diff --git a/.changeset/ai-mcp-carve-out.md b/.changeset/ai-mcp-carve-out.md
new file mode 100644
index 0000000..5ca8e06
--- /dev/null
+++ b/.changeset/ai-mcp-carve-out.md
@@ -0,0 +1,7 @@
+---
+"@gemstack/ai-sdk": minor
+---
+
+Remove the `./mcp` subpath. The agent<->MCP bridge (`mcpClientTools` / `mcpServerFromAgent`) has moved to its own package, `@gemstack/ai-mcp`, so the optional `@modelcontextprotocol/sdk` peer dependency is now declared only by the package that uses it (and no longer surfaces to every `@gemstack/ai-sdk` consumer).
+
+Migration: replace `@gemstack/ai-sdk/mcp` imports with `@gemstack/ai-mcp`, and move the `@modelcontextprotocol/sdk` peer to that package. The bridge API is unchanged.
diff --git a/.changeset/ai-mcp-initial.md b/.changeset/ai-mcp-initial.md
new file mode 100644
index 0000000..14f2d0a
--- /dev/null
+++ b/.changeset/ai-mcp-initial.md
@@ -0,0 +1,10 @@
+---
+"@gemstack/ai-mcp": minor
+---
+
+Initial release. The agent<->MCP bridge, carved out of `@gemstack/ai-sdk`'s former `./mcp` subpath:
+
+- `mcpClientTools(transport, opts?)` — consume a remote MCP server's tools as `@gemstack/ai-sdk` Agent tools (HTTP URL / stdio spawn / connected SDK client).
+- `mcpServerFromAgent(AgentClass, opts?)` — expose an Agent as an MCP server, with `'tools'` / `'agent'` / `'both'` exposure modes.
+
+Depends on `@gemstack/ai-sdk`; `@modelcontextprotocol/sdk` is an optional peer.
diff --git a/packages/ai-mcp/README.md b/packages/ai-mcp/README.md
new file mode 100644
index 0000000..62c0527
--- /dev/null
+++ b/packages/ai-mcp/README.md
@@ -0,0 +1,58 @@
+# @gemstack/ai-mcp
+
+The bridge between [`@gemstack/ai-sdk`](https://github.com/gemstack-land/gemstack/tree/main/packages/ai-sdk) Agents and [Model Context Protocol](https://modelcontextprotocol.io) servers. Two connectors:
+
+- **`mcpClientTools(transport, opts?)`** — consume a remote MCP server's tools as Agent tools.
+- **`mcpServerFromAgent(AgentClass, opts?)`** — expose an Agent as an MCP server external clients (Claude Desktop, Cursor, etc.) can call.
+
+This is the **agent bridge** axis of MCP. It depends on `@gemstack/ai-sdk` and is useless without an Agent. It was carved out of `@gemstack/ai-sdk`'s `/mcp` subpath so the optional MCP SDK dependency is declared only by the package that actually needs it.
+
+## Which MCP package do I use?
+
+> **Exposing an existing Agent, or feeding remote MCP tools into one?** Use `@gemstack/ai-mcp` (this package).
+> **Authoring an MCP server from scratch** (tools / resources / prompts / auth)? Use a standalone MCP server framework — that is a separate, agent-agnostic concern, not this bridge.
+
+Both can "produce an MCP server", but from different inputs: `mcpServerFromAgent(anAgent)` versus a hand-authored server. That overlap is expected, not duplication.
+
+## Installation
+
+```bash
+pnpm add @gemstack/ai-mcp @modelcontextprotocol/sdk
+```
+
+`@modelcontextprotocol/sdk` is an **optional peer dependency** — install it when you use this bridge. `@gemstack/ai-sdk` comes in as a regular dependency.
+
+## Usage
+
+### Consume a remote MCP server's tools
+
+```ts
+import { mcpClientTools } from '@gemstack/ai-mcp'
+
+// (a) HTTP — string URL or URL instance
+const tools = await mcpClientTools('https://api.example.com/mcp')
+
+// (b) Local stdio subprocess
+const tools = await mcpClientTools({ command: 'npx', args: ['some-mcp-server'] })
