MCP Server Hosting

Value: Production-ready hosting templates for custom MCP servers on Azure Functions and Container Apps — with dual-auth, VNet isolation, health probes, and OTel observability pre-configured. Deploy a governed MCP server in minutes instead of weeks.

Overview

The Enterprise Kit provides two hosting patterns for deploying custom MCP servers into your Azure environment. Both include Bicep infrastructure modules, application scaffolding, and automatic integration with the Foundry Toolbox ecosystem. Once deployed, servers are registered in the Private Tool Catalog (API Center) and become available to agents through the Toolbox consumer endpoint.

Hosting Patterns

Pattern	Platform	Best For	Key Features
Azure Functions	Flex Consumption	Event-driven, lightweight tools	FastMCP + SSE transport, `@register_tool` decorator, function key + Entra dual-auth, auto-scale to zero
Container Apps	Azure Container Apps	Stateful, VNet-isolated workloads	FastAPI + JSON-RPC 2.0 + SSE, sidecar pattern, VNet internal-only ingress, liveness/readiness probes, OTel to App Insights

Infrastructure (Bicep Modules)

Three Bicep modules support MCP hosting:

Module	Path	Resources Provisioned
`function-mcp.bicep`	`adapters/hosting/azure-functions/infra/`	Function App (Flex Consumption), Storage Account, App Insights, User-Assigned Managed Identity
`container-app-mcp.bicep`	`adapters/hosting/container-apps/infra/`	Container App, ACR, Container Apps Environment, Managed Identity, App Insights
`api-center.bicep`	`infra/bicep/modules/`	Azure API Center — Private Tool Catalog for MCP server discovery, RBAC, metadata schema

Authentication (5 Foundry Methods)

The MCPAuthProvider in sdk-starters/python/mcp_auth_provider.py implements all five Foundry MCP authentication methods with automatic token caching (5-minute buffer) and Key Vault credential rotation:

Method	Use Case	Environment
Key-Based	API key / PAT stored in Foundry project connection	Dev only
Entra Agent Identity	Per-agent scoped token with auto-request	All
Entra Project Managed Identity	Shared MI across all agents in project (recommended default)	All (recommended)
OAuth Identity Passthrough	Delegated user consent with retry flow	All
Unauthenticated	Public or VNet-isolated servers only	Dev only

Production environments restrict auth to entra_project_mi and entra_agent_identity only (ZT-15).

Endpoint Resolution

The ToolboxEndpointResolver handles consumer vs. developer endpoint resolution with version pinning and APIM gateway URL rewriting:

Endpoint Type	URL Pattern	Use Case
Consumer	`{endpoint}/toolboxes/{name}/mcp?api-version=v1`	Production agents (uses default version)
Developer	`{endpoint}/toolboxes/{name}/versions/{ver}/mcp?api-version=v1`	CI/CD testing with version pinning

Deployment Workflow

Write tools — Use the @register_tool decorator in either template
Deploy infrastructure — Run the appropriate Bicep module (Functions for lightweight, Container Apps for stateful/VNet-isolated)
Register in catalog — Run scripts/register-mcp-servers.py to register in the Private Tool Catalog (API Center)
Wire to Toolbox — Configure in the agent's toolbox YAML with auth method and allowed tools
Verify — Auth is auto-resolved by MCPAuthProvider based on connection config

Security Controls

MCP hosting is governed by ZT-15 (MCP Security):

Transport: TLS 1.2+, VNet internal-only ingress, no CORS, POST-only (JSON-RPC 2.0), 1MB request limit
Gateway (APIM): IP filtering (RFC 1918 only), rate limiting (60 RPM per tool, 200 RPM per agent), header sanitization, circuit breaker (5 consecutive failures)
Authentication: Production restricted to Entra-based methods only
Monitoring: OTel spans to App Insights, KQL fleet dashboard queries

Project Structure

Path	Purpose
`adapters/hosting/azure-functions/`	Azure Functions MCP server template + Bicep
`adapters/hosting/container-apps/`	Container Apps MCP server template + Dockerfile + Bicep
`infra/bicep/modules/api-center.bicep`	Private Tool Catalog (API Center) module
`sdk-starters/python/mcp_auth_provider.py`	Unified MCP auth abstraction (5 methods)
`sdk-starters/python/toolbox_endpoint_resolver.py`	Consumer vs. developer endpoint resolution
`scripts/register-mcp-servers.py`	Catalog registration script

Next Steps

Review MCP Adapters — 7 pre-built adapters for enterprise systems
Set up MCP Fleet Governance — Toolbox lifecycle, policies, and monitoring
Configure Zero Trust Controls — ZT-07, ZT-12, ZT-15 for MCP security