diff --git a/test/mcp/README.md b/test/mcp/README.md
index aef4bc58435..a3c8a896c2d 100644
--- a/test/mcp/README.md
+++ b/test/mcp/README.md
@@ -27,28 +27,6 @@ That's it! It should automatically compile everything needed.
 
 Then you can use `/playwright` to ask specific questions.
 
-## Quick Start - HTTP
-
-Getting started with the MCP server is simple - just run the pre-configured Code - OSS task:
-
-1. Launch the MCP Server
-
-   In Code - OSS, open the Command Palette (`Ctrl+Shift+P` / `Cmd+Shift+P`) and run:
-
-   ```
-   Tasks: Run Task → Launch MCP Server
-   ```
-
-2. Start the MCP Server
-
-   Open the Command Palette and run:
-   ```
-   MCP: List Servers → vscode-playwright-mcp → Start Server
-   ```
-   or open [mcp.json](../../.vscode/mcp.json) and start it from there.
-
-That's it! Your AI assistant can now use browser automation capabilities through MCP.
-
 ## Arguments
 
 Open the [mcp.json](../../.vscode/mcp.json) and modify the `args`:
@@ -149,11 +127,6 @@ test/mcp/
 - Check that port 33418 is not already in use
 - Verify all dependencies are installed with `npm install`
 
-### Connection Issues
-- Confirm the server is running on `http://localhost:33418/mcp`
-- Check your AI assistant's MCP configuration
-- Look for CORS-related errors in browser console
-
 ### Browser Automation Issues
 - Ensure Code - OSS has been built and run at least once
 - Check the server logs for Playwright-related errors
diff --git a/test/mcp/package.json b/test/mcp/package.json
index 14e89b3106c..37098b708d8 100644
--- a/test/mcp/package.json
+++ b/test/mcp/package.json
@@ -9,7 +9,6 @@
     "watch-automation": "cd ../automation && npm run watch",
     "watch-mcp": "node ../../node_modules/typescript/bin/tsc --watch --preserveWatchOutput",
     "watch": "npm-run-all -lp watch-automation watch-mcp",
-    "start-http": "npm run -s compile && node ./out/main.js",
     "start-stdio": "npm run -s compile && node ./out/stdio.js"
   },
   "dependencies": {
diff --git a/test/mcp/src/application.ts b/test/mcp/src/application.ts
index 2552fafd347..5f01cc93d6c 100644
--- a/test/mcp/src/application.ts
+++ b/test/mcp/src/application.ts
@@ -4,7 +4,7 @@
  *--------------------------------------------------------------------------------------------*/
 
 import * as playwright from 'playwright';
-import { getDevElectronPath, Quality, ConsoleLogger, FileLogger, Logger, MultiLogger, getBuildElectronPath, getBuildVersion, measureAndLog } from '../../automation';
+import { getDevElectronPath, Quality, ConsoleLogger, FileLogger, Logger, MultiLogger, getBuildElectronPath, getBuildVersion, measureAndLog, Application } from '../../automation';
 import * as path from 'path';
 import * as fs from 'fs';
 import * as os from 'os';
@@ -281,7 +281,6 @@ async function ensureStableCode(): Promise<void> {
 }
 
 async function setup(): Promise<void> {
-	logger.log('Test data path:', testDataPath);
 	logger.log('Preparing smoketest setup...');
 
 	if (!opts.web && !opts.remote && opts.build) {
@@ -329,3 +328,55 @@ export async function getApplication() {
 	});
 	return application;
 }
+
+export class ApplicationService {
+	private _application: Application | undefined;
+	private _closing: Promise<void> | undefined;
+	private _listeners: ((app: Application | undefined) => void)[] = [];
+
+	onApplicationChange(listener: (app: Application | undefined) => void): void {
+		this._listeners.push(listener);
+	}
+
+	removeApplicationChangeListener(listener: (app: Application | undefined) => void): void {
+		const index = this._listeners.indexOf(listener);
+		if (index >= 0) {
+			this._listeners.splice(index, 1);
+		}
+	}
+
+	get application(): Application | undefined {
+		return this._application;
+	}
+
+	async getOrCreateApplication(): Promise<Application> {
+		if (this._closing) {
+			await this._closing;
+		}
+		if (!this._application) {
+			this._application = await getApplication();
+			this._application.code.driver.browserContext.on('close', () => {
+				this._closing = (async () => {
+					if (this._application) {
+						this._application.code.driver.browserContext.removeAllListeners();
+						await this._application.stop();
+						this._application = undefined;
+						this._runAllListeners();
+					}
+				})();
+			});
+			this._runAllListeners();
+		}
+		return this._application;
+	}
+
+	private _runAllListeners() {
+		for (const listener of this._listeners) {
+			try {
+				listener(this._application);
+			} catch (error) {
+				console.error('Error occurred in application change listener:', error);
+			}
+		}
+	}
+}
diff --git a/test/mcp/src/automation.ts b/test/mcp/src/automation.ts
index 5f779ef221c..5b52e14a0a8 100644
--- a/test/mcp/src/automation.ts
+++ b/test/mcp/src/automation.ts
@@ -4,25 +4,47 @@
  *--------------------------------------------------------------------------------------------*/
 
 import { McpServer } from '@modelcontextprotocol/sdk/server/mcp.js';
-import { getApplication } from './application';
+import { ApplicationService } from './application';
 import { applyAllTools } from './automationTools/index.js';
-import { Application } from '../../automation';
 import type { Server } from '@modelcontextprotocol/sdk/server/index.js';
 
-export async function getServer(app?: Application): Promise<Server> {
+export async function getServer(appService: ApplicationService): Promise<Server> {
 	const server = new McpServer({
 		name: 'VS Code Automation Server',
 		version: '1.0.0',
 		title: 'An MCP Server that can interact with a local build of VS Code. Used for verifying UI behavior.'
 	}, { capabilities: { logging: {} } });
 
-	const application = app ?? await getApplication();
+	server.tool(
+		'vscode_automation_start',
+		'Start VS Code Build',
+		{},
+		async () => {
+			const app = await appService.getOrCreateApplication();
+			return {
+				content: [{
+					type: 'text' as const,
+					text: app ? `VS Code started successfully` : `Failed to start VS Code`
+				}]
+			};
+		}
+	);
 
 	// Apply all VS Code automation tools using the modular structure
-	applyAllTools(server, application);
+	const registeredTools = applyAllTools(server, appService);
+	const app = appService.application;
+	if (app) {
+		registeredTools.forEach(t => t.enable());
+	} else {
+		registeredTools.forEach(t => t.disable());
+	}
 
-	application.code.driver.browserContext.on('close', async () => {
-		await server.close();
+	appService.onApplicationChange(app => {
+		if (app) {
+			registeredTools.forEach(t => t.enable());
+		} else {
+			registeredTools.forEach(t => t.disable());
+		}
 	});
 
 	return server.server;
diff --git a/test/mcp/src/automationTools/activityBar.ts b/test/mcp/src/automationTools/activityBar.ts
index 651b0762b54..8b06471dda9 100644
--- a/test/mcp/src/automationTools/activityBar.ts
+++ b/test/mcp/src/automationTools/activityBar.ts
@@ -3,13 +3,15 @@
  *  Licensed under the MIT License. See License.txt in the project root for license information.
  *--------------------------------------------------------------------------------------------*/
 
-import { McpServer } from '@modelcontextprotocol/sdk/server/mcp.js';
-import { Application } from '../../../automation';
+import { McpServer, RegisteredTool } from '@modelcontextprotocol/sdk/server/mcp.js';
+import { ApplicationService } from '../application';
 
 /**
  * Activity Bar Tools
  */
-export function applyActivityBarTools(server: McpServer, app: Application) {
+export function applyActivityBarTools(server: McpServer, appService: ApplicationService): RegisteredTool[] {
+	const tools: RegisteredTool[] = [];
+
 	// Doesn't seem particularly useful
 	// server.tool(
 	// 	'vscode_automation_activitybar_wait_for_position',
@@ -29,4 +31,6 @@ export function applyActivityBarTools(server: McpServer, app: Application) {
 	// 		};
 	// 	}
 	// );
+
+	return tools;
 }
diff --git a/test/mcp/src/automationTools/core.ts b/test/mcp/src/automationTools/core.ts
index 4a00011b9a4..879f58ef7c0 100644
--- a/test/mcp/src/automationTools/core.ts
+++ b/test/mcp/src/automationTools/core.ts
@@ -3,27 +3,15 @@
  *  Licensed under the MIT License. See License.txt in the project root for license information.
  *--------------------------------------------------------------------------------------------*/
 
