diff --git a/examples/inspector/src/components/McpServers.tsx b/examples/inspector/src/components/McpServers.tsx
index e210e34..b99160d 100644
--- a/examples/inspector/src/components/McpServers.tsx
+++ b/examples/inspector/src/components/McpServers.tsx
@@ -3,14 +3,22 @@ import { useMcp, type Tool } from 'use-mcp/react'
 import { Info, X, ChevronRight, ChevronDown } from 'lucide-react'
 
 // MCP Connection wrapper that only renders when active
-function McpConnection({ serverUrl, onConnectionUpdate }: { serverUrl: string; onConnectionUpdate: (data: any) => void }) {
+function McpConnection({
+  serverUrl,
+  transportType,
+  onConnectionUpdate,
+}: {
+  serverUrl: string
+  transportType: 'auto' | 'http' | 'sse'
+  onConnectionUpdate: (data: any) => void
+}) {
   // Use the MCP hook with the server URL
   const connection = useMcp({
     url: serverUrl,
     debug: true,
     autoRetry: false,
     popupFeatures: 'width=500,height=600,resizable=yes,scrollbars=yes',
-    transportType: 'auto',
+    transportType,
   })
 
   // Update parent component with connection data
@@ -26,6 +34,9 @@ export function McpServers({ onToolsUpdate }: { onToolsUpdate?: (tools: Tool[])
   const [serverUrl, setServerUrl] = useState(() => {
     return sessionStorage.getItem('mcpServerUrl') || ''
   })
+  const [transportType, setTransportType] = useState<'auto' | 'http' | 'sse'>(() => {
+    return (sessionStorage.getItem('mcpTransportType') as 'auto' | 'http' | 'sse') || 'auto'
+  })
   const [isActive, setIsActive] = useState(false)
 
   const [connectionData, setConnectionData] = useState<any>({
@@ -293,6 +304,20 @@ export function McpServers({ onToolsUpdate }: { onToolsUpdate?: (tools: Tool[])
             }}
             disabled={isActive && state !== 'failed'}
           />
+          <select
+            className="p-2 border border-gray-200 rounded text-sm focus:outline-none focus:ring-1 focus:ring-blue-300"
+            value={transportType}
+            onChange={(e) => {
+              const newValue = e.target.value as 'auto' | 'http' | 'sse'
+              setTransportType(newValue)
+              sessionStorage.setItem('mcpTransportType', newValue)
+            }}
+            disabled={isActive && state !== 'failed'}
+          >
+            <option value="auto">Auto</option>
+            <option value="http">HTTP</option>
+            <option value="sse">SSE</option>
+          </select>
 
           {state === 'ready' || (isActive && state !== 'not-connected' && state !== 'failed') ? (
             <button
@@ -477,7 +502,7 @@ export function McpServers({ onToolsUpdate }: { onToolsUpdate?: (tools: Tool[])
       </div>
 
       {/* Only render the actual MCP connection when active */}
-      {isActive && <McpConnection serverUrl={serverUrl} onConnectionUpdate={setConnectionData} />}
+      {isActive && <McpConnection serverUrl={serverUrl} transportType={transportType} onConnectionUpdate={setConnectionData} />}
     </section>
   )
 }
diff --git a/examples/inspector/vite.config.ts b/examples/inspector/vite.config.ts
index 20492b1..beaea7c 100644
--- a/examples/inspector/vite.config.ts
+++ b/examples/inspector/vite.config.ts
@@ -6,7 +6,7 @@ import tailwindcss from '@tailwindcss/vite'
 export default defineConfig({
   plugins: [react(), tailwindcss()],
   build: {
-    // @ts-ignore
-    minify: !process.env.NO_MINIFY,
+    // @ts-expect-error I don't want to install @types/node for this one line
+    minify: process.env.NO_MINIFY !== 'true',
   },
 })
diff --git a/src/react/useMcp.ts b/src/react/useMcp.ts
index 2db44bf..e02382f 100644
--- a/src/react/useMcp.ts
+++ b/src/react/useMcp.ts
@@ -369,9 +369,10 @@ export function useMcp(options: UseMcpOptions): UseMcpResult {
         }
 
         // Handle other connection errors
-        // Use stable failConnection
+        // For HTTP transport, consider fallback only for specific error types
+        // "Not connected" errors should still be treated as failures, not fallback triggers
         failConnection(`Failed to connect via ${transportType.toUpperCase()}: ${errorMessage}`, errorInstance)
-        return 'fallback' // If our logic above is wrong, we'd prevent HTTPs servers from ever working. So always fall back as a last resort.
+        return 'failed'
       }
     } // End of tryConnectWithTransport helper
 
