diff --git a/actions/setup/js/mount_mcp_as_cli.cjs b/actions/setup/js/mount_mcp_as_cli.cjs
index 33d5c626f6c..494ca48dcef 100644
--- a/actions/setup/js/mount_mcp_as_cli.cjs
+++ b/actions/setup/js/mount_mcp_as_cli.cjs
@@ -146,6 +146,53 @@ function httpPostJSON(urlStr, headers, body, timeoutMs = DEFAULT_HTTP_TIMEOUT_MS
   });
 }
 
+/**
+ * Parse an MCP response body that may be JSON or Server-Sent Events (SSE).
+ *
+ * Some MCP gateway responses are streamed as SSE and contain lines like:
+ *   data: {"jsonrpc":"2.0","id":3,"result":{...}}
+ *
+ * @param {unknown} body - Parsed response body from httpPostJSON
+ * @returns {unknown}
+ */
+function parseMCPResponseBody(body) {
+  if (body && typeof body === "object" && !Array.isArray(body)) {
+    return body;
+  }
+  if (typeof body !== "string") {
+    return null;
+  }
+
+  const trimmed = body.trim();
+  if (!trimmed) {
+    return null;
+  }
+
+  try {
+    return JSON.parse(trimmed);
+  } catch {
+    // Fall through to SSE parsing.
+  }
+
+  /** @type {unknown} */
+  let lastDataMessage = null;
+  for (const line of trimmed.split(/\r?\n/)) {
+    if (!line.startsWith("data:")) {
+      continue;
+    }
+    const payload = line.slice(5).trim();
+    if (!payload || payload === "[DONE]") {
+      continue;
+    }
+    try {
+      lastDataMessage = JSON.parse(payload);
+    } catch {
+      // Ignore non-JSON SSE data lines.
+    }
+  }
+  return lastDataMessage;
+}
+
 /**
  * Query the tools list from an MCP server via JSON-RPC.
  * Follows the standard MCP handshake: initialize → notifications/initialized → tools/list.
@@ -196,7 +243,7 @@ async function fetchMCPTools(serverUrl, apiKey, core) {
   // Step 3: tools/list – get the available tool definitions
   try {
     const listResp = await httpPostJSON(serverUrl, { ...authHeaders, ...sessionHeader }, { jsonrpc: "2.0", id: 2, method: "tools/list" }, DEFAULT_HTTP_TIMEOUT_MS);
-    const respBody = listResp.body;
+    const respBody = parseMCPResponseBody(listResp.body);
     if (respBody && typeof respBody === "object" && "result" in respBody && respBody.result && typeof respBody.result === "object") {
       const result = respBody.result;
       if ("tools" in result && Array.isArray(result.tools)) {
@@ -396,4 +443,4 @@ async function main() {
   core.setOutput("mounted-servers", mountedServers.join(","));
 }
 
-module.exports = { main, fetchMCPTools, generateCLIWrapperScript, isValidServerName, shellEscapeDoubleQuoted };
+module.exports = { main, fetchMCPTools, generateCLIWrapperScript, isValidServerName, shellEscapeDoubleQuoted, parseMCPResponseBody };
diff --git a/actions/setup/js/mount_mcp_as_cli.test.cjs b/actions/setup/js/mount_mcp_as_cli.test.cjs
new file mode 100644
index 00000000000..cd86c1f53be
--- /dev/null
+++ b/actions/setup/js/mount_mcp_as_cli.test.cjs
@@ -0,0 +1,41 @@
+// @ts-check
+import { describe, expect, it } from "vitest";
+
+import { parseMCPResponseBody } from "./mount_mcp_as_cli.cjs";
+
+describe("mount_mcp_as_cli.cjs", () => {
+  it("parses JSON object responses unchanged", () => {
+    const body = { jsonrpc: "2.0", result: { tools: [{ name: "logs" }] } };
+    expect(parseMCPResponseBody(body)).toEqual(body);
+  });
+
+  it("parses raw JSON string responses", () => {
+    const body = '{"jsonrpc":"2.0","result":{"tools":[{"name":"logs"}]}}';
+    expect(parseMCPResponseBody(body)).toEqual({
+      jsonrpc: "2.0",
+      result: { tools: [{ name: "logs" }] },
+    });
+  });
+
+  it("parses SSE data lines and returns the JSON payload", () => {
+    const sseToolListPayload = 'data: {"jsonrpc":"2.0","id":2,"result":{"tools":[{"name":"logs","inputSchema":{"properties":{"count":{"type":"integer"}}}}]}}';
+    const body = ["event: message", sseToolListPayload, ""].join("\n");
+
+    expect(parseMCPResponseBody(body)).toEqual({
+      jsonrpc: "2.0",
+      id: 2,
+      result: {
+        tools: [
+          {
+            name: "logs",
+            inputSchema: {
+              properties: {
+                count: { type: "integer" },
+              },
+            },
+          },
+        ],
+      },
+    });
+  });
+});