Python: [BREAKING] changed AIFunction to FunctionTool and @ai_function to @tool (#3413)

* changed AIFunction to FunctionTool and @ai_function to @tool

* test and mypy fixes

* mypy fix

* switch function tool to always_require

* fix noop

* fix github copilot imports

* test fixes

* fix ollama test

* fixes for tests

* fix tests

* reverted change to always_require and extended timeout

* fix test

python/packages/ag-ui/agent_framework_ag_ui/_client.py

@@ -12,12 +12,12 @@ from typing import TYPE_CHECKING, Any, Generic, cast
 
 import httpx
 from agent_framework import (
-    AIFunction,
     BaseChatClient,
     ChatMessage,
     ChatResponse,
     ChatResponseUpdate,
     Content,
+    FunctionTool,
     use_chat_middleware,
     use_function_invocation,
 )
@@ -239,7 +239,7 @@ class AGUIChatClient(BaseChatClient[TAGUIChatOptions], Generic[TAGUIChatOptions]
         if any(getattr(tool, "name", None) == tool_name for tool in config.additional_tools):
             return
 
-        placeholder: AIFunction[Any, Any] = AIFunction(
+        placeholder: FunctionTool[Any, Any] = FunctionTool(
             name=tool_name,
             description="Server-managed tool placeholder (AG-UI)",
             func=None,

python/packages/ag-ui/agent_framework_ag_ui/_utils.py

@@ -10,7 +10,7 @@ from dataclasses import asdict, is_dataclass
 from datetime import date, datetime
 from typing import Any
 
-from agent_framework import AgentResponseUpdate, AIFunction, ChatResponseUpdate, Role, ToolProtocol
+from agent_framework import AgentResponseUpdate, ChatResponseUpdate, FunctionTool, Role, ToolProtocol
 
 # Role mapping constants
 AGUI_TO_FRAMEWORK_ROLE: dict[str, Role] = {
@@ -160,10 +160,10 @@ def make_json_safe(obj: Any) -> Any:  # noqa: ANN401
 
 def convert_agui_tools_to_agent_framework(
     agui_tools: list[dict[str, Any]] | None,
-) -> list[AIFunction[Any, Any]] | None:
-    """Convert AG-UI tool definitions to Agent Framework AIFunction declarations.
+) -> list[FunctionTool[Any, Any]] | None:
+    """Convert AG-UI tool definitions to Agent Framework FunctionTool declarations.
 
-    Creates declaration-only AIFunction instances (no executable implementation).
+    Creates declaration-only FunctionTool instances (no executable implementation).
     These are used to tell the LLM about available tools. The actual execution
     happens on the client side via @use_function_invocation.
 
@@ -174,18 +174,18 @@ def convert_agui_tools_to_agent_framework(
         agui_tools: List of AG-UI tool definitions with name, description, parameters
 
     Returns:
-        List of AIFunction declarations, or None if no tools provided
+        List of FunctionTool declarations, or None if no tools provided
     """
     if not agui_tools:
         return None
 
-    result: list[AIFunction[Any, Any]] = []
+    result: list[FunctionTool[Any, Any]] = []
     for tool_def in agui_tools:
-        # Create declaration-only AIFunction (func=None means no implementation)
+        # Create declaration-only FunctionTool (func=None means no implementation)
         # When func=None, the declaration_only property returns True,
         # which tells @use_function_invocation to return the function call
         # without executing it (so it can be sent back to the client)
-        func: AIFunction[Any, Any] = AIFunction(
+        func: FunctionTool[Any, Any] = FunctionTool(
             name=tool_def.get("name", ""),
             description=tool_def.get("description", ""),
             func=None,  # CRITICAL: Makes declaration_only=True
@@ -229,24 +229,24 @@ def convert_tools_to_agui_format(
 
     results: list[dict[str, Any]] = []
 
-    for tool in tool_list:
-        if isinstance(tool, dict):
+    for tool_item in tool_list:
+        if isinstance(tool_item, dict):
             # Already in dict format, pass through
-            results.append(tool)  # type: ignore[arg-type]
-        elif isinstance(tool, AIFunction):
-            # Convert AIFunction to AG-UI tool format
+            results.append(tool_item)  # type: ignore[arg-type]
+        elif isinstance(tool_item, FunctionTool):
+            # Convert FunctionTool to AG-UI tool format
             results.append(
                 {
-                    "name": tool.name,
-                    "description": tool.description,
-                    "parameters": tool.parameters(),
+                    "name": tool_item.name,
+                    "description": tool_item.description,
+                    "parameters": tool_item.parameters(),
                 }
             )
-        elif callable(tool):
-            # Convert callable to AIFunction first, then to AG-UI format
-            from agent_framework import ai_function
+        elif callable(tool_item):
+            # Convert callable to FunctionTool first, then to AG-UI format
+            from agent_framework import tool
 
-            ai_func = ai_function(tool)
+            ai_func = tool(tool_item)
             results.append(
                 {
                     "name": ai_func.name,
@@ -254,11 +254,11 @@ def convert_tools_to_agui_format(
                     "parameters": ai_func.parameters(),
                 }
             )
-        elif isinstance(tool, ToolProtocol):
+        elif isinstance(tool_item, ToolProtocol):
             # Handle other ToolProtocol implementations
-            # For now, we'll skip non-AIFunction tools as they may not have
+            # For now, we'll skip non-FunctionTool instances as they may not have
             # the parameters() method. This matches .NET behavior which only
-            # converts AIFunctionDeclaration instances.
+            # converts FunctionToolDeclaration instances.
             continue
 
     return results if results else None

python/packages/ag-ui/agent_framework_ag_ui_examples/README.md

@@ -187,11 +187,11 @@ The package uses a clean, orchestrator-based architecture:
 You can create your own agent factories following the same pattern as the examples:
 
 ```python
-from agent_framework import ChatAgent, ai_function
+from agent_framework import ChatAgent, tool
 from agent_framework import ChatClientProtocol
 from agent_framework.ag_ui import AgentFrameworkAgent
 
-@ai_function
+@tool
 def my_tool(param: str) -> str:
     """My custom tool."""
     return f"Result: {param}"
@@ -294,9 +294,9 @@ wrapped_agent = AgentFrameworkAgent(
 Human-in-the-loop is automatically handled when tools are marked for approval:
 
 ```python
-from agent_framework import ai_function
+from agent_framework import tool
 
-@ai_function(approval_mode="always_require")
+@tool(approval_mode="always_require")
 def sensitive_action(param: str) -> str:
     """This action requires user approval."""
     return f"Executed with {param}"

python/packages/ag-ui/agent_framework_ag_ui_examples/agents/document_writer_agent.py

@@ -2,11 +2,11 @@
 
 """Example agent demonstrating predictive state updates with document writing."""
 
-from agent_framework import ChatAgent, ChatClientProtocol, ai_function
+from agent_framework import ChatAgent, ChatClientProtocol, tool
 from agent_framework.ag_ui import AgentFrameworkAgent
 
 
-@ai_function(approval_mode="always_require")
+@tool(approval_mode="always_require")
 def write_document(document: str) -> str:
     """Write a document. Use markdown formatting to format the document.
 

python/packages/ag-ui/agent_framework_ag_ui_examples/agents/human_in_the_loop_agent.py

@@ -5,7 +5,7 @@
 from enum import Enum
 from typing import Any
 
-from agent_framework import ChatAgent, ChatClientProtocol, ai_function
+from agent_framework import ChatAgent, ChatClientProtocol, tool
 from pydantic import BaseModel, Field
 
 
@@ -23,7 +23,7 @@ class TaskStep(BaseModel):
     status: StepStatus = Field(default=StepStatus.ENABLED, description="Whether the step is enabled or disabled")
 
 
-@ai_function(
+@tool(
     name="generate_task_steps",
     description="Generate execution steps for a task",
     approval_mode="always_require",

python/packages/ag-ui/agent_framework_ag_ui_examples/agents/recipe_agent.py

@@ -5,7 +5,7 @@
 from enum import Enum
 from typing import Any
 
-from agent_framework import ChatAgent, ChatClientProtocol, ai_function
+from agent_framework import ChatAgent, ChatClientProtocol, tool
 from agent_framework.ag_ui import AgentFrameworkAgent
 from pydantic import BaseModel, Field
 
@@ -49,7 +49,7 @@ class Recipe(BaseModel):
     instructions: list[str] = Field(..., description="Step-by-step cooking instructions")
 
 
-@ai_function
+@tool
 def update_recipe(recipe: Recipe) -> str:
     """Update the recipe with new or modified content.
 

python/packages/ag-ui/agent_framework_ag_ui_examples/agents/research_assistant_agent.py

@@ -5,11 +5,11 @@
 import asyncio
 from typing import Any
 
-from agent_framework import ChatAgent, ChatClientProtocol, ai_function
+from agent_framework import ChatAgent, ChatClientProtocol, tool
 from agent_framework.ag_ui import AgentFrameworkAgent
 
 
-@ai_function
+@tool
 async def research_topic(topic: str) -> str:
     """Research a topic and generate a comprehensive report.
 
@@ -35,7 +35,7 @@ async def research_topic(topic: str) -> str:
     return f"Research report on '{topic}':\n" + "\n".join(results)
 
 
-@ai_function
+@tool
 async def create_presentation(title: str, num_slides: int) -> str:
     """Create a presentation with multiple slides.
 
@@ -55,7 +55,7 @@ async def create_presentation(title: str, num_slides: int) -> str:
     return f"Created presentation '{title}' with {num_slides} slides:\n" + "\n".join(slides)
 
 
-@ai_function
+@tool
 async def analyze_data(dataset: str) -> str:
     """Analyze a dataset and produce insights.
 

python/packages/ag-ui/agent_framework_ag_ui_examples/agents/task_planner_agent.py

@@ -4,11 +4,11 @@
 
 from typing import Any
 
-from agent_framework import ChatAgent, ChatClientProtocol, ai_function
+from agent_framework import ChatAgent, ChatClientProtocol, tool
 from agent_framework.ag_ui import AgentFrameworkAgent
 
 
-@ai_function(approval_mode="always_require")
+@tool(approval_mode="always_require")
 def create_calendar_event(title: str, date: str, time: str) -> str:
     """Create a calendar event.
 
@@ -23,7 +23,7 @@ def create_calendar_event(title: str, date: str, time: str) -> str:
     return f"Calendar event '{title}' created for {date} at {time}"
 
 
-@ai_function(approval_mode="always_require")
+@tool(approval_mode="always_require")
 def send_email(to: str, subject: str, body: str) -> str:
     """Send an email.
 
@@ -38,7 +38,7 @@ def send_email(to: str, subject: str, body: str) -> str:
     return f"Email sent to {to} with subject '{subject}'"
 
 
-@ai_function(approval_mode="always_require")
+@tool(approval_mode="always_require")
 def book_meeting_room(room_name: str, date: str, start_time: str, end_time: str) -> str:
     """Book a meeting room.
 

python/packages/ag-ui/agent_framework_ag_ui_examples/agents/task_steps_agent.py

@@ -18,7 +18,7 @@ from ag_ui.core import (
     TextMessageStartEvent,
     ToolCallStartEvent,
 )
-from agent_framework import ChatAgent, ChatClientProtocol, ChatMessage, Content, ai_function
+from agent_framework import ChatAgent, ChatClientProtocol, ChatMessage, Content, tool
 from agent_framework.ag_ui import AgentFrameworkAgent
 from pydantic import BaseModel, Field
 
@@ -39,7 +39,7 @@ class TaskStep(BaseModel):
     status: StepStatus = Field(default=StepStatus.PENDING, description="The status of the step")
 
 
-@ai_function
+@tool
 def generate_task_steps(steps: list[TaskStep]) -> str:
     """Generate a list of task steps for completing a task.
 

python/packages/ag-ui/agent_framework_ag_ui_examples/agents/ui_generator_agent.py

@@ -3,9 +3,9 @@
 """Example agent demonstrating Tool-based Generative UI (Feature 5)."""
 
 import sys
-from typing import Any, TypedDict
+from typing import TYPE_CHECKING, Any, TypedDict
 
-from agent_framework import AIFunction, ChatAgent, ChatClientProtocol, ChatOptions
+from agent_framework import ChatAgent, ChatClientProtocol, FunctionTool
 from agent_framework.ag_ui import AgentFrameworkAgent
 
 if sys.version_info >= (3, 13):
@@ -13,8 +13,11 @@ if sys.version_info >= (3, 13):
 else:
     from typing_extensions import TypeVar  # type: ignore # pragma: no cover
 
+if TYPE_CHECKING:
+    from agent_framework import ChatOptions
+
 # Declaration-only tools (func=None) - actual rendering happens on the client side
-generate_haiku = AIFunction[Any, str](
+generate_haiku = FunctionTool[Any, str](
     name="generate_haiku",
     description="""Generate a haiku with image and gradient background (FRONTEND_RENDER).
 
@@ -62,7 +65,7 @@ generate_haiku = AIFunction[Any, str](
     },
 )
 
-create_chart = AIFunction[Any, str](
+create_chart = FunctionTool[Any, str](
     name="create_chart",
     description="""Create an interactive chart (FRONTEND_RENDER).
 
@@ -90,7 +93,7 @@ create_chart = AIFunction[Any, str](
     },
 )
 
-display_timeline = AIFunction[Any, str](
+display_timeline = FunctionTool[Any, str](
     name="display_timeline",
     description="""Display an interactive timeline (FRONTEND_RENDER).
 
@@ -118,7 +121,7 @@ display_timeline = AIFunction[Any, str](
     },
 )
 
-show_comparison_table = AIFunction[Any, str](
+show_comparison_table = FunctionTool[Any, str](
     name="show_comparison_table",
     description="""Show a comparison table (FRONTEND_RENDER).
 

python/packages/ag-ui/agent_framework_ag_ui_examples/agents/weather_agent.py

@@ -4,10 +4,10 @@
 
 from typing import Any
 
-from agent_framework import ChatAgent, ChatClientProtocol, ai_function
+from agent_framework import ChatAgent, ChatClientProtocol, tool
 
 
-@ai_function
+@tool
 def get_weather(location: str) -> dict[str, Any]:
     """Get the current weather for a location.
 
@@ -39,7 +39,7 @@ def get_weather(location: str) -> dict[str, Any]:
     }
 
 
-@ai_function
+@tool
 def get_forecast(location: str, days: int = 3) -> str:
     """Get the weather forecast for a location.
 

python/packages/ag-ui/getting_started/client_advanced.py

@@ -12,11 +12,11 @@ This example demonstrates advanced AGUIChatClient features including:
 import asyncio
 import os
 
-from agent_framework import ai_function
+from agent_framework import tool
 from agent_framework.ag_ui import AGUIChatClient
 
 
-@ai_function
+@tool
 def get_weather(location: str) -> str:
     """Get the current weather for a location.
 
@@ -33,7 +33,7 @@ def get_weather(location: str) -> str:
     return weather_data.get(location.lower(), f"Weather data not available for {location}")
 
 
-@ai_function
+@tool
 def calculate(a: float, b: float, operation: str) -> str:
     """Perform basic arithmetic operations.
 

python/packages/ag-ui/getting_started/client_with_agent.py

@@ -22,7 +22,7 @@ import asyncio
 import logging
 import os
 
-from agent_framework import ChatAgent, ai_function
+from agent_framework import ChatAgent, tool
 from agent_framework.ag_ui import AGUIChatClient
 
 # Enable debug logging
@@ -33,7 +33,7 @@ logging.basicConfig(
 logger = logging.getLogger(__name__)
 
 
-@ai_function(description="Get the current weather for a location.")
+@tool(description="Get the current weather for a location.")
 def get_weather(location: str) -> str:
     """Get the current weather for a location.
 

python/packages/ag-ui/getting_started/server.py

@@ -5,7 +5,7 @@
 import logging
 import os
 
-from agent_framework import ChatAgent, ai_function
+from agent_framework import ChatAgent, tool
 from agent_framework.ag_ui import add_agent_framework_fastapi_endpoint
 from agent_framework.azure import AzureOpenAIChatClient
 from dotenv import load_dotenv
@@ -87,7 +87,7 @@ async def verify_api_key(api_key: str | None = Security(API_KEY_HEADER)) -> None
 
 
 # Server-side tool (executes on server)
-@ai_function(description="Get the time zone for a location.")
+@tool(description="Get the time zone for a location.")
 def get_time_zone(location: str) -> str:
     """Get the time zone for a location.
 

python/packages/ag-ui/tests/test_ag_ui_client.py

@@ -13,7 +13,7 @@ from agent_framework import (
     ChatResponseUpdate,
     Content,
     Role,
-    ai_function,
+    tool,
 )
 from pytest import MonkeyPatch
 
@@ -231,9 +231,9 @@ class TestAGUIChatClient:
         When server requests a client function, @use_function_invocation decorator
         intercepts and executes it locally. This matches .NET AG-UI implementation.
         """
-        from agent_framework import ai_function
+        from agent_framework import tool
 
-        @ai_function
+        @tool
         def test_tool(param: str) -> str:
             """Test tool."""
             return "result"
@@ -299,7 +299,7 @@ class TestAGUIChatClient:
     async def test_server_tool_calls_not_executed_locally(self, monkeypatch: MonkeyPatch) -> None:
         """Server tools should not trigger local function invocation even when client tools exist."""
 
-        @ai_function
+        @tool
         def client_tool() -> str:
             """Client tool stub."""
             return "client"

python/packages/ag-ui/tests/test_agent_wrapper_comprehensive.py

@@ -680,12 +680,12 @@ async def test_agent_with_use_service_thread_is_true():
 
 async def test_function_approval_mode_executes_tool():
     """Test that function approval with approval_mode='always_require' sends the correct messages."""
-    from agent_framework import ai_function
+    from agent_framework import tool
     from agent_framework.ag_ui import AgentFrameworkAgent
 
     messages_received: list[Any] = []
 
-    @ai_function(
+    @tool(
         name="get_datetime",
         description="Get the current date and time",
         approval_mode="always_require",
@@ -771,12 +771,12 @@ async def test_function_approval_mode_executes_tool():
 
 async def test_function_approval_mode_rejection():
     """Test that function approval rejection creates a rejection response."""
-    from agent_framework import ai_function
+    from agent_framework import tool
     from agent_framework.ag_ui import AgentFrameworkAgent
 
     messages_received: list[Any] = []
 
-    @ai_function(
+    @tool(
         name="delete_all_data",
         description="Delete all user data",
         approval_mode="always_require",

python/packages/ag-ui/tests/test_tooling.py

@@ -2,7 +2,7 @@
 
 from unittest.mock import MagicMock
 
-from agent_framework import ChatAgent, ai_function
+from agent_framework import ChatAgent, tool
 
 from agent_framework_ag_ui._orchestration._tooling import (
     collect_server_tools,
@@ -25,7 +25,7 @@ class MockMCPTool:
         self.is_connected = is_connected
 
 
-@ai_function
+@tool
 def regular_tool() -> str:
     """Regular tool for testing."""
     return "result"
@@ -35,7 +35,7 @@ def _create_chat_agent_with_tool(tool_name: str = "regular_tool") -> ChatAgent:
     """Create a ChatAgent with a mocked chat client and a simple tool.
 
