diff --git a/src/Tests/Microsoft.Agents.A365.Tooling.Tests/Services/McpClientInitializationTimeoutTests.cs b/src/Tests/Microsoft.Agents.A365.Tooling.Tests/Services/McpClientInitializationTimeoutTests.cs
new file mode 100644
index 00000000..f0f258e1
--- /dev/null
+++ b/src/Tests/Microsoft.Agents.A365.Tooling.Tests/Services/McpClientInitializationTimeoutTests.cs
@@ -0,0 +1,139 @@
+// Copyright (c) Microsoft Corporation.
+// Licensed under the MIT License.
+
+using FluentAssertions;
+using Microsoft.Agents.A365.Tooling.Models;
+using Microsoft.Agents.A365.Tooling.Services;
+using Microsoft.Agents.Builder;
+using Microsoft.Extensions.Configuration;
+using Microsoft.Extensions.Http;
+using Microsoft.Extensions.Logging;
+using Moq;
+using Xunit;
+
+namespace Microsoft.Agents.A365.Tooling.Tests.Services
+{
+    /// <summary>
+    /// Unit tests for McpClientInitializationTimeoutSeconds in ToolOptions
+    /// and its application in McpToolServerConfigurationService.
+    /// </summary>
+    public class McpClientInitializationTimeoutTests
+    {
+        private readonly Mock<ILogger<IMcpToolServerConfigurationService>> _loggerMock;
+        private readonly Mock<IConfiguration> _configurationMock;
+        private readonly Mock<IServiceProvider> _serviceProviderMock;
+        private readonly Mock<IHttpClientFactory> _httpClientFactoryMock;
+
+        public McpClientInitializationTimeoutTests()
+        {
+            _loggerMock = new Mock<ILogger<IMcpToolServerConfigurationService>>();
+            _configurationMock = new Mock<IConfiguration>();
+            _serviceProviderMock = new Mock<IServiceProvider>();
+            _httpClientFactoryMock = new Mock<IHttpClientFactory>();
+
+            _httpClientFactoryMock.Setup(f => f.CreateClient(It.IsAny<string>()))
+                .Returns(new HttpClient());
+        }
+
+        [Fact]
+        public void ToolOptions_McpClientInitializationTimeoutSeconds_DefaultsToNull()
+        {
+            // Arrange & Act
+            var options = new ToolOptions();
+
+            // Assert
+            options.McpClientInitializationTimeoutSeconds.Should().BeNull();
+        }
+
+        [Fact]
+        public void ToolOptions_McpClientInitializationTimeoutSeconds_CanBeSetToValidValue()
+        {
+            // Arrange & Act
+            var options = new ToolOptions
+            {
+                McpClientInitializationTimeoutSeconds = 180
+            };
+
+            // Assert
+            options.McpClientInitializationTimeoutSeconds.Should().Be(180);
+        }
+
+        [Fact]
+        public void ToolOptions_McpClientInitializationTimeoutSeconds_CanBeSetToNull()
+        {
+            // Arrange
+            var options = new ToolOptions
+            {
+                McpClientInitializationTimeoutSeconds = 120
+            };
+
+            // Act
+            options.McpClientInitializationTimeoutSeconds = null;
+
+            // Assert
+            options.McpClientInitializationTimeoutSeconds.Should().BeNull();
+        }
+
+        [Theory]
+        [InlineData(0)]
+        [InlineData(-1)]
+        [InlineData(-100)]
+        [InlineData(601)]
+        [InlineData(int.MaxValue)]
+        public async Task GetMcpClientToolsAsync_InvalidTimeoutValue_ThrowsArgumentOutOfRangeException(int invalidTimeout)
+        {
+            // Arrange
+            var configMock = new Mock<IConfiguration>();
+            configMock.Setup(c => c["ASPNETCORE_ENVIRONMENT"]).Returns("Development");
+
+            var service = new McpToolServerConfigurationService(
+                _loggerMock.Object,
+                configMock.Object,
+                _serviceProviderMock.Object,
+                _httpClientFactoryMock.Object);
+
+            var serverConfig = new MCPServerConfig
+            {
+                mcpServerName = "test_server",
+                url = "https://localhost:52856/agents/servers/test_server",
+                id = "test-id",
+                scope = "test-scope",
+                audience = "test-audience",
+                publisher = "test-publisher",
+            };
+
+            var toolOptions = new ToolOptions
+            {
+                McpClientInitializationTimeoutSeconds = invalidTimeout
+            };
+
+            var turnContextMock = new Mock<ITurnContext>();
