MCP Server Development Guide

Overview

Create MCP (Model Context Protocol) servers that enable LLMs to interact with external services through well-designed tools. The quality of an MCP server is measured by how well it enables LLMs to accomplish real-world tasks.

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Microsoft MCP Ecosystem

Microsoft provides extensive MCP infrastructure for Azure and Foundry services. Understanding this ecosystem helps you decide whether to build custom servers or leverage existing ones.

Server Types

Type	Transport	Use Case	Example
Local	stdio	Desktop apps, single-user, local dev	Azure MCP Server via NPM/Docker
Remote	Streamable HTTP	Cloud services, multi-tenant, Agent Service	https://mcp.ai.azure.com (Foundry)

Microsoft MCP Servers

Before building a custom server, check if Microsoft already provides one:

Server	Type	Description
Azure MCP	Local	48+ Azure services (Storage, KeyVault, Cosmos, SQL, etc.)
Foundry MCP	Remote	https://mcp.ai.azure.com - Models, deployments, evals, agents
Fabric MCP	Local	Microsoft Fabric APIs, OneLake, item definitions
Playwright MCP	Local	Browser automation and testing
GitHub MCP	Remote	https://api.githubcopilot.com/mcp

Full ecosystem: See 🔷 Microsoft MCP Patterns for complete server catalog and patterns.

When to Use Microsoft vs Custom

Scenario	Recommendation
Azure service integration	Use Azure MCP Server (48 services covered)
AI Foundry agents/evals	Use Foundry MCP remote server
Custom internal APIs	Build custom server (this guide)
Third-party SaaS integration	Build custom server (this guide)
Extending Azure MCP	Follow Microsoft MCP Patterns

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Process

🚀 High-Level Workflow

Creating a high-quality MCP server involves four main phases:

Phase 1: Deep Research and Planning

1.1 Understand Modern MCP Design

API Coverage vs. Workflow Tools: Balance comprehensive API endpoint coverage with specialized workflow tools. Workflow tools can be more convenient for specific tasks, while comprehensive coverage gives agents flexibility to compose operations. Performance varies by client—some clients benefit from code execution that combines basic tools, while others work better with higher-level workflows. When uncertain, prioritize comprehensive API coverage.

Tool Naming and Discoverability: Clear, descriptive tool names help agents find the right tools quickly. Use consistent prefixes (e.g., github_create_issue, github_list_repos) and action-oriented naming.

Context Management: Agents benefit from concise tool descriptions and the ability to filter/paginate results. Design tools that return focused, relevant data. Some clients support code execution which can help agents filter and process data efficiently.

Actionable Error Messages: Error messages should guide agents toward solutions with specific suggestions and next steps.

1.2 Study MCP Protocol Documentation

Navigate the MCP specification:

Start with the sitemap to find relevant pages: https://modelcontextprotocol.io/sitemap.xml

Then fetch specific pages with .md suffix for markdown format (e.g., https://modelcontextprotocol.io/specification/draft.md).

Key pages to review: - Specification overview and architecture - Transport mechanisms (streamable HTTP, stdio) - Tool, resource, and prompt definitions

1.3 Study Framework Documentation

Language Selection:

Language	Best For	SDK
TypeScript (recommended)	General MCP servers, broad compatibility	@modelcontextprotocol/sdk
Python	Data/ML pipelines, FastAPI integration	mcp (FastMCP)
C#/.NET	Azure/Microsoft ecosystem, enterprise	Microsoft.Mcp.Core

Transport Selection:

Transport	Use Case	Characteristics
Streamable HTTP	Remote servers, multi-tenant, Agent Service	Stateless, scalable, requires auth
stdio	Local servers, desktop apps	Simple, single-user, no network

Load framework documentation:

• MCP Best Practices: 📋 View Best Practices - Core guidelines

For TypeScript (recommended): - TypeScript SDK: Use WebFetch to load https://raw.githubusercontent.com/modelcontextprotocol/typescript-sdk/main/README.md - ⚡ TypeScript Guide - TypeScript patterns and examples

For Python: - Python SDK: Use WebFetch to load https://raw.githubusercontent.com/modelcontextprotocol/python-sdk/main/README.md - 🐍 Python Guide - Python patterns and examples

For C#/.NET (Microsoft ecosystem): - 🔷 Microsoft MCP Patterns - C# patterns, Azure MCP architecture, command hierarchy

1.4 Plan Your Implementation

Understand the API: Review the service's API documentation to identify key endpoints, authentication requirements, and data models. Use web search and WebFetch as needed.

Tool Selection: Prioritize comprehensive API coverage. List endpoints to implement, starting with the most common operations.