     Note: tool_name parameter is kept for API compatibility but the tool
-    will always be named 'regular_tool' since ai_function uses the function name.
+    will always be named 'regular_tool' since tool uses the function name.
     """
     mock_chat_client = MagicMock()
     return ChatAgent(chat_client=mock_chat_client, tools=[regular_tool])

python/packages/ag-ui/tests/test_utils.py

@@ -252,13 +252,13 @@ def test_make_json_safe_dataclass_with_nested_to_dict_object():
     assert json_str is not None
 
 
-def test_convert_tools_to_agui_format_with_ai_function():
-    """Test converting AIFunction to AG-UI format."""
-    from agent_framework import ai_function
+def test_convert_tools_to_agui_format_with_tool():
+    """Test converting FunctionTool to AG-UI format."""
+    from agent_framework import tool
 
     from agent_framework_ag_ui._utils import convert_tools_to_agui_format
 
-    @ai_function
+    @tool
     def test_func(param: str, count: int = 5) -> str:
         """Test function."""
         return f"{param} {count}"
@@ -318,11 +318,11 @@ def test_convert_tools_to_agui_format_with_none():
 
 def test_convert_tools_to_agui_format_with_single_tool():
     """Test converting single tool (not in list)."""
-    from agent_framework import ai_function
+    from agent_framework import tool
 
     from agent_framework_ag_ui._utils import convert_tools_to_agui_format
 
-    @ai_function
+    @tool
     def single_tool(arg: str) -> str:
         """Single tool."""
         return arg
@@ -336,16 +336,16 @@ def test_convert_tools_to_agui_format_with_single_tool():
 
 def test_convert_tools_to_agui_format_with_multiple_tools():
     """Test converting multiple tools."""
-    from agent_framework import ai_function
+    from agent_framework import tool
 
     from agent_framework_ag_ui._utils import convert_tools_to_agui_format
 
-    @ai_function
+    @tool
     def tool1(x: int) -> int:
         """Tool 1."""
         return x
 
-    @ai_function
+    @tool
     def tool2(y: str) -> str:
         """Tool 2."""
         return y

python/packages/anthropic/agent_framework_anthropic/_chat_client.py

@@ -6,7 +6,6 @@ from typing import Any, ClassVar, Final, Generic, Literal, TypedDict
 
 from agent_framework import (
     AGENT_FRAMEWORK_USER_AGENT,
-    AIFunction,
     Annotation,
     BaseChatClient,
     ChatMessage,
@@ -15,6 +14,7 @@ from agent_framework import (
     ChatResponseUpdate,
     Content,
     FinishReason,
+    FunctionTool,
     HostedCodeInterpreterTool,
     HostedMCPTool,
     HostedWebSearchTool,
@@ -583,7 +583,7 @@ class AnthropicClient(BaseChatClient[TAnthropicOptions], Generic[TAnthropicOptio
                 match tool:
                     case MutableMapping():
                         tool_list.append(tool)
-                    case AIFunction():
+                    case FunctionTool():
                         tool_list.append({
                             "type": "custom",
                             "name": tool.name,

python/packages/anthropic/tests/test_anthropic_client.py

@@ -16,7 +16,7 @@ from agent_framework import (
     HostedMCPTool,
     HostedWebSearchTool,
     Role,
-    ai_function,
+    tool,
 )
 from agent_framework.exceptions import ServiceInitializationError
 from anthropic.types.beta import (
@@ -259,11 +259,11 @@ def test_prepare_messages_for_anthropic_without_system(mock_anthropic_client: Ma
 # Tool Conversion Tests
 
 
-def test_prepare_tools_for_anthropic_ai_function(mock_anthropic_client: MagicMock) -> None:
-    """Test converting AIFunction to Anthropic format."""
+def test_prepare_tools_for_anthropic_tool(mock_anthropic_client: MagicMock) -> None:
+    """Test converting FunctionTool to Anthropic format."""
     chat_client = create_test_anthropic_client(mock_anthropic_client)
 
-    @ai_function
+    @tool(approval_mode="never_require")
     def get_weather(location: Annotated[str, Field(description="Location to get weather for")]) -> str:
         """Get weather for a location."""
         return f"Weather for {location}"
@@ -443,7 +443,7 @@ async def test_prepare_options_with_tools(mock_anthropic_client: MagicMock) -> N
     """Test _prepare_options with tools."""
     chat_client = create_test_anthropic_client(mock_anthropic_client)
 
-    @ai_function
+    @tool(approval_mode="never_require")
     def get_weather(location: str) -> str:
         """Get weather for a location."""
         return f"Weather for {location}"
@@ -709,7 +709,7 @@ async def test_inner_get_streaming_response(mock_anthropic_client: MagicMock) ->
 # Integration Tests
 
 
-@ai_function
+@tool(approval_mode="never_require")
 def get_weather(
     location: Annotated[str, Field(description="The location to get the weather for.")],
 ) -> str:

python/packages/azure-ai/agent_framework_azure_ai/_agent_provider.py

@@ -6,9 +6,9 @@ from typing import TYPE_CHECKING, Any, Generic, TypedDict, cast
 
 from agent_framework import (
     AGENT_FRAMEWORK_USER_AGENT,
-    AIFunction,
     ChatAgent,
     ContextProvider,
+    FunctionTool,
     Middleware,
     ToolProtocol,
     normalize_tools,
@@ -445,9 +445,9 @@ class AzureAIAgentsProvider(Generic[TOptions_co]):
         # Add user-provided function tools and MCP tools
         if provided_tools:
             for provided_tool in provided_tools:
-                # AIFunction - has implementation for function calling
+                # FunctionTool - has implementation for function calling
                 # MCPTool - ChatAgent handles MCP connection and tool discovery at runtime
-                if isinstance(provided_tool, (AIFunction, MCPTool)):
+                if isinstance(provided_tool, (FunctionTool, MCPTool)):
                     merged.append(provided_tool)  # type: ignore[reportUnknownArgumentType]
 
         return merged
@@ -488,7 +488,7 @@ class AzureAIAgentsProvider(Generic[TOptions_co]):
         provided_names: set[str] = set()
         if provided_tools:
             for tool in provided_tools:
-                if isinstance(tool, AIFunction):
+                if isinstance(tool, FunctionTool):
                     provided_names.add(tool.name)
 
         # Check for missing implementations

python/packages/azure-ai/agent_framework_azure_ai/_chat_client.py

@@ -10,7 +10,6 @@ from typing import Any, ClassVar, Generic, TypedDict
 
 from agent_framework import (
     AGENT_FRAMEWORK_USER_AGENT,
-    AIFunction,
     Annotation,
     BaseChatClient,
     ChatAgent,
@@ -21,6 +20,7 @@ from agent_framework import (
     ChatResponseUpdate,
     Content,
     ContextProvider,
+    FunctionTool,
     HostedCodeInterpreterTool,
     HostedFileSearchTool,
     HostedMCPTool,
@@ -1117,7 +1117,7 @@ class AzureAIAgentClient(BaseChatClient[TAzureAIAgentOptions], Generic[TAzureAIA
         tool_definitions: list[ToolDefinition | dict[str, Any]] = []
         for tool in tools:
             match tool:
-                case AIFunction():
+                case FunctionTool():
                     tool_definitions.append(tool.to_json_schema_spec())  # type: ignore[reportUnknownArgumentType]
                 case HostedWebSearchTool():
                     additional_props = tool.additional_properties or {}

python/packages/azure-ai/agent_framework_azure_ai/_project_provider.py

@@ -6,9 +6,9 @@ from typing import Any, Generic, TypedDict
 
 from agent_framework import (
     AGENT_FRAMEWORK_USER_AGENT,
-    AIFunction,
     ChatAgent,
     ContextProvider,
+    FunctionTool,
     Middleware,
     ToolProtocol,
     get_logger,
@@ -20,10 +20,12 @@ from azure.ai.projects.aio import AIProjectClient
 from azure.ai.projects.models import (
     AgentReference,
     AgentVersionDetails,
-    FunctionTool,
     PromptAgentDefinition,
     PromptAgentDefinitionText,
 )
+from azure.ai.projects.models import (
+    FunctionTool as AzureFunctionTool,
+)
 from azure.core.credentials_async import AsyncTokenCredential
 from pydantic import ValidationError
 
@@ -224,7 +226,7 @@ class AzureAIProjectAgentProvider(Generic[TOptions_co]):
 
         # Connect MCP tools and discover their functions BEFORE creating the agent
         # This is required because Azure AI Responses API doesn't accept tools at request time
-        mcp_discovered_functions: list[AIFunction[Any, Any]] = []
+        mcp_discovered_functions: list[FunctionTool] = []
         for mcp_tool in mcp_tools:
             if not mcp_tool.is_connected:
                 await mcp_tool.connect()
@@ -433,9 +435,9 @@ class AzureAIProjectAgentProvider(Generic[TOptions_co]):
         # Add user-provided function tools and MCP tools
         if provided_tools:
             for provided_tool in provided_tools:
-                # AIFunction - has implementation for function calling
+                # FunctionTool - has implementation for function calling
                 # MCPTool - ChatAgent handles MCP connection and tool discovery at runtime
-                if isinstance(provided_tool, (AIFunction, MCPTool)):
+                if isinstance(provided_tool, (FunctionTool, MCPTool)):
                     merged.append(provided_tool)  # type: ignore[reportUnknownArgumentType]
 
         return merged
@@ -452,12 +454,14 @@ class AzureAIProjectAgentProvider(Generic[TOptions_co]):
         """Validate that required function tools are provided."""
         # Normalize and validate function tools
         normalized_tools = normalize_tools(provided_tools)
-        tool_names = {tool.name for tool in normalized_tools if isinstance(tool, AIFunction)}
+        tool_names = {tool.name for tool in normalized_tools if isinstance(tool, FunctionTool)}
 
         # If function tools exist in agent definition but were not provided,
         # we need to raise an error, as it won't be possible to invoke the function.
         missing_tools = [
-            tool.name for tool in (agent_tools or []) if isinstance(tool, FunctionTool) and tool.name not in tool_names
+            tool.name
+            for tool in (agent_tools or [])
+            if isinstance(tool, AzureFunctionTool) and tool.name not in tool_names
         ]
 
         if missing_tools:

python/packages/azure-ai/agent_framework_azure_ai/_shared.py

@@ -5,8 +5,8 @@ from collections.abc import Mapping, MutableMapping, Sequence
 from typing import Any, ClassVar, Literal, cast
 
 from agent_framework import (
-    AIFunction,
     Content,
+    FunctionTool,
     HostedCodeInterpreterTool,
     HostedFileSearchTool,
     HostedImageGenerationTool,
@@ -29,7 +29,6 @@ from azure.ai.projects.models import (
     ApproximateLocation,
     CodeInterpreterTool,
     CodeInterpreterToolAuto,
-    FunctionTool,
     ImageGenTool,
     ImageGenToolInputImageMask,
     MCPTool,
@@ -42,6 +41,9 @@ from azure.ai.projects.models import (
 from azure.ai.projects.models import (
     FileSearchTool as ProjectsFileSearchTool,
 )
+from azure.ai.projects.models import (
+    FunctionTool as AzureFunctionTool,
+)
 from pydantic import BaseModel
 
 logger = get_logger("agent_framework.azure")
@@ -141,7 +143,7 @@ def to_azure_ai_agent_tools(
     tool_definitions: list[ToolDefinition | dict[str, Any]] = []
     for tool in tools:
         match tool:
-            case AIFunction():
+            case FunctionTool():
                 tool_definitions.append(tool.to_json_schema_spec())  # type: ignore[reportUnknownArgumentType]
             case HostedWebSearchTool():
                 additional_props = tool.additional_properties or {}
@@ -439,11 +441,11 @@ def to_azure_ai_tools(
                     container = CodeInterpreterToolAuto(file_ids=file_ids if file_ids else None)
                     ci_tool: CodeInterpreterTool = CodeInterpreterTool(container=container)
                     azure_tools.append(ci_tool)
-                case AIFunction():
+                case FunctionTool():
                     params = tool.parameters()
                     params["additionalProperties"] = False
                     azure_tools.append(
-                        FunctionTool(
+                        AzureFunctionTool(
                             name=tool.name,
                             parameters=params,
                             strict=False,

python/packages/azure-ai/tests/test_agent_provider.py

@@ -12,7 +12,7 @@ from agent_framework import (
     HostedFileSearchTool,
     HostedMCPTool,
     HostedWebSearchTool,
-    ai_function,
+    tool,
 )
 from agent_framework.exceptions import ServiceInitializationError
 from azure.ai.agents.models import (
@@ -222,7 +222,7 @@ async def test_create_agent_with_tools(
 
     provider = AzureAIAgentsProvider(agents_client=mock_agents_client)
 
-    @ai_function
+    @tool(approval_mode="never_require")
     def get_weather(city: str) -> str:
         """Get weather for a city."""
         return f"Weather in {city}"
@@ -366,7 +366,7 @@ async def test_get_agent_with_provided_function_tools(
     mock_agent.tools = [mock_function_tool]
     mock_agents_client.get_agent = AsyncMock(return_value=mock_agent)
 
-    @ai_function
+    @tool(approval_mode="never_require")
     def get_weather(city: str) -> str:
         """Get weather for a city."""
         return f"Weather in {city}"
@@ -483,9 +483,9 @@ def test_to_azure_ai_agent_tools_empty() -> None:
 
 
 def test_to_azure_ai_agent_tools_function() -> None:
-    """Test converting AIFunction to Azure tool definition."""
+    """Test converting FunctionTool to Azure tool definition."""
 
-    @ai_function
+    @tool(approval_mode="never_require")
     def get_weather(city: str) -> str:
         """Get weather for a city."""
         return f"Weather in {city}"

python/packages/azure-ai/tests/test_azure_ai_agent_client.py

@@ -23,6 +23,7 @@ from agent_framework import (
     HostedMCPTool,
     HostedWebSearchTool,
     Role,
+    tool,
 )
 from agent_framework._serialization import SerializationMixin
 from agent_framework.exceptions import ServiceInitializationError
@@ -940,7 +941,7 @@ async def test_azure_ai_chat_client_service_url(mock_agents_client: MagicMock) -
     assert result == "https://test-endpoint.com/"
 
 
-async def test_azure_ai_chat_client_prepare_tool_outputs_for_azure_ai_function_result(
+async def test_azure_ai_chat_client_prepare_tool_outputs_for_azure_tool_result(
     mock_agents_client: MagicMock,
 ) -> None:
     """Test _prepare_tool_outputs_for_azure_ai with FunctionResultContent."""
@@ -1336,6 +1337,7 @@ def test_azure_ai_chat_client_extract_file_path_contents_empty_annotations(
     assert len(file_contents) == 0
 
 
+@tool(approval_mode="never_require")
 def get_weather(
     location: Annotated[str, Field(description="The location to get the weather for.")],
 ) -> str:

python/packages/azure-ai/tests/test_azure_ai_client.py

@@ -22,6 +22,7 @@ from agent_framework import (
     HostedMCPTool,
     HostedWebSearchTool,
     Role,
+    tool,
 )
 from agent_framework.exceptions import ServiceInitializationError
 from azure.ai.projects.aio import AIProjectClient
@@ -1025,6 +1026,7 @@ def test_from_azure_ai_tools() -> None:
 # region Integration Tests
 
 
+@tool(approval_mode="never_require")
 def get_weather(
     location: Annotated[str, Field(description="The location to get the weather for.")],
 ) -> str:

python/packages/azure-ai/tests/test_provider.py

@@ -4,16 +4,18 @@ import os
 from unittest.mock import AsyncMock, MagicMock, patch
 
 import pytest
-from agent_framework import AIFunction, ChatAgent
+from agent_framework import ChatAgent, FunctionTool
 from agent_framework._mcp import MCPTool
 from agent_framework.exceptions import ServiceInitializationError
 from azure.ai.projects.aio import AIProjectClient
 from azure.ai.projects.models import (
     AgentReference,
     AgentVersionDetails,
-    FunctionTool,
     PromptAgentDefinition,
 )
+from azure.ai.projects.models import (
+    FunctionTool as AzureFunctionTool,
+)
 from azure.identity.aio import AzureCliCredential
 
 from agent_framework_azure_ai import AzureAIProjectAgentProvider
@@ -373,7 +375,7 @@ async def test_provider_get_agent_missing_function_tools(mock_project_client: Ma
     mock_agent_version.description = None
     mock_agent_version.definition = MagicMock(spec=PromptAgentDefinition)
     mock_agent_version.definition.tools = [
-        FunctionTool(name="test_tool", parameters=[], strict=True, description="Test tool")
+        AzureFunctionTool(name="test_tool", parameters=[], strict=True, description="Test tool")
     ]
 
     mock_agent_object = MagicMock()
@@ -494,7 +496,7 @@ class MockMCPTool(MCPTool):  # pyright: ignore[reportGeneralTypeIssues]
     unit testing. We only need isinstance(obj, MCPTool) to return True.
     """
 
-    def __init__(self, functions: list[AIFunction] | None = None) -> None:
+    def __init__(self, functions: list[FunctionTool] | None = None) -> None:
         self.name = "MockMCPTool"
         self.description = "A mock MCP tool for testing"
         self.is_connected = False
@@ -502,7 +504,7 @@ class MockMCPTool(MCPTool):  # pyright: ignore[reportGeneralTypeIssues]
         self._connect_called = False
 
     @property
-    def functions(self) -> list[AIFunction]:
+    def functions(self) -> list[FunctionTool]:
         return self._mock_functions
 
     async def connect(self, *, reset: bool = False) -> None:
@@ -520,13 +522,13 @@ def mock_mcp_tool() -> MockMCPTool:
     return MockMCPTool(functions=mock_functions)
 
 
-def create_mock_ai_function(name: str, description: str = "A mock function") -> AIFunction:
-    """Create a real AIFunction for testing."""
+def create_mock_ai_function(name: str, description: str = "A mock function") -> FunctionTool:
+    """Create a real FunctionTool for testing."""
 
     def mock_func(arg: str) -> str:
         return f"Result from {name}: {arg}"
 
-    return AIFunction(func=mock_func, name=name, description=description)
+    return FunctionTool(func=mock_func, name=name, description=description, approval_mode="never_require")
 
 
 async def test_provider_create_agent_with_mcp_tool(
@@ -593,8 +595,8 @@ async def test_provider_create_agent_with_mcp_and_regular_tools(
     azure_ai_unit_test_env: dict[str, str],
     mock_mcp_tool: "MockMCPTool",
 ) -> None:
-    """Test that create_agent handles both MCP tools and regular AIFunctions."""
-    # Create a regular AIFunction
+    """Test that create_agent handles both MCP tools and regular FunctionTools."""
+    # Create a regular FunctionTool
     regular_function = create_mock_ai_function("regular_function", "A regular function")
 
     # Patch normalize_tools to return tools as-is in a list (avoids callable check)
@@ -637,7 +639,7 @@ async def test_provider_create_agent_with_mcp_and_regular_tools(
         )
 
         # Verify to_azure_ai_tools was called with:
-        # - The regular AIFunction (1)
+        # - The regular FunctionTool (1)
         # - The 2 discovered MCP functions
         mock_to_azure_tools.assert_called_once()
         tools_passed = mock_to_azure_tools.call_args[0][0]

python/packages/bedrock/agent_framework_bedrock/_chat_client.py

@@ -10,7 +10,6 @@ from uuid import uuid4
 
 from agent_framework import (
     AGENT_FRAMEWORK_USER_AGENT,
-    AIFunction,
     BaseChatClient,
     ChatMessage,
     ChatOptions,
@@ -18,6 +17,7 @@ from agent_framework import (
     ChatResponseUpdate,
     Content,
     FinishReason,
+    FunctionTool,
     Role,
     ToolProtocol,
     UsageDetails,
@@ -548,7 +548,7 @@ class BedrockChatClient(BaseChatClient[TBedrockChatOptions], Generic[TBedrockCha
             if isinstance(tool, MutableMapping):
                 converted.append(dict(tool))
                 continue
-            if isinstance(tool, AIFunction):
+            if isinstance(tool, FunctionTool):
                 converted.append({
                     "toolSpec": {
                         "name": tool.name,

python/packages/bedrock/samples/bedrock_sample.py

@@ -2,22 +2,13 @@
 
 import asyncio
 import logging
-from collections.abc import Sequence
 
-from agent_framework import (
-    AgentResponse,
-    ChatAgent,
-    FunctionCallContent,
-    FunctionResultContent,
-    Role,
-    TextContent,
-    ai_function,
-)
+from agent_framework import ChatAgent, tool
 
 from agent_framework_bedrock import BedrockChatClient
 
 
-@ai_function
+@tool(approval_mode="never_require")
 def get_weather(city: str) -> dict[str, str]:
     """Return a mock forecast for the requested city."""
     normalized = city.strip() or "New York"
@@ -36,27 +27,18 @@ async def main() -> None:
 
     response = await agent.run("Use the weather tool to check the forecast for new york.")
     logging.info("\nAssistant reply:", response.text or "<no text returned>")
-    _log_response(response)
-
-
-def _log_response(response: AgentResponse) -> None:
     logging.info("\nConversation transcript:")
-    for idx, message in enumerate(response.messages, start=1):
-        tag = f"{idx}. {message.role.value if isinstance(message.role, Role) else message.role}"
-        _log_contents(tag, message.contents)
-
-
-def _log_contents(tag: str, contents: Sequence[object]) -> None:
-    logging.info(f"[{tag}] {len(contents)} content blocks")
-    for idx, content in enumerate(contents, start=1):
-        if isinstance(content, TextContent):
-            logging.info(f"  {idx}. text -> {content.text}")
-        elif isinstance(content, FunctionCallContent):
-            logging.info(f"  {idx}. tool_call ({content.name}) -> {content.arguments}")
-        elif isinstance(content, FunctionResultContent):
-            logging.info(f"  {idx}. tool_result ({content.call_id}) -> {content.result}")
-        else:  # pragma: no cover - defensive
-            logging.info(f"  {idx}. {content.type}")
+    for message in response.messages:
+        for idx, content in enumerate(message.contents, start=1):
+            match content.type:
+                case "text":
+                    logging.info(f"  {idx}. text -> {content.text}")
+                case "function_call":
+                    logging.info(f"  {idx}. function_call ({content.name}) -> {content.arguments}")
+                case "function_result":
+                    logging.info(f"  {idx}. function_result ({content.call_id}) -> {content.result}")
+                case _:
+                    logging.info(f"  {idx}. {content.type}")
 
 
 if __name__ == "__main__":

python/packages/bedrock/tests/test_bedrock_settings.py

@@ -6,10 +6,10 @@ from unittest.mock import MagicMock
 
 import pytest
 from agent_framework import (
-    AIFunction,
     ChatMessage,
     ChatOptions,
     Content,
+    FunctionTool,
     Role,
 )
 from pydantic import BaseModel
@@ -42,7 +42,7 @@ def test_settings_load_from_environment(monkeypatch: pytest.MonkeyPatch) -> None
 def test_build_request_includes_tool_config() -> None:
     client = _build_client()
 
-    tool = AIFunction(name="get_weather", description="desc", func=_dummy_weather, input_model=_WeatherArgs)
+    tool = FunctionTool(name="get_weather", description="desc", func=_dummy_weather, input_model=_WeatherArgs)
     options = {
         "tools": [tool],
         "tool_choice": {"mode": "required", "required_function_name": "get_weather"},

python/packages/core/agent_framework/_agents.py

@@ -31,7 +31,7 @@ from ._memory import Context, ContextProvider
 from ._middleware import Middleware, use_agent_middleware
 from ._serialization import SerializationMixin
 from ._threads import AgentThread, ChatMessageStoreProtocol
-from ._tools import FUNCTION_INVOKING_CHAT_CLIENT_MARKER, AIFunction, ToolProtocol
+from ._tools import FUNCTION_INVOKING_CHAT_CLIENT_MARKER, FunctionTool, ToolProtocol
 from ._types import (
     AgentResponse,
     AgentResponseUpdate,
@@ -417,8 +417,8 @@ class BaseAgent(SerializationMixin):
         stream_callback: Callable[[AgentResponseUpdate], None]
         | Callable[[AgentResponseUpdate], Awaitable[None]]
         | None = None,
-    ) -> AIFunction[BaseModel, str]:
-        """Create an AIFunction tool that wraps this agent.
+    ) -> FunctionTool[BaseModel, str]:
+        """Create a FunctionTool that wraps this agent.
 
         Keyword Args:
             name: The name for the tool. If None, uses the agent's name.
@@ -429,7 +429,7 @@ class BaseAgent(SerializationMixin):
             stream_callback: Optional callback for streaming responses. If provided, uses run_stream.
 
         Returns:
-            An AIFunction that can be used as a tool by other agents.
+            A FunctionTool that can be used as a tool by other agents.
 
