[BUG] Hosted MCP connectors (Slack/M365) no longer inject into VS Code extension chat after v2.1.195

Preflight Checklist

• [x] I have searched existing issues and this hasn't been reported yet
• [x] This is a single bug report (please file separate reports for different bugs)
• [x] I am using the latest version of Claude Code

What's Wrong?

Claude.ai Hosted MCP connectors (Microsoft 365, Slack) stopped being injected into VS Code extension chat sessions after the extension updated from v2.1.193 to v2.1.195.

We have direct evidence: inside a single, uninterrupted VS Code extension chat session (entrypoint: claude-vscode, workspace c:\cc_work), a hosted M365 connector tool call succeeded on 2026-06-29 at 18:14 JST while the extension was on v2.1.193. In the same session transcript, the extension version changed to v2.1.195 at approximately 19:01 JST (~47 minutes later). From that point onward, no hosted connector tool was ever invoked again in that session, or in any subsequent VS Code extension session we've tested through v2.1.198.

Hosted connectors continue to work normally via:

• CLI/TUI (interactive terminal launch of the same bundled claude.exe binary)
• Cloud-executed Routines/CCR (server-side scheduled/one-shot cloud agents)

The problem appears isolated specifically to hosted MCP tool injection into VS Code extension chat sessions.

Environment: Windows 11, VS Code + Claude Code extension, versions 2.1.193 (working) → 2.1.195/2.1.197/2.1.198 (broken).

What Should Happen?

Hosted MCP connectors (Microsoft 365, Slack, Zoom, QuickBooks) that show "✔ Connected" via claude mcp list should be injected into and usable from the VS Code extension chat session, exactly as they were prior to v2.1.195, and exactly as they still are today via CLI/TUI and Cloud Routines/CCR on the same account.

Error Messages/Logs

RULED-OUT CAUSES (tested specifically):
- Auth/token expiration: `claude mcp list` (terminal, same account) shows Microsoft 365 / Slack / Zoom / Intuit QuickBooks as Connected (not Needs Auth, not Failed) at time of testing (2026-07-02).
- Connector removed on claude.ai side: not the case, same as above.
- `--resume` reviving stale session state: tested extensively; a completely fresh "New Session" (no --resume) still shows zero hosted tools.
- Version mixing / stale processes: verified via OS process inspection that only a single, current extension version's binary was running across all claude.exe processes at time of testing.
- Local .mcp.json misconfiguration: .mcp.json only configures two unrelated local stdio servers; has no bearing on claude.ai hosted connector loading.
- "By design, cloud/interactive-only" theory: disproven by the 2026-06-29 18:14 JST evidence below — hosted connectors demonstrably worked inside VS Code extension chat prior to the version transition.

DECISIVE EVIDENCE (from raw session transcript, ~/.claude/projects/.../<session-id>.jsonl):

2026-06-29 18:14 JST (2026-06-29T09:14:19Z / 09:14:20Z UTC) — extension version 2.1.193
- Two tool_use blocks, role: "assistant", tool name mcp__claude_ai_Microsoft_365__outlook_calendar_search
- Input: {"query": "*", "afterDateTime": "2026-06-29T00:00:00", "beforeDateTime": "2026-06-30T00:00:00", "order": "oldest", "limit": 25}
- Followed within ~5 seconds by tool_result with is_error: null (success)
- tool_result payload contained real, well-formed calendar event objects (event URI, event ID, organizer, attendees, start/end datetime) — contents redacted here for privacy, but structure and success were unambiguous and matched the requested date range.
- Session metadata confirms: entrypoint: "claude-vscode", cwd: "c:\\cc_work", userType: "external"

2026-06-29 19:01 JST (2026-06-29T10:01:54Z UTC) — same session transcript now shows version: "2.1.195"
- Cannot pinpoint the exact second of the extension auto-update, only that it occurred between 18:14 and 19:01 JST.

2026-06-29 19:01 JST through 2026-06-30 10:28 JST (rest of same session, version 2.1.195)
- Session continues for several more hours (local tool use: Edit, Skill, Bash).
- Zero occurrences of any mcp__claude_ai_* tool call for the remainder of this session.

2026-06-30 through 2026-07-02, versions 2.1.195 -> 2.1.197 -> 2.1.198
- Multiple fresh VS Code extension chat sessions tested, including "New Session" (no --resume) on a clean, single-version-installed extension.
- In every session, tool discovery shows zero hosted connector tools (mcp__claude_ai_Microsoft_365__*, mcp__claude_ai_Slack__*, mcp__claude_ai_Zoom__*, mcp__claude_ai_QuickBooks__*). Only project-local stdio MCP servers appear.