@@ -392,10 +393,18 @@ export function useMcp(options: UseMcpOptions): UseMcpResult {
       // Auto mode - try HTTP first, fallback to SSE
       addLog('debug', 'Using auto transport mode (HTTP with SSE fallback)')
       const httpResult = await tryConnectWithTransport('http')
-      // 2. Try SSE only if HTTP requested fallback and we haven't failed/redirected
-      if (httpResult === 'fallback' && isMountedRef.current && stateRef.current !== 'failed' && stateRef.current !== 'authenticating') {
+
+      // Try SSE only if HTTP requested fallback and we haven't redirected for auth
+      // Allow fallback even if state is 'failed' from a previous HTTP attempt in auto mode
+      if (httpResult === 'fallback' && isMountedRef.current && stateRef.current !== 'authenticating') {
+        addLog('info', 'HTTP failed, attempting SSE fallback...')
         const sseResult = await tryConnectWithTransport('sse')
         finalStatus = sseResult // Use SSE result as final status
+
+        // If SSE also failed, we need to properly fail the connection since HTTP didn't call failConnection
+        if (sseResult === 'failed' && isMountedRef.current) {
+          // SSE failure already called failConnection, so we don't need to do anything else
+        }
       } else {
         finalStatus = httpResult // Use HTTP result if no fallback was needed/possible
       }
diff --git a/test/integration/mcp-connection.test.ts b/test/integration/mcp-connection.test.ts
index fab85e6..85738c9 100644
--- a/test/integration/mcp-connection.test.ts
+++ b/test/integration/mcp-connection.test.ts
@@ -33,13 +33,22 @@ function getMCPServers() {
         url: `http://localhost:${state.cfAgentsPort}/mcp`,
         expectedTools: 1, // Minimum expected tools count
       },
+      {
+        name: 'cf-agents-sse',
+        url: `http://localhost:${state.cfAgentsPort}/sse`,
+        expectedTools: 1, // Minimum expected tools count
+      },
     ]
   } catch (error) {
     throw new Error(`Test environment not properly initialized: ${error}`)
   }
 }
 
-async function connectToMCPServer(page: Page, serverUrl: string): Promise<{ success: boolean; tools: string[]; debugLog: string }> {
+async function connectToMCPServer(
+  page: Page,
+  serverUrl: string,
+  transportType: 'auto' | 'http' | 'sse' = 'auto',
+): Promise<{ success: boolean; tools: string[]; debugLog: string }> {
   // Navigate to the inspector
   const stateData = readFileSync(testStateFile, 'utf-8')
   const state = JSON.parse(stateData)
@@ -58,6 +67,10 @@ async function connectToMCPServer(page: Page, serverUrl: string): Promise<{ succ
   const urlInput = page.locator('input[placeholder="Enter MCP server URL"]')
   await urlInput.fill(serverUrl)
 
+  // Set transport type
+  const transportSelect = page.locator('select')
+  await transportSelect.selectOption(transportType)
+
   // Click connect button
   const connectButton = page.locator('button:has-text("Connect")')
   await connectButton.click()
@@ -202,13 +215,35 @@ describe('MCP Connection Integration Tests', () => {
     }
   })
 
-  test('should connect to all MCP servers and retrieve tools', async () => {
-    const servers = getMCPServers()
+  const testScenarios = [
+    // Working examples with auto transport (should pass)
+    { serverName: 'hono-mcp', transportType: 'auto' as const },
+    { serverName: 'cf-agents', transportType: 'auto' as const },
+
+    // SSE endpoint with SSE transport (should pass)
+    { serverName: 'cf-agents-sse', transportType: 'sse' as const },
+
+    // Additional test cases for HTTP transport
+    { serverName: 'hono-mcp', transportType: 'http' as const },
+    { serverName: 'cf-agents', transportType: 'http' as const },
 
-    for (const server of servers) {
-      console.log(`\n🔗 Testing connection to ${server.name} at ${server.url}`)
+    // Failing case: SSE endpoint with auto transport (should fail)
+    { serverName: 'cf-agents-sse', transportType: 'auto' as const },
+  ]
 
-      const result = await connectToMCPServer(page, server.url)
+  test.each(testScenarios)(
+    'should connect to $serverName with $transportType transport (expect: $shouldPass)',
+    async ({ serverName, transportType }) => {
+      const servers = getMCPServers()
+      const server = servers.find((s) => s.name === serverName)
+
+      if (!server) {
+        throw new Error(`Server ${serverName} not found. Available servers: ${servers.map((s) => s.name).join(', ')}`)
+      }
+
+      console.log(`\n🔗 Testing connection to ${server.name} at ${server.url} with ${transportType} transport`)
+
+      const result = await connectToMCPServer(page, server.url, transportType)
 
       if (result.success) {
         console.log(`✅ Successfully connected to ${server.name}`)
@@ -228,8 +263,9 @@ describe('MCP Connection Integration Tests', () => {
         }
 
         // Fail the test with detailed information
-        throw new Error(`Failed to connect to ${server.name}. Debug log: ${result.debugLog}`)
+        throw new Error(`Expected to connect to ${server.name} with ${transportType} transport but failed. Debug log: ${result.debugLog}`)
       }
-    }
-  }, 45000)
+    },
+    45000,
+  )
 })
diff --git a/test/setup/global-setup.ts b/test/setup/global-setup.ts
index 75153f8..945a306 100644
--- a/test/setup/global-setup.ts
+++ b/test/setup/global-setup.ts
@@ -113,12 +113,13 @@ function findAvailablePortFromBase(basePort: number): Promise<number> {
   })
 }
 
-function runCommand(command: string, args: string[], cwd: string): Promise<void> {
+function runCommand(command: string, args: string[], cwd: string, env?: Record<string, string>): Promise<void> {
   return new Promise((resolve, reject) => {
     const child = spawn(command, args, {
       cwd,
       stdio: 'inherit',
       shell: true,
+      env: env ? { ...process.env, ...env } : process.env,
     })
 
     child.on('close', (code) => {
@@ -209,7 +210,7 @@ export default async function globalSetup() {
     // Step 2: Build inspector example
     console.log('📦 Building inspector example...')
     const inspectorDir = join(rootDir, 'examples/inspector')
-    await runCommand('pnpm', ['build'], inspectorDir)
+    await runCommand('pnpm', ['build'], inspectorDir, { NO_MINIFY: 'true' })
 
     // Step 3: Find available port and start hono-mcp server
     console.log('🔍 Finding available port starting from 9901...')