         Raises:
             TypeError: If the agent does not implement AgentProtocol.
@@ -491,11 +491,12 @@ class BaseAgent(SerializationMixin):
             # Create final text from accumulated updates
             return AgentResponse.from_agent_run_response_updates(response_updates).text
 
-        agent_tool: AIFunction[BaseModel, str] = AIFunction(
+        agent_tool: FunctionTool[BaseModel, str] = FunctionTool(
             name=tool_name,
             description=tool_description,
             func=agent_wrapper,
             input_model=input_model,  # type: ignore
+            approval_mode="never_require",
         )
         agent_tool._forward_runtime_kwargs = True  # type: ignore
         return agent_tool
@@ -1213,7 +1214,19 @@ class ChatAgent(BaseAgent, Generic[TOptions_co]):  # type: ignore[misc]
         Raises:
             AgentExecutionException: If the conversation IDs on the thread and agent don't match.
         """
-        chat_options = deepcopy(self.default_options) if self.default_options else {}
+        # Create a shallow copy of options and deep copy non-tool values
+        # Tools containing HTTP clients or other non-copyable objects cannot be deep copied
+        if self.default_options:
+            chat_options: dict[str, Any] = {}
+            for key, value in self.default_options.items():
+                if key == "tools":
+                    # Keep tool references as-is (don't deep copy)
+                    chat_options[key] = list(value) if value else []
+                else:
+                    # Deep copy other options to prevent mutation
+                    chat_options[key] = deepcopy(value)
+        else:
+            chat_options = {}
         thread = thread or self.get_new_thread()
         if thread.service_thread_id and thread.context_provider:
             await thread.context_provider.thread_created(thread.service_thread_id)
@@ -1237,7 +1250,7 @@ class ChatAgent(BaseAgent, Generic[TOptions_co]):  # type: ignore[misc]
                 if context.instructions:
                     chat_options["instructions"] = (
                         context.instructions
-                        if not chat_options.get("instructions")
+                        if "instructions" not in chat_options
                         else f"{chat_options['instructions']}\n{context.instructions}"
                     )
         thread_messages.extend(input_messages or [])

python/packages/core/agent_framework/_mcp.py

@@ -25,7 +25,7 @@ from mcp.shared.session import RequestResponder
 from pydantic import BaseModel, create_model
 
 from ._tools import (
-    AIFunction,
+    FunctionTool,
     HostedMCPSpecificApproval,
     _build_pydantic_model_from_json_schema,
 )
@@ -356,7 +356,7 @@ class MCPTool:
         self.session = session
         self.request_timeout = request_timeout
         self.chat_client = chat_client
-        self._functions: list[AIFunction[Any, Any]] = []
+        self._functions: list[FunctionTool[Any, Any]] = []
         self.is_connected: bool = False
         self._tools_loaded: bool = False
         self._prompts_loaded: bool = False
@@ -365,7 +365,7 @@ class MCPTool:
         return f"MCPTool(name={self.name}, description={self.description})"
 
     @property
-    def functions(self) -> list[AIFunction[Any, Any]]:
+    def functions(self) -> list[FunctionTool[Any, Any]]:
         """Get the list of functions that are allowed."""
         if not self.allowed_tools:
             return self._functions
@@ -609,7 +609,7 @@ class MCPTool:
         """Load prompts from the MCP server.
 
         Retrieves available prompts from the connected MCP server and converts
-        them into AIFunction instances. Handles pagination automatically.
+        them into FunctionTool instances. Handles pagination automatically.
 
         Raises:
             ToolExecutionException: If the MCP server is not connected.
@@ -633,7 +633,7 @@ class MCPTool:
 
                 input_model = _get_input_model_from_mcp_prompt(prompt)
                 approval_mode = self._determine_approval_mode(local_name)
-                func: AIFunction[BaseModel, list[ChatMessage] | Any | types.GetPromptResult] = AIFunction(
+                func: FunctionTool[BaseModel, list[ChatMessage] | Any | types.GetPromptResult] = FunctionTool(
                     func=partial(self.get_prompt, prompt.name),
                     name=local_name,
                     description=prompt.description or "",
@@ -652,7 +652,7 @@ class MCPTool:
         """Load tools from the MCP server.
 
         Retrieves available tools from the connected MCP server and converts
-        them into AIFunction instances. Handles pagination automatically.
+        them into FunctionTool instances. Handles pagination automatically.
 
         Raises:
             ToolExecutionException: If the MCP server is not connected.
@@ -676,8 +676,8 @@ class MCPTool:
 
                 input_model = _get_input_model_from_mcp_tool(tool)
                 approval_mode = self._determine_approval_mode(local_name)
-                # Create AIFunctions out of each tool
-                func: AIFunction[BaseModel, list[Content] | Any | types.CallToolResult] = AIFunction(
+                # Create FunctionTools out of each tool
+                func: FunctionTool[BaseModel, list[Content] | Any | types.CallToolResult] = FunctionTool(
                     func=partial(self.call_tool, tool.name),
                     name=local_name,
                     description=tool.description or "",

python/packages/core/agent_framework/_middleware.py

@@ -17,7 +17,7 @@ if TYPE_CHECKING:
     from ._agents import AgentProtocol
     from ._clients import ChatClientProtocol
     from ._threads import AgentThread
-    from ._tools import AIFunction
+    from ._tools import FunctionTool
     from ._types import ChatResponse, ChatResponseUpdate
 
 
@@ -172,7 +172,7 @@ class FunctionInvocationContext(SerializationMixin):
 
     def __init__(
         self,
-        function: "AIFunction[Any, Any]",
+        function: "FunctionTool[Any, Any]",
         arguments: "BaseModel",
         metadata: dict[str, Any] | None = None,
         result: Any = None,

python/packages/core/agent_framework/_serialization.py

@@ -444,11 +444,11 @@ class SerializationMixin:
                 chat_client = OpenAIChatClient.from_dict(client_data, dependencies=dependencies)
                 # Now ready to make API calls with the injected client
 
-            **Function Injection for Tools** - AIFunction runtime dependency:
+            **Function Injection for Tools** - FunctionTool runtime dependency:
 
             .. code-block:: python
 
-                from agent_framework import AIFunction
+                from agent_framework import FunctionTool
                 from typing import Annotated
 
 
@@ -458,19 +458,19 @@ class SerializationMixin:
                     return f"Current weather in {location}: 72°F and sunny"
 
 
-                # AIFunction has INJECTABLE = {"func"}
+                # FunctionTool has INJECTABLE = {"func"}
                 function_data = {
-                    "type": "ai_function",
+                    "type": "function_tool",
                     "name": "get_weather",
                     "description": "Get current weather for a location",
                     # func is excluded from serialization
                 }
 
                 # Inject the actual function implementation during deserialization
-                dependencies = {"ai_function": {"func": get_current_weather}}
+                dependencies = {"function_tool": {"func": get_current_weather}}
 
-                # Reconstruct the AIFunction with the callable injected
-                weather_func = AIFunction.from_dict(function_data, dependencies=dependencies)
+                # Reconstruct the FunctionTool with the callable injected
+                weather_func = FunctionTool.from_dict(function_data, dependencies=dependencies)
                 # The function is now callable and ready for agent use
 
             **Middleware Context Injection** - Agent execution context:

python/packages/core/agent_framework/_tools.py

@@ -33,7 +33,7 @@ from typing import (
     runtime_checkable,
 )
 
-from opentelemetry.metrics import Histogram
+from opentelemetry.metrics import Histogram, NoOpHistogram
 from pydantic import AnyUrl, BaseModel, Field, ValidationError, create_model
 
 from ._logging import get_logger
@@ -64,12 +64,20 @@ if sys.version_info >= (3, 12):
 else:
     from typing_extensions import override  # type: ignore[import] # pragma: no cover
 
+# TypeVar with defaults support for Python < 3.13
+if sys.version_info >= (3, 13):
+    from typing import TypeVar as TypeVarWithDefaults  # type: ignore # pragma: no cover
+else:
+    from typing_extensions import (
+        TypeVar as TypeVarWithDefaults,  # type: ignore[import] # pragma: no cover
+    )
+
 logger = get_logger()
 
 __all__ = [
     "FUNCTION_INVOKING_CHAT_CLIENT_MARKER",
-    "AIFunction",
     "FunctionInvocationConfiguration",
+    "FunctionTool",
     "HostedCodeInterpreterTool",
     "HostedFileSearchTool",
     "HostedImageGenerationTool",
@@ -77,7 +85,7 @@ __all__ = [
     "HostedMCPTool",
     "HostedWebSearchTool",
     "ToolProtocol",
-    "ai_function",
+    "tool",
     "use_function_invocation",
 ]
 
@@ -89,16 +97,8 @@ DEFAULT_MAX_CONSECUTIVE_ERRORS_PER_REQUEST: Final[int] = 3
 TChatClient = TypeVar("TChatClient", bound="ChatClientProtocol[Any]")
 # region Helpers
 
-ArgsT = TypeVar("ArgsT", bound=BaseModel)
-ReturnT = TypeVar("ReturnT")
-
-
-class _NoOpHistogram:
-    def record(self, *args: Any, **kwargs: Any) -> None:  # pragma: no cover - trivial
-        return None
-
-
-_NOOP_HISTOGRAM = _NoOpHistogram()
+ArgsT = TypeVarWithDefaults("ArgsT", bound=BaseModel, default=BaseModel)
+ReturnT = TypeVarWithDefaults("ReturnT", default=Any)
 
 
 def _parse_inputs(
@@ -163,7 +163,7 @@ class ToolProtocol(Protocol):
 
     This protocol defines the interface that all tools must implement to be compatible
     with the agent framework. It is implemented by various tool classes such as HostedMCPTool,
-    HostedWebSearchTool, and AIFunction's. A AIFunction is usually created by the `ai_function` decorator.
+    HostedWebSearchTool, and FunctionTool's. A FunctionTool is usually created by the `tool` decorator.
 
     Since each connector needs to parse tools differently, users can pass a dict to
     specify a service-specific tool when no abstraction is available.
@@ -190,7 +190,7 @@ class BaseTool(SerializationMixin):
     """Base class for AI tools, providing common attributes and methods.
 
     Used as the base class for the various tools in the agent framework, such as HostedMCPTool,
-    HostedWebSearchTool, and AIFunction.
+    HostedWebSearchTool, and FunctionTool.
 
     Since each connector needs to parse tools differently, this class is not exposed directly to end users.
     In most cases, users can pass a dict to specify a service-specific tool when no abstraction is available.
@@ -543,7 +543,10 @@ def _default_histogram() -> Histogram:
     from .observability import OBSERVABILITY_SETTINGS  # local import to avoid circulars
 
     if not OBSERVABILITY_SETTINGS.ENABLED:  # type: ignore[name-defined]
-        return _NOOP_HISTOGRAM  # type: ignore[return-value]
+        return NoOpHistogram(
+            name=OtelAttr.MEASUREMENT_FUNCTION_INVOCATION_DURATION,
+            unit=OtelAttr.DURATION_UNIT,
+        )
     meter = get_meter()
     try:
         return meter.create_histogram(
@@ -567,7 +570,7 @@ class EmptyInputModel(BaseModel):
     """An empty input model for functions with no parameters."""
 
 
-class AIFunction(BaseTool, Generic[ArgsT, ReturnT]):
+class FunctionTool(BaseTool, Generic[ArgsT, ReturnT]):
     """A tool that wraps a Python function to make it callable by AI models.
 
     This class wraps a Python function to make it callable by AI models with automatic
@@ -578,11 +581,11 @@ class AIFunction(BaseTool, Generic[ArgsT, ReturnT]):
 
             from typing import Annotated
             from pydantic import BaseModel, Field
-            from agent_framework import AIFunction, ai_function
+            from agent_framework import FunctionTool, tool
 
 
             # Using the decorator with string annotations
-            @ai_function
+            @tool(approval_mode="never_require")
             def get_weather(
                 location: Annotated[str, "The city name"],
                 unit: Annotated[str, "Temperature unit"] = "celsius",
@@ -597,7 +600,7 @@ class AIFunction(BaseTool, Generic[ArgsT, ReturnT]):
                 unit: Annotated[str, Field(description="Temperature unit")] = "celsius"
 
 
-            weather_func = AIFunction(
+            weather_func = FunctionTool(
                 name="get_weather",
                 description="Get the weather for a location",
                 func=lambda location, unit="celsius": f"Weather in {location}: 22°{unit[0].upper()}",
@@ -625,13 +628,13 @@ class AIFunction(BaseTool, Generic[ArgsT, ReturnT]):
         input_model: type[ArgsT] | Mapping[str, Any] | None = None,
         **kwargs: Any,
     ) -> None:
-        """Initialize the AIFunction.
+        """Initialize the FunctionTool.
 
         Keyword Args:
             name: The name of the function.
             description: A description of the function.
             approval_mode: Whether or not approval is required to run this tool.
-                Default is that approval is not needed.
+                Default is that approval is required.
             max_invocations: The maximum number of times this function can be invoked.
                 If None, there is no limit. Should be at least 1.
             max_invocation_exceptions: The maximum number of exceptions allowed during invocations.
@@ -652,7 +655,7 @@ class AIFunction(BaseTool, Generic[ArgsT, ReturnT]):
         self.func = func
         self._instance = None  # Store the instance for bound methods
         self.input_model = self._resolve_input_model(input_model)
-        self._cached_parameters: dict[str, Any] | None = None  # Cache for model_json_schema()
+        self._cached_parameters: dict[str, Any] | None = None
         self.approval_mode = approval_mode or "never_require"
         if max_invocations is not None and max_invocations < 1:
             raise ValueError("max_invocations must be at least 1 or None.")
@@ -663,7 +666,7 @@ class AIFunction(BaseTool, Generic[ArgsT, ReturnT]):
         self.max_invocation_exceptions = max_invocation_exceptions
         self.invocation_exception_count = 0
         self._invocation_duration_histogram = _default_histogram()
-        self.type: Literal["ai_function"] = "ai_function"
+        self.type: Literal["function_tool"] = "function_tool"
         self._forward_runtime_kwargs: bool = False
         if self.func:
             sig = inspect.signature(self.func)
@@ -680,10 +683,10 @@ class AIFunction(BaseTool, Generic[ArgsT, ReturnT]):
             return True
         return self.func is None
 
-    def __get__(self, obj: Any, objtype: type | None = None) -> "AIFunction[ArgsT, ReturnT]":
+    def __get__(self, obj: Any, objtype: type | None = None) -> "FunctionTool[ArgsT, ReturnT]":
         """Implement the descriptor protocol to support bound methods.
 
-        When an AIFunction is accessed as an attribute of a class instance,
+        When a FunctionTool is accessed as an attribute of a class instance,
         this method is called to bind the instance to the function.
 
         Args:
@@ -691,7 +694,7 @@ class AIFunction(BaseTool, Generic[ArgsT, ReturnT]):
             objtype: The type that owns the descriptor.
 
         Returns:
-            A new AIFunction with the instance bound to the wrapped function.
+            A new FunctionTool with the instance bound to the wrapped function.
         """
         if obj is None:
             # Accessed from the class, not an instance
@@ -702,7 +705,7 @@ class AIFunction(BaseTool, Generic[ArgsT, ReturnT]):
             sig = inspect.signature(self.func)
             params = list(sig.parameters.keys())
             if params and params[0] in {"self", "cls"}:
-                # Create a new AIFunction with the bound method
+                # Create a new FunctionTool with the bound method
                 import copy
 
                 bound_func = copy.copy(self)
@@ -849,7 +852,7 @@ class AIFunction(BaseTool, Generic[ArgsT, ReturnT]):
         return self._cached_parameters
 
     def to_json_schema_spec(self) -> dict[str, Any]:
-        """Convert a AIFunction to the JSON Schema function specification format.
+        """Convert a FunctionTool to the JSON Schema function specification format.
 
         Returns:
             A dictionary containing the function specification in JSON Schema format.
@@ -892,29 +895,29 @@ def _tools_to_dict(
     if not tools:
         return None
     if not isinstance(tools, list):
-        if isinstance(tools, AIFunction):
+        if isinstance(tools, FunctionTool):
             return [tools.to_json_schema_spec()]
         if isinstance(tools, SerializationMixin):
             return [tools.to_dict()]
         if isinstance(tools, dict):
             return [tools]
         if callable(tools):
-            return [ai_function(tools).to_json_schema_spec()]
+            return [tool(tools).to_json_schema_spec()]
         logger.warning("Can't parse tool.")
         return None
     results: list[str | dict[str, Any]] = []
-    for tool in tools:
-        if isinstance(tool, AIFunction):
-            results.append(tool.to_json_schema_spec())
+    for tool_item in tools:
+        if isinstance(tool_item, FunctionTool):
+            results.append(tool_item.to_json_schema_spec())
             continue
-        if isinstance(tool, SerializationMixin):
-            results.append(tool.to_dict())
+        if isinstance(tool_item, SerializationMixin):
+            results.append(tool_item.to_dict())
             continue
-        if isinstance(tool, dict):
-            results.append(tool)
+        if isinstance(tool_item, dict):
+            results.append(tool_item)
             continue
-        if callable(tool):
-            results.append(ai_function(tool).to_json_schema_spec())
+        if callable(tool_item):
+            results.append(tool(tool_item).to_json_schema_spec())
             continue
         logger.warning("Can't parse tool.")
     return results
@@ -958,10 +961,8 @@ def _parse_annotation(annotation: Any) -> Any:
 
 def _create_input_model_from_func(func: Callable[..., Any], name: str) -> type[BaseModel]:
     """Create a Pydantic model from a function's signature."""
-    # Unwrap AIFunction objects to get the underlying function
-    from agent_framework._tools import AIFunction
-
-    if isinstance(func, AIFunction):
+    # Unwrap FunctionTool objects to get the underlying function
+    if isinstance(func, FunctionTool):
         func = func.func  # type: ignore[assignment]
 
     sig = inspect.signature(func)
@@ -1212,7 +1213,7 @@ def _create_model_from_json_schema(tool_name: str, schema_json: Mapping[str, Any
 
 
 @overload
-def ai_function(
+def tool(
     func: Callable[..., ReturnT | Awaitable[ReturnT]],
     *,
     name: str | None = None,
@@ -1221,11 +1222,11 @@ def ai_function(
     max_invocations: int | None = None,
     max_invocation_exceptions: int | None = None,
     additional_properties: dict[str, Any] | None = None,
-) -> AIFunction[Any, ReturnT]: ...
+) -> FunctionTool[Any, ReturnT]: ...
 
 
 @overload
-def ai_function(
+def tool(
     func: None = None,
     *,
     name: str | None = None,
@@ -1234,10 +1235,10 @@ def ai_function(
     max_invocations: int | None = None,
     max_invocation_exceptions: int | None = None,
     additional_properties: dict[str, Any] | None = None,
-) -> Callable[[Callable[..., ReturnT | Awaitable[ReturnT]]], AIFunction[Any, ReturnT]]: ...
+) -> Callable[[Callable[..., ReturnT | Awaitable[ReturnT]]], FunctionTool[Any, ReturnT]]: ...
 
 
-def ai_function(
+def tool(
     func: Callable[..., ReturnT | Awaitable[ReturnT]] | None = None,
     *,
     name: str | None = None,
@@ -1246,8 +1247,8 @@ def ai_function(
     max_invocations: int | None = None,
     max_invocation_exceptions: int | None = None,
     additional_properties: dict[str, Any] | None = None,
-) -> AIFunction[Any, ReturnT] | Callable[[Callable[..., ReturnT | Awaitable[ReturnT]]], AIFunction[Any, ReturnT]]:
-    """Decorate a function to turn it into a AIFunction that can be passed to models and executed automatically.
+) -> FunctionTool[Any, ReturnT] | Callable[[Callable[..., ReturnT | Awaitable[ReturnT]]], FunctionTool[Any, ReturnT]]:
+    """Decorate a function to turn it into a FunctionTool that can be passed to models and executed automatically.
 
     This decorator creates a Pydantic model from the function's signature,
     which will be used to validate the arguments passed to the function
@@ -1266,7 +1267,7 @@ def ai_function(
         description: A description of the function. If not provided, the function's
             docstring will be used.
         approval_mode: Whether or not approval is required to run this tool.
-            Default is that approval is not needed.
+            Default is that approval is required.
         max_invocations: The maximum number of times this function can be invoked.
             If None, there is no limit, should be at least 1.
         max_invocation_exceptions: The maximum number of exceptions allowed during invocations.
@@ -1283,12 +1284,12 @@ def ai_function(
 
         .. code-block:: python
 
-            from agent_framework import ai_function
+            from agent_framework import tool
             from typing import Annotated
 
 
-            @ai_function
-            def ai_function_example(
+            @tool(approval_mode="never_require")
+            def tool_example(
                 arg1: Annotated[str, "The first argument"],
                 arg2: Annotated[int, "The second argument"],
             ) -> str:
@@ -1297,8 +1298,8 @@ def ai_function(
 
 
             # the same function but with approval required to run
-            @ai_function(approval_mode="always_require")
-            def ai_function_example(
+            @tool(approval_mode="always_require")
+            def tool_example(
                 arg1: Annotated[str, "The first argument"],
                 arg2: Annotated[int, "The second argument"],
             ) -> str:
@@ -1307,13 +1308,13 @@ def ai_function(
 
 
             # With custom name and description
-            @ai_function(name="custom_weather", description="Custom weather function")
+            @tool(name="custom_weather", description="Custom weather function")
             def another_weather_func(location: str) -> str:
                 return f"Weather in {location}"
 
 
             # Async functions are also supported
-            @ai_function
+            @tool(approval_mode="never_require")
             async def async_get_weather(location: str) -> str:
                 '''Get weather asynchronously.'''
                 # Simulate async operation
@@ -1321,12 +1322,12 @@ def ai_function(
 
     """
 
-    def decorator(func: Callable[..., ReturnT | Awaitable[ReturnT]]) -> AIFunction[Any, ReturnT]:
+    def decorator(func: Callable[..., ReturnT | Awaitable[ReturnT]]) -> FunctionTool[Any, ReturnT]:
         @wraps(func)
-        def wrapper(f: Callable[..., ReturnT | Awaitable[ReturnT]]) -> AIFunction[Any, ReturnT]:
+        def wrapper(f: Callable[..., ReturnT | Awaitable[ReturnT]]) -> FunctionTool[Any, ReturnT]:
             tool_name: str = name or getattr(f, "__name__", "unknown_function")  # type: ignore[assignment]
             tool_desc: str = description or (f.__doc__ or "")
-            return AIFunction[Any, ReturnT](
+            return FunctionTool[Any, ReturnT](
                 name=tool_name,
                 description=tool_desc,
                 approval_mode=approval_mode,
@@ -1490,7 +1491,7 @@ async def _auto_invoke_function(
     custom_args: dict[str, Any] | None = None,
     *,
     config: FunctionInvocationConfiguration,
-    tool_map: dict[str, AIFunction[BaseModel, Any]],
+    tool_map: dict[str, FunctionTool[BaseModel, Any]],
     sequence_index: int | None = None,
     request_index: int | None = None,
     middleware_pipeline: Any = None,  # Optional MiddlewarePipeline
@@ -1503,7 +1504,7 @@ async def _auto_invoke_function(
 
     Keyword Args:
         config: The function invocation configuration.
-        tool_map: A mapping of tool names to AIFunction instances.
+        tool_map: A mapping of tool names to FunctionTool instances.
         sequence_index: The index of the function call in the sequence.
         request_index: The index of the request iteration.
         middleware_pipeline: Optional middleware pipeline to apply during execution.
@@ -1522,7 +1523,7 @@ async def _auto_invoke_function(
     # this function is called. This function only handles the actual execution of approved,
     # non-declaration-only functions.
 
