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Connect to the Dynamics 365 ERP MCP server with Microsoft Foundry

This guide provides information on how to configure an agent in Microsoft Foundry to work with the data and business logic of Dynamics 365 ERP applications by connecting to the Dynamics 365 ERP MCP server.

For more information on Microsoft Foundry, see What is Microsoft Foundry?, including links to getting started with agent development on the platform.

Prerequisites

Before building an agent in Microsoft Foundry by using the Dynamics 365 ERP MCP server, make sure the Dynamics 365 ERP MCP server is enabled in your environment. For more information about enabling the server, see Use Model Context Protocol for finance and operations apps.

Register an app in Microsoft Entra ID

Step 1: Create a new app registration

  1. Sign in to the Azure portal for your tenant.
  2. Go to App registrations, and select New registration.
  3. Enter a name like Dynamics 365 ERP MCP agents, or another name to identify the application.
  4. Select an option for supported account types based on which accounts should access the server.
  5. Select Register.

Step 2: Define API permissions for the application

  1. On the app registration, go to Manage > API permissions.
  2. Select Add a permission.
  3. On the Microsoft APIs tab, select Dynamics ERP.
  4. Select Delegated permissions.
  5. Select the following permission, and then select Add permissions.
Permission Description
mcp.tools Access Microsoft Dynamics AX MCP tools as organization users

Step 3: Create a client secret

  1. On the app registration, go to Manage > Certificates & secrets.
  2. On the Client secrets tab, select New client secret.
  3. Enter a description and your preferred expiration.
  4. Select Add.
  5. Copy the Value immediately. You can't access the value after the page is closed.

Note

Keep the app registration open. You need to return to the page to get ID values and add a redirect URL generated later in the process.

Configure Dynamics 365 finance and operations apps

Step 1: Enable the MCP server

In the Dynamics 365 finance and operations apps client, make sure the Dynamics 365 ERP Model Context Protocol server feature is enabled in Feature management.

Step 2: Grant permissions to the application

  1. Go to System administration > Setup > Microsoft Entra ID application to open the Microsoft Entra ID applications page.
  2. Select New on the action ribbon.
  3. In the Client ID field of the new record, enter the Application (client) ID value of your new app, found on the Overview page of the Entra ID app registration.
  4. In the Name field, enter a name for the registration.
  5. In the User ID field, select a user that has the appropriate security role for permissions required for your agent to access in Dynamics 365 finance and operations apps.

Step 3: Allow your new application to access the Dynamics 365 ERP MCP server

  1. Go to System administration > Setup > Allowed MCP clients to open the Allowed MCP clients page.
  2. Select New on the action ribbon.
  3. Set the following values for the new record.
Property Value
Name Provide a name for your MCP connection
ClientId The Application (client) ID value of your new registered app from the Entra ID app registration
Allowed true

Configure Microsoft Foundry

Step 1: Add the MCP server as a custom tool

  1. Go to Microsoft Foundry.

  2. Open your project, or create a new one.

  3. Select Build to open the Agent builder.

  4. On the navigation pane, select Tools.

  5. Select Connect a tool.

  6. On the Custom tab of the Select a tool dialog, select Model Context Protocol (MCP), and then select Create.

  7. In the Add Model Context Protocol tool dialog, enter the following detail, and then select Connect.

    Property Value
    Name Provide a unique name, like "Dynamics365ERP"
    Remote MCP Server endpoint The URL of the remote MCP server for your Dynamics 365 finance and operations apps environment. This URL is formatted as https://<your-environment-base-url>/mcp. For example, https://contoso.operations.dynamics.com/mcp.
    Authentication OAuth Identity Passthrough
    Client ID Your Application (client) ID from your app registration configured in the previous steps
    Client secret The Value of the client secret configured for your app registration
    Token URL https://login.microsoftonline.com/<your-tenant-ID>/oauth2/v2.0/token
    Auth URL https://login.microsoftonline.com/<your-tenant-ID>/oauth2/v2.0/authorize
    Refresh URL https://login.microsoftonline.com/<your-tenant-ID>/oauth2/v2.0/token
    Scopes https://<your-environment-base-url>/.default

Note

You can find your tenant ID on the Overview page of the Entra ID app registration created earlier.

Step 2: Configure the redirect URL

  1. On the You've created a credential provider dialog, copy the Redirect URL value.
  2. Go back to the Entra ID app registration you created earlier.
  3. Select Authentication (Preview) in the left navigation.
  4. On the Authentication (Preview) page, select Add Redirect URI.
  5. Select Web.
  6. Enter the generated redirect URL in the Redirect URI field.
  7. Under Implicit grant and hybrid flows, select both the options:
    • Access tokens (used for implicit flows)
    • ID tokens (used for implicit and hybrid flows)
  8. Select Configure.

Test the MCP connection

After you configure the MCP tool in Microsoft Foundry, you can create an agent to test the connection.

  1. In the Agent Builder in Microsoft Foundry, select Create agent.
  2. On the Playground tab, select a model from the available deployed models to manage the agent orchestration. Recommended models include claude-sonnet-4-5 and gpt-5-chat.
  3. Provide instructions in the Instructions field to guide the agent orchestration in using the MCP tools. See Providing agent instructions for more information.
  4. Save the agent.
  5. In the Message the agent... box, send a message. For example, send "Find the purchase requisition page."
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