Automated International Classification of Diseases (ICD) coding assigns standardized diagnosis and procedure codes to clinical records, playing a critical role in healthcare systems. However, existing methods face challenges such as semantic gaps between clinical text and ICD codes, poor performance on rare and long-tail codes, and limited interpretability. To address these issues, we propose TraceCoder, a novel framework integrating multi-source external knowledge to enhance traceability and explainability in ICD coding. TraceCoder dynamically incorporates diverse knowledge sources, including UMLS, Wikipedia, and large language models (LLMs), to enrich code representations, bridge semantic gaps, and handle rare and ambiguous codes. It also introduces a hybrid attention mechanism to model interactions among labels, clinical context, and knowledge, improving long-tail code recognition and making predictions interpretable by grounding them in external evidence. Experiments on MIMIC-III-ICD9, MIMIC-IV-ICD9, and MIMIC-IV-ICD10 datasets demonstrate that TraceCoder achieves state-of-the-art performance, with ablation studies validating the effectiveness of its components. TraceCoder offers a scalable and robust solution for automated ICD coding, aligning with clinical needs for accuracy, interpretability, and reliability.