-    tool: AIFunction[BaseModel, Any] | None = None
+    tool: FunctionTool[BaseModel, Any] | None = None
     if function_call_content.type == "function_call":
         tool = tool_map.get(function_call_content.name)  # type: ignore[arg-type]
         # Tool should exist because _try_execute_function_calls validates this
@@ -1645,17 +1646,17 @@ def _get_tool_map(
     | Callable[..., Any] \
     | MutableMapping[str, Any] \
     | Sequence[ToolProtocol | Callable[..., Any] | MutableMapping[str, Any]]",
-) -> dict[str, AIFunction[Any, Any]]:
-    ai_function_list: dict[str, AIFunction[Any, Any]] = {}
-    for tool in tools if isinstance(tools, list) else [tools]:
-        if isinstance(tool, AIFunction):
-            ai_function_list[tool.name] = tool
+) -> dict[str, FunctionTool[Any, Any]]:
+    tool_list: dict[str, FunctionTool[Any, Any]] = {}
+    for tool_item in tools if isinstance(tools, list) else [tools]:
+        if isinstance(tool_item, FunctionTool):
+            tool_list[tool_item.name] = tool_item
             continue
-        if callable(tool):
+        if callable(tool_item):
             # Convert to AITool if it's a function or callable
-            ai_tool = ai_function(tool)
-            ai_function_list[ai_tool.name] = ai_tool
-    return ai_function_list
+            ai_tool = tool(tool_item)
+            tool_list[ai_tool.name] = ai_tool
+    return tool_list
 
 
 async def _try_execute_function_calls(

python/packages/core/agent_framework/_types.py

@@ -18,7 +18,7 @@ from pydantic import BaseModel, ValidationError
 
 from ._logging import get_logger
 from ._serialization import SerializationMixin
-from ._tools import ToolProtocol, ai_function
+from ._tools import ToolProtocol, tool
 from .exceptions import AdditionItemMismatch, ContentError
 
 __all__ = [
@@ -2854,7 +2854,7 @@ def normalize_tools(
 ) -> list[ToolProtocol | MutableMapping[str, Any]]:
     """Normalize tools into a list.
 
-    Converts callables to AIFunction objects and ensures all tools are either
+    Converts callables to FunctionTool objects and ensures all tools are either
     ToolProtocol instances or MutableMappings.
 
     Args:
@@ -2866,10 +2866,10 @@ def normalize_tools(
     Examples:
         .. code-block:: python
 
-            from agent_framework import normalize_tools, ai_function
+            from agent_framework import normalize_tools, tool
 
 
-            @ai_function
+            @tool
             def my_tool(x: int) -> int:
                 return x * 2
 
@@ -2886,14 +2886,14 @@ def normalize_tools(
     if not isinstance(tools, Sequence) or isinstance(tools, (str, MutableMapping)):
         # Single tool (not a sequence, or is a mapping which shouldn't be treated as sequence)
         if not isinstance(tools, (ToolProtocol, MutableMapping)):
-            return [ai_function(tools)]
+            return [tool(tools)]
         return [tools]
-    for tool in tools:
-        if isinstance(tool, (ToolProtocol, MutableMapping)):
-            final_tools.append(tool)
+    for tool_item in tools:
+        if isinstance(tool_item, (ToolProtocol, MutableMapping)):
+            final_tools.append(tool_item)
         else:
-            # Convert callable to AIFunction
-            final_tools.append(ai_function(tool))
+            # Convert callable to FunctionTool
+            final_tools.append(tool(tool_item))
     return final_tools
 
 
@@ -2908,7 +2908,7 @@ async def validate_tools(
 ) -> list[ToolProtocol | MutableMapping[str, Any]]:
     """Validate and normalize tools into a list.
 
-    Converts callables to AIFunction objects, expands MCP tools to their constituent
+    Converts callables to FunctionTool objects, expands MCP tools to their constituent
     functions (connecting them if needed), and ensures all tools are either ToolProtocol
     instances or MutableMappings.
 
@@ -2921,10 +2921,10 @@ async def validate_tools(
     Examples:
         .. code-block:: python
 
-            from agent_framework import validate_tools, ai_function
+            from agent_framework import validate_tools, tool
 
 
-            @ai_function
+            @tool
             def my_tool(x: int) -> int:
                 return x * 2
 
@@ -2935,22 +2935,22 @@ async def validate_tools(
             # List of tools
             tools = await validate_tools([my_tool, another_tool])
     """
-    # Use normalize_tools for common sync logic (converts callables to AIFunction)
+    # Use normalize_tools for common sync logic (converts callables to FunctionTool)
     normalized = normalize_tools(tools)
 
     # Handle MCP tool expansion (async-only)
     final_tools: list[ToolProtocol | MutableMapping[str, Any]] = []
-    for tool in normalized:
+    for tool_ in normalized:
         # Import MCPTool here to avoid circular imports
         from ._mcp import MCPTool
 
-        if isinstance(tool, MCPTool):
+        if isinstance(tool_, MCPTool):
             # Expand MCP tools to their constituent functions
-            if not tool.is_connected:
-                await tool.connect()
-            final_tools.extend(tool.functions)  # type: ignore
+            if not tool_.is_connected:
+                await tool_.connect()
+            final_tools.extend(tool_.functions)  # type: ignore
         else:
-            final_tools.append(tool)
+            final_tools.append(tool_)
 
     return final_tools
 

python/packages/core/agent_framework/_workflows/_agent.py

@@ -138,7 +138,7 @@ class WorkflowAgent(BaseAgent):
                 used to load and restore the checkpoint. When provided without checkpoint_id,
                 enables checkpointing for this run.
             **kwargs: Additional keyword arguments passed through to underlying workflow
-                and ai_function tools.
+                and tool functions.
 
         Returns:
             The final workflow response as an AgentResponse.
@@ -185,7 +185,7 @@ class WorkflowAgent(BaseAgent):
                 used to load and restore the checkpoint. When provided without checkpoint_id,
                 enables checkpointing for this run.
             **kwargs: Additional keyword arguments passed through to underlying workflow
-                and ai_function tools.
+                and tool functions.
 
         Yields:
             AgentResponseUpdate objects representing the workflow execution progress.
@@ -225,7 +225,7 @@ class WorkflowAgent(BaseAgent):
             checkpoint_id: ID of checkpoint to restore from.
             checkpoint_storage: Runtime checkpoint storage.
             **kwargs: Additional keyword arguments passed through to the underlying
-                workflow and ai_function tools.
+                workflow and tool functions.
 
         Yields:
             AgentResponseUpdate objects representing the workflow execution progress.

python/packages/core/agent_framework/_workflows/_const.py

@@ -11,7 +11,7 @@ INTERNAL_SOURCE_PREFIX = "internal"
 
 # SharedState key for storing run kwargs that should be passed to agent invocations.
 # Used by all orchestration patterns (Sequential, Concurrent, GroupChat, Handoff, Magentic)
-# to pass kwargs from workflow.run_stream() through to agent.run_stream() and @ai_function tools.
+# to pass kwargs from workflow.run_stream() through to agent.run_stream() and @tool functions.
 WORKFLOW_RUN_KWARGS_KEY = "_workflow_run_kwargs"
 
 

python/packages/core/agent_framework/_workflows/_handoff.py

@@ -41,7 +41,7 @@ from typing_extensions import Never
 from .._agents import AgentProtocol, ChatAgent
 from .._middleware import FunctionInvocationContext, FunctionMiddleware
 from .._threads import AgentThread
-from .._tools import AIFunction, ai_function
+from .._tools import FunctionTool, tool
 from .._types import AgentResponse, ChatMessage, Role
 from ._agent_executor import AgentExecutor, AgentExecutorRequest, AgentExecutorResponse
 from ._agent_utils import resolve_agent_id
@@ -331,7 +331,7 @@ class HandoffAgentExecutor(AgentExecutor):
         existing_tools = list(default_options.get("tools") or [])
         existing_names = {getattr(tool, "name", "") for tool in existing_tools if hasattr(tool, "name")}
 
-        new_tools: list[AIFunction[Any, Any]] = []
+        new_tools: list[FunctionTool[Any, Any]] = []
         for target in targets:
             tool = self._create_handoff_tool(target.target_id, target.description)
             if tool.name in existing_names:
@@ -347,17 +347,17 @@ class HandoffAgentExecutor(AgentExecutor):
         else:
             default_options["tools"] = existing_tools
 
-    def _create_handoff_tool(self, target_id: str, description: str | None = None) -> AIFunction[Any, Any]:
+    def _create_handoff_tool(self, target_id: str, description: str | None = None) -> FunctionTool[Any, Any]:
         """Construct the synthetic handoff tool that signals routing to `target_id`."""
         tool_name = get_handoff_tool_name(target_id)
         doc = description or f"Handoff to the {target_id} agent."
-        # Note: approval_mode is intentionally NOT set for handoff tools.
-        # Handoff tools are framework-internal signals that trigger routing logic,
-        # not actual function executions. They are automatically intercepted by
+        # Note: approval_mode is set to "never_require" for handoff tools because
+        # they are framework-internal signals that trigger routing logic, not
+        # actual function executions. They are automatically intercepted by
         # _AutoHandoffMiddleware which short-circuits execution and provides synthetic
         # results, so the function body never actually runs in practice.
 
-        @ai_function(name=tool_name, description=doc)
+        @tool(name=tool_name, description=doc, approval_mode="never_require")
         def _handoff_tool(context: str | None = None) -> str:
             """Return a deterministic acknowledgement that encodes the target alias."""
             return f"Handoff to {target_id}"

python/packages/core/agent_framework/_workflows/_workflow.py

@@ -456,7 +456,7 @@ class Workflow(DictConvertible):
                                - Without checkpoint_id: Enables checkpointing for this run, overriding
                                  build-time configuration
             **kwargs: Additional keyword arguments to pass through to agent invocations.
-                     These are stored in SharedState and accessible in @ai_function tools
+                     These are stored in SharedState and accessible in @tool functions
                      via the **kwargs parameter.
 
         Yields:
@@ -476,7 +476,7 @@ class Workflow(DictConvertible):
                 async for event in workflow.run_stream("start message"):
                     process(event)
 
-            With custom context for ai_functions:
+            With custom context for tools:
 
             .. code-block:: python
 
@@ -590,7 +590,7 @@ class Workflow(DictConvertible):
                                  build-time configuration
             include_status_events: Whether to include WorkflowStatusEvent instances in the result list.
             **kwargs: Additional keyword arguments to pass through to agent invocations.
-                     These are stored in SharedState and accessible in @ai_function tools
+                     These are stored in SharedState and accessible in @tool functions
                      via the **kwargs parameter.
 
         Returns:
@@ -610,7 +610,7 @@ class Workflow(DictConvertible):
                 result = await workflow.run("start message")
                 outputs = result.get_outputs()
 
-            With custom context for ai_functions:
+            With custom context for tools:
 
             .. code-block:: python
 

python/packages/core/agent_framework/observability.py

@@ -33,7 +33,7 @@ if TYPE_CHECKING:  # pragma: no cover
     from ._agents import AgentProtocol
     from ._clients import ChatClientProtocol
     from ._threads import AgentThread
-    from ._tools import AIFunction
+    from ._tools import FunctionTool
     from ._types import (
         AgentResponse,
         AgentResponseUpdate,
@@ -1546,7 +1546,7 @@ def use_agent_instrumentation(
 # region Otel Helpers
 
 
-def get_function_span_attributes(function: "AIFunction[Any, Any]", tool_call_id: str | None = None) -> dict[str, str]:
+def get_function_span_attributes(function: "FunctionTool[Any, Any]", tool_call_id: str | None = None) -> dict[str, str]:
     """Get the span attributes for the given function.
 
     Args:

python/packages/core/agent_framework/openai/_assistant_provider.py

@@ -11,7 +11,7 @@ from pydantic import BaseModel, SecretStr, ValidationError
 from .._agents import ChatAgent
 from .._memory import ContextProvider
 from .._middleware import Middleware
-from .._tools import AIFunction, ToolProtocol
+from .._tools import FunctionTool, ToolProtocol
 from .._types import normalize_tools
 from ..exceptions import ServiceInitializationError
 from ._assistants_client import OpenAIAssistantsClient
@@ -215,7 +215,7 @@ class OpenAIAssistantProvider(Generic[TOptions_co]):
             instructions: System instructions for the assistant.
             description: A description of the assistant.
             tools: Tools available to the assistant. Can include:
-                - AIFunction instances or callables decorated with @ai_function
+                - FunctionTool instances or callables decorated with @tool
                 - HostedCodeInterpreterTool for code execution
                 - HostedFileSearchTool for vector store search
                 - Raw tool dictionaries
@@ -467,7 +467,7 @@ class OpenAIAssistantProvider(Generic[TOptions_co]):
         if provided_tools is not None:
             normalized = normalize_tools(provided_tools)
             for tool in normalized:
-                if isinstance(tool, AIFunction):
+                if isinstance(tool, FunctionTool):
                     provided_functions.add(tool.name)
                 elif isinstance(tool, MutableMapping) and "function" in tool:
                     func_spec = tool.get("function", {})

python/packages/core/agent_framework/openai/_assistants_client.py

@@ -36,7 +36,7 @@ from .._memory import ContextProvider
 from .._middleware import Middleware, use_chat_middleware
 from .._threads import ChatMessageStoreProtocol
 from .._tools import (
-    AIFunction,
+    FunctionTool,
     HostedCodeInterpreterTool,
     HostedFileSearchTool,
     ToolProtocol,
@@ -626,7 +626,7 @@ class OpenAIAssistantsClient(
         tool_definitions: list[MutableMapping[str, Any]] = []
         if tool_mode["mode"] != "none" and tools is not None:
             for tool in tools:
-                if isinstance(tool, AIFunction):
+                if isinstance(tool, FunctionTool):
                     tool_definitions.append(tool.to_json_schema_spec())  # type: ignore[reportUnknownArgumentType]
                 elif isinstance(tool, HostedCodeInterpreterTool):
                     tool_definitions.append({"type": "code_interpreter"})

python/packages/core/agent_framework/openai/_chat_client.py

@@ -19,7 +19,7 @@ from pydantic import ValidationError
 from .._clients import BaseChatClient
 from .._logging import get_logger
 from .._middleware import use_chat_middleware
-from .._tools import AIFunction, HostedWebSearchTool, ToolProtocol, use_function_invocation
+from .._tools import FunctionTool, HostedWebSearchTool, ToolProtocol, use_function_invocation
 from .._types import (
     ChatMessage,
     ChatOptions,
@@ -198,7 +198,7 @@ class OpenAIBaseChatClient(OpenAIBase, BaseChatClient[TOpenAIChatOptions], Gener
         for tool in tools:
             if isinstance(tool, ToolProtocol):
                 match tool:
-                    case AIFunction():
+                    case FunctionTool():
                         chat_tools.append(tool.to_json_schema_spec())
                     case HostedWebSearchTool():
                         web_search_options = (

python/packages/core/agent_framework/openai/_responses_client.py

@@ -38,7 +38,7 @@ from .._clients import BaseChatClient
 from .._logging import get_logger
 from .._middleware import use_chat_middleware
 from .._tools import (
-    AIFunction,
+    FunctionTool,
     HostedCodeInterpreterTool,
     HostedFileSearchTool,
     HostedImageGenerationTool,
@@ -384,7 +384,7 @@ class OpenAIBaseResponsesClient(
                                 container=tool_args,
                             )
                         )
-                    case AIFunction():
+                    case FunctionTool():
                         params = tool.parameters()
                         params["additionalProperties"] = False
                         response_tools.append(

python/packages/core/agent_framework/openai/_shared.py

@@ -24,7 +24,7 @@ from .._logging import get_logger
 from .._pydantic import AFBaseSettings
 from .._serialization import SerializationMixin
 from .._telemetry import APP_INFO, USER_AGENT_KEY, prepend_agent_framework_to_user_agent
-from .._tools import AIFunction, HostedCodeInterpreterTool, HostedFileSearchTool, ToolProtocol
+from .._tools import FunctionTool, HostedCodeInterpreterTool, HostedFileSearchTool, ToolProtocol
 from ..exceptions import ServiceInitializationError
 
 logger: logging.Logger = get_logger("agent_framework.openai")
@@ -295,7 +295,7 @@ def to_assistant_tools(
     tool_definitions: list[dict[str, Any]] = []
 
     for tool in tools:
-        if isinstance(tool, AIFunction):
+        if isinstance(tool, FunctionTool):
             tool_definitions.append(tool.to_json_schema_spec())
         elif isinstance(tool, HostedCodeInterpreterTool):
             tool_definitions.append({"type": "code_interpreter"})

python/packages/core/tests/azure/test_azure_assistants_client.py

@@ -18,6 +18,7 @@ from agent_framework import (
     ChatResponse,
     ChatResponseUpdate,
     HostedCodeInterpreterTool,
+    tool,
 )
 from agent_framework.azure import AzureOpenAIAssistantsClient
 from agent_framework.exceptions import ServiceInitializationError
@@ -253,6 +254,7 @@ def test_azure_assistants_client_serialize(azure_openai_unit_test_env: dict[str,
     assert "User-Agent" not in dumped_settings["default_headers"]
 
 
+@tool(approval_mode="never_require")
 def get_weather(
     location: Annotated[str, Field(description="The location to get the weather for.")],
 ) -> str:

python/packages/core/tests/azure/test_azure_chat_client.py

@@ -25,7 +25,7 @@ from agent_framework import (
     ChatMessage,
     ChatResponse,
     ChatResponseUpdate,
-    ai_function,
+    tool,
 )
 from agent_framework._telemetry import USER_AGENT_KEY
 from agent_framework.azure import AzureOpenAIChatClient
@@ -631,7 +631,7 @@ async def test_streaming_with_none_delta(
     assert any(msg.contents for msg in results)
 
 
-@ai_function
+@tool(approval_mode="never_require")
 def get_story_text() -> str:
     """Returns a story about Emily and David."""
     return (
@@ -642,7 +642,7 @@ def get_story_text() -> str:
     )
 
 
-@ai_function
+@tool(approval_mode="never_require")
 def get_weather(location: str) -> str:
     """Get the current weather for a location."""
     return f"The weather in {location} is sunny and 72°F."

python/packages/core/tests/azure/test_azure_responses_client.py

@@ -20,7 +20,7 @@ from agent_framework import (
     HostedFileSearchTool,
     HostedMCPTool,
     HostedWebSearchTool,
-    ai_function,
+    tool,
 )
 from agent_framework.azure import AzureOpenAIResponsesClient
 from agent_framework.exceptions import ServiceInitializationError
@@ -41,7 +41,7 @@ class OutputStruct(BaseModel):
     weather: str
 
 
-@ai_function
+@tool(approval_mode="never_require")
 async def get_weather(location: Annotated[str, "The location as a city name"]) -> str:
     """Get the current weather in a given location."""
     # Implementation of the tool to get weather

python/packages/core/tests/core/conftest.py

@@ -23,7 +23,7 @@ from agent_framework import (
     Content,
     Role,
     ToolProtocol,
-    ai_function,
+    tool,
     use_chat_middleware,
     use_function_invocation,
 )
@@ -65,10 +65,10 @@ def ai_tool() -> ToolProtocol:
 
 
 @fixture
-def ai_function_tool() -> ToolProtocol:
+def tool_tool() -> ToolProtocol:
     """Returns a executable ToolProtocol."""
 