+
+// (c) Already-connected SDK Client (caller owns lifecycle)
+const tools = await mcpClientTools(myClient)
+
+// Spread into your Agent's tools(). Call tools.close() when done (cases a + b).
+```
+
+### Expose an Agent as an MCP server
+
+```ts
+import { mcpServerFromAgent } from '@gemstack/ai-mcp'
+import { StdioServerTransport } from '@modelcontextprotocol/sdk/server/stdio.js'
+
+const server = await mcpServerFromAgent(MyAgent)
+await server.connect(new StdioServerTransport())
+```
+
+Three exposure modes via `opts.expose`: `'tools'` (default, one MCP tool per `agent.tools()` entry), `'agent'` (one tool that runs the whole agent: `prompt(text) → text`), or `'both'`.
+
+## License
+
+MIT
diff --git a/packages/ai-mcp/package.json b/packages/ai-mcp/package.json
new file mode 100644
index 0000000..3942634
--- /dev/null
+++ b/packages/ai-mcp/package.json
@@ -0,0 +1,66 @@
+{
+  "name": "@gemstack/ai-mcp",
+  "version": "0.0.0",
+  "description": "Bridge between @gemstack/ai-sdk Agents and Model Context Protocol servers: consume remote MCP tools as Agent tools, and expose an Agent as an MCP server.",
+  "keywords": [
+    "ai",
+    "agent",
+    "agents",
+    "mcp",
+    "model-context-protocol",
+    "tools",
+    "tool-calling",
+    "bridge",
+    "gemstack"
+  ],
+  "license": "MIT",
+  "homepage": "https://github.com/gemstack-land/gemstack/tree/main/packages/ai-mcp#readme",
+  "bugs": {
+    "url": "https://github.com/gemstack-land/gemstack/issues"
+  },
+  "repository": {
+    "type": "git",
+    "url": "https://github.com/gemstack-land/gemstack",
+    "directory": "packages/ai-mcp"
+  },
+  "type": "module",
+  "engines": {
+    "node": ">=22.12.0"
+  },
+  "files": [
+    "dist"
+  ],
+  "main": "./dist/index.js",
+  "types": "./dist/index.d.ts",
+  "exports": {
+    ".": {
+      "import": "./dist/index.js",
+      "types": "./dist/index.d.ts"
+    }
+  },
+  "scripts": {
+    "build": "tsc -p tsconfig.build.json",
+    "dev": "tsc -p tsconfig.build.json --watch",
+    "typecheck": "tsc --noEmit",
+    "test": "tsc -p tsconfig.test.json && cd dist-test && node --test",
+    "clean": "rm -rf dist"
+  },
+  "dependencies": {
+    "@gemstack/ai-sdk": "workspace:^",
+    "zod": "^4.0.0"
+  },
+  "peerDependencies": {
+    "@modelcontextprotocol/sdk": "^1.29.0"
+  },
+  "peerDependenciesMeta": {
+    "@modelcontextprotocol/sdk": {
+      "optional": true
+    }
+  },
+  "devDependencies": {
+    "@modelcontextprotocol/sdk": "^1.29.0",
+    "@types/node": "^20.0.0",
+    "typescript": "^5.4.0"
+  },
+  "author": "Suleiman Shahbari"
+}
diff --git a/packages/ai-sdk/src/mcp-client-tools.test.ts b/packages/ai-mcp/src/client-tools.test.ts
similarity index 98%
rename from packages/ai-sdk/src/mcp-client-tools.test.ts
rename to packages/ai-mcp/src/client-tools.test.ts
index d5b9209..e5636ee 100644
--- a/packages/ai-sdk/src/mcp-client-tools.test.ts
+++ b/packages/ai-mcp/src/client-tools.test.ts
@@ -4,8 +4,8 @@ import { z } from 'zod'
 import { Client } from '@modelcontextprotocol/sdk/client/index.js'
 import { McpServer } from '@modelcontextprotocol/sdk/server/mcp.js'
 import { InMemoryTransport } from '@modelcontextprotocol/sdk/inMemory.js'
-import { mcpClientTools } from './mcp/client-tools.js'
-import { toolToSchema } from './tool.js'
+import { mcpClientTools } from './client-tools.js'
+import { toolToSchema } from '@gemstack/ai-sdk'
 