-import { McpServer } from '@modelcontextprotocol/sdk/server/mcp.js';
-import { Application } from '../../../automation';
+import { McpServer, RegisteredTool } from '@modelcontextprotocol/sdk/server/mcp.js';
+import { ApplicationService } from '../application';
 
 /**
  * Core Application Management Tools
  */
-export function applyCoreTools(server: McpServer, app: Application) {
-	// A dummy start tool just so that the model has something to hold on to.
-	server.tool(
-		'vscode_automation_start',
-		'Start VS Code Build',
-		{},
-		async () => {
-			return {
-				content: [{
-					type: 'text' as const,
-					text: `VS Code started successfully`
-				}]
-			};
-		}
-	);
+export function applyCoreTools(server: McpServer, appService: ApplicationService): RegisteredTool[] {
+	const tools: RegisteredTool[] = [];
+
 	// Playwright keeps using this as a start... maybe it needs some massaging
 	// server.tool(
 	// 	'vscode_automation_restart',
@@ -166,4 +154,6 @@ export function applyCoreTools(server: McpServer, app: Application) {
 	// 		};
 	// 	}
 	// );
+
+	return tools;
 }
diff --git a/test/mcp/src/automationTools/debug.ts b/test/mcp/src/automationTools/debug.ts
index 8e98e875970..b9dfb2951f3 100644
--- a/test/mcp/src/automationTools/debug.ts
+++ b/test/mcp/src/automationTools/debug.ts
@@ -3,18 +3,20 @@
  *  Licensed under the MIT License. See License.txt in the project root for license information.
  *--------------------------------------------------------------------------------------------*/
 
-import { McpServer } from '@modelcontextprotocol/sdk/server/mcp.js';
-import { Application } from '../../../automation';
+import { McpServer, RegisteredTool } from '@modelcontextprotocol/sdk/server/mcp.js';
+import { ApplicationService } from '../application';
 import { z } from 'zod';
 
 /**
  * Debug Tools
  */
-export function applyDebugTools(server: McpServer, app: Application) {
-	server.tool(
+export function applyDebugTools(server: McpServer, appService: ApplicationService): RegisteredTool[] {
+	const tools: RegisteredTool[] = [];
+	tools.push(server.tool(
 		'vscode_automation_debug_open',
 		'Open the debug viewlet',
 		async () => {
+			const app = await appService.getOrCreateApplication();
 			await app.workbench.debug.openDebugViewlet();
 			return {
 				content: [{
@@ -23,9 +25,9 @@ export function applyDebugTools(server: McpServer, app: Application) {
 				}]
 			};
 		}
-	);
+	));
 
-	server.tool(
+	tools.push(server.tool(
 		'vscode_automation_debug_set_breakpoint',
 		'Set a breakpoint on a specific line',
 		{
@@ -33,6 +35,7 @@ export function applyDebugTools(server: McpServer, app: Application) {
 		},
 		async (args) => {
 			const { lineNumber } = args;
+			const app = await appService.getOrCreateApplication();
 			await app.workbench.debug.setBreakpointOnLine(lineNumber);
 			return {
 				content: [{
@@ -41,12 +44,13 @@ export function applyDebugTools(server: McpServer, app: Application) {
 				}]
 			};
 		}
-	);
+	));
 
-	server.tool(
+	tools.push(server.tool(
 		'vscode_automation_debug_start',
 		'Start debugging',
 		async () => {
+			const app = await appService.getOrCreateApplication();
 			const result = await app.workbench.debug.startDebugging();
 			return {
 				content: [{
@@ -55,7 +59,7 @@ export function applyDebugTools(server: McpServer, app: Application) {
 				}]
 			};
 		}
-	);
+	));
 
 	// Playwright can probably figure this out
 	// server.tool(
@@ -131,4 +135,6 @@ export function applyDebugTools(server: McpServer, app: Application) {
 	// 		};
 	// 	}
 	// );
+
+	return tools;
 }
diff --git a/test/mcp/src/automationTools/editor.ts b/test/mcp/src/automationTools/editor.ts
index f94c111fec4..0af80f18650 100644
--- a/test/mcp/src/automationTools/editor.ts
+++ b/test/mcp/src/automationTools/editor.ts
@@ -3,14 +3,15 @@
  *  Licensed under the MIT License. See License.txt in the project root for license information.
  *--------------------------------------------------------------------------------------------*/
 
-import { McpServer } from '@modelcontextprotocol/sdk/server/mcp.js';
-import { Application } from '../../../automation';
+import { McpServer, RegisteredTool } from '@modelcontextprotocol/sdk/server/mcp.js';
+import { ApplicationService } from '../application';
 import { z } from 'zod';
 
 /**
  * Editor Management Tools
  */
-export function applyEditorTools(server: McpServer, app: Application) {
+export function applyEditorTools(server: McpServer, appService: ApplicationService): RegisteredTool[] {
+	const tools: RegisteredTool[] = [];
 	// Playwright can probably figure this one out
 	// server.tool(
 	// 	'vscode_automation_editor_open_file',
@@ -31,7 +32,7 @@ export function applyEditorTools(server: McpServer, app: Application) {
 	// );
 
 	// This one is critical as Playwright had trouble typing in monaco
-	server.tool(
+	tools.push(server.tool(
 		'vscode_automation_editor_type_text',
 		'Type text in the currently active editor',
 		{
@@ -40,6 +41,7 @@ export function applyEditorTools(server: McpServer, app: Application) {
 		},
 		async (args) => {
 			const { text, filename } = args;
+			const app = await appService.getOrCreateApplication();
 			await app.workbench.editor.waitForTypeInEditor(filename, text);
 			return {
 				content: [{
@@ -48,7 +50,7 @@ export function applyEditorTools(server: McpServer, app: Application) {
 				}]
 			};
 		}
-	);
+	));
 
 	// Doesn't seem particularly useful
 	// server.tool(
@@ -161,10 +163,11 @@ export function applyEditorTools(server: McpServer, app: Application) {
 	// );
 
 	// Editor File Management Tools
-	server.tool(
+	tools.push(server.tool(
 		'vscode_automation_editor_new_untitled_file',
 		'Create a new untitled file',
 		async () => {
+			const app = await appService.getOrCreateApplication();
 			await app.workbench.editors.newUntitledFile();
 			return {
 				content: [{
@@ -173,12 +176,13 @@ export function applyEditorTools(server: McpServer, app: Application) {
 				}]
 			};
 		}
-	);
+	));
 
-	server.tool(
+	tools.push(server.tool(
 		'vscode_automation_editor_save_file',
 		'Save the currently active file',
 		async () => {
+			const app = await appService.getOrCreateApplication();
 			await app.workbench.editors.saveOpenedFile();
 			return {
 				content: [{
@@ -187,7 +191,7 @@ export function applyEditorTools(server: McpServer, app: Application) {
 				}]
 			};
 		}
-	);
+	));
 
 	// Playwright can probably figure this out
 	// server.tool(
@@ -247,4 +251,6 @@ export function applyEditorTools(server: McpServer, app: Application) {
 	// 		};
 	// 	}
 	// );
+
+	return tools;
 }
diff --git a/test/mcp/src/automationTools/explorer.ts b/test/mcp/src/automationTools/explorer.ts
index ebf3c7e2072..777d7e3dfcb 100644
--- a/test/mcp/src/automationTools/explorer.ts
+++ b/test/mcp/src/automationTools/explorer.ts
@@ -3,13 +3,15 @@
  *  Licensed under the MIT License. See License.txt in the project root for license information.
  *--------------------------------------------------------------------------------------------*/
 
-import { McpServer } from '@modelcontextprotocol/sdk/server/mcp.js';
-import { Application } from '../../../automation';
+import { McpServer, RegisteredTool } from '@modelcontextprotocol/sdk/server/mcp.js';
+import { ApplicationService } from '../application';
 