-    @ai_function
+    @tool(approval_mode="never_require")
     def simple_function(x: int, y: int) -> int:
         """A simple function that adds two numbers."""
         return x + y

python/packages/core/tests/core/test_agents.py

@@ -23,7 +23,7 @@ from agent_framework import (
     ContextProvider,
     HostedCodeInterpreterTool,
     Role,
-    ai_function,
+    tool,
 )
 from agent_framework._mcp import MCPTool
 from agent_framework.exceptions import AgentExecutionException
@@ -423,7 +423,7 @@ async def test_chat_agent_as_tool_no_name(chat_client: ChatClientProtocol) -> No
 
 
 async def test_chat_agent_as_tool_function_execution(chat_client: ChatClientProtocol) -> None:
-    """Test that the generated AIFunction can be executed."""
+    """Test that the generated FunctionTool can be executed."""
     agent = ChatAgent(chat_client=chat_client, name="TestAgent", description="Test agent")
 
     tool = agent.as_tool()
@@ -564,7 +564,7 @@ async def test_agent_tool_receives_thread_in_kwargs(chat_client_base: Any) -> No
 
     captured: dict[str, Any] = {}
 
-    @ai_function(name="echo_thread_info")
+    @tool(name="echo_thread_info", approval_mode="never_require")
     def echo_thread_info(text: str, **kwargs: Any) -> str:  # type: ignore[reportUnknownParameterType]
         thread = kwargs.get("thread")
         captured["has_thread"] = thread is not None
@@ -596,9 +596,7 @@ async def test_agent_tool_receives_thread_in_kwargs(chat_client_base: Any) -> No
     assert captured.get("has_message_store") is True
 
 
-async def test_chat_agent_tool_choice_run_level_overrides_agent_level(
-    chat_client_base: Any, ai_function_tool: Any
-) -> None:
+async def test_chat_agent_tool_choice_run_level_overrides_agent_level(chat_client_base: Any, tool_tool: Any) -> None:
     """Verify that tool_choice passed to run() overrides agent-level tool_choice."""
 
     captured_options: list[dict[str, Any]] = []
@@ -617,7 +615,7 @@ async def test_chat_agent_tool_choice_run_level_overrides_agent_level(
     # Create agent with agent-level tool_choice="auto" and a tool (tools required for tool_choice to be meaningful)
     agent = ChatAgent(
         chat_client=chat_client_base,
-        tools=[ai_function_tool],
+        tools=[tool_tool],
         options={"tool_choice": "auto"},
     )
 
@@ -630,7 +628,7 @@ async def test_chat_agent_tool_choice_run_level_overrides_agent_level(
 
 
 async def test_chat_agent_tool_choice_agent_level_used_when_run_level_not_specified(
-    chat_client_base: Any, ai_function_tool: Any
+    chat_client_base: Any, tool_tool: Any
 ) -> None:
     """Verify that agent-level tool_choice is used when run() doesn't specify one."""
     from agent_framework import ChatOptions
@@ -650,7 +648,7 @@ async def test_chat_agent_tool_choice_agent_level_used_when_run_level_not_specif
     # Create agent with agent-level tool_choice="required" and a tool
     agent = ChatAgent(
         chat_client=chat_client_base,
-        tools=[ai_function_tool],
+        tools=[tool_tool],
         default_options={"tool_choice": "required"},
     )
 
@@ -664,9 +662,7 @@ async def test_chat_agent_tool_choice_agent_level_used_when_run_level_not_specif
     assert captured_options[0]["tool_choice"] == "required"
 
 
-async def test_chat_agent_tool_choice_none_at_run_preserves_agent_level(
-    chat_client_base: Any, ai_function_tool: Any
-) -> None:
+async def test_chat_agent_tool_choice_none_at_run_preserves_agent_level(chat_client_base: Any, tool_tool: Any) -> None:
     """Verify that tool_choice=None at run() uses agent-level default."""
     from agent_framework import ChatOptions
 
@@ -685,7 +681,7 @@ async def test_chat_agent_tool_choice_none_at_run_preserves_agent_level(
     # Create agent with agent-level tool_choice="auto" and a tool
     agent = ChatAgent(
         chat_client=chat_client_base,
-        tools=[ai_function_tool],
+        tools=[tool_tool],
         default_options={"tool_choice": "auto"},
     )
 

python/packages/core/tests/core/test_chat_agent_integration.py

@@ -1,433 +0,0 @@
-# Copyright (c) Microsoft. All rights reserved.
-
-import json
-import os
-from typing import Annotated
-
-import pytest
-from pydantic import BaseModel
-
-from agent_framework import (
-    AgentResponse,
-    AgentResponseUpdate,
-    AgentThread,
-    ChatAgent,
-    HostedCodeInterpreterTool,
-    HostedImageGenerationTool,
-    HostedMCPTool,
-    MCPStreamableHTTPTool,
-    ai_function,
-)
-from agent_framework.openai import OpenAIResponsesClient
-
-skip_if_openai_integration_tests_disabled = pytest.mark.skipif(
-    os.getenv("RUN_INTEGRATION_TESTS", "false").lower() != "true"
-    or os.getenv("OPENAI_API_KEY", "") in ("", "test-dummy-key"),
-    reason="No real OPENAI_API_KEY provided; skipping integration tests."
-    if os.getenv("RUN_INTEGRATION_TESTS", "false").lower() == "true"
-    else "Integration tests are disabled.",
-)
-
-
-@ai_function
-async def get_weather(location: Annotated[str, "The location as a city name"]) -> str:
-    """Get the current weather in a given location."""
-    # Implementation of the tool to get weather
-    return f"The current weather in {location} is sunny."
-
-
-@pytest.mark.flaky
-@skip_if_openai_integration_tests_disabled
-async def test_openai_responses_client_agent_basic_run_streaming():
-    """Test OpenAI Responses Client agent basic streaming functionality with OpenAIResponsesClient."""
-    async with ChatAgent(
-        chat_client=OpenAIResponsesClient(),
-    ) as agent:
-        # Test streaming run
-        full_text = ""
-        async for chunk in agent.run_stream("Please respond with exactly: 'This is a streaming response test.'"):
-            assert isinstance(chunk, AgentResponseUpdate)
-            if chunk.text:
-                full_text += chunk.text
-
-        assert len(full_text) > 0
-        assert "streaming response test" in full_text.lower()
-
-
-@pytest.mark.flaky
-@skip_if_openai_integration_tests_disabled
-async def test_openai_responses_client_agent_thread_persistence():
-    """Test OpenAI Responses Client agent thread persistence across runs with OpenAIResponsesClient."""
-    async with ChatAgent(
-        chat_client=OpenAIResponsesClient(),
-        instructions="You are a helpful assistant with good memory.",
-    ) as agent:
-        # Create a new thread that will be reused
-        thread = agent.get_new_thread()
-
-        # First interaction
-        first_response = await agent.run("My favorite programming language is Python. Remember this.", thread=thread)
-
-        assert isinstance(first_response, AgentResponse)
-        assert first_response.text is not None
-
-        # Second interaction - test memory
-        second_response = await agent.run("What is my favorite programming language?", thread=thread)
-
-        assert isinstance(second_response, AgentResponse)
-        assert second_response.text is not None
-
-
-@pytest.mark.flaky
-@skip_if_openai_integration_tests_disabled
-async def test_openai_responses_client_agent_thread_storage_with_store_true():
-    """Test OpenAI Responses Client agent with store=True to verify service_thread_id is returned."""
-    async with ChatAgent(
-        chat_client=OpenAIResponsesClient(),
-        instructions="You are a helpful assistant.",
-    ) as agent:
-        # Create a new thread
-        thread = AgentThread()
-
-        # Initially, service_thread_id should be None
-        assert thread.service_thread_id is None
-
-        # Run with store=True to store messages on OpenAI side
-        response = await agent.run(
-            "Hello! Please remember that my name is Alex.",
-            thread=thread,
-            options={"store": True},
-        )
-
-        # Validate response
-        assert isinstance(response, AgentResponse)
-        assert response.text is not None
-        assert len(response.text) > 0
-
-        # After store=True, service_thread_id should be populated
-        assert thread.service_thread_id is not None
-        assert isinstance(thread.service_thread_id, str)
-        assert len(thread.service_thread_id) > 0
-
-
-@pytest.mark.flaky
-@skip_if_openai_integration_tests_disabled
-async def test_openai_responses_client_agent_existing_thread():
-    """Test OpenAI Responses Client agent with existing thread to continue conversations across agent instances."""
-    # First conversation - capture the thread
-    preserved_thread = None
-
-    async with ChatAgent(
-        chat_client=OpenAIResponsesClient(),
-        instructions="You are a helpful assistant with good memory.",
-    ) as first_agent:
-        # Start a conversation and capture the thread
-        thread = first_agent.get_new_thread()
-        first_response = await first_agent.run("My hobby is photography. Remember this.", thread=thread)
-
-        assert isinstance(first_response, AgentResponse)
-        assert first_response.text is not None
-
-        # Preserve the thread for reuse
-        preserved_thread = thread
-
-    # Second conversation - reuse the thread in a new agent instance
-    if preserved_thread:
-        async with ChatAgent(
-            chat_client=OpenAIResponsesClient(),
-            instructions="You are a helpful assistant with good memory.",
-        ) as second_agent:
-            # Reuse the preserved thread
-            second_response = await second_agent.run("What is my hobby?", thread=preserved_thread)
-
-            assert isinstance(second_response, AgentResponse)
-            assert second_response.text is not None
-            assert "photography" in second_response.text.lower()
-
-
-@pytest.mark.flaky
-@skip_if_openai_integration_tests_disabled
-async def test_openai_responses_client_agent_hosted_code_interpreter_tool():
-    """Test OpenAI Responses Client agent with HostedCodeInterpreterTool through OpenAIResponsesClient."""
-    async with ChatAgent(
-        chat_client=OpenAIResponsesClient(),
-        instructions="You are a helpful assistant that can execute Python code.",
-        tools=[HostedCodeInterpreterTool()],
-    ) as agent:
-        # Test code interpreter functionality
-        response = await agent.run("Calculate the sum of numbers from 1 to 10 using Python code.")
-
-        assert isinstance(response, AgentResponse)
-        assert response.text is not None
-        assert len(response.text) > 0
-        # Should contain calculation result (sum of 1-10 = 55) or code execution content
-        contains_relevant_content = any(
-            term in response.text.lower() for term in ["55", "sum", "code", "python", "calculate", "10"]
-        )
-        assert contains_relevant_content or len(response.text.strip()) > 10
-
-
-@pytest.mark.flaky
-@skip_if_openai_integration_tests_disabled
-async def test_openai_responses_client_agent_image_generation_tool():
-    """Test OpenAI Responses Client agent with raw image_generation tool through OpenAIResponsesClient."""
-    async with ChatAgent(
-        chat_client=OpenAIResponsesClient(),
-        instructions="You are a helpful assistant that can generate images.",
-        tools=HostedImageGenerationTool(options={"image_size": "1024x1024", "media_type": "png"}),
-    ) as agent:
-        # Test image generation functionality
-        response = await agent.run("Generate an image of a cute red panda sitting on a tree branch in a forest.")
-
-        assert isinstance(response, AgentResponse)
-        assert response.messages
-
-        # Verify we got image content - look for ImageGenerationToolResultContent
-        image_content_found = False
-        for message in response.messages:
-            for content in message.contents:
-                if content.type == "image_generation_tool_result" and content.outputs:
-                    image_content_found = True
-                    break
-            if image_content_found:
-                break
-
-        # The test passes if we got image content
-        assert image_content_found, "Expected to find image content in response"
-
-
-@pytest.mark.flaky
-@skip_if_openai_integration_tests_disabled
-async def test_openai_responses_client_agent_level_tool_persistence():
-    """Test that agent-level tools persist across multiple runs with OpenAI Responses Client."""
-
-    async with ChatAgent(
-        chat_client=OpenAIResponsesClient(),
-        instructions="You are a helpful assistant that uses available tools.",
-        tools=[get_weather],  # Agent-level tool
-    ) as agent:
-        # First run - agent-level tool should be available
-        first_response = await agent.run("What's the weather like in Chicago?")
-
-        assert isinstance(first_response, AgentResponse)
-        assert first_response.text is not None
-        # Should use the agent-level weather tool
-        assert any(term in first_response.text.lower() for term in ["chicago", "sunny", "72"])
-
-        # Second run - agent-level tool should still be available (persistence test)
-        second_response = await agent.run("What's the weather in Miami?")
-
-        assert isinstance(second_response, AgentResponse)
-        assert second_response.text is not None
-        # Should use the agent-level weather tool again
-        assert any(term in second_response.text.lower() for term in ["miami", "sunny", "72"])
-
-
-@pytest.mark.flaky
-@skip_if_openai_integration_tests_disabled
-async def test_openai_responses_client_run_level_tool_isolation():
-    """Test that run-level tools are isolated to specific runs and don't persist with OpenAI Responses Client."""
-    # Counter to track how many times the weather tool is called
-    call_count = 0
-
-    @ai_function
-    async def get_weather_with_counter(
-        location: Annotated[str, "The location as a city name"],
-    ) -> str:
-        """Get the current weather in a given location."""
-        nonlocal call_count
-        call_count += 1
-        return f"The weather in {location} is sunny and 72°F."
-
-    async with ChatAgent(
-        chat_client=OpenAIResponsesClient(),
-        instructions="You are a helpful assistant.",
-    ) as agent:
-        # First run - use run-level tool
-        first_response = await agent.run(
-            "What's the weather like in Chicago?",
-            tools=[get_weather_with_counter],  # Run-level tool
-        )
-
-        assert isinstance(first_response, AgentResponse)
-        assert first_response.text is not None
-        # Should use the run-level weather tool (call count should be 1)
-        assert call_count == 1
-        assert any(term in first_response.text.lower() for term in ["chicago", "sunny", "72"])
-
-        # Second run - run-level tool should NOT persist (key isolation test)
-        second_response = await agent.run("What's the weather like in Miami?")
-
-        assert isinstance(second_response, AgentResponse)
-        assert second_response.text is not None
-        # Should NOT use the weather tool since it was only run-level in previous call
-        # Call count should still be 1 (no additional calls)
-        assert call_count == 1
-
-
-@pytest.mark.flaky
-@skip_if_openai_integration_tests_disabled
-async def test_openai_responses_client_agent_chat_options_agent_level() -> None:
-    """Integration test for comprehensive ChatOptions parameter coverage with OpenAI Response Agent."""
-    async with ChatAgent(
-        chat_client=OpenAIResponsesClient(),
-        instructions="You are a helpful assistant.",
-        tools=[get_weather],
-        default_options={
-            "max_tokens": 100,
-            "temperature": 0.7,
-            "top_p": 0.9,
-            "seed": 123,
-            "user": "comprehensive-test-user",
-            "tool_choice": "auto",
-        },
-    ) as agent:
-        response = await agent.run(
-            "Provide a brief, helpful response.",
-        )
-
-        assert isinstance(response, AgentResponse)
-        assert response.text is not None
-        assert len(response.text) > 0
-
-
-@pytest.mark.flaky
-@skip_if_openai_integration_tests_disabled
-async def test_openai_responses_client_agent_hosted_mcp_tool() -> None:
-    """Integration test for HostedMCPTool with OpenAI Response Agent using Microsoft Learn MCP."""
-
-    async with ChatAgent(
-        chat_client=OpenAIResponsesClient(),
-        instructions="You are a helpful assistant that can help with microsoft documentation questions.",
-        tools=HostedMCPTool(
-            name="Microsoft Learn MCP",
-            url="https://learn.microsoft.com/api/mcp",
-            description="A Microsoft Learn MCP server for documentation questions",
-            approval_mode="never_require",
-        ),
-    ) as agent:
-        response = await agent.run(
-            "How to create an Azure storage account using az cli?",
-            # this needs to be high enough to handle the full MCP tool response.
-            options={"max_tokens": 5000},
-        )
-
-        assert isinstance(response, AgentResponse)
-        assert response.text
-        # Should contain Azure-related content since it's asking about Azure CLI
-        assert any(term in response.text.lower() for term in ["azure", "storage", "account", "cli"])
-
-
-@pytest.mark.flaky
-@skip_if_openai_integration_tests_disabled
-async def test_openai_responses_client_agent_local_mcp_tool() -> None:
-    """Integration test for MCPStreamableHTTPTool with OpenAI Response Agent using Microsoft Learn MCP."""
-
-    mcp_tool = MCPStreamableHTTPTool(
-        name="Microsoft Learn MCP",
-        url="https://learn.microsoft.com/api/mcp",
-    )
-
-    async with ChatAgent(
-        chat_client=OpenAIResponsesClient(),
-        instructions="You are a helpful assistant that can help with microsoft documentation questions.",
-        tools=[mcp_tool],
-    ) as agent:
-        response = await agent.run(
-            "How to create an Azure storage account using az cli?",
-            options={"max_tokens": 200},
-        )
-
-        assert isinstance(response, AgentResponse)
-        assert response.text is not None
-        assert len(response.text) > 0
-        # Should contain Azure-related content since it's asking about Azure CLI
-        assert any(term in response.text.lower() for term in ["azure", "storage", "account", "cli"])
-
-
-class ReleaseBrief(BaseModel):
-    """Structured output model for release brief testing."""
-
-    title: str
-    summary: str
-    highlights: list[str]
-    model_config = {"extra": "forbid"}
-
-
-@pytest.mark.flaky
-@skip_if_openai_integration_tests_disabled
-async def test_openai_responses_client_agent_with_response_format_pydantic() -> None:
-    """Integration test for response_format with Pydantic model using OpenAI Responses Client."""
-    async with ChatAgent(
-        chat_client=OpenAIResponsesClient(),
-        instructions="You are a helpful assistant that returns structured JSON responses.",
-    ) as agent:
-        response = await agent.run(
-            "Summarize the following release notes into a ReleaseBrief:\n\n"
-            "Version 2.0 Release Notes:\n"
-            "- Added new streaming API for real-time responses\n"
-            "- Improved error handling with detailed messages\n"
-            "- Performance boost of 50% in batch processing\n"
-            "- Fixed memory leak in connection pooling",
-            options={
-                "response_format": ReleaseBrief,
-            },
-        )
-
-        # Validate response
-        assert isinstance(response, AgentResponse)
-        assert response.value is not None
-        assert isinstance(response.value, ReleaseBrief)
-
-        # Validate structured output fields
-        brief = response.value
-        assert len(brief.title) > 0
-        assert len(brief.summary) > 0
-        assert len(brief.highlights) > 0
-
-
-@pytest.mark.flaky
-@skip_if_openai_integration_tests_disabled
-async def test_openai_responses_client_agent_with_runtime_json_schema() -> None:
-    """Integration test for response_format with runtime JSON schema using OpenAI Responses Client."""
-    runtime_schema = {
-        "title": "WeatherDigest",
-        "type": "object",
-        "properties": {
-            "location": {"type": "string"},
-            "conditions": {"type": "string"},
-            "temperature_c": {"type": "number"},
-            "advisory": {"type": "string"},
-        },
-        "required": ["location", "conditions", "temperature_c", "advisory"],
-        "additionalProperties": False,
-    }
-
-    async with ChatAgent(
-        chat_client=OpenAIResponsesClient(),
-        instructions="Return only JSON that matches the provided schema. Do not add commentary.",
-    ) as agent:
-        response = await agent.run(
-            "Give a brief weather digest for Seattle.",
-            options={
-                "response_format": {
-                    "type": "json_schema",
-                    "json_schema": {
-                        "name": runtime_schema["title"],
-                        "strict": True,
-                        "schema": runtime_schema,
-                    },
-                },
-            },
-        )
-
-        # Validate response
-        assert isinstance(response, AgentResponse)
-        assert response.text is not None
-
-        # Parse JSON and validate structure
-        parsed = json.loads(response.text)
-        assert "location" in parsed
-        assert "conditions" in parsed
-        assert "temperature_c" in parsed
-        assert "advisory" in parsed

python/packages/core/tests/core/test_function_invocation_logic.py

@@ -1,5 +1,6 @@
 # Copyright (c) Microsoft. All rights reserved.
 
+import asyncio
 from collections.abc import Awaitable, Callable
 from typing import Any
 
@@ -13,7 +14,7 @@ from agent_framework import (
     ChatResponseUpdate,
     Content,
     Role,
-    ai_function,
+    tool,
 )
 from agent_framework._middleware import FunctionInvocationContext, FunctionMiddleware
 
@@ -21,7 +22,7 @@ from agent_framework._middleware import FunctionInvocationContext, FunctionMiddl
 async def test_base_client_with_function_calling(chat_client_base: ChatClientProtocol):
     exec_counter = 0
 
-    @ai_function(name="test_function")
+    @tool(name="test_function", approval_mode="never_require")
     def ai_func(arg1: str) -> str:
         nonlocal exec_counter
         exec_counter += 1
@@ -57,7 +58,7 @@ async def test_base_client_with_function_calling(chat_client_base: ChatClientPro
 async def test_base_client_with_function_calling_resets(chat_client_base: ChatClientProtocol):
     exec_counter = 0
 
-    @ai_function(name="test_function")
+    @tool(name="test_function", approval_mode="never_require")
     def ai_func(arg1: str) -> str:
         nonlocal exec_counter
         exec_counter += 1
@@ -99,7 +100,7 @@ async def test_base_client_with_function_calling_resets(chat_client_base: ChatCl
 async def test_base_client_with_streaming_function_calling(chat_client_base: ChatClientProtocol):
     exec_counter = 0
 
-    @ai_function(name="test_function")
+    @tool(name="test_function", approval_mode="never_require")
     def ai_func(arg1: str) -> str:
         nonlocal exec_counter
         exec_counter += 1
@@ -142,7 +143,7 @@ async def test_function_invocation_inside_aiohttp_server(chat_client_base: ChatC
 
     exec_counter = 0
 
-    @ai_function(name="start_todo_investigation")
+    @tool(name="start_todo_investigation", approval_mode="never_require")
     def ai_func(user_query: str) -> str:
         nonlocal exec_counter
         exec_counter += 1
@@ -199,7 +200,7 @@ async def test_function_invocation_in_threaded_aiohttp_app(chat_client_base: Cha
 
     exec_counter = 0
 
-    @ai_function(name="start_threaded_investigation")
+    @tool(name="start_threaded_investigation", approval_mode="never_require")
     def ai_func(user_query: str) -> str:
         nonlocal exec_counter
         exec_counter += 1
@@ -319,13 +320,13 @@ async def test_function_invocation_scenarios(
         # Simulate a service-side thread with conversation_id
         conversation_id = "test-thread-123"
 
-    @ai_function(name="no_approval_func")
+    @tool(name="no_approval_func", approval_mode="never_require")
     def func_no_approval(arg1: str) -> str:
         nonlocal exec_counter
         exec_counter += 1
         return f"Processed {arg1}"
 
-    @ai_function(name="approval_func", approval_mode="always_require")
+    @tool(name="approval_func", approval_mode="always_require")
     def func_with_approval(arg1: str) -> str:
         nonlocal exec_counter
         exec_counter += 1
@@ -473,13 +474,13 @@ async def test_rejected_approval(chat_client_base: ChatClientProtocol):
     exec_counter_approved = 0
     exec_counter_rejected = 0
 
-    @ai_function(name="approved_func", approval_mode="always_require")
+    @tool(name="approved_func", approval_mode="always_require")
     def func_approved(arg1: str) -> str:
         nonlocal exec_counter_approved
         exec_counter_approved += 1
         return f"Approved {arg1}"
 
-    @ai_function(name="rejected_func", approval_mode="always_require")
+    @tool(name="rejected_func", approval_mode="always_require")
     def func_rejected(arg1: str) -> str:
         nonlocal exec_counter_rejected
         exec_counter_rejected += 1
@@ -569,7 +570,7 @@ async def test_approval_requests_in_assistant_message(chat_client_base: ChatClie
     """Approval requests should be added to the assistant message that contains the function call."""
     exec_counter = 0
 
-    @ai_function(name="test_func", approval_mode="always_require")
+    @tool(name="test_func", approval_mode="always_require")
     def func_with_approval(arg1: str) -> str:
         nonlocal exec_counter
         exec_counter += 1
@@ -604,7 +605,7 @@ async def test_persisted_approval_messages_replay_correctly(chat_client_base: Ch
 
     exec_counter = 0
 
-    @ai_function(name="test_func", approval_mode="always_require")
+    @tool(name="test_func", approval_mode="always_require")
     def func_with_approval(arg1: str) -> str:
         nonlocal exec_counter
         exec_counter += 1
@@ -656,7 +657,7 @@ async def test_persisted_approval_messages_replay_correctly(chat_client_base: Ch
 async def test_no_duplicate_function_calls_after_approval_processing(chat_client_base: ChatClientProtocol):
     """Processing approval should not create duplicate function calls in messages."""
 