 // ─── Helpers ─────────────────────────────────────────────
 
diff --git a/packages/ai-sdk/src/mcp/client-tools.ts b/packages/ai-mcp/src/client-tools.ts
similarity index 97%
rename from packages/ai-sdk/src/mcp/client-tools.ts
rename to packages/ai-mcp/src/client-tools.ts
index fbe48a1..e0f8186 100644
--- a/packages/ai-sdk/src/mcp/client-tools.ts
+++ b/packages/ai-mcp/src/client-tools.ts
@@ -1,11 +1,11 @@
 import { z } from 'zod'
-import { dynamicTool } from '../tool.js'
-import type { Tool, ToolCallContext } from '../types.js'
+import { dynamicTool } from '@gemstack/ai-sdk'
+import type { Tool, ToolCallContext } from '@gemstack/ai-sdk'
 import type {
   McpClientTransport, McpClientToolsOptions, StdioServerSpawn,
 } from './types.js'
 
-const CLIENT_INFO = { name: 'rudderjs-ai-mcp-bridge', version: '1.0.0' } as const
+const CLIENT_INFO = { name: 'gemstack-ai-mcp-bridge', version: '1.0.0' } as const
 
 /**
  * The result of `mcpClientTools()` — an array of `Tool`s that also carries a
@@ -21,7 +21,7 @@ export interface McpClientToolsHandle extends ReadonlyArray<Tool> {
 }
 
 /**
- * Connect to a remote MCP server and surface its tools as Rudder `Tool`s.
+ * Connect to a remote MCP server and surface its tools as `@gemstack/ai-sdk` `Tool`s.
  *
  * Three transport shapes are accepted:
  *
diff --git a/packages/ai-sdk/src/mcp/index.ts b/packages/ai-mcp/src/index.ts
similarity index 88%
rename from packages/ai-sdk/src/mcp/index.ts
rename to packages/ai-mcp/src/index.ts
index 4bb583d..0c26fb2 100644
--- a/packages/ai-sdk/src/mcp/index.ts
+++ b/packages/ai-mcp/src/index.ts
@@ -1,5 +1,5 @@
 /**
- * `@gemstack/ai-sdk/mcp` — bridge between `@gemstack/ai-sdk` Agents and Model Context
+ * `@gemstack/ai-mcp` — bridge between `@gemstack/ai-sdk` Agents and Model Context
  * Protocol servers. Two connectors:
  *
  * - {@link mcpClientTools} — consume a remote MCP server's tools as Agent tools
diff --git a/packages/ai-sdk/src/mcp-server-from-agent-modes.test.ts b/packages/ai-mcp/src/server-from-agent-modes.test.ts
similarity index 97%
rename from packages/ai-sdk/src/mcp-server-from-agent-modes.test.ts
rename to packages/ai-mcp/src/server-from-agent-modes.test.ts
index 9450c6e..5f9f473 100644
--- a/packages/ai-sdk/src/mcp-server-from-agent-modes.test.ts
+++ b/packages/ai-mcp/src/server-from-agent-modes.test.ts
@@ -3,13 +3,11 @@ import assert from 'node:assert/strict'
 import { z } from 'zod'
 import { Client } from '@modelcontextprotocol/sdk/client/index.js'
 import { InMemoryTransport } from '@modelcontextprotocol/sdk/inMemory.js'
-import { Agent } from './agent.js'
-import { AiRegistry } from './registry.js'
-import { toolDefinition } from './tool.js'
-import { mcpServerFromAgent } from './mcp/server-from-agent.js'
+import { Agent, AiRegistry, toolDefinition } from '@gemstack/ai-sdk'
+import { mcpServerFromAgent } from './server-from-agent.js'
 import type {
   AiMessage, ProviderAdapter, ProviderRequestOptions, ProviderResponse, StreamChunk,
-} from './types.js'
+} from '@gemstack/ai-sdk'
 
 // ─── Scripted adapter (copy of handoff.test.ts pattern) ───
 
diff --git a/packages/ai-sdk/src/mcp-server-from-agent.test.ts b/packages/ai-mcp/src/server-from-agent.test.ts
similarity index 95%
rename from packages/ai-sdk/src/mcp-server-from-agent.test.ts
rename to packages/ai-mcp/src/server-from-agent.test.ts
index d5be3fa..787e9ae 100644
--- a/packages/ai-sdk/src/mcp-server-from-agent.test.ts
+++ b/packages/ai-mcp/src/server-from-agent.test.ts
@@ -3,11 +3,8 @@ import assert from 'node:assert/strict'
 import { z } from 'zod'
 import { Client } from '@modelcontextprotocol/sdk/client/index.js'
 import { InMemoryTransport } from '@modelcontextprotocol/sdk/inMemory.js'
-import { Agent } from './agent.js'
-import { AiFake } from './fake.js'
-import { AiRegistry } from './registry.js'
-import { toolDefinition } from './tool.js'
-import { mcpServerFromAgent } from './mcp/server-from-agent.js'
+import { Agent, AiFake, AiRegistry, toolDefinition } from '@gemstack/ai-sdk'
+import { mcpServerFromAgent } from './server-from-agent.js'
 
