diff --git a/tests/unit/providers/utils/tools/test_mcp.py b/tests/unit/providers/utils/tools/test_mcp.py
new file mode 100644
index 000000000..9ee90cd3a
--- /dev/null
+++ b/tests/unit/providers/utils/tools/test_mcp.py
@@ -0,0 +1,90 @@
+import asyncio
+import re
+from typing import List
+from mcp import ListToolsResult
+import pytest
+from unittest.mock import AsyncMock, patch
+import json
+
+from llama_stack.apis.tools.tools import ToolParameter
+from llama_stack.providers.utils.tools.mcp import list_mcp_tools
+
+
+def find_param(params:List[ToolParameter], param_name: str)->ToolParameter| None:
+    return next((p for p in params if p.name == param_name), None)
+
+@pytest.mark.asyncio
+async def test_list_mcp_tools_with_ref_defs():
+    mcp_tools_resp_json = """
+    {"tools":[{"name":"book_reservation",
+    "inputSchema":{
+        "$defs":{
+            "FlightInfo":{"properties":{"flight_number":{"description":"Flight number, such as \'HAT001\'.","title":"Flight Number","type":"string"},"date":{"description":"The date for the flight in the format \'YYYY-MM-DD\', such as \'2024-05-01\'.","title":"Date","type":"string"}},"required":["flight_number","date"],"title":"FlightInfo","type":"object"},
+            "Passenger":{"properties":{"first_name":{"description":"Passenger\'s first name","title":"First Name","type":"string"},"last_name":{"description":"Passenger\'s last name","title":"Last Name","type":"string"},"dob":{"description":"Date of birth in YYYY-MM-DD format","title":"Dob","type":"string"}},"required":["first_name","last_name","dob"],"title":"Passenger","type":"object"},
+            "Payment":{"properties":{"payment_id":{"description":"Unique reference for the payment method in the user\'s payment methods.","title":"Payment Id","type":"string"},"amount":{"description":"Payment amount in dollars","title":"Amount","type":"integer"}},"required":["payment_id","amount"],"title":"Payment","type":"object"}
+        },
+        "properties":{
+            "user_id":{"title":"User Id","type":"string"},
+            "origin":{"title":"Origin","type":"string"},
+            "destination":{"title":"Destination","type":"string"},
+            "flight_type":{"enum":["round_trip","one_way"],"title":"Flight Type","type":"string"},
+            "cabin":{"enum":["business","economy","basic_economy"],"title":"Cabin","type":"string"},
+            "flights":{"items":{"$ref":"#/$defs/FlightInfo"},"title":"Flights","type":"array"},
+            "passengers":{"items":{"anyOf":[{"$ref":"#/$defs/Passenger"},{"additionalProperties":true,"type":"object"}]},"title":"Passengers","type":"array"},
+            "payment":{"$ref":"#/$defs/Payment","title":"Payment Methods"},
+            "total_baggages":{"title":"Total Baggages","type":"integer"},
+            "nonfree_baggages":{"title":"Nonfree Baggages","type":"integer"},
+            "insurance":{"enum":["yes","no"],"title":"Insurance","type":"string"}
+        },
+        "required":["user_id","origin","destination","flight_type","cabin","flights","passengers","payment_methods","total_baggages","nonfree_baggages","insurance"],
+        "type":"object"
+    },
+        
+    "outputSchema":{
+        "$defs":{
+            "Passenger":{"properties":{"first_name":{"description":"Passenger\'s first name","title":"First Name","type":"string"},"last_name":{"description":"Passenger\'s last name","title":"Last Name","type":"string"},"dob":{"description":"Date of birth in YYYY-MM-DD format","title":"Dob","type":"string"}},"required":["first_name","last_name","dob"],"title":"Passenger","type":"object"},
+            "Payment":{"properties":{"payment_id":{"description":"Unique reference for the payment method in the user\'s payment methods.","title":"Payment Id","type":"string"},"amount":{"description":"Payment amount in dollars","title":"Amount","type":"integer"}},"required":["payment_id","amount"],"title":"Payment","type":"object"},