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Phase 2: Implementation

2.1 Set Up Project Structure

See language-specific guides for project setup: - ⚡ TypeScript Guide - Project structure, package.json, tsconfig.json - 🐍 Python Guide - Module organization, dependencies - 🔷 Microsoft MCP Patterns - C# project structure, command hierarchy

2.2 Implement Core Infrastructure

Create shared utilities: - API client with authentication - Error handling helpers - Response formatting (JSON/Markdown) - Pagination support

2.3 Implement Tools

For each tool:

Input Schema: - Use Zod (TypeScript) or Pydantic (Python) - Include constraints and clear descriptions - Add examples in field descriptions

Output Schema: - Define outputSchema where possible for structured data - Use structuredContent in tool responses (TypeScript SDK feature) - Helps clients understand and process tool outputs

Tool Description: - Concise summary of functionality - Parameter descriptions - Return type schema

Implementation: - Async/await for I/O operations - Proper error handling with actionable messages - Support pagination where applicable - Return both text content and structured data when using modern SDKs

Annotations: - readOnlyHint: true/false - destructiveHint: true/false - idempotentHint: true/false - openWorldHint: true/false

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Phase 3: Review and Test

3.1 Code Quality

Review for: - No duplicated code (DRY principle) - Consistent error handling - Full type coverage - Clear tool descriptions

3.2 Build and Test

TypeScript: - Run npm run build to verify compilation - Test with MCP Inspector: npx @modelcontextprotocol/inspector

Python: - Verify syntax: python -m py_compile your_server.py - Test with MCP Inspector

See language-specific guides for detailed testing approaches and quality checklists.

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Phase 4: Create Evaluations

After implementing your MCP server, create comprehensive evaluations to test its effectiveness.

Load ✅ Evaluation Guide for complete evaluation guidelines.

4.1 Understand Evaluation Purpose

Use evaluations to test whether LLMs can effectively use your MCP server to answer realistic, complex questions.

4.2 Create 10 Evaluation Questions

To create effective evaluations, follow the process outlined in the evaluation guide:

1. Tool Inspection: List available tools and understand their capabilities
2. Content Exploration: Use READ-ONLY operations to explore available data
3. Question Generation: Create 10 complex, realistic questions
4. Answer Verification: Solve each question yourself to verify answers

4.3 Evaluation Requirements

Ensure each question is: - Independent: Not dependent on other questions - Read-only: Only non-destructive operations required - Complex: Requiring multiple tool calls and deep exploration - Realistic: Based on real use cases humans would care about - Verifiable: Single, clear answer that can be verified by string comparison - Stable: Answer won't change over time

4.4 Output Format

Create an XML file with this structure:

<evaluation>
  <qa_pair>
    <question>Find discussions about AI model launches with animal codenames. One model needed a specific safety designation that uses the format ASL-X. What number X was being determined for the model named after a spotted wild cat?</question>
    <answer>3</answer>
  </qa_pair>
<!-- More qa_pairs... -->
</evaluation>

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Reference Files

📚 Documentation Library

Load these resources as needed during development:

Core MCP Documentation (Load First)

• MCP Protocol: Start with sitemap at https://modelcontextprotocol.io/sitemap.xml, then fetch specific pages with .md suffix
• 📋 MCP Best Practices - Universal MCP guidelines including:
• Server and tool naming conventions
• Response format guidelines (JSON vs Markdown)
• Pagination best practices
• Transport selection (streamable HTTP vs stdio)
• Security and error handling standards

Microsoft MCP Documentation (For Azure/Foundry)

• 🔷 Microsoft MCP Patterns - Microsoft-specific patterns including:
• Azure MCP Server architecture (48+ Azure services)
• C#/.NET command implementation patterns
• Remote MCP with Foundry Agent Service
• Authentication (Entra ID, OBO flow, Managed Identity)
• Testing infrastructure with Bicep templates

SDK Documentation (Load During Phase 1/2)

• Python SDK: Fetch from https://raw.githubusercontent.com/modelcontextprotocol/python-sdk/main/README.md
• TypeScript SDK: Fetch from https://raw.githubusercontent.com/modelcontextprotocol/typescript-sdk/main/README.md
• Microsoft MCP SDK: See Microsoft MCP Patterns for C#/.NET

Language-Specific Implementation Guides (Load During Phase 2)

• 🐍 Python Implementation Guide - Complete Python/FastMCP guide with:
• Server initialization patterns
• Pydantic model examples
• Tool registration with @mcp.tool
• Complete working examples

• Quality checklist

• ⚡ TypeScript Implementation Guide - Complete TypeScript guide with:

• Project structure
• Zod schema patterns
• Tool registration with server.registerTool
• Complete working examples

• Quality checklist

• 🔷 Microsoft MCP Patterns - Complete C#/.NET guide with:

• Command hierarchy (BaseCommand → GlobalCommand → SubscriptionCommand)
• Naming conventions ({Resource}{Operation}Command)
• Option handling with .AsRequired() / .AsOptional()
• Azure Functions remote MCP deployment
• Live test patterns with Bicep

Evaluation Guide (Load During Phase 4)

• ✅ Evaluation Guide - Complete evaluation creation guide with:
• Question creation guidelines
• Answer verification strategies
• XML format specifications
• Example questions and answers
• Running an evaluation with the provided scripts