The Problem: Tokens Don’t Scale

If you’ve ever connected a hosted MCP (Model Context Protocol) server to tools like ChatGPT, Claude Desktop, or Copilot, you’ve probably felt the pain:

  • Copying access tokens by hand.
  • Managing token rotation and expiry.
  • Worrying about leaks in logs or environment variables.
  • Explaining to users why “enter your secret key” is still a thing in 2025.

In short — manual tokens are insecure, unscalable, and unfriendly.
OAuth solves all of that.

The Solution: OAuth for Hosted MCP Servers

OAuth 2.0 is the industry standard for secure, delegated authorization.
It lets users connect applications safely — without ever sharing passwords or long-lived tokens.

For a hosted MCP server, enabling OAuth means:

  • ✅ Instant sign-in experience — users click “Connect” and authorize via Google, GitHub, or SSO.
  • ✅ No manual token management — short-lived, auto-refreshed access tokens.
  • ✅ Granular permissions — only the scopes you need (mcp.read, mcp.write, etc.).
  • ✅ Auditable & revocable — users can revoke access at any time via their identity provider.

This is how every modern API — from Google to Slack — secures third-party integrations.

How It Works

When ChatGPT (or Claude Desktop) connects to your hosted MCP server, it should see that the server supports OAuth:

{
  "auth": {
    "type": "oauth2",
    "authorization_endpoint": "https://your-mcp-server.com/login",
    "token_endpoint": "https://your-mcp-server.com/token",
    "scopes": ["openid", "profile", "mcp.api"]
  }
}

From there:

  1. The user clicks “Authorize”.
  2. The browser opens your identity provider (Google, Auth0, Azure AD).
  3. The user signs in and grants access.
  4. The client (ChatGPT or Claude) receives a short-lived Access Token.
  5. It uses that token to talk to your MCP server’s API.

No secrets. No manual steps. Just secure, auditable authorization.

OAuth Integration Architecture

The following diagram illustrates the architecture of an MCP server with OAuth integration:

flowchart TD
    User[User] <--> AIAssistant[AI Assistant\nChatGPT/Claude]
    AIAssistant <--> MCPServer[MCP Server]
    MCPServer <--> Tools[Tool Registry]
    MCPServer <--> ExternalSystems[External Systems]
    
    AIAssistant <--> AuthFlow[OAuth Flow]
    AuthFlow <--> IdP[Identity Provider\nAuth0/Google/Azure AD]
    IdP <--> UserAuth[User Authentication]
    
    MCPServer <--> TokenValidator[Token Validator]
    TokenValidator <--> IdP
    
    subgraph "Security Layer"
        AuthFlow
        TokenValidator
        IdP
    end
    
    subgraph "MCP Infrastructure"
        MCPServer
        Tools
        ExternalSystems
    end
    
    classDef auth fill:#f9f,stroke:#333,stroke-width:2px
    classDef mcp fill:#bbf,stroke:#333,stroke-width:1px
    classDef user fill:#dfd,stroke:#333,stroke-width:1px
    
    class AuthFlow,TokenValidator,IdP,UserAuth auth
    class MCPServer,Tools,ExternalSystems mcp
    class User,AIAssistant user

Key Components

  1. AI Assistant: ChatGPT or Claude Desktop that needs to connect to the MCP server
  2. MCP Server: Your hosted server implementing the Model Context Protocol
  3. Identity Provider (IdP): OAuth provider like Auth0, Google, or Azure AD
  4. OAuth Flow: Handles the authorization code exchange process
  5. Token Validator: Verifies access tokens with the IdP
  6. Tool Registry: Contains the tools available through your MCP server
  7. External Systems: Backend services that your tools interact with

Security Boundaries

The OAuth integration creates clear security boundaries:

  • User identity is verified by a trusted third party
  • Access tokens have limited scope and lifetime
  • The MCP server never sees user credentials
  • Token validation happens on every request

OAuth Integration Workflow

The following sequence diagram shows the detailed OAuth flow for MCP server integration:

sequenceDiagram
    participant User
    participant AIAssistant as AI Assistant
    participant MCPServer as MCP Server
    participant IdP as Identity Provider
    participant ExternalSystems as External Systems
    
    User->>AIAssistant: Connect to MCP Server
    AIAssistant->>MCPServer: Discover auth requirements
    MCPServer-->>AIAssistant: Return OAuth configuration
    
    AIAssistant->>User: Request authorization
    User->>AIAssistant: Approve connection
    
    AIAssistant->>IdP: Initiate OAuth flow
    IdP->>User: Present login screen
    User->>IdP: Authenticate & authorize
    IdP->>AIAssistant: Return authorization code
    
    AIAssistant->>IdP: Exchange code for tokens
    IdP-->>AIAssistant: Return access & refresh tokens
    