-    @ai_function(name="test_func", approval_mode="always_require")
+    @tool(name="test_func", approval_mode="always_require")
     def func_with_approval(arg1: str) -> str:
         return f"Result {arg1}"
 
@@ -700,7 +701,7 @@ async def test_no_duplicate_function_calls_after_approval_processing(chat_client
 async def test_rejection_result_uses_function_call_id(chat_client_base: ChatClientProtocol):
     """Rejection error result should use the function call's call_id, not the approval's id."""
 
-    @ai_function(name="test_func", approval_mode="always_require")
+    @tool(name="test_func", approval_mode="always_require")
     def func_with_approval(arg1: str) -> str:
         return f"Result {arg1}"
 
@@ -745,7 +746,7 @@ async def test_max_iterations_limit(chat_client_base: ChatClientProtocol):
     """Test that MAX_ITERATIONS in additional_properties limits function call loops."""
     exec_counter = 0
 
-    @ai_function(name="test_function")
+    @tool(name="test_function", approval_mode="never_require")
     def ai_func(arg1: str) -> str:
         nonlocal exec_counter
         exec_counter += 1
@@ -790,7 +791,7 @@ async def test_function_invocation_config_enabled_false(chat_client_base: ChatCl
     """Test that setting enabled=False disables function invocation."""
     exec_counter = 0
 
-    @ai_function(name="test_function")
+    @tool(name="test_function")
     def ai_func(arg1: str) -> str:
         nonlocal exec_counter
         exec_counter += 1
@@ -814,7 +815,7 @@ async def test_function_invocation_config_enabled_false(chat_client_base: ChatCl
 async def test_function_invocation_config_max_consecutive_errors(chat_client_base: ChatClientProtocol):
     """Test that max_consecutive_errors_per_request limits error retries."""
 
-    @ai_function(name="error_function")
+    @tool(name="error_function", approval_mode="never_require")
     def error_func(arg1: str) -> str:
         raise ValueError("Function error")
 
@@ -882,7 +883,7 @@ async def test_function_invocation_config_terminate_on_unknown_calls_false(chat_
     """Test that terminate_on_unknown_calls=False returns error message for unknown functions."""
     exec_counter = 0
 
-    @ai_function(name="known_function")
+    @tool(name="known_function")
     def known_func(arg1: str) -> str:
         nonlocal exec_counter
         exec_counter += 1
@@ -917,7 +918,7 @@ async def test_function_invocation_config_terminate_on_unknown_calls_true(chat_c
     """Test that terminate_on_unknown_calls=True stops execution on unknown functions."""
     exec_counter = 0
 
-    @ai_function(name="known_function")
+    @tool(name="known_function")
     def known_func(arg1: str) -> str:
         nonlocal exec_counter
         exec_counter += 1
@@ -949,13 +950,13 @@ async def test_function_invocation_config_additional_tools(chat_client_base: Cha
     exec_counter_visible = 0
     exec_counter_hidden = 0
 
-    @ai_function(name="visible_function")
+    @tool(name="visible_function")
     def visible_func(arg1: str) -> str:
         nonlocal exec_counter_visible
         exec_counter_visible += 1
         return f"Visible {arg1}"
 
-    @ai_function(name="hidden_function")
+    @tool(name="hidden_function")
     def hidden_func(arg1: str) -> str:
         nonlocal exec_counter_hidden
         exec_counter_hidden += 1
@@ -996,7 +997,7 @@ async def test_function_invocation_config_additional_tools(chat_client_base: Cha
 async def test_function_invocation_config_include_detailed_errors_false(chat_client_base: ChatClientProtocol):
     """Test that include_detailed_errors=False returns generic error messages."""
 
-    @ai_function(name="error_function")
+    @tool(name="error_function", approval_mode="never_require")
     def error_func(arg1: str) -> str:
         raise ValueError("Specific error message that should not appear")
 
@@ -1030,7 +1031,7 @@ async def test_function_invocation_config_include_detailed_errors_false(chat_cli
 async def test_function_invocation_config_include_detailed_errors_true(chat_client_base: ChatClientProtocol):
     """Test that include_detailed_errors=True returns detailed error information."""
 
-    @ai_function(name="error_function")
+    @tool(name="error_function", approval_mode="never_require")
     def error_func(arg1: str) -> str:
         raise ValueError("Specific error message that should appear")
 
@@ -1100,7 +1101,7 @@ async def test_function_invocation_config_validation_max_consecutive_errors():
 async def test_argument_validation_error_with_detailed_errors(chat_client_base: ChatClientProtocol):
     """Test that argument validation errors include details when include_detailed_errors=True."""
 
-    @ai_function(name="typed_function")
+    @tool(name="typed_function", approval_mode="never_require")
     def typed_func(arg1: int) -> str:  # Expects int, not str
         return f"Got {arg1}"
 
@@ -1134,7 +1135,7 @@ async def test_argument_validation_error_with_detailed_errors(chat_client_base:
 async def test_argument_validation_error_without_detailed_errors(chat_client_base: ChatClientProtocol):
     """Test that argument validation errors are generic when include_detailed_errors=False."""
 
-    @ai_function(name="typed_function")
+    @tool(name="typed_function", approval_mode="never_require")
     def typed_func(arg1: int) -> str:  # Expects int, not str
         return f"Got {arg1}"
 
@@ -1168,7 +1169,7 @@ async def test_argument_validation_error_without_detailed_errors(chat_client_bas
 async def test_hosted_tool_approval_response(chat_client_base: ChatClientProtocol):
     """Test handling of approval responses for hosted tools (tools not in tool_map)."""
 
-    @ai_function(name="local_function")
+    @tool(name="local_function")
     def local_func(arg1: str) -> str:
         return f"Local {arg1}"
 
@@ -1201,7 +1202,7 @@ async def test_hosted_tool_approval_response(chat_client_base: ChatClientProtoco
 async def test_unapproved_tool_execution_raises_exception(chat_client_base: ChatClientProtocol):
     """Test that attempting to execute an unapproved tool raises ToolException."""
 
-    @ai_function(name="test_function", approval_mode="always_require")
+    @tool(name="test_function", approval_mode="always_require")
     def test_func(arg1: str) -> str:
         return f"Result {arg1}"
 
@@ -1256,7 +1257,7 @@ async def test_approved_function_call_with_error_without_detailed_errors(chat_cl
 
     exec_counter = 0
 
-    @ai_function(name="error_func", approval_mode="always_require")
+    @tool(name="error_func", approval_mode="always_require")
     def error_func(arg1: str) -> str:
         nonlocal exec_counter
         exec_counter += 1
@@ -1319,7 +1320,7 @@ async def test_approved_function_call_with_error_with_detailed_errors(chat_clien
 
     exec_counter = 0
 
-    @ai_function(name="error_func", approval_mode="always_require")
+    @tool(name="error_func", approval_mode="always_require")
     def error_func(arg1: str) -> str:
         nonlocal exec_counter
         exec_counter += 1
@@ -1380,7 +1381,7 @@ async def test_approved_function_call_with_validation_error(chat_client_base: Ch
 
     exec_counter = 0
 
-    @ai_function(name="typed_func", approval_mode="always_require")
+    @tool(name="typed_func", approval_mode="always_require")
     def typed_func(arg1: int) -> str:  # Expects int, not str
         nonlocal exec_counter
         exec_counter += 1
@@ -1441,7 +1442,7 @@ async def test_approved_function_call_successful_execution(chat_client_base: Cha
 
     exec_counter = 0
 
-    @ai_function(name="success_func", approval_mode="always_require")
+    @tool(name="success_func", approval_mode="always_require")
     def success_func(arg1: str) -> str:
         nonlocal exec_counter
         exec_counter += 1
@@ -1493,10 +1494,10 @@ async def test_approved_function_call_successful_execution(chat_client_base: Cha
 
 async def test_declaration_only_tool(chat_client_base: ChatClientProtocol):
     """Test that declaration_only tools without implementation (func=None) are not executed."""
-    from agent_framework import AIFunction
+    from agent_framework import FunctionTool
 
     # Create a truly declaration-only function with no implementation
-    declaration_func = AIFunction(
+    declaration_func = FunctionTool(
         name="declaration_func",
         func=None,
         description="A declaration-only function for testing",
@@ -1547,14 +1548,14 @@ async def test_multiple_function_calls_parallel_execution(chat_client_base: Chat
 
     exec_order = []
 
-    @ai_function(name="func1")
+    @tool(name="func1", approval_mode="never_require")
     async def func1(arg1: str) -> str:
         exec_order.append("func1_start")
         await asyncio.sleep(0.01)  # Small delay
         exec_order.append("func1_end")
         return f"Result1 {arg1}"
 
-    @ai_function(name="func2")
+    @tool(name="func2", approval_mode="never_require")
     async def func2(arg1: str) -> str:
         exec_order.append("func2_start")
         await asyncio.sleep(0.01)  # Small delay
@@ -1587,10 +1588,11 @@ async def test_multiple_function_calls_parallel_execution(chat_client_base: Chat
     assert len(results) == 2
 
 
-async def test_callable_function_converted_to_ai_function(chat_client_base: ChatClientProtocol):
-    """Test that plain callable functions are converted to AIFunction."""
+async def test_callable_function_converted_to_tool(chat_client_base: ChatClientProtocol):
+    """Test that plain callable functions are converted to FunctionTool."""
     exec_counter = 0
 
+    @tool(approval_mode="never_require")
     def plain_function(arg1: str) -> str:
         """A plain function without decorator."""
         nonlocal exec_counter
@@ -1621,7 +1623,7 @@ async def test_callable_function_converted_to_ai_function(chat_client_base: Chat
 async def test_conversation_id_handling(chat_client_base: ChatClientProtocol):
     """Test that conversation_id is properly handled and messages are cleared."""
 
-    @ai_function(name="test_function")
+    @tool(name="test_function", approval_mode="never_require")
     def test_func(arg1: str) -> str:
         return f"Result {arg1}"
 
@@ -1653,7 +1655,7 @@ async def test_conversation_id_handling(chat_client_base: ChatClientProtocol):
 async def test_function_result_appended_to_existing_assistant_message(chat_client_base: ChatClientProtocol):
     """Test that function results are appended to existing assistant message when appropriate."""
 
-    @ai_function(name="test_function")
+    @tool(name="test_function", approval_mode="never_require")
     def test_func(arg1: str) -> str:
         return f"Result {arg1}"
 
@@ -1685,7 +1687,7 @@ async def test_error_recovery_resets_counter(chat_client_base: ChatClientProtoco
 
     call_count = 0
 
-    @ai_function(name="sometimes_fails")
+    @tool(name="sometimes_fails", approval_mode="never_require")
     def sometimes_fails(arg1: str) -> str:
         nonlocal call_count
         call_count += 1
@@ -1741,7 +1743,7 @@ async def test_streaming_approval_request_generated(chat_client_base: ChatClient
     """Test that approval requests are generated correctly in streaming mode."""
     exec_counter = 0
 
-    @ai_function(name="test_func", approval_mode="always_require")
+    @tool(name="test_func", approval_mode="always_require")
     def func_with_approval(arg1: str) -> str:
         nonlocal exec_counter
         exec_counter += 1
@@ -1777,7 +1779,7 @@ async def test_streaming_max_iterations_limit(chat_client_base: ChatClientProtoc
     """Test that MAX_ITERATIONS in streaming mode limits function call loops."""
     exec_counter = 0
 
-    @ai_function(name="test_function")
+    @tool(name="test_function", approval_mode="never_require")
     def ai_func(arg1: str) -> str:
         nonlocal exec_counter
         exec_counter += 1
@@ -1829,7 +1831,7 @@ async def test_streaming_function_invocation_config_enabled_false(chat_client_ba
     """Test that setting enabled=False disables function invocation in streaming mode."""
     exec_counter = 0
 
-    @ai_function(name="test_function")
+    @tool(name="test_function", approval_mode="never_require")
     def ai_func(arg1: str) -> str:
         nonlocal exec_counter
         exec_counter += 1
@@ -1857,7 +1859,7 @@ async def test_streaming_function_invocation_config_enabled_false(chat_client_ba
 async def test_streaming_function_invocation_config_max_consecutive_errors(chat_client_base: ChatClientProtocol):
     """Test that max_consecutive_errors_per_request limits error retries in streaming mode."""
 
-    @ai_function(name="error_function")
+    @tool(name="error_function", approval_mode="never_require")
     def error_func(arg1: str) -> str:
         raise ValueError("Function error")
 
@@ -1920,7 +1922,7 @@ async def test_streaming_function_invocation_config_terminate_on_unknown_calls_f
     """Test that terminate_on_unknown_calls=False returns error message for unknown functions in streaming mode."""
     exec_counter = 0
 
-    @ai_function(name="known_function")
+    @tool(name="known_function", approval_mode="never_require")
     def known_func(arg1: str) -> str:
         nonlocal exec_counter
         exec_counter += 1
@@ -1963,7 +1965,7 @@ async def test_streaming_function_invocation_config_terminate_on_unknown_calls_t
     """Test that terminate_on_unknown_calls=True stops execution on unknown functions in streaming mode."""
     exec_counter = 0
 
-    @ai_function(name="known_function")
+    @tool(name="known_function", approval_mode="never_require")
     def known_func(arg1: str) -> str:
         nonlocal exec_counter
         exec_counter += 1
@@ -1996,7 +1998,7 @@ async def test_streaming_function_invocation_config_terminate_on_unknown_calls_t
 async def test_streaming_function_invocation_config_include_detailed_errors_true(chat_client_base: ChatClientProtocol):
     """Test that include_detailed_errors=True returns detailed error information in streaming mode."""
 
-    @ai_function(name="error_function")
+    @tool(name="error_function", approval_mode="never_require")
     def error_func(arg1: str) -> str:
         raise ValueError("Specific error message that should appear")
 
@@ -2036,7 +2038,7 @@ async def test_streaming_function_invocation_config_include_detailed_errors_fals
 ):
     """Test that include_detailed_errors=False returns generic error messages in streaming mode."""
 
-    @ai_function(name="error_function")
+    @tool(name="error_function", approval_mode="never_require")
     def error_func(arg1: str) -> str:
         raise ValueError("Specific error message that should not appear")
 
@@ -2074,7 +2076,7 @@ async def test_streaming_function_invocation_config_include_detailed_errors_fals
 async def test_streaming_argument_validation_error_with_detailed_errors(chat_client_base: ChatClientProtocol):
     """Test that argument validation errors include details when include_detailed_errors=True in streaming mode."""
 
-    @ai_function(name="typed_function")
+    @tool(name="typed_function", approval_mode="never_require")
     def typed_func(arg1: int) -> str:  # Expects int, not str
         return f"Got {arg1}"
 
@@ -2112,7 +2114,7 @@ async def test_streaming_argument_validation_error_with_detailed_errors(chat_cli
 async def test_streaming_argument_validation_error_without_detailed_errors(chat_client_base: ChatClientProtocol):
     """Test that argument validation errors are generic when include_detailed_errors=False in streaming mode."""
 
-    @ai_function(name="typed_function")
+    @tool(name="typed_function", approval_mode="never_require")
     def typed_func(arg1: int) -> str:  # Expects int, not str
         return f"Got {arg1}"
 
@@ -2149,18 +2151,17 @@ async def test_streaming_argument_validation_error_without_detailed_errors(chat_
 
 async def test_streaming_multiple_function_calls_parallel_execution(chat_client_base: ChatClientProtocol):
     """Test that multiple function calls are executed in parallel in streaming mode."""
-    import asyncio
 
     exec_order = []
 
-    @ai_function(name="func1")
+    @tool(name="func1", approval_mode="never_require")
     async def func1(arg1: str) -> str:
         exec_order.append("func1_start")
         await asyncio.sleep(0.01)  # Small delay
         exec_order.append("func1_end")
         return f"Result1 {arg1}"
 
-    @ai_function(name="func2")
+    @tool(name="func2", approval_mode="never_require")
     async def func2(arg1: str) -> str:
         exec_order.append("func2_start")
         await asyncio.sleep(0.01)  # Small delay
@@ -2202,7 +2203,7 @@ async def test_streaming_approval_requests_in_assistant_message(chat_client_base
     """Approval requests should be added to assistant updates in streaming mode."""
     exec_counter = 0
 
-    @ai_function(name="test_func", approval_mode="always_require")
+    @tool(name="test_func", approval_mode="always_require")
     def func_with_approval(arg1: str) -> str:
         nonlocal exec_counter
         exec_counter += 1
@@ -2238,7 +2239,7 @@ async def test_streaming_error_recovery_resets_counter(chat_client_base: ChatCli
 
     call_count = 0
 
-    @ai_function(name="sometimes_fails")
+    @tool(name="sometimes_fails", approval_mode="never_require")
     def sometimes_fails(arg1: str) -> str:
         nonlocal call_count
         call_count += 1
@@ -2306,7 +2307,7 @@ async def test_terminate_loop_single_function_call(chat_client_base: ChatClientP
     """Test that terminate_loop=True exits the function calling loop after single function call."""
     exec_counter = 0
 
-    @ai_function(name="test_function")
+    @tool(name="test_function", approval_mode="never_require")
     def ai_func(arg1: str) -> str:
         nonlocal exec_counter
         exec_counter += 1
@@ -2367,13 +2368,13 @@ async def test_terminate_loop_multiple_function_calls_one_terminates(chat_client
     normal_call_count = 0
     terminating_call_count = 0
 
-    @ai_function(name="normal_function")
+    @tool(name="normal_function", approval_mode="never_require")
     def normal_func(arg1: str) -> str:
         nonlocal normal_call_count
         normal_call_count += 1
         return f"Normal {arg1}"
 
-    @ai_function(name="terminating_function")
+    @tool(name="terminating_function", approval_mode="never_require")
     def terminating_func(arg1: str) -> str:
         nonlocal terminating_call_count
         terminating_call_count += 1
@@ -2423,7 +2424,7 @@ async def test_terminate_loop_streaming_single_function_call(chat_client_base: C
     """Test that terminate_loop=True exits the streaming function calling loop."""
     exec_counter = 0
 
-    @ai_function(name="test_function")
+    @tool(name="test_function", approval_mode="never_require")
     def ai_func(arg1: str) -> str:
         nonlocal exec_counter
         exec_counter += 1

python/packages/core/tests/core/test_kwargs_propagation_to_ai_function.py

@@ -1,6 +1,6 @@
 # Copyright (c) Microsoft. All rights reserved.
 
-"""Tests for kwargs propagation from get_response() to @ai_function tools."""
+"""Tests for kwargs propagation from get_response() to @tool functions."""
 
 from typing import Any
 
@@ -9,19 +9,19 @@ from agent_framework import (
     ChatResponse,
     ChatResponseUpdate,
     Content,
-    ai_function,
+    tool,
 )
 from agent_framework._tools import _handle_function_calls_response, _handle_function_calls_streaming_response
 
 
-class TestKwargsPropagationToAIFunction:
-    """Test cases for kwargs flowing from get_response() to @ai_function tools."""
+class TestKwargsPropagationToFunctionTool:
+    """Test cases for kwargs flowing from get_response() to @tool functions."""
 
-    async def test_kwargs_propagate_to_ai_function_with_kwargs(self) -> None:
-        """Test that kwargs passed to get_response() are available in @ai_function **kwargs."""
+    async def test_kwargs_propagate_to_tool_with_kwargs(self) -> None:
+        """Test that kwargs passed to get_response() are available in @tool **kwargs."""
         captured_kwargs: dict[str, Any] = {}
 
-        @ai_function
+        @tool(approval_mode="never_require")
         def capture_kwargs_tool(x: int, **kwargs: Any) -> str:
             """A tool that captures kwargs for testing."""
             captured_kwargs.update(kwargs)
@@ -75,10 +75,10 @@ class TestKwargsPropagationToAIFunction:
         # Verify result
         assert result.messages[-1].text == "Done!"
 