+
+            // Act
+            Func<Task> act = async () => await service.GetMcpClientToolsAsync(
+                turnContextMock.Object, serverConfig, "test-token", toolOptions);
+
+            // Assert - ArgumentOutOfRangeException is wrapped in InvalidOperationException by the catch block
+            var ex = await act.Should().ThrowAsync<InvalidOperationException>();
+            ex.WithInnerException<ArgumentOutOfRangeException>();
+        }
+
+        [Theory]
+        [InlineData(1)]
+        [InlineData(60)]
+        [InlineData(120)]
+        [InlineData(300)]
+        [InlineData(600)]
+        public void ToolOptions_McpClientInitializationTimeoutSeconds_AcceptsValidValues(int validTimeout)
+        {
+            // Arrange & Act
+            var options = new ToolOptions
+            {
+                McpClientInitializationTimeoutSeconds = validTimeout
+            };
+
+            // Assert
+            options.McpClientInitializationTimeoutSeconds.Should().Be(validTimeout);
+        }
+    }
+}
diff --git a/src/Tooling/Core/Models/ToolOptions.cs b/src/Tooling/Core/Models/ToolOptions.cs
index 3a63f213..ade9bf3b 100644
--- a/src/Tooling/Core/Models/ToolOptions.cs
+++ b/src/Tooling/Core/Models/ToolOptions.cs
@@ -14,5 +14,15 @@ public class ToolOptions
         /// Gets or sets the user agent configuration for this orchestrator.
         /// </summary>
         public IUserAgentConfiguration? UserAgentConfiguration { get; set; }
+
+        /// <summary>
+        /// Gets or sets the timeout in seconds for MCP client initialization.
+        /// This includes the time for the MCP protocol handshake (initialize/initialized exchange)
+        /// and the underlying HTTP connection. Increase this value if the MCP server performs
+        /// slow operations during initialization (e.g., token exchanges in test environments).
+        /// When null, the MCP SDK default timeout is used.
+        /// Valid range: 1 to 600 seconds. Values outside this range will throw <see cref="ArgumentOutOfRangeException"/>.
+        /// </summary>
+        public int? McpClientInitializationTimeoutSeconds { get; set; }
     }
 }
diff --git a/src/Tooling/Core/Services/McpToolServerConfigurationService.cs b/src/Tooling/Core/Services/McpToolServerConfigurationService.cs
index db26decb..5fdc604d 100644
--- a/src/Tooling/Core/Services/McpToolServerConfigurationService.cs
+++ b/src/Tooling/Core/Services/McpToolServerConfigurationService.cs
@@ -503,10 +503,36 @@ private async Task<IMcpClient> CreateMcpClientWithAuthHandlers(ITurnContext turn
             // Create HTTP client with the authentication handler chain
             var httpClient = new HttpClient(loggingHandler);
 
+            // Apply custom timeout only when explicitly configured
+            if (toolOptions.McpClientInitializationTimeoutSeconds.HasValue)
+            {
+                var timeoutSeconds = toolOptions.McpClientInitializationTimeoutSeconds.Value;
+                if (timeoutSeconds < 1 || timeoutSeconds > 600)
+                {
+                    throw new ArgumentOutOfRangeException(
+                        nameof(toolOptions),
+                        timeoutSeconds,
+                        "McpClientInitializationTimeoutSeconds must be between 1 and 600 seconds.");
+                }
+
+                httpClient.Timeout = TimeSpan.FromSeconds(timeoutSeconds);
+            }
+
             var clientTransport = new SseClientTransport(options, httpClient);
 
             try
             {
+                // Only pass McpClientOptions when a custom timeout is set to preserve default SDK behavior
+                if (toolOptions.McpClientInitializationTimeoutSeconds.HasValue)
+                {
+                    var clientOptions = new McpClientOptions
+                    {
+                        InitializationTimeout = TimeSpan.FromSeconds(toolOptions.McpClientInitializationTimeoutSeconds.Value),
+                    };
+
+                    return await McpClientFactory.CreateAsync(clientTransport, clientOptions, loggerFactory: this._loggerFactory);
+                }
+
                 return await McpClientFactory.CreateAsync(clientTransport, loggerFactory: this._loggerFactory);
             }
             catch (Exception ex)