 /**
  * Explorer and File Management Tools
  */
-export function applyExplorerTools(server: McpServer, app: Application) {
+export function applyExplorerTools(server: McpServer, appService: ApplicationService): RegisteredTool[] {
+	const tools: RegisteredTool[] = [];
+
 	// Playwright can probably figure this out
 	// server.tool(
 	// 	'vscode_automation_explorer_open',
@@ -24,4 +26,6 @@ export function applyExplorerTools(server: McpServer, app: Application) {
 	// 		};
 	// 	}
 	// );
+
+	return tools;
 }
diff --git a/test/mcp/src/automationTools/extensions.ts b/test/mcp/src/automationTools/extensions.ts
index d84c17b1eef..e379a7d90e4 100644
--- a/test/mcp/src/automationTools/extensions.ts
+++ b/test/mcp/src/automationTools/extensions.ts
@@ -3,14 +3,16 @@
  *  Licensed under the MIT License. See License.txt in the project root for license information.
  *--------------------------------------------------------------------------------------------*/
 
-import { McpServer } from '@modelcontextprotocol/sdk/server/mcp.js';
-import { Application } from '../../../automation';
+import { McpServer, RegisteredTool } from '@modelcontextprotocol/sdk/server/mcp.js';
+import { ApplicationService } from '../application';
 import { z } from 'zod';
 
 /**
  * Extensions Tools
  */
-export function applyExtensionsTools(server: McpServer, app: Application) {
+export function applyExtensionsTools(server: McpServer, appService: ApplicationService): RegisteredTool[] {
+	const tools: RegisteredTool[] = [];
+
 	// Playwright can probably figure this out
 	// server.tool(
 	// 	'vscode_automation_extensions_search',
@@ -30,7 +32,7 @@ export function applyExtensionsTools(server: McpServer, app: Application) {
 	// 	}
 	// );
 
-	server.tool(
+	tools.push(server.tool(
 		'vscode_automation_extensions_open',
 		'Open an extension by ID',
 		{
@@ -38,6 +40,7 @@ export function applyExtensionsTools(server: McpServer, app: Application) {
 		},
 		async (args) => {
 			const { extensionId } = args;
+			const app = await appService.getOrCreateApplication();
 			await app.workbench.extensions.openExtension(extensionId);
 			return {
 				content: [{
@@ -46,7 +49,7 @@ export function applyExtensionsTools(server: McpServer, app: Application) {
 				}]
 			};
 		}
-	);
+	));
 
 	// Playwright can probably figure this out
 	// server.tool(
@@ -67,7 +70,7 @@ export function applyExtensionsTools(server: McpServer, app: Application) {
 	// 	}
 	// );
 
-	server.tool(
+	tools.push(server.tool(
 		'vscode_automation_extensions_install',
 		'Install an extension by ID',
 		{
@@ -76,6 +79,7 @@ export function applyExtensionsTools(server: McpServer, app: Application) {
 		},
 		async (args) => {
 			const { extensionId, waitUntilEnabled = true } = args;
+			const app = await appService.getOrCreateApplication();
 			await app.workbench.extensions.installExtension(extensionId, waitUntilEnabled);
 			return {
 				content: [{
@@ -84,5 +88,7 @@ export function applyExtensionsTools(server: McpServer, app: Application) {
 				}]
 			};
 		}
-	);
+	));
+
+	return tools;
 }
diff --git a/test/mcp/src/automationTools/index.ts b/test/mcp/src/automationTools/index.ts
index ee24c3f81a7..8bcbc3705b8 100644
--- a/test/mcp/src/automationTools/index.ts
+++ b/test/mcp/src/automationTools/index.ts
@@ -3,8 +3,7 @@
  *  Licensed under the MIT License. See License.txt in the project root for license information.
  *--------------------------------------------------------------------------------------------*/
 
-import { McpServer } from '@modelcontextprotocol/sdk/server/mcp.js';
-import { Application } from '../../../automation';
+import { McpServer, RegisteredTool } from '@modelcontextprotocol/sdk/server/mcp.js';
 
 // Import all tool modules
 import { applyCoreTools } from './core.js';
@@ -25,66 +24,73 @@ import { applyNotebookTools } from './notebook.js';
 import { applyLocalizationTools } from './localization.js';
 import { applyTaskTools } from './task.js';
 import { applyProfilerTools } from './profiler.js';
+import { ApplicationService } from '../application';
 
 /**
  * Apply all VS Code automation tools to the MCP server
  * @param server - The MCP server instance
- * @param app - The VS Code application instance
+ * @param appService - The application service instance
+ * @returns The registered tools from the server
  */
-export function applyAllTools(server: McpServer, app: Application): void {
+export function applyAllTools(server: McpServer, appService: ApplicationService): RegisteredTool[] {
+	let tools: RegisteredTool[] = [];
+
 	// Core Application Management Tools
-	applyCoreTools(server, app);
+	tools = tools.concat(applyCoreTools(server, appService));
 
 	// Editor Management Tools
-	applyEditorTools(server, app);
+	tools = tools.concat(applyEditorTools(server, appService));
 
 	// Terminal Management Tools
-	applyTerminalTools(server, app);
+	tools = tools.concat(applyTerminalTools(server, appService));
 
 	// Debug Tools
-	applyDebugTools(server, app);
+	tools = tools.concat(applyDebugTools(server, appService));
 
 	// Search Tools
-	applySearchTools(server, app);
+	tools = tools.concat(applySearchTools(server, appService));
 
 	// Extensions Tools
-	applyExtensionsTools(server, app);
+	tools = tools.concat(applyExtensionsTools(server, appService));
 
 	// Command Palette and Quick Access Tools
-	applyQuickAccessTools(server, app);
+	tools = tools.concat(applyQuickAccessTools(server, appService));
 
 	// Explorer and File Management Tools
-	applyExplorerTools(server, app);
+	tools = tools.concat(applyExplorerTools(server, appService));
 
 	// Activity Bar Tools
-	applyActivityBarTools(server, app);
+	tools = tools.concat(applyActivityBarTools(server, appService));
 
 	// Source Control Management Tools
-	applySCMTools(server, app);
+	tools = tools.concat(applySCMTools(server, appService));
 
 	// Status Bar Tools
-	applyStatusBarTools(server, app);
+	tools = tools.concat(applyStatusBarTools(server, appService));
 
 	// Problems Panel Tools
-	applyProblemsTools(server, app);
+	tools = tools.concat(applyProblemsTools(server, appService));
 
 	// Settings Editor Tools
-	applySettingsTools(server, app);
+	tools = tools.concat(applySettingsTools(server, appService));
 
 	// Keybindings Editor Tools
-	applyKeybindingsTools(server, app);
+	tools = tools.concat(applyKeybindingsTools(server, appService));
 
 	// Notebook Tools
-	applyNotebookTools(server, app);
+	tools = tools.concat(applyNotebookTools(server, appService));
 
 	// Localization Tools
-	applyLocalizationTools(server, app);
+	tools = tools.concat(applyLocalizationTools(server, appService));
 
 	// Task Tools
-	applyTaskTools(server, app);
+	tools = tools.concat(applyTaskTools(server, appService));
 
 	// Profiler Tools
-	applyProfilerTools(server, app);
+	tools = tools.concat(applyProfilerTools(server, appService));
+
+	// Return all registered tools
+	return tools;
 }
 
 // Re-export individual tool functions for selective use
diff --git a/test/mcp/src/automationTools/keybindings.ts b/test/mcp/src/automationTools/keybindings.ts
index c2d8375633e..28908119e0d 100644
--- a/test/mcp/src/automationTools/keybindings.ts
+++ b/test/mcp/src/automationTools/keybindings.ts
@@ -3,13 +3,15 @@
  *  Licensed under the MIT License. See License.txt in the project root for license information.
  *--------------------------------------------------------------------------------------------*/
 
-import { McpServer } from '@modelcontextprotocol/sdk/server/mcp.js';
-import { Application } from '../../../automation';
+import { McpServer, RegisteredTool } from '@modelcontextprotocol/sdk/server/mcp.js';
+import { ApplicationService } from '../application';
 