 // ─── Fixture agent ────────────────────────────────────────
 
diff --git a/packages/ai-sdk/src/mcp/server-from-agent.ts b/packages/ai-mcp/src/server-from-agent.ts
similarity index 97%
rename from packages/ai-sdk/src/mcp/server-from-agent.ts
rename to packages/ai-mcp/src/server-from-agent.ts
index dc50e43..851112c 100644
--- a/packages/ai-sdk/src/mcp/server-from-agent.ts
+++ b/packages/ai-mcp/src/server-from-agent.ts
@@ -1,6 +1,6 @@
 import { z } from 'zod'
-import type { Agent } from '../agent.js'
-import type { HasTools, Tool, ToolCallContext } from '../types.js'
+import type { Agent } from '@gemstack/ai-sdk'
+import type { HasTools, Tool, ToolCallContext } from '@gemstack/ai-sdk'
 import type { McpServerFromAgentOptions } from './types.js'
 
 /**
@@ -11,7 +11,7 @@ import type { McpServerFromAgentOptions } from './types.js'
  * SDK's stdio / HTTP transports:
  *
  * ```ts
- * import { mcpServerFromAgent } from '@gemstack/ai-sdk/mcp'
+ * import { mcpServerFromAgent } from '@gemstack/ai-mcp'
  * import { StdioServerTransport } from '@modelcontextprotocol/sdk/server/stdio.js'
  *
  * const server = await mcpServerFromAgent(MyAgent)
diff --git a/packages/ai-sdk/src/mcp/types.ts b/packages/ai-mcp/src/types.ts
similarity index 97%
rename from packages/ai-sdk/src/mcp/types.ts
rename to packages/ai-mcp/src/types.ts
index 14790df..38cf167 100644
--- a/packages/ai-sdk/src/mcp/types.ts
+++ b/packages/ai-mcp/src/types.ts
@@ -1,5 +1,5 @@
 /**
- * Public types for `@gemstack/ai-sdk/mcp`. Kept in a separate module so the
+ * Public types for `@gemstack/ai-mcp`. Kept in a separate module so the
  * client + server connectors can share them without circular imports.
  */
 
diff --git a/packages/ai-mcp/tsconfig.build.json b/packages/ai-mcp/tsconfig.build.json
new file mode 100644
index 0000000..e578064
--- /dev/null
+++ b/packages/ai-mcp/tsconfig.build.json
@@ -0,0 +1,6 @@
+{
+  "extends": "../../tsconfig.base.json",
+  "compilerOptions": { "outDir": "dist", "rootDir": "src" },
+  "include": ["src"],
+  "exclude": ["src/**/*.test.ts"]
+}
diff --git a/packages/ai-mcp/tsconfig.json b/packages/ai-mcp/tsconfig.json
new file mode 100644
index 0000000..404aab4
--- /dev/null
+++ b/packages/ai-mcp/tsconfig.json
@@ -0,0 +1,5 @@
+{
+  "extends": "../../tsconfig.base.json",
+  "compilerOptions": { "noEmit": true, "rootDir": "src" },
+  "include": ["src"]
+}
diff --git a/packages/ai-mcp/tsconfig.test.json b/packages/ai-mcp/tsconfig.test.json
new file mode 100644
index 0000000..eebda2f
--- /dev/null
+++ b/packages/ai-mcp/tsconfig.test.json
@@ -0,0 +1,5 @@
+{
+  "extends": "../../tsconfig.base.json",
+  "compilerOptions": { "outDir": "dist-test", "rootDir": "src" },
+  "include": ["src"]
+}
diff --git a/packages/ai-sdk/README.md b/packages/ai-sdk/README.md
index 19fef91..babe207 100644
--- a/packages/ai-sdk/README.md
+++ b/packages/ai-sdk/README.md
@@ -1,6 +1,6 @@
 # @gemstack/ai-sdk
 
-AI engine: providers, agents, tools, streaming, middleware, structured output, conversation memory, evals, MCP, computer-use, and testing fakes.
+AI engine: providers, agents, tools, streaming, middleware, structured output, conversation memory, evals, computer-use, and testing fakes.
 
 The first [GemStack](https://github.com/gemstack-land/gemstack) package. Spun out of Rudder's `@rudderjs/ai` (carried forward from the 1.17.x line, renamed and re-versioned under the GemStack umbrella). The Rudder package now ships as a thin deprecated re-export of this one.
 
