diff --git a/agents/agents-mcp-server/build.gradle.kts b/agents/agents-mcp-server/build.gradle.kts
index e22ce427ee..a11ef0e107 100644
--- a/agents/agents-mcp-server/build.gradle.kts
+++ b/agents/agents-mcp-server/build.gradle.kts
@@ -13,6 +13,9 @@ kotlin {
         commonMain {
             dependencies {
                 api(libs.mcp.server)
+                implementation(libs.ktor.server.core)
+                implementation(libs.ktor.server.sse)
+
                 api(project(":agents:agents-tools"))
             }
         }
diff --git a/agents/agents-mcp-server/src/jvmTest/kotlin/ai/koog/agents/mcp/server/KoogToolAsMcpToolTest.kt b/agents/agents-mcp-server/src/jvmTest/kotlin/ai/koog/agents/mcp/server/KoogToolAsMcpToolTest.kt
index 94358d16c1..c94b32f296 100644
--- a/agents/agents-mcp-server/src/jvmTest/kotlin/ai/koog/agents/mcp/server/KoogToolAsMcpToolTest.kt
+++ b/agents/agents-mcp-server/src/jvmTest/kotlin/ai/koog/agents/mcp/server/KoogToolAsMcpToolTest.kt
@@ -20,7 +20,6 @@ import kotlinx.serialization.json.buildJsonObject
 import kotlinx.serialization.json.put
 import kotlin.test.Test
 import kotlin.test.assertEquals
-import kotlin.test.assertFailsWith
 import kotlin.test.assertIsNot
 import kotlin.test.assertNotEquals
 import kotlin.test.assertNotNull
@@ -68,19 +67,20 @@ class KoogToolAsMcpToolTest {
     @OptIn(InternalAgentToolsApi::class)
     @Test
     fun testKoogToolAsMcpToolWithInvalidArguments() = testMcpTool(RandomNumberTool()) { mcpTool, origin ->
-        assertFailsWith<IllegalStateException> {
-            val args = buildJsonObject { put("seed", "forty-two") }
+        run {
+            val errorArgs = buildJsonObject { put("seed", "forty-two") }
 
-            withContext(Dispatchers.Default.limitedParallelism(1)) {
+            val errorResult = withContext(Dispatchers.Default.limitedParallelism(1)) {
                 withTimeout(20.seconds) {
-                    mcpTool.execute(args)
+                    mcpTool.execute(errorArgs)
                 }
             }
+
+            assertTrue(errorResult?.isError ?: false)
         }
 
+        // check that the server is still working
         run {
-            // check that the server is still working
-
             val args = buildJsonObject { put("seed", "42") }
 
             val result = withContext(Dispatchers.Default.limitedParallelism(1)) {
@@ -102,17 +102,19 @@ class KoogToolAsMcpToolTest {
         val tool = ThrowingExceptionTool()
 
         testMcpTool(tool) { mcpTool, origin ->
-            tool.throwing = true
+            run {
+                tool.throwing = true
 
-            assertFailsWith<IllegalStateException> {
                 val args = EmptyJsonObject
 
-                withContext(Dispatchers.Default.limitedParallelism(1)) {
+                val errorResult = withContext(Dispatchers.Default.limitedParallelism(1)) {
                     withTimeout(20.seconds) {
                         mcpTool.execute(args)
                     }
                 }
 
+                assertTrue(errorResult?.isError ?: false)
+
                 val last = origin.last
                 assertNotNull(last)
                 assertTrue(last.isFailure)
@@ -158,7 +160,7 @@ class KoogToolAsMcpToolTest {
             val toolRegistry = withContext(Dispatchers.Default.limitedParallelism(1)) {
                 withTimeout(20.seconds) {
                     McpToolRegistryProvider.fromTransport(
-                        transport = McpToolRegistryProvider.defaultSseTransport("http://localhost:$port/sse")
+                        transport = McpToolRegistryProvider.defaultSseTransport("http://localhost:$port")
                     )
                 }
             }
diff --git a/agents/agents-mcp/src/jvmTest/kotlin/ai/koog/agents/mcp/McpToolTest.kt b/agents/agents-mcp/src/jvmTest/kotlin/ai/koog/agents/mcp/McpToolTest.kt
index 3483f7fe05..4ed38605d1 100644
--- a/agents/agents-mcp/src/jvmTest/kotlin/ai/koog/agents/mcp/McpToolTest.kt
+++ b/agents/agents-mcp/src/jvmTest/kotlin/ai/koog/agents/mcp/McpToolTest.kt
@@ -48,7 +48,7 @@ class McpToolTest {
         val toolRegistry = withContext(Dispatchers.Default.limitedParallelism(1)) {
             withTimeout(1.minutes) {
                 McpToolRegistryProvider.fromTransport(
-                    transport = McpToolRegistryProvider.defaultSseTransport("http://localhost:$testPort/sse"),
+                    transport = McpToolRegistryProvider.defaultSseTransport("http://localhost:$testPort"),
                     name = "test-client",
                     version = "0.1.0"
                 )
diff --git a/examples/simple-examples/src/main/kotlin/ai/koog/agents/example/mcp/PlaywrightMcpClient.kt b/examples/simple-examples/src/main/kotlin/ai/koog/agents/example/mcp/PlaywrightMcpClient.kt
index b683f520a1..f7aecbb8d9 100644
--- a/examples/simple-examples/src/main/kotlin/ai/koog/agents/example/mcp/PlaywrightMcpClient.kt
+++ b/examples/simple-examples/src/main/kotlin/ai/koog/agents/example/mcp/PlaywrightMcpClient.kt
@@ -39,7 +39,7 @@ fun main() {
                 // Create the ToolRegistry with tools from the MCP server
                 println("Connecting to Playwright MCP server...")
                 val toolRegistry = McpToolRegistryProvider.fromTransport(
-                    transport = McpToolRegistryProvider.defaultSseTransport("http://localhost:8931")
+                    transport = McpToolRegistryProvider.defaultSseTransport("http://localhost:8931/sse")
                 )
                 println("Successfully connected to Playwright MCP server")
 
diff --git a/gradle/libs.versions.toml b/gradle/libs.versions.toml
index 9ca8efbf0f..d05d099895 100644
--- a/gradle/libs.versions.toml
+++ b/gradle/libs.versions.toml
@@ -23,7 +23,7 @@ ktlint = "14.0.1"
 ktor3 = "3.2.2"
 lettuce = "6.5.5.RELEASE"
 logback = "1.5.13"
-mcp = "0.7.2"
+mcp = "0.7.7"
 mockito = "5.19.0"
 mockk = "1.13.8"
 mokksy = "0.5.1"