Remote MCP Servers using Azure Functions (Python)

This is a quickstart template to easily build and deploy a custom remote MCP server to the cloud using Azure Functions with Python. You can clone/restore/run on your local machine with debugging. The MCP server is secured by design using keys and HTTPS, and allows more options for OAuth using built-in auth and/or API Management as well as network isolation using VNET.

Prerequisites

• Python version 3.11 or higher

• Azure Functions Core Tools >= 4.0.7030

• Azure Developer CLI

• To use Visual Studio Code to run and debug locally:

  • Visual Studio Code

  • Azure Functions extension

Related MCP server: Custom MCP Server on Databricks Apps

Prepare your local environment

An Azure Storage Emulator is required for this particular sample.

1. Start Azurite

   docker run -p 10000:10000 -p 10001:10001 -p 10002:10002 \
       mcr.microsoft.com/azure-storage/azurite

Note if you use Azurite coming from VS Code extension you need to run Azurite: Start now or you will see errors.

Run your MCP Server locally from the terminal

1. Change to the src folder in a new terminal window:

   cd src

2. Install Python dependencies:

   pip install -r requirements.txt

Note it is a best practice to create a Virtual Environment before doing the pip install to avoid dependency issues/collisions, or if you are running in CodeSpaces. See Python Environments in VS Code for more information.

1. Start the Functions host locally:

   cd .\src
   func start

Note by default this will use the webhooks route: /runtime/webhooks/mcp/sse. Later we will use this in Azure to set the key on client/host calls: /runtime/webhooks/mcp/sse?code=<system_key>

Connect to the local MCP server from a client/host

VS Code - Copilot agent mode

1. Add MCP Server from command palette and add URL to your running Function app's SSE endpoint:

   http://0.0.0.0:7071/runtime/webhooks/mcp/sse

2. List MCP Servers from command palette and start the server

3. In Copilot chat agent mode enter a prompt to trigger the tool, e.g., select some code and enter this prompt

   Say Hello

   what is the stock price of tesla 

   hows the weather in New York city

4. When prompted to run the tool, consent by clicking Continue

5. When you're done, press Ctrl+C in the terminal window to stop the Functions host process.

MCP Inspector

1. In a new terminal window, install and run MCP Inspector

   npx @modelcontextprotocol/inspector

2. CTRL click to load the MCP Inspector web app from the URL displayed by the app (e.g. http://0.0.0.0:5173/#resources)

3. Set the transport type to SSE

4. Set the URL to your running Function app's SSE endpoint and Connect:

   http://0.0.0.0:7071/runtime/webhooks/mcp/sse

Note this step will not work in CodeSpaces. Please move on to Deploy to Remote MCP.

5. List Tools. Click on a tool and Run Tool.

Deploy to Azure for Remote MCP from VSCode

you can deploy azure function from the vscode using azure extension. login to azure. Look for Function App in Resource, right click and click "Deploy to Function App". you can also use Azure CLI to deploy the function app to Azure.

Connect to your remote MCP server function app from a client

Your client will need a key in order to invoke the new hosted SSE endpoint, which will be of the form https://<funcappname>.azurewebsites.net/runtime/webhooks/mcp/sse. The hosted function requires a system key by default which can be obtained from the portal or the CLI (az functionapp keys list --resource-group <resource_group> --name <function_app_name>). Obtain the system key named mcp_extension.

Connect to remote MCP server in MCP Inspector

For MCP Inspector, you can include the key in the URL:

https://<funcappname>.azurewebsites.net/runtime/webhooks/mcp/sse?code=<your-mcp-extension-system-key>

Connect to remote MCP server in VS Code - GitHub Copilot

For GitHub Copilot within VS Code, you should instead set the key as the x-functions-key header in mcp.json, and you would just use https://<funcappname>.azurewebsites.net/runtime/webhooks/mcp/sse for the URL. The following example uses an input and will prompt you to provide the key when you start the server from VS Code. Note mcp.json has already been included in this repo and will be picked up by VS Code. Click Start on the server to be prompted for values including functionapp-name (in your /.azure/*/.env file) and functions-mcp-extension-system-key which can be obtained from CLI command above or API Keys in the portal for the Function App.

{
    "inputs": [
        {
            "type": "promptString",
            "id": "functions-mcp-extension-system-key",
            "description": "Azure Functions MCP Extension System Key",
            "password": true
        },
        {
            "type": "promptString",
            "id": "functionapp-name",
            "description": "Azure Functions App Name"
        }
    ],
    "servers": {
        "remote-mcp-function": {
            "type": "sse",
            "url": "https://${input:functionapp-name}.azurewebsites.net/runtime/webhooks/mcp/sse",
            "headers": {
                "x-functions-key": "${input:functions-mcp-extension-system-key}"
            }
        },
        "local-mcp-function": {
            "type": "sse",
            "url": "http://0.0.0.0:7071/runtime/webhooks/mcp/sse"
        }
    }
}

For MCP Inspector, you can include the key in the URL: https://<funcappname>.azurewebsites.net/runtime/webhooks/mcp/sse?code=<your-mcp-extension-system-key>.

For GitHub Copilot within VS Code, you should instead set the key as the x-functions-key header in mcp.json, and you would just use https://<funcappname>.azurewebsites.net/runtime/webhooks/mcp/sse for the URL. The following example uses an input and will prompt you to provide the key when you start the server from VS Code:

{
    "inputs": [
        {
            "type": "promptString",
            "id": "functions-mcp-extension-system-key",
            "description": "Azure Functions MCP Extension System Key",
            "password": true
        }
    ],
    "servers": {
        "my-mcp-server": {
            "type": "sse",
            "url": "<funcappname>.azurewebsites.net/runtime/webhooks/mcp/sse",
            "headers": {
                "x-functions-key": "${input:functions-mcp-extension-system-key}"
            }
        }
    }
}