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Generative AI & LLMs Intermediate

Building and Integrating a Custom Model Context Protocol (MCP) Server

This hands-on lab guide walks developers through building a custom Model Context Protocol (MCP) server using Python and fastmcp, and integrating it seamlessly into Visual Studio Code and Claude Code. By connecting local Python tools and APIs directly to your AI client, you enable real-time data retrieval and local tool execution without relying on proprietary plugins.

By Archana Jagannathan
Problem statement

Standard AI coding assistants and Large Language Models (LLMs) operate within isolated sandbox environments. They lack native, real-time access to live external data feeds, custom corporate APIs, local database records, or system logs out of the box. Without a standardized integration protocol, connecting LLMs to external data sources requires writing ad-hoc custom API client code or fragile prompt workarounds every time a new tool is introduced.

Why we need this realtime usecase
  • Standardized Agentic Integration: The Model Context Protocol (MCP) establishes an open, universal standard for connecting AI models to secure data sources and tool servers.
  • Real-Time Data Retrieval: Allows AI assistants to dynamically fetch live external information (such as real-time weather updates, inventory levels, or system metrics) on-the-fly during a chat session without manual developer intervention.
  • Modular Architecture: Decouples tool execution logic from the core LLM client, allowing developers to build, test, and scale specialized micro-servers independently.
When we need this realtime usecase
  • When your AI coding assistant needs to interact with live external services or public APIs (e.g., checking real-time weather, fetching GitHub repository metrics, or querying live databases) during development.
  • When building custom internal developer tools or enterprise plugins that need to expose secure resources, prompt templates, and executable functions to Claude Code or VS Code.
  • When migrating away from monolithic prompt scripts toward clean, modular, and reusable MCP server architectures.
Prerequisites for the lab

Before beginning this lab, ensure you have:

  1. Windows OS with administrative access (PowerShell 5.1+ or PowerShell 7+).
  2. Visual Studio Code installed on your workstation.
  3. Python 3.10+ installed and accessible via terminal commands.
  4. An active Claude Code CLI environment setup inside VS Code (such as an OpenRouter-backed configuration). Refer to my lab "Zero-Cost AI Development: Integrating Claude Code with Free OpenRouter LLMs in VS Code"
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