 /**
  * Keybindings Editor Tools
  */
-export function applyKeybindingsTools(server: McpServer, app: Application) {
+export function applyKeybindingsTools(server: McpServer, appService: ApplicationService): RegisteredTool[] {
+	const tools: RegisteredTool[] = [];
+
 	// Seems too niche
 	// server.tool(
 	// 	'vscode_automation_keybindings_update',
@@ -31,4 +33,6 @@ export function applyKeybindingsTools(server: McpServer, app: Application) {
 	// 		};
 	// 	}
 	// );
+
+	return tools;
 }
diff --git a/test/mcp/src/automationTools/localization.ts b/test/mcp/src/automationTools/localization.ts
index 207a5a86618..bff17b43e70 100644
--- a/test/mcp/src/automationTools/localization.ts
+++ b/test/mcp/src/automationTools/localization.ts
@@ -3,13 +3,15 @@
  *  Licensed under the MIT License. See License.txt in the project root for license information.
  *--------------------------------------------------------------------------------------------*/
 
-import { McpServer } from '@modelcontextprotocol/sdk/server/mcp.js';
-import { Application } from '../../../automation';
+import { McpServer, RegisteredTool } from '@modelcontextprotocol/sdk/server/mcp.js';
+import { ApplicationService } from '../application';
 
 /**
  * Localization Tools
  */
-export function applyLocalizationTools(server: McpServer, app: Application) {
+export function applyLocalizationTools(server: McpServer, appService: ApplicationService): RegisteredTool[] {
+	const tools: RegisteredTool[] = [];
+
 	// Seems too niche
 	// server.tool(
 	// 	'vscode_automation_localization_get_locale_info',
@@ -39,4 +41,6 @@ export function applyLocalizationTools(server: McpServer, app: Application) {
 	// 		};
 	// 	}
 	// );
+
+	return tools;
 }
diff --git a/test/mcp/src/automationTools/notebook.ts b/test/mcp/src/automationTools/notebook.ts
index 37e30c8f792..68ce82ca6eb 100644
--- a/test/mcp/src/automationTools/notebook.ts
+++ b/test/mcp/src/automationTools/notebook.ts
@@ -3,18 +3,21 @@
  *  Licensed under the MIT License. See License.txt in the project root for license information.
  *--------------------------------------------------------------------------------------------*/
 
-import { McpServer } from '@modelcontextprotocol/sdk/server/mcp.js';
-import { Application } from '../../../automation';
+import { McpServer, RegisteredTool } from '@modelcontextprotocol/sdk/server/mcp.js';
+import { ApplicationService } from '../application';
 import { z } from 'zod';
 
 /**
  * Notebook Tools
  */
-export function applyNotebookTools(server: McpServer, app: Application) {
-	server.tool(
+export function applyNotebookTools(server: McpServer, appService: ApplicationService): RegisteredTool[] {
+	const tools: RegisteredTool[] = [];
+
+	tools.push(server.tool(
 		'vscode_automation_notebook_open',
 		'Open a notebook',
 		async () => {
+			const app = await appService.getOrCreateApplication();
 			await app.workbench.notebook.openNotebook();
 			return {
 				content: [{
@@ -23,7 +26,7 @@ export function applyNotebookTools(server: McpServer, app: Application) {
 				}]
 			};
 		}
-	);
+	));
 
 	// Playwright can probably figure this one out
 	// server.tool(
@@ -55,10 +58,11 @@ export function applyNotebookTools(server: McpServer, app: Application) {
 	// 	}
 	// );
 
-	server.tool(
+	tools.push(server.tool(
 		'vscode_automation_notebook_edit_cell',
 		'Enter edit mode for the current cell',
 		async () => {
+			const app = await appService.getOrCreateApplication();
 			await app.workbench.notebook.editCell();
 			return {
 				content: [{
@@ -67,7 +71,7 @@ export function applyNotebookTools(server: McpServer, app: Application) {
 				}]
 			};
 		}
-	);
+	));
 
 	// Seems too niche
 	// server.tool(
@@ -84,7 +88,7 @@ export function applyNotebookTools(server: McpServer, app: Application) {
 	// 	}
 	// );
 
-	server.tool(
+	tools.push(server.tool(
 		'vscode_automation_notebook_type_in_editor',
 		'Type text in the notebook cell editor',
 		{
@@ -92,6 +96,7 @@ export function applyNotebookTools(server: McpServer, app: Application) {
 		},
 		async (args) => {
 			const { text } = args;
+			const app = await appService.getOrCreateApplication();
 			await app.workbench.notebook.waitForTypeInEditor(text);
 			return {
 				content: [{
@@ -100,7 +105,7 @@ export function applyNotebookTools(server: McpServer, app: Application) {
 				}]
 			};
 		}
-	);
+	));
 
 	// Playwright can probably figure this one out
 	// server.tool(
@@ -238,4 +243,6 @@ export function applyNotebookTools(server: McpServer, app: Application) {
 	// 		};
 	// 	}
 	// );
+
+	return tools;
 }
diff --git a/test/mcp/src/automationTools/problems.ts b/test/mcp/src/automationTools/problems.ts
index 827dc33c075..81c6f297e23 100644
--- a/test/mcp/src/automationTools/problems.ts
+++ b/test/mcp/src/automationTools/problems.ts
@@ -3,18 +3,21 @@
  *  Licensed under the MIT License. See License.txt in the project root for license information.
  *--------------------------------------------------------------------------------------------*/
 
-import { McpServer } from '@modelcontextprotocol/sdk/server/mcp.js';
-import { Application } from '../../../automation';
+import { McpServer, RegisteredTool } from '@modelcontextprotocol/sdk/server/mcp.js';
+import { ApplicationService } from '../application';
 import { z } from 'zod';
 
 /**
  * Problems Panel Tools
  */
-export function applyProblemsTools(server: McpServer, app: Application) {
-	server.tool(
+export function applyProblemsTools(server: McpServer, appService: ApplicationService): RegisteredTool[] {
+	const tools: RegisteredTool[] = [];
+
+	tools.push(server.tool(
 		'vscode_automation_problems_show',
 		'Show the problems view',
 		async () => {
+			const app = await appService.getOrCreateApplication();
 			await app.workbench.problems.showProblemsView();
 			return {
 				content: [{
@@ -23,12 +26,13 @@ export function applyProblemsTools(server: McpServer, app: Application) {
 				}]
 			};
 		}
-	);
+	));
 
-	server.tool(
+	tools.push(server.tool(
 		'vscode_automation_problems_hide',
 		'Hide the problems view',
 		async () => {
+			const app = await appService.getOrCreateApplication();
 			await app.workbench.problems.hideProblemsView();
 			return {
 				content: [{
@@ -37,7 +41,7 @@ export function applyProblemsTools(server: McpServer, app: Application) {
 				}]
 			};
 		}
-	);
+	));
 
 	// Playwright can probably figure this one out
 	// server.tool(
@@ -54,7 +58,7 @@ export function applyProblemsTools(server: McpServer, app: Application) {
 	// 	}
 	// );
 
-	server.tool(
+	tools.push(server.tool(
 		'vscode_automation_problems_get_selector_in_view',
 		'Get CSS selector for problems of a specific severity in the problems view',
 		{
@@ -68,6 +72,7 @@ export function applyProblemsTools(server: McpServer, app: Application) {
 			};
 
 			// This is a static method that returns a selector, not an async operation
+			const app = await appService.getOrCreateApplication();
 			const selector = (app.workbench.problems.constructor as any).getSelectorInProblemsView(severityMap[severity]);
 			return {
 				content: [{
@@ -76,7 +81,7 @@ export function applyProblemsTools(server: McpServer, app: Application) {
 				}]
 			};
 		}
-	);
+	));
 
 	// Seems too niche
 	// server.tool(
@@ -102,4 +107,6 @@ export function applyProblemsTools(server: McpServer, app: Application) {
 	// 		};
 	// 	}
 	// );
+
+	return tools;
 }
diff --git a/test/mcp/src/automationTools/profiler.ts b/test/mcp/src/automationTools/profiler.ts
index b5a19ab5013..c47f8bb00cb 100644
--- a/test/mcp/src/automationTools/profiler.ts
+++ b/test/mcp/src/automationTools/profiler.ts
@@ -3,15 +3,17 @@
  *  Licensed under the MIT License. See License.txt in the project root for license information.
  *--------------------------------------------------------------------------------------------*/
 
