        vi.spyOn(service, '_updateLocalBuildCache').mockImplementation(() => {})
+        service._handleBuildIdentifier(caps)
+
+        expect(caps[0]['bstack:options']?.buildIdentifier).toEqual('#3')
+        delete process.env.BROWSERSTACK_BUILD_NAME
+    })
+
+    it('should not retain an unresolved buildIdentifier template when the identifier is skipped', async() => {
+        const caps: any = [{
+            'bstack:options': {
+                buildIdentifier: '#${BUILD_NUMBER}'
+            }
+        }]
+        const service = new BrowserstackLauncher(options as any, caps, config)
+
+        service._handleBuildIdentifier(caps)
+
+        // onPrepare forwards this to TestHub as build_identifier; the raw template must not leak
+        expect(service._buildIdentifier).toBeUndefined()
+    })
+
     it('should not evaluate buildIdentifier if buildIdentifier is not present in the caps', async() => {
         const caps: any = [{}]
         const updatedcaps: any = [{ 'browserstack.wdioService': pkg.version }]