+            "ReservationFlight":{"properties":{"flight_number":{"description":"Unique flight identifier","title":"Flight Number","type":"string"},"origin":{"description":"IATA code for origin airport","title":"Origin","type":"string"},"destination":{"description":"IATA code for destination airport","title":"Destination","type":"string"},"date":{"description":"Flight date in YYYY-MM-DD format","title":"Date","type":"string"},"price":{"description":"Flight price in dollars.","title":"Price","type":"integer"}},"required":["flight_number","origin","destination","date","price"],"title":"ReservationFlight","type":"object"}
+        },
+        "properties":{
+            "reservation_id":{"description":"Unique identifier for the reservation","title":"Reservation Id","type":"string"},
+            "user_id":{"description":"ID of the user who made the reservation","title":"User Id","type":"string"},
+            "origin":{"description":"IATA code for trip origin","title":"Origin","type":"string"},"destination":{"description":"IATA code for trip destination","title":"Destination","type":"string"},
+            "flight_type":{"description":"Type of trip","enum":["round_trip","one_way"],"title":"Flight Type","type":"string"},
+            "cabin":{"description":"Selected cabin class","enum":["business","economy","basic_economy"],"title":"Cabin","type":"string"},
+            "flights":{"description":"List of flights in the reservation","items":{"$ref":"#/$defs/ReservationFlight"},"title":"Flights","type":"array"},"passengers":{"description":"List of passengers on the reservation","items":{"$ref":"#/$defs/Passenger"},"title":"Passengers","type":"array"},
+            "payment_history":{"description":"History of payments for this reservation","items":{"$ref":"#/$defs/Payment"},"title":"Payment History","type":"array"},
+            "created_at":{"description":"Timestamp when reservation was created in the format YYYY-MM-DDTHH:MM:SS","title":"Created At","type":"string"},
+            "total_baggages":{"description":"Total number of bags in reservation","title":"Total Baggages","type":"integer"},
+            "nonfree_baggages":{"description":"Number of paid bags in reservation","title":"Nonfree Baggages","type":"integer"},
+            "insurance":{"description":"Whether travel insurance was purchased","enum":["yes","no"],"title":"Insurance","type":"string"},
+            "status":{"anyOf":[{"const":"cancelled","type":"string"},{"type":"null"}],"default":null,"description":"Status of the reservation","title":"Status"}
+        },
+        "required":["reservation_id","user_id","origin","destination","flight_type","cabin","flights","passengers","payment_history","created_at","total_baggages","nonfree_baggages","insurance"],"title":"Reservation","type":"object"},
+        "annotations":null,"meta":{"_fastmcp":{"tags":[]}}
+    }]}"""
+    mcp_tools_resp = ListToolsResult.model_validate_json(mcp_tools_resp_json)
+
+    # Mock the client_wrapper context manager
+    mock_session = AsyncMock()
+    mock_session.list_tools.return_value = mcp_tools_resp
+
+    mock_cm = AsyncMock()
+    mock_cm.__aenter__.return_value = mock_session
+    mock_cm.__aexit__.return_value = None
+
+    # Patch the client_wrapper to return our mock context manager
+    with patch("llama_stack.providers.utils.tools.mcp.client_wrapper", return_value=mock_cm):
+        tools_data = await list_mcp_tools("fake_endpoint", {"Authorization": "Bearer X"})
+    tools = tools_data.data
+    assert len(tools) == 1
+    book_resv = tools[0]
+    assert book_resv.name == "book_reservation"
+    assert find_param(book_resv.parameters, "payment").properties.payment_id.type == "string"
+    assert find_param(book_resv.parameters, "flights").items.properties.flight_number.type == "string"
+    assert find_param(book_resv.parameters, "passengers").items.properties.first_name.title == "First Name"
+    mock_session.list_tools.assert_awaited_once()
+
+asyncio.run(
+    test_list_mcp_tools_with_ref_defs()
+)