-    async def test_kwargs_not_forwarded_to_ai_function_without_kwargs(self) -> None:
-        """Test that kwargs are NOT forwarded to @ai_function that doesn't accept **kwargs."""
+    async def test_kwargs_not_forwarded_to_tool_without_kwargs(self) -> None:
+        """Test that kwargs are NOT forwarded to @tool that doesn't accept **kwargs."""
 
-        @ai_function
+        @tool(approval_mode="never_require")
         def simple_tool(x: int) -> str:
             """A simple tool without **kwargs."""
             # This should not receive any extra kwargs
@@ -120,7 +120,7 @@ class TestKwargsPropagationToAIFunction:
         """Test that kwargs don't leak between different function call invocations."""
         invocation_kwargs: list[dict[str, Any]] = []
 
-        @ai_function
+        @tool(approval_mode="never_require")
         def tracking_tool(name: str, **kwargs: Any) -> str:
             """A tool that tracks kwargs from each invocation."""
             invocation_kwargs.append(dict(kwargs))
@@ -170,10 +170,10 @@ class TestKwargsPropagationToAIFunction:
         assert result.messages[-1].text == "All done!"
 
     async def test_streaming_response_kwargs_propagation(self) -> None:
-        """Test that kwargs propagate to @ai_function in streaming mode."""
+        """Test that kwargs propagate to @tool in streaming mode."""
         captured_kwargs: dict[str, Any] = {}
 
-        @ai_function
+        @tool(approval_mode="never_require")
         def streaming_capture_tool(value: str, **kwargs: Any) -> str:
             """A tool that captures kwargs during streaming."""
             captured_kwargs.update(kwargs)

python/packages/core/tests/core/test_mcp.py

@@ -1228,7 +1228,7 @@ async def test_streamable_http_integration():
     if not url.startswith("http"):
         pytest.skip("LOCAL_MCP_URL is not an HTTP URL")
 
-    tool = MCPStreamableHTTPTool(name="integration_test", url=url)
+    tool = MCPStreamableHTTPTool(name="integration_test", url=url, approval_mode="never_require")
 
     async with tool:
         # Test that we can connect and load tools
@@ -1260,7 +1260,7 @@ async def test_mcp_connection_reset_integration():
     """
     url = os.environ.get("LOCAL_MCP_URL")
 
-    tool = MCPStreamableHTTPTool(name="integration_test", url=url)
+    tool = MCPStreamableHTTPTool(name="integration_test", url=url, approval_mode="never_require")
 
     async with tool:
         # Verify initial connection
@@ -1620,7 +1620,7 @@ def test_mcp_websocket_tool_get_mcp_client_with_kwargs():
 async def test_mcp_tool_deduplication():
     """Test that MCP tools are not duplicated in MCPTool"""
     from agent_framework._mcp import MCPTool
-    from agent_framework._tools import AIFunction
+    from agent_framework._tools import FunctionTool
 
     # Create MCPStreamableHTTPTool instance
     tool = MCPTool(name="test_mcp_tool")
@@ -1629,12 +1629,12 @@ async def test_mcp_tool_deduplication():
     tool._functions = []
 
     # Add initial functions
-    func1 = AIFunction(
+    func1 = FunctionTool(
         func=lambda x: f"Result: {x}",
         name="analyze_content",
         description="Analyzes content",
     )
-    func2 = AIFunction(
+    func2 = FunctionTool(
         func=lambda x: f"Extract: {x}",
         name="extract_info",
         description="Extracts information",
@@ -1662,7 +1662,7 @@ async def test_mcp_tool_deduplication():
         if tool_name in existing_names:
             continue  # Skip duplicates
 
-        new_func = AIFunction(func=lambda x: f"Process: {x}", name=tool_name, description=description)
+        new_func = FunctionTool(func=lambda x: f"Process: {x}", name=tool_name, description=description)
         tool._functions.append(new_func)
         existing_names.add(tool_name)
         added_count += 1

python/packages/core/tests/core/test_middleware.py

@@ -28,7 +28,7 @@ from agent_framework._middleware import (
     FunctionMiddleware,
     FunctionMiddlewarePipeline,
 )
-from agent_framework._tools import AIFunction
+from agent_framework._tools import FunctionTool
 
 
 class TestAgentRunContext:
@@ -73,7 +73,7 @@ class TestAgentRunContext:
 class TestFunctionInvocationContext:
     """Test cases for FunctionInvocationContext."""
 
-    def test_init_with_defaults(self, mock_function: AIFunction[Any, Any]) -> None:
+    def test_init_with_defaults(self, mock_function: FunctionTool[Any, Any]) -> None:
         """Test FunctionInvocationContext initialization with default values."""
         arguments = FunctionTestArgs(name="test")
         context = FunctionInvocationContext(function=mock_function, arguments=arguments)
@@ -82,7 +82,7 @@ class TestFunctionInvocationContext:
         assert context.arguments == arguments
         assert context.metadata == {}
 
-    def test_init_with_custom_metadata(self, mock_function: AIFunction[Any, Any]) -> None:
+    def test_init_with_custom_metadata(self, mock_function: FunctionTool[Any, Any]) -> None:
         """Test FunctionInvocationContext initialization with custom metadata."""
         arguments = FunctionTestArgs(name="test")
         metadata = {"key": "value"}
@@ -419,7 +419,7 @@ class TestFunctionMiddlewarePipeline:
             await next(context)
             context.terminate = True
 
-    async def test_execute_with_pre_next_termination(self, mock_function: AIFunction[Any, Any]) -> None:
+    async def test_execute_with_pre_next_termination(self, mock_function: FunctionTool[Any, Any]) -> None:
         """Test pipeline execution with termination before next()."""
         middleware = self.PreNextTerminateFunctionMiddleware()
         pipeline = FunctionMiddlewarePipeline([middleware])
@@ -438,7 +438,7 @@ class TestFunctionMiddlewarePipeline:
         # Handler should not be called when terminated before next()
         assert execution_order == []
 
-    async def test_execute_with_post_next_termination(self, mock_function: AIFunction[Any, Any]) -> None:
+    async def test_execute_with_post_next_termination(self, mock_function: FunctionTool[Any, Any]) -> None:
         """Test pipeline execution with termination after next()."""
         middleware = self.PostNextTerminateFunctionMiddleware()
         pipeline = FunctionMiddlewarePipeline([middleware])
@@ -477,7 +477,7 @@ class TestFunctionMiddlewarePipeline:
         pipeline = FunctionMiddlewarePipeline([test_middleware])
         assert pipeline.has_middlewares
 
-    async def test_execute_no_middleware(self, mock_function: AIFunction[Any, Any]) -> None:
+    async def test_execute_no_middleware(self, mock_function: FunctionTool[Any, Any]) -> None:
         """Test pipeline execution with no middleware."""
         pipeline = FunctionMiddlewarePipeline()
         arguments = FunctionTestArgs(name="test")
@@ -491,7 +491,7 @@ class TestFunctionMiddlewarePipeline:
         result = await pipeline.execute(mock_function, arguments, context, final_handler)
         assert result == expected_result
 
-    async def test_execute_with_middleware(self, mock_function: AIFunction[Any, Any]) -> None:
+    async def test_execute_with_middleware(self, mock_function: FunctionTool[Any, Any]) -> None:
         """Test pipeline execution with middleware."""
         execution_order: list[str] = []
 
@@ -778,7 +778,7 @@ class TestClassBasedMiddleware:
         assert context.metadata["after"] is True
         assert metadata_updates == ["before", "handler", "after"]
 
-    async def test_function_middleware_execution(self, mock_function: AIFunction[Any, Any]) -> None:
+    async def test_function_middleware_execution(self, mock_function: FunctionTool[Any, Any]) -> None:
         """Test class-based function middleware execution."""
         metadata_updates: list[str] = []
 
@@ -840,7 +840,7 @@ class TestFunctionBasedMiddleware:
         assert context.metadata["function_middleware"] is True
         assert execution_order == ["function_before", "handler", "function_after"]
 
-    async def test_function_function_middleware(self, mock_function: AIFunction[Any, Any]) -> None:
+    async def test_function_function_middleware(self, mock_function: FunctionTool[Any, Any]) -> None:
         """Test function-based function middleware."""
         execution_order: list[str] = []
 
@@ -902,7 +902,7 @@ class TestMixedMiddleware:
         assert result is not None
         assert execution_order == ["class_before", "function_before", "handler", "function_after", "class_after"]
 
-    async def test_mixed_function_middleware(self, mock_function: AIFunction[Any, Any]) -> None:
+    async def test_mixed_function_middleware(self, mock_function: FunctionTool[Any, Any]) -> None:
         """Test mixed class and function-based function middleware."""
         execution_order: list[str] = []
 
@@ -1022,7 +1022,7 @@ class TestMultipleMiddlewareOrdering:
         ]
         assert execution_order == expected_order
 
-    async def test_function_middleware_execution_order(self, mock_function: AIFunction[Any, Any]) -> None:
+    async def test_function_middleware_execution_order(self, mock_function: FunctionTool[Any, Any]) -> None:
         """Test that multiple function middleware execute in registration order."""
         execution_order: list[str] = []
 
@@ -1150,7 +1150,7 @@ class TestContextContentValidation:
         result = await pipeline.execute(mock_agent, messages, context, final_handler)
         assert result is not None
 
-    async def test_function_context_validation(self, mock_function: AIFunction[Any, Any]) -> None:
+    async def test_function_context_validation(self, mock_function: FunctionTool[Any, Any]) -> None:
         """Test that function context contains expected data."""
 
         class ContextValidationMiddleware(FunctionMiddleware):
@@ -1498,7 +1498,7 @@ class TestMiddlewareExecutionControl:
         assert not handler_called
         assert context.result is None
 
-    async def test_function_middleware_no_next_no_execution(self, mock_function: AIFunction[Any, Any]) -> None:
+    async def test_function_middleware_no_next_no_execution(self, mock_function: FunctionTool[Any, Any]) -> None:
         """Test that when function middleware doesn't call next(), no execution happens."""
 
         class FunctionTestArgs(BaseModel):
@@ -1672,9 +1672,9 @@ def mock_agent() -> AgentProtocol:
 
 
 @pytest.fixture
-def mock_function() -> AIFunction[Any, Any]:
+def mock_function() -> FunctionTool[Any, Any]:
     """Mock function for testing."""
-    function = MagicMock(spec=AIFunction[Any, Any])
+    function = MagicMock(spec=FunctionTool[Any, Any])
     function.name = "test_function"
     return function
 

python/packages/core/tests/core/test_middleware_context_result.py

@@ -24,7 +24,7 @@ from agent_framework._middleware import (
     FunctionMiddleware,
     FunctionMiddlewarePipeline,
 )
-from agent_framework._tools import AIFunction
+from agent_framework._tools import FunctionTool
 
 from .conftest import MockChatClient
 
@@ -103,7 +103,7 @@ class TestResultOverrideMiddleware:
         assert updates[0].text == "overridden"
         assert updates[1].text == " stream"
 
-    async def test_function_middleware_result_override(self, mock_function: AIFunction[Any, Any]) -> None:
+    async def test_function_middleware_result_override(self, mock_function: FunctionTool[Any, Any]) -> None:
         """Test that function middleware can override result."""
         override_result = "overridden function result"
 
@@ -260,7 +260,7 @@ class TestResultOverrideMiddleware:
         assert execute_result.messages[0].text == "executed response"
         assert handler_called
 
-    async def test_function_middleware_conditional_no_next(self, mock_function: AIFunction[Any, Any]) -> None:
+    async def test_function_middleware_conditional_no_next(self, mock_function: FunctionTool[Any, Any]) -> None:
         """Test that when function middleware conditionally doesn't call next(), no execution happens."""
 
         class ConditionalNoNextFunctionMiddleware(FunctionMiddleware):
@@ -345,7 +345,7 @@ class TestResultObservability:
         assert observed_responses[0].messages[0].text == "executed response"
         assert result == observed_responses[0]
 
-    async def test_function_middleware_result_observability(self, mock_function: AIFunction[Any, Any]) -> None:
+    async def test_function_middleware_result_observability(self, mock_function: FunctionTool[Any, Any]) -> None:
         """Test that middleware can observe function result after execution."""
         observed_results: list[str] = []
 
@@ -414,7 +414,7 @@ class TestResultObservability:
         assert result is not None
         assert result.messages[0].text == "modified after execution"
 
-    async def test_function_middleware_post_execution_override(self, mock_function: AIFunction[Any, Any]) -> None:
+    async def test_function_middleware_post_execution_override(self, mock_function: FunctionTool[Any, Any]) -> None:
         """Test that middleware can override function result after observing execution."""
 
         class PostExecutionOverrideMiddleware(FunctionMiddleware):
@@ -456,8 +456,8 @@ def mock_agent() -> AgentProtocol:
 
 
 @pytest.fixture
-def mock_function() -> AIFunction[Any, Any]:
+def mock_function() -> FunctionTool[Any, Any]:
     """Mock function for testing."""
-    function = MagicMock(spec=AIFunction[Any, Any])
+    function = MagicMock(spec=FunctionTool[Any, Any])
     function.name = "test_function"
     return function

python/packages/core/tests/core/test_middleware_with_agent.py

@@ -14,6 +14,7 @@ from agent_framework import (
     ChatResponse,
     ChatResponseUpdate,
     Content,
+    FunctionTool,
     Role,
     agent_middleware,
     chat_middleware,
@@ -214,9 +215,13 @@ class TestChatAgentFunctionBasedMiddleware:
             execution_order.append("function_called")
             return "test_result"
 
+        test_function_tool = FunctionTool(
+            func=test_function, name="test_function", description="Test function", approval_mode="never_require"
+        )
+
         # Create ChatAgent with function middleware and test function
         middleware = PreTerminationFunctionMiddleware()
-        agent = ChatAgent(chat_client=chat_client, middleware=[middleware], tools=[test_function])
+        agent = ChatAgent(chat_client=chat_client, middleware=[middleware], tools=[test_function_tool])
 
         # Execute the agent
         await agent.run(messages)
@@ -271,9 +276,13 @@ class TestChatAgentFunctionBasedMiddleware:
             execution_order.append("function_called")
             return "test_result"
 
+        test_function_tool = FunctionTool(
+            func=test_function, name="test_function", description="Test function", approval_mode="never_require"
+        )
+
         # Create ChatAgent with function middleware and test function
         middleware = PostTerminationFunctionMiddleware()
-        agent = ChatAgent(chat_client=chat_client, middleware=[middleware], tools=[test_function])
+        agent = ChatAgent(chat_client=chat_client, middleware=[middleware], tools=[test_function_tool])
 
         # Execute the agent
         response = await agent.run(messages)
@@ -518,11 +527,19 @@ class TestChatAgentMultipleMiddlewareOrdering:
 # region Tool Functions for Testing
 
 
-def sample_tool_function(location: str) -> str:
+def _sample_tool_function_impl(location: str) -> str:
     """A simple tool function for middleware testing."""
     return f"Weather in {location}: sunny"
 
 
+sample_tool_function = FunctionTool(
+    func=_sample_tool_function_impl,
+    name="sample_tool_function",
+    description="A simple tool function for middleware testing.",
+    approval_mode="never_require",
+)
+
+
 # region ChatAgent Function Middleware Tests with Tools
 
 
@@ -1157,6 +1174,10 @@ class TestRunLevelMiddleware:
             execution_log.append("tool_executed")
             return f"Tool response: {message}"
 
+        custom_tool_wrapped = FunctionTool(
+            func=custom_tool, name="custom_tool", description="Custom tool", approval_mode="never_require"
+        )
+
         # Set up mock to return a function call first, then a regular response
         function_call_response = ChatResponse(
             messages=[
@@ -1179,7 +1200,7 @@ class TestRunLevelMiddleware:
         agent = ChatAgent(
             chat_client=chat_client,
             middleware=[AgentLevelAgentMiddleware(), AgentLevelFunctionMiddleware()],
-            tools=[custom_tool],
+            tools=[custom_tool_wrapped],
         )
 
         # Execute with run-level middleware
@@ -1246,6 +1267,10 @@ class TestMiddlewareDecoratorLogic:
             execution_order.append("tool_executed")
             return f"Tool response: {message}"
 
+        custom_tool_wrapped = FunctionTool(
+            func=custom_tool, name="custom_tool", description="Custom tool", approval_mode="never_require"
+        )
+
         # Set up mock to return a function call first, then a regular response
         function_call_response = ChatResponse(
             messages=[
@@ -1268,7 +1293,7 @@ class TestMiddlewareDecoratorLogic:
         agent = ChatAgent(
             chat_client=chat_client,
             middleware=[matching_agent_middleware, matching_function_middleware],
-            tools=[custom_tool],
+            tools=[custom_tool_wrapped],
         )
 
         response = await agent.run([ChatMessage(role=Role.USER, text="test")])
@@ -1313,6 +1338,10 @@ class TestMiddlewareDecoratorLogic:
             execution_order.append("tool_executed")
             return f"Tool response: {message}"
 
+        custom_tool_wrapped = FunctionTool(
+            func=custom_tool, name="custom_tool", description="Custom tool", approval_mode="never_require"
+        )
+
         # Set up mock to return a function call first, then a regular response
         function_call_response = ChatResponse(
             messages=[
@@ -1333,7 +1362,9 @@ class TestMiddlewareDecoratorLogic:
 
         # Should work - relies on decorator
         agent = ChatAgent(
-            chat_client=chat_client, middleware=[decorator_only_agent, decorator_only_function], tools=[custom_tool]
+            chat_client=chat_client,
+            middleware=[decorator_only_agent, decorator_only_function],
+            tools=[custom_tool_wrapped],
         )
 
         response = await agent.run([ChatMessage(role=Role.USER, text="test")])
@@ -1363,6 +1394,10 @@ class TestMiddlewareDecoratorLogic:
             execution_order.append("tool_executed")
             return f"Tool response: {message}"
 
+        custom_tool_wrapped = FunctionTool(
+            func=custom_tool, name="custom_tool", description="Custom tool", approval_mode="never_require"
+        )
+
         # Set up mock to return a function call first, then a regular response
         function_call_response = ChatResponse(
             messages=[
@@ -1383,7 +1418,7 @@ class TestMiddlewareDecoratorLogic:
 
         # Should work - relies on type annotations
         agent = ChatAgent(
-            chat_client=chat_client, middleware=[type_only_agent, type_only_function], tools=[custom_tool]
+            chat_client=chat_client, middleware=[type_only_agent, type_only_function], tools=[custom_tool_wrapped]
         )
 
         response = await agent.run([ChatMessage(role=Role.USER, text="test")])

python/packages/core/tests/core/test_middleware_with_chat.py

@@ -11,6 +11,7 @@ from agent_framework import (
     ChatResponse,
     Content,
     FunctionInvocationContext,
+    FunctionTool,
     Role,
     chat_middleware,
     function_middleware,
@@ -337,6 +338,13 @@ class TestChatMiddleware:
             """Get weather for a location."""
             return f"Weather in {location}: sunny"
 
+        sample_tool_wrapped = FunctionTool(
+            func=sample_tool,
+            name="sample_tool",
+            description="Get weather for a location",
+            approval_mode="never_require",
+        )
+
         # Create function-invocation enabled chat client
         chat_client = use_chat_middleware(use_function_invocation(MockBaseChatClient))()
 
@@ -366,7 +374,7 @@ class TestChatMiddleware:
 
         # Execute the chat client directly with tools - this should trigger function invocation and middleware
         messages = [ChatMessage(role=Role.USER, text="What's the weather in San Francisco?")]
-        response = await chat_client.get_response(messages, options={"tools": [sample_tool]})
+        response = await chat_client.get_response(messages, options={"tools": [sample_tool_wrapped]})
 
         # Verify response
         assert response is not None
@@ -396,6 +404,13 @@ class TestChatMiddleware:
             """Get weather for a location."""
             return f"Weather in {location}: sunny"
 
+        sample_tool_wrapped = FunctionTool(
+            func=sample_tool,
+            name="sample_tool",
+            description="Get weather for a location",
+            approval_mode="never_require",
+        )
+
         # Create function-invocation enabled chat client
         chat_client = use_function_invocation(MockBaseChatClient)()
 
@@ -423,7 +438,7 @@ class TestChatMiddleware:
         # Execute the chat client directly with run-level middleware and tools
         messages = [ChatMessage(role=Role.USER, text="What's the weather in New York?")]
         response = await chat_client.get_response(
-            messages, options={"tools": [sample_tool]}, middleware=[run_level_function_middleware]
+            messages, options={"tools": [sample_tool_wrapped]}, middleware=[run_level_function_middleware]
         )
 
         # Verify response

python/packages/core/tests/core/test_observability.py

@@ -21,8 +21,8 @@ from agent_framework import (
     ChatResponseUpdate,
     Role,
     UsageDetails,
-    ai_function,
     prepend_agent_framework_to_user_agent,
+    tool,
 )
 from agent_framework.exceptions import AgentInitializationError, ChatClientInitializationError
 from agent_framework.observability import (
@@ -606,7 +606,7 @@ async def test_function_call_with_error_handling(span_exporter: InMemorySpanExpo
     """Test that function call errors are properly captured in telemetry."""
 
     # Create a function that raises an error using the decorator
-    @ai_function(name="failing_function", description="A function that fails")
+    @tool(name="failing_function", description="A function that fails")
     async def failing_function(param: str) -> str:
         raise ValueError("Function execution failed")
 

python/packages/core/tests/core/test_tools.py

@@ -8,13 +8,13 @@ from opentelemetry.sdk.trace.export.in_memory_span_exporter import InMemorySpanE
 from pydantic import BaseModel, ValidationError
 
 from agent_framework import (
-    AIFunction,
     Content,
+    FunctionTool,
     HostedCodeInterpreterTool,
     HostedImageGenerationTool,
     HostedMCPTool,
     ToolProtocol,
-    ai_function,
+    tool,
 )
 from agent_framework._tools import (
     _build_pydantic_model_from_json_schema,
@@ -24,19 +24,19 @@ from agent_framework._tools import (
 from agent_framework.exceptions import ToolException
 from agent_framework.observability import OtelAttr
 
-# region AIFunction and ai_function decorator tests
+# region FunctionTool and tool decorator tests
 
 
-def test_ai_function_decorator():
-    """Test the ai_function decorator."""
+def test_tool_decorator():
+    """Test the tool decorator."""
 
