A developer manages a serverless application that uses an AWS Lambda function.

AWS Secrets Manager is purpose-built for securely storing and managing sensitive information such as API keys, tokens, and credentials. It provides automatic secret rotation, fine-grained IAM access control, encryption at rest using AWS KMS, and audit logging through AWS CloudTrail. This makes it the most secure and scalable option for managing short-lived authentication keys.

AWS Lambda extensions enable efficient secret retrieval by caching secrets locally within the execution environment. This reduces repeated calls to Secrets Manager on every invocation, improving performance and lowering costs while maintaining up-to-date credentials. AWS documentation explicitly recommends using Lambda extensions or caching logic for secrets that are frequently accessed.

Storing secrets in S3 (Option B) or environment variables (Option C) lacks built-in rotation and increases exposure risk. Parameter Store (Option D) supports encryption but does not provide native rotation for secrets without custom automation, making it less suitable for this use case.

Therefore, Secrets Manager with Lambda extensions provides the most secure, automated, and operationally efficient solution.