@@ -40,7 +40,6 @@ The neutral storage contracts (`UserMemory`, `ConversationStore`, `BudgetStorage
 | `.` | Core: `Agent`, `tool`, streaming, middleware, facade |
 | `./server` | The server provider entry |
 | `./node` | Node-only entry |
-| `./mcp` | Model Context Protocol server/client helpers |
 | `./computer-use` | Computer-use tool + executor |
 | `./eval` | Eval framework (`evalSuite`, metrics, reporters) |
 | `./gateway` | Gateway helpers |
@@ -48,6 +47,8 @@ The neutral storage contracts (`UserMemory`, `ConversationStore`, `BudgetStorage
 | `./memory-embedding` | Embedding-backed user memory |
 | `./react` | React bindings |
 
+> **Moved in `0.3.0`:** the MCP bridge (`mcpClientTools` / `mcpServerFromAgent`), previously the `./mcp` subpath, is now its own package, [`@gemstack/ai-mcp`](https://github.com/gemstack-land/gemstack/tree/main/packages/ai-mcp). Update `@gemstack/ai-sdk/mcp` imports to `@gemstack/ai-mcp` and move the `@modelcontextprotocol/sdk` peer there.
+
 ## License
 
 MIT
diff --git a/packages/ai-sdk/package.json b/packages/ai-sdk/package.json
index 3f8d040..a86cf59 100644
--- a/packages/ai-sdk/package.json
+++ b/packages/ai-sdk/package.json
@@ -11,8 +11,6 @@
     "tools",
     "tool-calling",
     "streaming",
-    "mcp",
-    "model-context-protocol",
     "computer-use",
     "eval",
     "structured-output",
@@ -73,10 +71,6 @@
       "import": "./dist/observers.js",
       "types": "./dist/observers.d.ts"
     },
-    "./mcp": {
-      "import": "./dist/mcp/index.js",
-      "types": "./dist/mcp/index.d.ts"
-    },
     "./chat-mentions": {
       "import": "./dist/chat-mentions.js",
       "types": "./dist/chat-mentions.d.ts"
@@ -125,7 +119,6 @@
     "zod": "^4.0.0"
   },
   "peerDependencies": {
-    "@modelcontextprotocol/sdk": "^1.29.0",
     "@rudderjs/console": "^1.4.3",
     "@rudderjs/core": "^1.13.3",
     "@rudderjs/orm": "^1.22.0",
@@ -141,9 +134,6 @@
     "@rudderjs/orm": {
       "optional": true
     },
-    "@modelcontextprotocol/sdk": {
-      "optional": true
-    },
     "react": {
       "optional": true
     }
@@ -156,7 +146,6 @@
     "openai": ">=4.70.0"
   },
   "devDependencies": {
-    "@modelcontextprotocol/sdk": "^1.29.0",
     "@rudderjs/console": "^1.4.3",
     "@rudderjs/core": "^1.13.3",
     "@rudderjs/orm": "^1.22.0",
diff --git a/pnpm-lock.yaml b/pnpm-lock.yaml
index d566e19..940de42 100644
--- a/pnpm-lock.yaml
+++ b/pnpm-lock.yaml
@@ -18,8 +18,11 @@ importers:
         specifier: ^5.4.0
         version: 5.9.3
 
-  packages/ai-sdk:
+  packages/ai-mcp:
     dependencies:
+      '@gemstack/ai-sdk':
+        specifier: workspace:^
+        version: link:../ai-sdk
       zod:
         specifier: ^4.0.0
         version: 4.4.3
@@ -27,6 +30,19 @@ importers:
       '@modelcontextprotocol/sdk':
         specifier: ^1.29.0
         version: 1.29.0(zod@4.4.3)
+      '@types/node':
+        specifier: ^20.0.0
+        version: 20.19.43
+      typescript:
+        specifier: ^5.4.0
+        version: 5.9.3
+
+  packages/ai-sdk:
+    dependencies:
+      zod:
+        specifier: ^4.0.0
+        version: 4.4.3
+    devDependencies:
       '@rudderjs/console':
         specifier: ^1.4.3
         version: 1.4.3