-import { McpServer } from '@modelcontextprotocol/sdk/server/mcp.js';
-import { Application } from '../../../automation';
+import { McpServer, RegisteredTool } from '@modelcontextprotocol/sdk/server/mcp.js';
+import { ApplicationService } from '../application';
 
 /**
  * Profiler Tools
  * Note: Due to MCP limitations, these tools provide information about profiler methods
  * but cannot execute them directly as they require function parameters
  */
-export function applyProfilerTools(server: McpServer, app: Application) {
+export function applyProfilerTools(server: McpServer, appService: ApplicationService): RegisteredTool[] {
+	const tools: RegisteredTool[] = [];
+
 	// Seems too niche
 	// 	server.tool(
 	// 		'vscode_automation_profiler_info',
@@ -31,4 +33,6 @@ export function applyProfilerTools(server: McpServer, app: Application) {
 	// 			};
 	// 		}
 	// 	);
+
+	return tools;
 }
diff --git a/test/mcp/src/automationTools/quickAccess.ts b/test/mcp/src/automationTools/quickAccess.ts
index 4592cc7e3be..aaed3d45ecf 100644
--- a/test/mcp/src/automationTools/quickAccess.ts
+++ b/test/mcp/src/automationTools/quickAccess.ts
@@ -3,15 +3,17 @@
  *  Licensed under the MIT License. See License.txt in the project root for license information.
  *--------------------------------------------------------------------------------------------*/
 
-import { McpServer } from '@modelcontextprotocol/sdk/server/mcp.js';
-import { Application } from '../../../automation';
+import { McpServer, RegisteredTool } from '@modelcontextprotocol/sdk/server/mcp.js';
+import { ApplicationService } from '../application';
 import { z } from 'zod';
 
 /**
  * Command Palette and Quick Access Tools
  */
-export function applyQuickAccessTools(server: McpServer, app: Application) {
-	server.tool(
+export function applyQuickAccessTools(server: McpServer, appService: ApplicationService): RegisteredTool[] {
+	const tools: RegisteredTool[] = [];
+
+	tools.push(server.tool(
 		'vscode_automation_command_run',
 		'Run a command by name through the command palette',
 		{
@@ -20,6 +22,7 @@ export function applyQuickAccessTools(server: McpServer, app: Application) {
 		},
 		async (args) => {
 			const { command, exactMatch } = args;
+			const app = await appService.getOrCreateApplication();
 			await app.workbench.quickaccess.runCommand(command, { exactLabelMatch: exactMatch });
 			return {
 				content: [{
@@ -28,9 +31,9 @@ export function applyQuickAccessTools(server: McpServer, app: Application) {
 				}]
 			};
 		}
-	);
+	));
 
-	server.tool(
+	tools.push(server.tool(
 		'vscode_automation_quick_open_file',
 		'Open quick file search and select a file',
 		{
@@ -39,6 +42,7 @@ export function applyQuickAccessTools(server: McpServer, app: Application) {
 		},
 		async (args) => {
 			const { fileName, exactFileName } = args;
+			const app = await appService.getOrCreateApplication();
 			await app.workbench.quickaccess.openFileQuickAccessAndWait(fileName, exactFileName || fileName);
 			return {
 				content: [{
@@ -47,7 +51,7 @@ export function applyQuickAccessTools(server: McpServer, app: Application) {
 				}]
 			};
 		}
-	);
+	));
 
 	// Playwright can probably figure this one out
 	// server.tool(
@@ -87,4 +91,6 @@ export function applyQuickAccessTools(server: McpServer, app: Application) {
 	// 		};
 	// 	}
 	// );
+
+	return tools;
 }
diff --git a/test/mcp/src/automationTools/scm.ts b/test/mcp/src/automationTools/scm.ts
index 39b90659168..55feec02b69 100644
--- a/test/mcp/src/automationTools/scm.ts
+++ b/test/mcp/src/automationTools/scm.ts
@@ -3,14 +3,16 @@
  *  Licensed under the MIT License. See License.txt in the project root for license information.
  *--------------------------------------------------------------------------------------------*/
 
-import { McpServer } from '@modelcontextprotocol/sdk/server/mcp.js';
-import { Application } from '../../../automation';
+import { McpServer, RegisteredTool } from '@modelcontextprotocol/sdk/server/mcp.js';
+import { ApplicationService } from '../application';
 import { z } from 'zod';
 
 /**
- * Source Control Management (SCM) Tools
+ * Source Control Management Tools
  */
-export function applySCMTools(server: McpServer, app: Application) {
+export function applySCMTools(server: McpServer, appService: ApplicationService): RegisteredTool[] {
+	const tools: RegisteredTool[] = [];
+
 	// Playwright can probably figure this one out
 	// server.tool(
 	// 	'vscode_automation_scm_open',
@@ -118,7 +120,7 @@ export function applySCMTools(server: McpServer, app: Application) {
 	// 	}
 	// );
 
-	server.tool(
+	tools.push(server.tool(
 		'vscode_automation_scm_commit',
 		'Commit staged changes with a message',
 		{
@@ -126,6 +128,7 @@ export function applySCMTools(server: McpServer, app: Application) {
 		},
 		async (args) => {
 			const { message } = args;
+			const app = await appService.getOrCreateApplication();
 			await app.workbench.scm.commit(message);
 			return {
 				content: [{
@@ -134,5 +137,7 @@ export function applySCMTools(server: McpServer, app: Application) {
 				}]
 			};
 		}
-	);
+	));
+
+	return tools;
 }
diff --git a/test/mcp/src/automationTools/search.ts b/test/mcp/src/automationTools/search.ts
index 5d92a2de84c..040ce94b68b 100644
--- a/test/mcp/src/automationTools/search.ts
+++ b/test/mcp/src/automationTools/search.ts
@@ -3,14 +3,16 @@
  *  Licensed under the MIT License. See License.txt in the project root for license information.
  *--------------------------------------------------------------------------------------------*/
 
-import { McpServer } from '@modelcontextprotocol/sdk/server/mcp.js';
-import { Application } from '../../../automation';
+import { McpServer, RegisteredTool } from '@modelcontextprotocol/sdk/server/mcp.js';
+import { ApplicationService } from '../application';
 import { z } from 'zod';
 
 /**
  * Search Tools
  */
-export function applySearchTools(server: McpServer, app: Application) {
+export function applySearchTools(server: McpServer, appService: ApplicationService): RegisteredTool[] {
+	const tools: RegisteredTool[] = [];
+
 	// Playwright can probably figure this one out
 	// server.tool(
 	// 	'vscode_automation_search_open',
@@ -26,7 +28,7 @@ export function applySearchTools(server: McpServer, app: Application) {
 	// 	}
 	// );
 
-	server.tool(
+	tools.push(server.tool(
 		'vscode_automation_search_for_text',
 		'Search for text in files',
 		{
@@ -34,6 +36,7 @@ export function applySearchTools(server: McpServer, app: Application) {
 		},
 		async (args) => {
 			const { searchText } = args;
+			const app = await appService.getOrCreateApplication();
 			await app.workbench.search.openSearchViewlet();
 			await app.workbench.search.searchFor(searchText);
 			return {
@@ -43,7 +46,7 @@ export function applySearchTools(server: McpServer, app: Application) {
 				}]
 			};
 		}
-	);
+	));
 
 	// Seems too niche
 	// server.tool(
@@ -93,4 +96,6 @@ export function applySearchTools(server: McpServer, app: Application) {
 	// 		};
 	// 	}
 	// );
+
+	return tools;
 }
diff --git a/test/mcp/src/automationTools/settings.ts b/test/mcp/src/automationTools/settings.ts
index 0cefde6889e..dad9f77c6fc 100644
--- a/test/mcp/src/automationTools/settings.ts
+++ b/test/mcp/src/automationTools/settings.ts
@@ -3,14 +3,16 @@
  *  Licensed under the MIT License. See License.txt in the project root for license information.
  *--------------------------------------------------------------------------------------------*/
 