CONFIRMED STILL-WORKING ALTERNATE PATHS (for context):
- CLI/TUI (interactive terminal launch of the same bundled claude.exe binary): hosted connectors load fully.
- Cloud-executed Routines/CCR: hosted connectors auto-attach and function correctly (confirmed via live test on 2026-07-01, including a real successful mcp__Microsoft_365__outlook_email_search call and a real successful hosted Slack post/search).

RELATIONSHIP TO KNOWN ISSUES:
This appears to be the same category of bug as several previously-reported, Anthropic-acknowledged issues, at a different version boundary/entrypoint:
- https://github.com/anthropics/claude-code/issues/36587 — claude.ai managed MCP servers unavailable in --print headless mode, regression at v2.1.79 (was working at v2.1.78). Labeled "regression".
- https://github.com/anthropics/claude-code/issues/36833 — claude -p headless sessions don't load Claude AI connector MCP tools. Closed as duplicate of #36587.
- https://github.com/anthropics/claude-code/issues/41057 — claude.ai Slack connector missing from VS Code extension's /mcp panel despite Connected via CLI (v2.1.87).

What's new here: same-session, before/after transcript evidence pinpointing the exact regression boundary (2.1.193 -> 2.1.195), rather than inferring it from separate before/after reports. Suggests a recurring fragility in how hosted connector injection is determined for non-fully-interactive session types (headless --print, and now also the VS Code extension's chat entrypoint).

QUESTIONS FOR ANTHROPIC:
1. Was there an intentional change in Claude Code 2.1.195 (or thereabouts) to how/whether claude.ai Hosted MCP connectors are injected into the VS Code extension's chat session tool registry?
2. If intentional, what is the supported/recommended way to access claude.ai Hosted connectors from within the VS Code extension chat going forward?
3. If unintentional (a regression), is it already tracked, and is there an expected fix version/timeline?
4. Is there any user-facing setting, feature flag, or permission that controls whether Hosted MCP connectors are loaded into the extension's chat session, which might currently be disabled or defaulted differently after 2.1.195?

HOW TO REPRODUCE:
1. Open a fresh ("New Session") VS Code extension Claude Code chat in a workspace with claude.ai hosted connectors already connected on the account (verify via `claude mcp list` in a terminal — should show Connected).
2. In the chat, attempt to discover/use any hosted connector tool.
3. Observe that no hosted connector tools are discoverable/callable, while `claude mcp list` still reports the same connectors as Connected.
4. For comparison, launch the same bundled claude.exe binary directly in an interactive terminal (not via VS Code) — hosted connectors load fully and are usable there.
5. For historical evidence, inspect local session transcripts under ~/.claude/projects/<project>/<session-id>.jsonl for tool_use entries with name matching mcp__claude_ai_*, checking the corresponding version and entrypoint fields at that point in the transcript.

Steps to Reproduce

1. Ensure claude.ai Hosted MCP connectors (e.g. Microsoft 365, Slack) are already connected on your account. Verify with claude mcp list in a terminal — it should show them as "✔ Connected".
2. Open a fresh VS Code extension Claude Code chat session ("New Session", not resumed) in any workspace.
3. In the chat, ask Claude to use a hosted connector directly, e.g. "search my Outlook calendar for today's events" or "search Slack for messages mentioning X" (expecting it to use a tool named like mcp__claude_ai_Microsoft_365__* or mcp__claude_ai_Slack__*).
4. Observe: no hosted connector tool is discoverable or callable. Only project-local stdio MCP servers (if any are configured in .mcp.json) appear. claude mcp list still reports the same connectors as "Connected" at this same moment.
5. For comparison, launch the same bundled claude.exe binary directly in an interactive terminal (not via VS Code) and repeat step 3 — hosted connectors load fully and the request succeeds.
6. For historical proof this previously worked inside the VS Code extension itself, inspect old local session transcripts under ~/.claude/projects/<project>/<session-id>.jsonl for tool_use entries with name matching mcp__claude_ai_*, and check the version and entrypoint fields at that point — we found a successful call at entrypoint "claude-vscode", version 2.1.193, and no further successful calls after the same session's version field changed to 2.1.195.

Note: This is not reproducible with a minimal code snippet since it's not about file/code content — it's about MCP tool availability in the VS Code extension's chat session, which is an infrastructure/session-level behavior, not something specific to a particular file or prompt.

Claude Model

Not sure / Multiple models

Is this a regression?

Yes, this worked in a previous version

Last Working Version

2.1.193

Claude Code Version

2.1.198

Platform

Anthropic API

Operating System

Windows

Terminal/Shell

VS Code integrated terminal

Additional Information

Note: This bug specifically occurs in the VS Code extension's built-in chat interface (not a standalone terminal/CLI session). The "Terminal/Shell" field above reflects the shell used during diagnostic verification (e.g. confirming claude mcp list output, process inspection), not the interface where the bug itself manifests.