diff --git a/apps/server/src/mcp/McpHttpServer.test.ts b/apps/server/src/mcp/McpHttpServer.test.ts
index 395d9dfe04fe5..e50795e0bc847 100644
--- a/apps/server/src/mcp/McpHttpServer.test.ts
+++ b/apps/server/src/mcp/McpHttpServer.test.ts
@@ -649,16 +649,25 @@ it.effect("decodes null optional arguments the way it decodes omitted ones", ()
 it.effect("rejects arguments a tool does not declare instead of dropping them", () => {
   const calls: Array<unknown> = [];
   return Effect.gen(function* () {
-    const launch = yield* Effect.flip(
-      callTool("t3_thread_launch", { title: "Repro", scratch: true, prompt: "say hi" }),
-    );
-    const wait = yield* Effect.flip(
-      callTool("t3_thread_wait", { threadId: "thread-excess-arguments", timeout: 5_000 }),
-    );
+    const launch = yield* callTool("t3_thread_launch", {
+      title: "Repro",
+      scratch: true,
+      prompt: "say hi",
+    });
+    const wait = yield* callTool("t3_thread_wait", {
+      threadId: "thread-excess-arguments",
+      timeout: 5_000,
+    });
 
     expect(calls).toEqual([]);
-    expect(launch.message).toContain('Unknown argument "prompt"');
-    expect(wait.message).toContain('Unknown argument "timeout"');
+    expect(launch.isError).toBe(true);
+    expect(launch.content).toEqual([
+      { type: "text", text: expect.stringContaining('Unknown argument "prompt"') },
+    ]);
+    expect(wait.isError).toBe(true);
+    expect(wait.content).toEqual([
+      { type: "text", text: expect.stringContaining('Unknown argument "timeout"') },
+    ]);
   }).pipe(Effect.provide(layerRecordingTools(calls)));
 });
 
@@ -717,9 +726,12 @@ it.effect.each(["limit", "runLimit", "maxCharsPerItem"])(
       const rejected = yield* callTool("t3_thread_read", {
         threadId: "thread-below-minimum",
         [field]: 0,
-      }).pipe(Effect.flip);
+      });
 
-      expect(String(rejected)).toContain("greater than or equal to 1");
+      expect(rejected.isError).toBe(true);
+      expect(rejected.content).toEqual([
+        { type: "text", text: expect.stringContaining("greater than or equal to 1") },
+      ]);
       expect(calls).toEqual([]);
     }).pipe(Effect.provide(layerRecordingTools(calls)));
   },
diff --git a/apps/server/src/mcp/McpHttpServer.ts b/apps/server/src/mcp/McpHttpServer.ts
index eaf54214ba07b..39a8fb4f0f7c7 100644
--- a/apps/server/src/mcp/McpHttpServer.ts
+++ b/apps/server/src/mcp/McpHttpServer.ts
@@ -1167,6 +1167,38 @@ const withAdvertisedSchemas = Effect.fn("McpHttpServer.withAdvertisedSchemas")(f
   return yield* registration.pipe(Effect.provideService(McpServer.McpServer, advertisingServer));
 });
 
+/**
+ * `registerToolkit` raises `InvalidParams` only for invalid arguments. MCP before 2025-11-25 sends
+ * that as a JSON-RPC error, which Cursor shows models as "Tool execution error", so it goes back
+ * as a tool result the model can read and correct.
+ */
+const withReadableInvalidArguments = Effect.fn("McpHttpServer.withReadableInvalidArguments")(
+  function* <A, E, R>(registration: Effect.Effect<A, E, R>) {
+    const server = yield* McpServer.McpServer;
+    const readableServer = McpServer.McpServer.of({
+      ...server,
+      addTool: Effect.fn("McpServer.addTool")(function (options) {
+        return server.addTool({
+          ...options,
+          handle: (payload) =>
+            options.handle(payload).pipe(
+              Effect.catchTags({
+                InvalidParams: (error) =>
+                  Effect.succeed(
+                    new McpSchema.CallToolResult({
+                      isError: true,
+                      content: [{ type: "text", text: error.message }],
+                    }),
+                  ),
+              }),
+            ),
+        });
+      }),
+    });
+    return yield* registration.pipe(Effect.provideService(McpServer.McpServer, readableServer));
+  },
+);
+
 /** Hands each call the services its registration was built with; the request's own still win. */
 const provideRegistrationServices = <Services>() =>
   McpServer.middleware<{ provides: Services }>()(
@@ -1191,7 +1223,10 @@ export const toolkitRegistration = <Tools extends Record<string, Tool.Any>, EX,
   Layer.effectDiscard(
     withToolAnalytics(
       withToolSpans(
-        withAdvertisedSchemas(toolkit, McpServer.registerToolkit(decodeAsAdvertised(toolkit))),
+        withAdvertisedSchemas(
+          toolkit,
+          withReadableInvalidArguments(McpServer.registerToolkit(decodeAsAdvertised(toolkit))),
+        ),
       ),
     ),
   ).pipe(
diff --git a/apps/server/src/mcp/toolkits/core.test.ts b/apps/server/src/mcp/toolkits/core.test.ts
index b2aaed70322cf..f31b5dbb36f49 100644
--- a/apps/server/src/mcp/toolkits/core.test.ts
+++ b/apps/server/src/mcp/toolkits/core.test.ts
@@ -575,12 +575,11 @@ it.effect("rejects an unknown organize target instead of archiving the calling t
       .pipe(
         Effect.provideService(McpInvocationContext.McpInvocationContext, scope),
         Effect.provideService(McpSchema.McpServerClient, client),
-        Effect.result,
       );
     expect(dispatched).toEqual([]);
     expect(outcome).toMatchObject({
-      _tag: "Failure",
-      failure: { message: expect.stringContaining('Unknown argument "threadIds"') },
+      isError: true,
+      content: [{ type: "text", text: expect.stringContaining('Unknown argument "threadIds"') }],
     });
   }).pipe(
     Effect.provide(