-import { McpServer } from '@modelcontextprotocol/sdk/server/mcp.js';
-import { Application } from '../../../automation';
+import { McpServer, RegisteredTool } from '@modelcontextprotocol/sdk/server/mcp.js';
+import { ApplicationService } from '../application';
 import { z } from 'zod';
 
 /**
  * Settings Editor Tools
  */
-export function applySettingsTools(server: McpServer, app: Application) {
+export function applySettingsTools(server: McpServer, appService: ApplicationService): RegisteredTool[] {
+	const tools: RegisteredTool[] = [];
+
 	// I don't think we need this and the batch version
 	// server.tool(
 	// 	'vscode_automation_settings_add_user_setting',
@@ -31,7 +33,7 @@ export function applySettingsTools(server: McpServer, app: Application) {
 	// 	}
 	// );
 
-	server.tool(
+	tools.push(server.tool(
 		'vscode_automation_settings_add_user_settings',
 		'Add multiple user settings at once',
 		{
@@ -39,6 +41,7 @@ export function applySettingsTools(server: McpServer, app: Application) {
 		},
 		async (args) => {
 			const { settings } = args;
+			const app = await appService.getOrCreateApplication();
 			await app.workbench.settingsEditor.addUserSettings(settings);
 			return {
 				content: [{
@@ -47,12 +50,13 @@ export function applySettingsTools(server: McpServer, app: Application) {
 				}]
 			};
 		}
-	);
+	));
 
-	server.tool(
+	tools.push(server.tool(
 		'vscode_automation_settings_clear_user_settings',
 		'Clear all user settings',
 		async () => {
+			const app = await appService.getOrCreateApplication();
 			await app.workbench.settingsEditor.clearUserSettings();
 			return {
 				content: [{
@@ -61,7 +65,7 @@ export function applySettingsTools(server: McpServer, app: Application) {
 				}]
 			};
 		}
-	);
+	));
 
 	// Playwright can probably figure this one out
 	// server.tool(
@@ -111,4 +115,6 @@ export function applySettingsTools(server: McpServer, app: Application) {
 	// 		};
 	// 	}
 	// );
+
+	return tools;
 }
diff --git a/test/mcp/src/automationTools/statusbar.ts b/test/mcp/src/automationTools/statusbar.ts
index 96ac1085acf..2944d2c9faf 100644
--- a/test/mcp/src/automationTools/statusbar.ts
+++ b/test/mcp/src/automationTools/statusbar.ts
@@ -3,13 +3,15 @@
  *  Licensed under the MIT License. See License.txt in the project root for license information.
  *--------------------------------------------------------------------------------------------*/
 
-import { McpServer } from '@modelcontextprotocol/sdk/server/mcp.js';
-import { Application } from '../../../automation';
+import { McpServer, RegisteredTool } from '@modelcontextprotocol/sdk/server/mcp.js';
+import { ApplicationService } from '../application';
 
 /**
  * Status Bar Tools
  */
-export function applyStatusBarTools(server: McpServer, app: Application) {
+export function applyStatusBarTools(server: McpServer, appService: ApplicationService): RegisteredTool[] {
+	const tools: RegisteredTool[] = [];
+
 	// Seems too niche
 	// server.tool(
 	// 	'vscode_automation_statusbar_wait_for_element',
@@ -128,4 +130,6 @@ export function applyStatusBarTools(server: McpServer, app: Application) {
 	// 		};
 	// 	}
 	// );
+
+	return tools;
 }
diff --git a/test/mcp/src/automationTools/task.ts b/test/mcp/src/automationTools/task.ts
index eceabc153ca..270d596fc18 100644
--- a/test/mcp/src/automationTools/task.ts
+++ b/test/mcp/src/automationTools/task.ts
@@ -3,14 +3,16 @@
  *  Licensed under the MIT License. See License.txt in the project root for license information.
  *--------------------------------------------------------------------------------------------*/
 
-import { McpServer } from '@modelcontextprotocol/sdk/server/mcp.js';
-import { Application } from '../../../automation';
+import { McpServer, RegisteredTool } from '@modelcontextprotocol/sdk/server/mcp.js';
+import { ApplicationService } from '../application';
 import { z } from 'zod';
 
 /**
  * Task Tools
  */
-export function applyTaskTools(server: McpServer, app: Application) {
+export function applyTaskTools(server: McpServer, appService: ApplicationService): RegisteredTool[] {
+	const tools: RegisteredTool[] = [];
+
 	// Seems too niche
 	// server.tool(
 	// 	'vscode_automation_task_assert_tasks',
@@ -45,7 +47,7 @@ export function applyTaskTools(server: McpServer, app: Application) {
 	// 	}
 	// );
 
-	server.tool(
+	tools.push(server.tool(
 		'vscode_automation_task_configure',
 		'Configure a task with specific properties',
 		{
@@ -66,6 +68,7 @@ export function applyTaskTools(server: McpServer, app: Application) {
 		},
 		async (args) => {
 			const { properties } = args;
+			const app = await appService.getOrCreateApplication();
 			await app.workbench.task.configureTask(properties);
 			return {
 				content: [{
@@ -74,5 +77,7 @@ export function applyTaskTools(server: McpServer, app: Application) {
 				}]
 			};
 		}
-	);
+	));
+
+	return tools;
 }
diff --git a/test/mcp/src/automationTools/terminal.ts b/test/mcp/src/automationTools/terminal.ts
index b16e922d95e..eaab27effdf 100644
--- a/test/mcp/src/automationTools/terminal.ts
+++ b/test/mcp/src/automationTools/terminal.ts
@@ -3,15 +3,16 @@
  *  Licensed under the MIT License. See License.txt in the project root for license information.
  *--------------------------------------------------------------------------------------------*/
 
-import { McpServer } from '@modelcontextprotocol/sdk/server/mcp.js';
-import { Application } from '../../../automation';
+import { McpServer, RegisteredTool } from '@modelcontextprotocol/sdk/server/mcp.js';
+import { ApplicationService } from '../application';
 import { z } from 'zod';
 
 /**
  * Terminal Management Tools
  */
-export function applyTerminalTools(server: McpServer, app: Application) {
-	server.tool(
+export function applyTerminalTools(server: McpServer, appService: ApplicationService): RegisteredTool[] {
+	const tools: RegisteredTool[] = [];
+	tools.push(server.tool(
 		'vscode_automation_terminal_create',
 		'Create a new terminal',
 		{
@@ -19,6 +20,7 @@ export function applyTerminalTools(server: McpServer, app: Application) {
 		},
 		async (args) => {
 			const { expectedLocation } = args;
+			const app = await appService.getOrCreateApplication();
 			await app.workbench.terminal.createTerminal(expectedLocation);
 			return {
 				content: [{
@@ -27,9 +29,9 @@ export function applyTerminalTools(server: McpServer, app: Application) {
 				}]
 			};
 		}
-	);
+	));
 
-	server.tool(
+	tools.push(server.tool(
 		'vscode_automation_terminal_run_command',
 		'Run a command in the terminal',
 		{
@@ -38,6 +40,7 @@ export function applyTerminalTools(server: McpServer, app: Application) {
 		},
 		async (args) => {
 			const { command, skipEnter } = args;
+			const app = await appService.getOrCreateApplication();
 			await app.workbench.terminal.runCommandInTerminal(command, skipEnter);
 			return {
 				content: [{
@@ -46,7 +49,7 @@ export function applyTerminalTools(server: McpServer, app: Application) {
 				}]
 			};
 		}
-	);
+	));
 
 	// Playwright can probably figure this out
 	// server.tool(
@@ -72,10 +75,11 @@ export function applyTerminalTools(server: McpServer, app: Application) {
 	// 	}
 	// );
 
-	server.tool(
+	tools.push(server.tool(
 		'vscode_automation_terminal_get_groups',
 		'Get current terminal groups information',
 		async () => {
+			const app = await appService.getOrCreateApplication();
 			const groups = await app.workbench.terminal.getTerminalGroups();
 			return {
 				content: [{
@@ -84,7 +88,7 @@ export function applyTerminalTools(server: McpServer, app: Application) {
 				}]
 			};
 		}
-	);
+	));
 