    AIAssistant->>MCPServer: API request with access token
    MCPServer->>IdP: Validate token
    IdP-->>MCPServer: Token validation result
    
    alt Valid Token
        MCPServer->>ExternalSystems: Execute tool operation
        ExternalSystems-->>MCPServer: Return results
        MCPServer-->>AIAssistant: Return API response
        AIAssistant-->>User: Present results
    else Invalid Token
        MCPServer-->>AIAssistant: Authentication error
        AIAssistant->>IdP: Request token refresh
        IdP-->>AIAssistant: New access token
        Note over AIAssistant,MCPServer: Retry request with new token
    end
    
    Note over User,ExternalSystems: Token refresh happens automatically

Key Workflow Phases

  1. Discovery: AI assistant discovers the MCP server requires OAuth
  2. Authorization: User approves the connection through the IdP
  3. Token Exchange: Authorization code is exchanged for access tokens
  4. Authenticated Requests: All API calls include the access token
  5. Token Validation: Server validates tokens on each request
  6. Token Refresh: Expired tokens are automatically refreshed

Token Lifecycle

stateDiagram-v2
    [*] --> Requested
    Requested --> Authorized: User approves
    Authorized --> Active: Code exchanged
    Active --> Expired: After timeout
    Expired --> Refreshed: Using refresh token
    Refreshed --> Active
    Active --> Revoked: User revokes
    Expired --> Revoked: Refresh fails
    Revoked --> [*]
    
    note right of Active
        Typical lifetime: 1 hour
    end note
    
    note right of Refreshed
        Can happen silently
        without user interaction
    end note

Implementation Sketch (FastAPI Example)

A minimal Python implementation using FastAPI + Authlib might look like this:

from fastapi import FastAPI, Request
from fastapi.responses import RedirectResponse, JSONResponse
from authlib.integrations.starlette_client import OAuth

app = FastAPI()
oauth = OAuth()

auth0 = oauth.register(
    name="auth0",
    client_id="YOUR_CLIENT_ID",
    client_secret="YOUR_CLIENT_SECRET",
    server_metadata_url="https://your-tenant.us.auth0.com/.well-known/openid-configuration",
    client_kwargs={"scope": "openid profile email"},
)

@app.get("/login")
async def login(request: Request):
    redirect_uri = "https://your-mcp-server.com/callback"
    return await oauth.auth0.authorize_redirect(request, redirect_uri)

@app.get("/callback")
async def callback(request: Request):
    token = await oauth.auth0.authorize_access_token(request)
    userinfo = token.get("userinfo")
    return JSONResponse(userinfo)

That’s it — your hosted MCP server is now OAuth-enabled.
Clients connect securely, and tokens are managed automatically.

Design Considerations

Concern Best Practice
Token Lifetime Keep Access Tokens short (e.g. 1 hour). Use Refresh Tokens for silent renewal.
Scope Design Define minimal scopes: mcp.read, mcp.write, mcp.admin.
Storage Never store tokens client-side. Keep them encrypted server-side.
Revocation Expose /oauth/revoke to let users disconnect any time.
SSO / MFA Integrate with enterprise IdPs (Azure AD, Okta, Google Workspace).

The Payoff

  • Developers love it — zero friction when connecting AI tools.
  • Security teams approve it — full compliance with enterprise auth standards.
  • Easier scaling — one identity layer, infinite MCP instances.
  • Future-proof — works seamlessly with ChatGPT, Claude, and any future AI client supporting OAuth.

In Short

If your hosted MCP server still asks for a token, you’re doing 2023 security in 2025.

OAuth isn’t just “nice to have” — it’s table stakes for secure, enterprise-ready MCP integrations.
Enable it once, and every AI client can connect safely with a single click.

For Architects

Feature Token-Based OAuth 2.0
Setup Manual One-click
Security Weak Strong
Revocation None Built-in
SSO / MFA No Yes
UX Clunky Seamless

Next Steps

  • Enable OAuth 2.0 Authorization Code + PKCE in your hosted MCP server.
  • Register your app with your chosen IdP (Auth0, Azure, Okta, Google).
  • Expose /login, /callback, /token, and /revoke endpoints.
  • Update your .well-known/mcp-manifest.json to advertise OAuth support.

Once done, ChatGPT or Claude Desktop will auto-detect and authenticate — no more tokens required.

Example Manifest Snippet

{
  "name": "Hosted MCP Server with OAuth",
  "version": "1.0.0",
  "auth": {
    "type": "oauth2",
    "authorization_endpoint": "https://your-mcp-server.com/login",
    "token_endpoint": "https://your-mcp-server.com/token",
    "scopes": ["openid", "profile", "mcp.api"]
  }
}