[BUG] OAuth token is dropped and requirement is ignored after MCP initialization failure

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?

Once the Claude Desktop/claude.ai client gets an error response from tools/list during a remote MCP server initialization, the client stays in a broken state. It "forgets" the authentication and keeps sending initialize requests without an Authorize header. Such requests receive a 401 error with a WWW-Authenticate OAuth link that is supposed to fix the state, but the client does not follow the link. After a couple of minutes, it just repeats the same behavior. As a result, such an MCP server remains in a "disconnected" state for the user until they go to the connector settings and re-connect manually.

What Should Happen?

https://modelcontextprotocol.io/specification/2025-06-18/basic/authorization

MCP clients MUST be able to parse WWW-Authenticate headers and respond appropriately to HTTP 401 Unauthorized responses from the MCP server.

• The client should not drop a valid authentication token once a request returned an error
• When getting a 401 response to initialize request, it should follow the link provided in WWW-Authenticate response header.

Error Messages/Logs

Steps to Reproduce

1. Connect to a remote MCP server behind OAuth, authenticate
2. Make it throw an error on tools/list, reload the client
3. Make tools/list work on the server again, reload the client

Claude Model

None

Is this a regression?

Yes, this worked in a previous version

Last Working Version

_No response_

Claude Code Version

Claude 0.13.37 (bfd4ed) 2025-09-24T22:18:50.000Z

Platform

Anthropic API

Operating System

macOS

Terminal/Shell

Terminal.app (macOS)

Additional Information

_No response_