 	// Seems too niche and redundant with runCommand tool
 	// server.tool(
@@ -134,4 +138,6 @@ export function applyTerminalTools(server: McpServer, app: Application) {
 	// 		};
 	// 	}
 	// );
+
+	return tools;
 }
diff --git a/test/mcp/src/main.ts b/test/mcp/src/main.ts
deleted file mode 100644
index f6568a7dc7a..00000000000
--- a/test/mcp/src/main.ts
+++ /dev/null
@@ -1,268 +0,0 @@
-/*---------------------------------------------------------------------------------------------
- *  Copyright (c) Microsoft Corporation. All rights reserved.
- *  Licensed under the MIT License. See License.txt in the project root for license information.
- *--------------------------------------------------------------------------------------------*/
-import * as express from 'express';
-import { Request, Response } from 'express';
-import * as cors from 'cors';
-import { StreamableHTTPServerTransport } from '@modelcontextprotocol/sdk/server/streamableHttp.js';
-import { isInitializeRequest } from '@modelcontextprotocol/sdk/types.js';
-import { randomUUID } from 'node:crypto';
-import { InMemoryEventStore } from './inMemoryEventStore';
-import { getServer } from './playwright';
-import { getServer as getAutomationServer } from './automation';
-import { getApplication } from './application';
-import { Application } from '../../automation';
-import type { Server } from '@modelcontextprotocol/sdk/server/index.js';
-
-interface McpServerConfig {
-	name: string;
-	port: number;
-	getServerInstance: (app: Application) => Promise<Server>;
-}
-
-const serverConfigs: McpServerConfig[] = [
-	{
-		name: 'Playwright',
-		port: 33418,
-		getServerInstance: getServer
-	},
-	{
-		name: 'Automation',
-		port: 33458,
-		getServerInstance: getAutomationServer
-	}
-];
-
-// Store all transports by server name
-const allTransports: { [serverName: string]: { [sessionId: string]: StreamableHTTPServerTransport } } = {};
-
-// Shared application instance
-let sharedApplication: Application | undefined = undefined;
-
-// Initialize shared application
-async function getSharedApplication(): Promise<Application> {
-	if (!sharedApplication) {
-		sharedApplication = await getApplication();
-	}
-	return sharedApplication;
-}
-
-// Check if there are any active transports across all servers
-function hasActiveTransports(): boolean {
-	for (const serverName in allTransports) {
-		if (Object.keys(allTransports[serverName]).length > 0) {
-			return true;
-		}
-	}
-	return false;
-}
-
-// Close shared application if no active transports remain
-async function closeSharedApplicationIfUnused(): Promise<void> {
-	if (sharedApplication && !hasActiveTransports()) {
-		try {
-			console.log('No active transports remaining, closing shared application...');
-			await sharedApplication.stop();
-			sharedApplication = undefined;
-		} catch (error) {
-			console.error('Error closing shared application:', error);
-		}
-	}
-}
-
-// Common CORS configuration
-const corsConfig = cors({
-	origin: '*', // Allow all origins
-	exposedHeaders: ['Mcp-Session-Id']
-});
-
-// Factory function to create MCP handlers
-function createMcpHandlers(serverName: string, getServerInstance: (app: Application) => Promise<any>) {
-	// Initialize transport storage for this server
-	allTransports[serverName] = {};
-	const transports = allTransports[serverName];
-
-	const postHandler = async (req: Request, res: Response) => {
-		const sessionId = req.headers['mcp-session-id'] as string | undefined;
-		if (sessionId) {
-			console.log(`Received ${serverName} MCP request for session: ${sessionId}`);
-		} else {
-			console.log(`${serverName} request body:`, req.body);
-		}
-
-		try {
-			let transport: StreamableHTTPServerTransport;
-			if (sessionId && transports[sessionId]) {
-				// Reuse existing transport
-				transport = transports[sessionId];
-			} else if (!sessionId && isInitializeRequest(req.body)) {
-				// New initialization request
-				const eventStore = new InMemoryEventStore();
-				transport = new StreamableHTTPServerTransport({
-					sessionIdGenerator: () => randomUUID(),
-					eventStore, // Enable resumability
-					onsessioninitialized: (sessionId: any) => {
-						console.log(`${serverName} session initialized with ID: ${sessionId}`);
-						transports[sessionId] = transport;
-					}
-				});
-
-				// Set up onclose handler to clean up transport when closed
-				transport.onclose = async () => {
-					const sid = transport.sessionId;
-					if (sid && transports[sid]) {
-						console.log(`${serverName} transport closed for session ${sid}, removing from transports map`);
-						delete transports[sid];
-						// Close shared application if no more transports are active
-						await closeSharedApplicationIfUnused();
-					}
-				};
-
-				// Connect the transport to the MCP server
-				const sharedApp = await getSharedApplication();
-				const server = await getServerInstance(sharedApp);
-				server.onclose = async () => {
-					const sid = transport.sessionId;
-					if (sid && transports[sid]) {
-						console.log(`${serverName} transport closed for session ${sid}, removing from transports map`);
-						delete transports[sid];
-						// Close shared application if no more transports are active
-						await closeSharedApplicationIfUnused();
-					}
-				};
-				await server.connect(transport);
-
-				await transport.handleRequest(req, res, req.body);
-				return; // Already handled
-			} else {
-				// Invalid request - no session ID or not initialization request
-				res.status(400).json({
-					jsonrpc: '2.0',
-					error: {
-						code: -32000,
-						message: 'Bad Request: No valid session ID provided',
-					},
-					id: null,
-				});
-				return;
-			}
-
-			// Handle the request with existing transport
-			await transport.handleRequest(req, res, req.body);
-		} catch (error) {
-			console.error(`Error handling ${serverName} MCP request:`, error);
-			if (!res.headersSent) {
-				res.status(500).json({
-					jsonrpc: '2.0',
-					error: {
-						code: -32603,
-						message: 'Internal server error',
-					},
-					id: null,
-				});
-			}
-		}
-	};
-
-	const getHandler = async (req: Request, res: Response) => {
-		const sessionId = req.headers['mcp-session-id'] as string | undefined;
-		if (!sessionId || !transports[sessionId]) {
-			res.status(400).send('Invalid or missing session ID');
-			return;
-		}
-
-		const lastEventId = req.headers['last-event-id'] as string | undefined;
-		if (lastEventId) {
-			console.log(`${serverName} client reconnecting with Last-Event-ID: ${lastEventId}`);
-		} else {
-			console.log(`Establishing new ${serverName} SSE stream for session ${sessionId}`);
-		}
-
-		const transport = transports[sessionId];
-		await transport.handleRequest(req, res);
-	};
-
-	const deleteHandler = async (req: Request, res: Response) => {
-		const sessionId = req.headers['mcp-session-id'] as string | undefined;
-		if (!sessionId || !transports[sessionId]) {
-			res.status(400).send('Invalid or missing session ID');
-			return;
-		}
-
-		console.log(`Received ${serverName} session termination request for session ${sessionId}`);
-
-		try {
-			const transport = transports[sessionId];
-			await transport.handleRequest(req, res);
-		} catch (error) {
-			console.error(`Error handling ${serverName} session termination:`, error);
-			if (!res.headersSent) {
-				res.status(500).send('Error processing session termination');
-			}
-		}
-	};
-
-	return { postHandler, getHandler, deleteHandler };
-}
-
-// Create and start all servers
-const servers: { name: string; app: express.Application; port: number }[] = [];
-
-for (const config of serverConfigs) {
-	const app = express();
-	app.use(express.json());
-	app.use(corsConfig);
-
-	const { postHandler, getHandler, deleteHandler } = createMcpHandlers(config.name, config.getServerInstance);
-
-	app.post('/mcp', postHandler);
-	app.get('/mcp', getHandler);
-	app.delete('/mcp', deleteHandler);
-
-	servers.push({ name: config.name, app, port: config.port });
-}
-
-// Start all servers
-for (const server of servers) {
-	server.app.listen(server.port, (error: any) => {
-		if (error) {
-			console.error(`Failed to start ${server.name} MCP server:`, error);
-			process.exit(1);
-		}
-		console.log(`${server.name} MCP available at http://localhost:${server.port}/mcp`);
-	});
-}
-
-// Handle server shutdown
-process.on('SIGINT', async () => {
-	console.log('Shutting down servers...');
-
-	// Close all active transports for all servers
-	for (const serverName in allTransports) {
-		const transports = allTransports[serverName];
-		for (const sessionId in transports) {
-			try {
-				console.log(`Closing ${serverName} transport for session ${sessionId}`);
-				await transports[sessionId].close();
-				delete transports[sessionId];
-			} catch (error) {
-				console.error(`Error closing ${serverName} transport for session ${sessionId}:`, error);
-			}
-		}
-	}
-
-	// Close the shared application if it exists
-	if (sharedApplication) {
-		try {
-			console.log('Closing shared application...');
-			await sharedApplication.stop();
-			sharedApplication = undefined;
-		} catch (error) {
-			console.error('Error closing shared application:', error);
-		}
-	}
-
-	console.log('Server shutdown complete');
-	process.exit(0);
-});
diff --git a/test/mcp/src/multiplex.ts b/test/mcp/src/multiplex.ts
index 5e844f1113b..1a438cf7649 100644
--- a/test/mcp/src/multiplex.ts
+++ b/test/mcp/src/multiplex.ts
@@ -2,16 +2,15 @@
  *  Copyright (c) Microsoft Corporation. All rights reserved.
  *  Licensed under the MIT License. See License.txt in the project root for license information.
  *--------------------------------------------------------------------------------------------*/
-import { z, ZodRawShape, AnyZodObject, ZodTypeAny } from 'zod';
 import { Server, ServerOptions } from '@modelcontextprotocol/sdk/server/index.js';
-import { RequestHandlerExtra } from '@modelcontextprotocol/sdk/shared/protocol.js';
 import { Transport } from '@modelcontextprotocol/sdk/shared/transport.js';
-import { Implementation, ListToolsRequestSchema, CallToolRequestSchema, ListToolsResult, Tool, CallToolResult, McpError, ErrorCode, ToolAnnotations, ServerRequest, ServerNotification, CallToolResultSchema } from '@modelcontextprotocol/sdk/types.js';
+import { Implementation, ListToolsRequestSchema, CallToolRequestSchema, ListToolsResult, Tool, CallToolResult, McpError, ErrorCode, CallToolResultSchema } from '@modelcontextprotocol/sdk/types.js';
 import { getServer as getAutomationServer } from './automation';
 import { getServer as getPlaywrightServer } from './playwright';
-import { getApplication } from './application';
+import { ApplicationService } from './application';
 import { createInMemoryTransportPair } from './inMemoryTransport';
 import { Client } from '@modelcontextprotocol/sdk/client/index.js';
+import { Application } from '../../automation';
 
 interface SubServer {
 	client: Client;
@@ -19,43 +18,61 @@ interface SubServer {
 }
 
 export async function getServer(): Promise<Server> {
-	const app = await getApplication();
-	const automationServer = await getAutomationServer(app);
-	const playwrightServer = await getPlaywrightServer(app);
-
-	// Create in-memory transport pairs for internal communication
+	const appService = new ApplicationService();
+	const automationServer = await getAutomationServer(appService);
 	const [automationServerTransport, automationClientTransport] = createInMemoryTransportPair();
-	const [playwrightServerTransport, playwrightClientTransport] = createInMemoryTransportPair();
-
-	const automationClient = new Client({
-		name: 'Automation Client',
-		version: '1.0.0'
-	});
-	const playwrightClient = new Client({
-		name: 'Playwright Client',
-		version: '1.0.0'
-	});
-
+	const automationClient = new Client({ name: 'Automation Client', version: '1.0.0' });
 	await automationServer.connect(automationServerTransport);
 	await automationClient.connect(automationClientTransport);
-	await playwrightServer.connect(playwrightServerTransport);
-	await playwrightClient.connect(playwrightClientTransport);
-	await playwrightClient.notification({
-		method: 'notifications/initialized',
-	});
 
-	return new MultiplexServer(
-		[
-			// Prefixes could change in the future... be careful.
-			{ client: playwrightClient, prefix: 'browser_' },
-			{ client: automationClient, prefix: 'vscode_automation_' }
-		],
+	const multiplexServer = new MultiplexServer(
+		[{ client: automationClient, prefix: 'vscode_automation_' }],
 		{
 			name: 'VS Code Automation + Playwright Server',
 			version: '1.0.0',
 			title: 'Contains tools that can interact with a local build of VS Code. Used for verifying UI behavior.'
 		}
-	).server;
+	);
+
+	const closables: { close(): Promise<void> }[] = [];
+	const createPlaywrightServer = async (app: Application) => {
+		const playwrightServer = await getPlaywrightServer(app);
+		const [playwrightServerTransport, playwrightClientTransport] = createInMemoryTransportPair();
+		const playwrightClient = new Client({ name: 'Playwright Client', version: '1.0.0' });
+		await playwrightServer.connect(playwrightServerTransport);
+		await playwrightClient.connect(playwrightClientTransport);
+		await playwrightClient.notification({ method: 'notifications/initialized' });
+		// Prefixes could change in the future... be careful.
+		const playwrightSubServer = { client: playwrightClient, prefix: 'browser_' };
+		multiplexServer.addSubServer(playwrightSubServer);
+		multiplexServer.sendToolListChanged();
+		closables.push(
+			playwrightClient,
+			playwrightServer,
+			playwrightServerTransport,
+			playwrightClientTransport,
+			{
+				async close() {
+					multiplexServer.removeSubServer(playwrightSubServer);
+					multiplexServer.sendToolListChanged();
+				}
+			}
+		);
+	};
+	const disposePlaywrightServer = async () => {
+		while (closables.length) {
+			closables.pop()?.close();
+		}
+	};
+	appService.onApplicationChange(async app => {
+		if (app) {
+			await createPlaywrightServer(app);
+		} else {
+			await disposePlaywrightServer();
+		}
+	});
+
+	return multiplexServer.server;
 }
 
 /**
@@ -164,46 +181,21 @@ export class MultiplexServer {
 			this.server.sendToolListChanged();
 		}
 	}
+
+	addSubServer(subServer: SubServer) {
+		this.subServers.push(subServer);
+		this.sendToolListChanged();
+	}
+
+	removeSubServer(subServer: SubServer) {
+		const index = this.subServers.indexOf(subServer);
+		if (index >= 0) {
+			const removed = this.subServers.splice(index);
+			if (removed) {
+				this.sendToolListChanged();
+			}
+		} else {
+			throw new Error('SubServer not found.');
+		}
+	}
 }
-
-/**
- * Callback for a tool handler registered with Server.tool().
- *
- * Parameters will include tool arguments, if applicable, as well as other request handler context.
- *
- * The callback should return:
- * - `structuredContent` if the tool has an outputSchema defined
- * - `content` if the tool does not have an outputSchema
- * - Both fields are optional but typically one should be provided
- */
-export type ToolCallback<Args extends undefined | ZodRawShape = undefined> =
-	Args extends ZodRawShape
-	? (
-		args: z.objectOutputType<Args, ZodTypeAny>,
-		extra: RequestHandlerExtra<ServerRequest, ServerNotification>,
-	) => CallToolResult | Promise<CallToolResult>
-	: (extra: RequestHandlerExtra<ServerRequest, ServerNotification>) => CallToolResult | Promise<CallToolResult>;
-
-export type RegisteredTool = {
-	title?: string;
-	description?: string;
-	inputSchema?: AnyZodObject;
-	outputSchema?: AnyZodObject;
-	annotations?: ToolAnnotations;
-	callback: ToolCallback<undefined | ZodRawShape>;
-	enabled: boolean;
-	enable(): void;
-	disable(): void;
-	update<InputArgs extends ZodRawShape, OutputArgs extends ZodRawShape>(
-		updates: {
-			name?: string | null;
-			title?: string;
-			description?: string;
-			paramsSchema?: InputArgs;
-			outputSchema?: OutputArgs;
-			annotations?: ToolAnnotations;
-			callback?: ToolCallback<InputArgs>;
-			enabled?: boolean;
-		}): void;
-	remove(): void;
-};