-    @ai_function(name="test_tool", description="A test tool")
+    @tool(name="test_tool", description="A test tool")
     def test_tool(x: int, y: int) -> int:
         """A simple function that adds two numbers."""
         return x + y
 
     assert isinstance(test_tool, ToolProtocol)
-    assert isinstance(test_tool, AIFunction)
+    assert isinstance(test_tool, FunctionTool)
     assert test_tool.name == "test_tool"
     assert test_tool.description == "A test tool"
     assert test_tool.parameters() == {
@@ -48,16 +48,16 @@ def test_ai_function_decorator():
     assert test_tool(1, 2) == 3
 
 
-def test_ai_function_decorator_without_args():
-    """Test the ai_function decorator."""
+def test_tool_decorator_without_args():
+    """Test the tool decorator."""
 
-    @ai_function
+    @tool
     def test_tool(x: int, y: int) -> int:
         """A simple function that adds two numbers."""
         return x + y
 
     assert isinstance(test_tool, ToolProtocol)
-    assert isinstance(test_tool, AIFunction)
+    assert isinstance(test_tool, FunctionTool)
     assert test_tool.name == "test_tool"
     assert test_tool.description == "A simple function that adds two numbers."
     assert test_tool.parameters() == {
@@ -67,18 +67,19 @@ def test_ai_function_decorator_without_args():
         "type": "object",
     }
     assert test_tool(1, 2) == 3
+    assert test_tool.approval_mode == "never_require"
 
 
-def test_ai_function_without_args():
-    """Test the ai_function decorator."""
+def test_tool_without_args():
+    """Test the tool decorator."""
 
-    @ai_function
+    @tool
     def test_tool() -> int:
         """A simple function that adds two numbers."""
         return 1 + 2
 
     assert isinstance(test_tool, ToolProtocol)
-    assert isinstance(test_tool, AIFunction)
+    assert isinstance(test_tool, FunctionTool)
     assert test_tool.name == "test_tool"
     assert test_tool.description == "A simple function that adds two numbers."
     assert test_tool.parameters() == {
@@ -89,16 +90,16 @@ def test_ai_function_without_args():
     assert test_tool() == 3
 
 
-async def test_ai_function_decorator_with_async():
-    """Test the ai_function decorator with an async function."""
+async def test_tool_decorator_with_async():
+    """Test the tool decorator with an async function."""
 
-    @ai_function(name="async_test_tool", description="An async test tool")
+    @tool(name="async_test_tool", description="An async test tool")
     async def async_test_tool(x: int, y: int) -> int:
         """An async function that adds two numbers."""
         return x + y
 
     assert isinstance(async_test_tool, ToolProtocol)
-    assert isinstance(async_test_tool, AIFunction)
+    assert isinstance(async_test_tool, FunctionTool)
     assert async_test_tool.name == "async_test_tool"
     assert async_test_tool.description == "An async test tool"
     assert async_test_tool.parameters() == {
@@ -110,11 +111,11 @@ async def test_ai_function_decorator_with_async():
     assert (await async_test_tool(1, 2)) == 3
 
 
-def test_ai_function_decorator_in_class():
-    """Test the ai_function decorator."""
+def test_tool_decorator_in_class():
+    """Test the tool decorator."""
 
     class my_tools:
-        @ai_function(name="test_tool", description="A test tool")
+        @tool(name="test_tool", description="A test tool")
         def test_tool(self, x: int, y: int) -> int:
             """A simple function that adds two numbers."""
             return x + y
@@ -122,7 +123,7 @@ def test_ai_function_decorator_in_class():
     test_tool = my_tools().test_tool
 
     assert isinstance(test_tool, ToolProtocol)
-    assert isinstance(test_tool, AIFunction)
+    assert isinstance(test_tool, FunctionTool)
     assert test_tool.name == "test_tool"
     assert test_tool.description == "A test tool"
     assert test_tool.parameters() == {
@@ -134,15 +135,15 @@ def test_ai_function_decorator_in_class():
     assert test_tool(1, 2) == 3
 
 
-def test_ai_function_with_literal_type_parameter():
-    """Test ai_function decorator with Literal type parameter (issue #2891)."""
+def test_tool_with_literal_type_parameter():
+    """Test tool decorator with Literal type parameter (issue #2891)."""
 
-    @ai_function
+    @tool
     def search_flows(category: Literal["Data", "Security", "Network"], issue: str) -> str:
         """Search flows by category."""
         return f"{category}: {issue}"
 
-    assert isinstance(search_flows, AIFunction)
+    assert isinstance(search_flows, FunctionTool)
     schema = search_flows.parameters()
     assert schema == {
         "properties": {
@@ -157,18 +158,18 @@ def test_ai_function_with_literal_type_parameter():
     assert search_flows("Data", "test issue") == "Data: test issue"
 
 
-def test_ai_function_with_literal_type_in_class_method():
-    """Test ai_function decorator with Literal type parameter in a class method (issue #2891)."""
+def test_tool_with_literal_type_in_class_method():
+    """Test tool decorator with Literal type parameter in a class method (issue #2891)."""
 
     class MyTools:
-        @ai_function
+        @tool
         def search_flows(self, category: Literal["Data", "Security", "Network"], issue: str) -> str:
             """Search flows by category."""
             return f"{category}: {issue}"
 
     tools = MyTools()
     search_tool = tools.search_flows
-    assert isinstance(search_tool, AIFunction)
+    assert isinstance(search_tool, FunctionTool)
     schema = search_tool.parameters()
     assert schema == {
         "properties": {
@@ -183,15 +184,15 @@ def test_ai_function_with_literal_type_in_class_method():
     assert search_tool("Security", "test issue") == "Security: test issue"
 
 
-def test_ai_function_with_literal_int_type():
-    """Test ai_function decorator with Literal int type parameter."""
+def test_tool_with_literal_int_type():
+    """Test tool decorator with Literal int type parameter."""
 
-    @ai_function
+    @tool
     def set_priority(priority: Literal[1, 2, 3], task: str) -> str:
         """Set priority for a task."""
         return f"Priority {priority}: {task}"
 
-    assert isinstance(set_priority, AIFunction)
+    assert isinstance(set_priority, FunctionTool)
     schema = set_priority.parameters()
     assert schema == {
         "properties": {
@@ -205,10 +206,10 @@ def test_ai_function_with_literal_int_type():
     assert set_priority(1, "important task") == "Priority 1: important task"
 
 
-def test_ai_function_with_literal_and_annotated():
-    """Test ai_function decorator with Literal type combined with Annotated for description."""
+def test_tool_with_literal_and_annotated():
+    """Test tool decorator with Literal type combined with Annotated for description."""
 
-    @ai_function
+    @tool
     def categorize(
         category: Annotated[Literal["A", "B", "C"], "The category to assign"],
         name: str,
@@ -216,14 +217,14 @@ def test_ai_function_with_literal_and_annotated():
         """Categorize an item."""
         return f"{category}: {name}"
 
-    assert isinstance(categorize, AIFunction)
+    assert isinstance(categorize, FunctionTool)
     schema = categorize.parameters()
     # Literal type inside Annotated should preserve enum values
     assert schema["properties"]["category"]["enum"] == ["A", "B", "C"]
     assert categorize("A", "test") == "A: test"
 
 
-async def test_ai_function_decorator_shared_state():
+async def test_tool_decorator_shared_state():
     """Test that decorated methods maintain shared state across multiple calls and tool usage."""
 
     class StatefulCounter:
@@ -233,20 +234,20 @@ async def test_ai_function_decorator_shared_state():
             self.counter = initial_value
             self.operation_log: list[str] = []
 
-        @ai_function(name="increment", description="Increment the counter")
+        @tool(name="increment", description="Increment the counter")
         def increment(self, amount: int) -> str:
             """Increment the counter by the given amount."""
             self.counter += amount
             self.operation_log.append(f"increment({amount})")
             return f"Counter incremented by {amount}. New value: {self.counter}"
 
-        @ai_function(name="get_value", description="Get the current counter value")
+        @tool(name="get_value", description="Get the current counter value")
         def get_value(self) -> str:
             """Get the current counter value."""
             self.operation_log.append("get_value()")
             return f"Current counter value: {self.counter}"
 
-        @ai_function(name="multiply", description="Multiply the counter")
+        @tool(name="multiply", description="Multiply the counter")
         def multiply(self, factor: int) -> str:
             """Multiply the counter by the given factor."""
             self.counter *= factor
@@ -261,10 +262,10 @@ async def test_ai_function_decorator_shared_state():
     get_value_tool = counter_instance.get_value
     multiply_tool = counter_instance.multiply
 
-    # Verify they are AIFunction instances
-    assert isinstance(increment_tool, AIFunction)
-    assert isinstance(get_value_tool, AIFunction)
-    assert isinstance(multiply_tool, AIFunction)
+    # Verify they are FunctionTool instances
+    assert isinstance(increment_tool, FunctionTool)
+    assert isinstance(get_value_tool, FunctionTool)
+    assert isinstance(multiply_tool, FunctionTool)
 
     # Tool 1 (increment) is used
     result1 = increment_tool(5)
@@ -329,10 +330,10 @@ async def test_ai_function_decorator_shared_state():
     assert counter_instance.counter == 60
 
 
-async def test_ai_function_invoke_telemetry_enabled(span_exporter: InMemorySpanExporter):
-    """Test the ai_function invoke method with telemetry enabled."""
+async def test_tool_invoke_telemetry_enabled(span_exporter: InMemorySpanExporter):
+    """Test the tool invoke method with telemetry enabled."""
 
-    @ai_function(
+    @tool(
         name="telemetry_test_tool",
         description="A test tool for telemetry",
     )
@@ -373,10 +374,10 @@ async def test_ai_function_invoke_telemetry_enabled(span_exporter: InMemorySpanE
 
 
 @pytest.mark.parametrize("enable_sensitive_data", [False], indirect=True)
-async def test_ai_function_invoke_telemetry_sensitive_disabled(span_exporter: InMemorySpanExporter):
-    """Test the ai_function invoke method with telemetry enabled."""
+async def test_tool_invoke_telemetry_sensitive_disabled(span_exporter: InMemorySpanExporter):
+    """Test the tool invoke method with telemetry enabled."""
 
-    @ai_function(
+    @tool(
         name="telemetry_test_tool",
         description="A test tool for telemetry",
     )
@@ -416,10 +417,10 @@ async def test_ai_function_invoke_telemetry_sensitive_disabled(span_exporter: In
     assert attributes[OtelAttr.TOOL_CALL_ID] == "test_call_id"
 
 
-async def test_ai_function_invoke_ignores_additional_kwargs() -> None:
-    """Ensure ai_function tools drop unknown kwargs when invoked with validated arguments."""
+async def test_tool_invoke_ignores_additional_kwargs() -> None:
+    """Ensure tools drop unknown kwargs when invoked with validated arguments."""
 
-    @ai_function
+    @tool
     async def simple_tool(message: str) -> str:
         """Echo tool."""
         return message.upper()
@@ -436,10 +437,10 @@ async def test_ai_function_invoke_ignores_additional_kwargs() -> None:
     assert result == "HELLO WORLD"
 
 
-async def test_ai_function_invoke_telemetry_with_pydantic_args(span_exporter: InMemorySpanExporter):
-    """Test the ai_function invoke method with Pydantic model arguments."""
+async def test_tool_invoke_telemetry_with_pydantic_args(span_exporter: InMemorySpanExporter):
+    """Test the tool invoke method with Pydantic model arguments."""
 
-    @ai_function(
+    @tool(
         name="pydantic_test_tool",
         description="A test tool with Pydantic args",
     )
@@ -470,10 +471,10 @@ async def test_ai_function_invoke_telemetry_with_pydantic_args(span_exporter: In
     assert span.attributes[OtelAttr.TOOL_ARGUMENTS] == '{"x":5,"y":10}'
 
 
-async def test_ai_function_invoke_telemetry_with_exception(span_exporter: InMemorySpanExporter):
-    """Test the ai_function invoke method with telemetry when an exception occurs."""
+async def test_tool_invoke_telemetry_with_exception(span_exporter: InMemorySpanExporter):
+    """Test the tool invoke method with telemetry when an exception occurs."""
 
-    @ai_function(
+    @tool(
         name="exception_test_tool",
         description="A test tool that raises an exception",
     )
@@ -507,10 +508,10 @@ async def test_ai_function_invoke_telemetry_with_exception(span_exporter: InMemo
     assert attributes[OtelAttr.ERROR_TYPE] == ValueError.__name__
 
 
-async def test_ai_function_invoke_telemetry_async_function(span_exporter: InMemorySpanExporter):
-    """Test the ai_function invoke method with telemetry on async function."""
+async def test_tool_invoke_telemetry_async_function(span_exporter: InMemorySpanExporter):
+    """Test the tool invoke method with telemetry on async function."""
 
-    @ai_function(
+    @tool(
         name="async_telemetry_test",
         description="An async test tool for telemetry",
     )
@@ -544,10 +545,10 @@ async def test_ai_function_invoke_telemetry_async_function(span_exporter: InMemo
     assert attributes[OtelAttr.MEASUREMENT_FUNCTION_TAG_NAME] == "async_telemetry_test"
 
 
-async def test_ai_function_invoke_invalid_pydantic_args():
-    """Test the ai_function invoke method with invalid Pydantic model arguments."""
+async def test_tool_invoke_invalid_pydantic_args():
+    """Test the tool invoke method with invalid Pydantic model arguments."""
 
-    @ai_function(name="invalid_args_test", description="A test tool for invalid args")
+    @tool(name="invalid_args_test", description="A test tool for invalid args")
     def invalid_args_test(x: int, y: int) -> int:
         """A function for testing invalid Pydantic args."""
         return x + y
@@ -564,20 +565,18 @@ async def test_ai_function_invoke_invalid_pydantic_args():
         await invalid_args_test.invoke(arguments=wrong_args)
 
 
-def test_ai_function_serialization():
-    """Test AIFunction serialization and deserialization."""
+def test_tool_serialization():
+    """Test FunctionTool serialization and deserialization."""
 
     def serialize_test(x: int, y: int) -> int:
         """A function for testing serialization."""
         return x - y
 
-    serialize_test_ai_function = ai_function(name="serialize_test", description="A test tool for serialization")(
-        serialize_test
-    )
+    serialize_test_tool = tool(name="serialize_test", description="A test tool for serialization")(serialize_test)
 
     # Serialize to dict
-    tool_dict = serialize_test_ai_function.to_dict()
-    assert tool_dict["type"] == "ai_function"
+    tool_dict = serialize_test_tool.to_dict()
+    assert tool_dict["type"] == "function_tool"
     assert tool_dict["name"] == "serialize_test"
     assert tool_dict["description"] == "A test tool for serialization"
     assert tool_dict["input_model"] == {
@@ -588,21 +587,21 @@ def test_ai_function_serialization():
     }
 
     # Deserialize from dict
-    restored_tool = AIFunction.from_dict(tool_dict, dependencies={"ai_function": {"func": serialize_test}})
-    assert isinstance(restored_tool, AIFunction)
+    restored_tool = FunctionTool.from_dict(tool_dict, dependencies={"function_tool": {"func": serialize_test}})
+    assert isinstance(restored_tool, FunctionTool)
     assert restored_tool.name == "serialize_test"
     assert restored_tool.description == "A test tool for serialization"
-    assert restored_tool.parameters() == serialize_test_ai_function.parameters()
+    assert restored_tool.parameters() == serialize_test_tool.parameters()
     assert restored_tool(10, 4) == 6
 
     # Deserialize from dict with instance name
-    restored_tool_2 = AIFunction.from_dict(
-        tool_dict, dependencies={"ai_function": {"name:serialize_test": {"func": serialize_test}}}
+    restored_tool_2 = FunctionTool.from_dict(
+        tool_dict, dependencies={"function_tool": {"name:serialize_test": {"func": serialize_test}}}
     )
-    assert isinstance(restored_tool_2, AIFunction)
+    assert isinstance(restored_tool_2, FunctionTool)
     assert restored_tool_2.name == "serialize_test"
     assert restored_tool_2.description == "A test tool for serialization"
-    assert restored_tool_2.parameters() == serialize_test_ai_function.parameters()
+    assert restored_tool_2.parameters() == serialize_test_tool.parameters()
     assert restored_tool_2(10, 4) == 6
 
 
@@ -979,13 +978,17 @@ def mock_chat_client():
     return MockChatClient()
 
 
-@ai_function(name="no_approval_tool", description="Tool that doesn't require approval")
+@tool(
+    name="no_approval_tool",
+    description="Tool that doesn't require approval",
+    approval_mode="never_require",
+)
 def no_approval_tool(x: int) -> int:
     """A tool that doesn't require approval."""
     return x * 2
 
 
-@ai_function(
+@tool(
     name="requires_approval_tool",
     description="Tool that requires approval",
     approval_mode="always_require",
@@ -1451,10 +1454,10 @@ async def test_streaming_two_functions_mixed_approval():
     assert all(c.type == "function_approval_request" for c in updates[2].contents)
 
 
-async def test_ai_function_with_kwargs_injection():
-    """Test that ai_function correctly handles kwargs injection and hides them from schema."""
+async def test_tool_with_kwargs_injection():
+    """Test that tool correctly handles kwargs injection and hides them from schema."""
 
-    @ai_function
+    @tool
     def tool_with_kwargs(x: int, **kwargs: Any) -> str:
         """A tool that accepts kwargs."""
         user_id = kwargs.get("user_id", "unknown")
@@ -1647,11 +1650,11 @@ def test_build_pydantic_model_from_json_schema_array_of_objects_issue():
     # CRITICAL: Validate using the same methods that actual chat clients use
     # This is what would actually be sent to the LLM
 
-    # Create an AIFunction wrapper to access the client-facing APIs
+    # Create a FunctionTool wrapper to access the client-facing APIs
     def dummy_func(**kwargs):
         return kwargs
 
-    test_func = AIFunction(
+    test_func = FunctionTool(
         func=dummy_func,
         name="create_sales_order",
         description="Create a sales order",

python/packages/core/tests/core/test_types.py

@@ -24,10 +24,10 @@ from agent_framework import (
     ToolMode,
     ToolProtocol,
     UsageDetails,
-    ai_function,
     detect_media_type_from_base64,
     merge_chat_options,
     prepare_function_call_results,
+    tool,
 )
 from agent_framework.exceptions import ContentError
 
@@ -51,10 +51,10 @@ def ai_tool() -> ToolProtocol:
 
 
 @fixture
-def ai_function_tool() -> ToolProtocol:
+def tool_tool() -> ToolProtocol:
     """Returns a executable ToolProtocol."""
 
-    @ai_function
+    @tool
     def simple_function(x: int, y: int) -> int:
         """A simple function that adds two numbers."""
         return x + y
@@ -1017,13 +1017,13 @@ def test_chat_options_tool_choice_validation():
         validate_tool_mode({"mode": "auto", "required_function_name": "should_not_be_here"})
 
 
-def test_chat_options_merge(ai_function_tool, ai_tool) -> None:
+def test_chat_options_merge(tool_tool, ai_tool) -> None:
     """Test merge_chat_options utility function."""
     from agent_framework import merge_chat_options
 
     options1: ChatOptions = {
         "model_id": "gpt-4o",
-        "tools": [ai_function_tool],
+        "tools": [tool_tool],
         "logit_bias": {"x": 1},
         "metadata": {"a": "b"},
     }
@@ -1034,7 +1034,7 @@ def test_chat_options_merge(ai_function_tool, ai_tool) -> None:
     options3 = merge_chat_options(options1, options2)
 
     assert options3.get("model_id") == "gpt-4.1"
-    assert options3.get("tools") == [ai_function_tool, ai_tool]  # tools are combined
+    assert options3.get("tools") == [tool_tool, ai_tool]  # tools are combined
     assert options3.get("logit_bias") == {"x": 1}  # base value preserved
     assert options3.get("metadata") == {"a": "b"}  # base value preserved
 

python/packages/core/tests/openai/test_assistant_provider.py

@@ -8,7 +8,7 @@ import pytest
 from openai.types.beta.assistant import Assistant
 from pydantic import BaseModel, Field
 
-from agent_framework import ChatAgent, HostedCodeInterpreterTool, HostedFileSearchTool, ai_function, normalize_tools
+from agent_framework import ChatAgent, HostedCodeInterpreterTool, HostedFileSearchTool, normalize_tools, tool
 from agent_framework.exceptions import ServiceInitializationError
 from agent_framework.openai import OpenAIAssistantProvider
 from agent_framework.openai._shared import from_assistant_tools, to_assistant_tools
@@ -244,11 +244,11 @@ class TestOpenAIAssistantProviderCreateAgent:
         assert call_kwargs["tools"][0]["type"] == "function"
         assert call_kwargs["tools"][0]["function"]["name"] == "get_weather"
 
-    async def test_create_agent_with_ai_function(self, mock_async_openai: MagicMock) -> None:
-        """Test assistant creation with AIFunction."""
+    async def test_create_agent_with_tool(self, mock_async_openai: MagicMock) -> None:
+        """Test assistant creation with FunctionTool."""
         provider = OpenAIAssistantProvider(mock_async_openai)
 
-        @ai_function
+        @tool
         def my_function(x: int) -> int:
             """Double a number."""
             return x * 2
@@ -537,10 +537,10 @@ class TestOpenAIAssistantProviderAsAgent:
 class TestToolConversion:
     """Tests for tool conversion utilities (shared functions)."""
 
-    def test_to_assistant_tools_ai_function(self) -> None:
-        """Test AIFunction conversion to API format."""
+    def test_to_assistant_tools_tool(self) -> None:
+        """Test FunctionTool conversion to API format."""
 
-        @ai_function
+        @tool
         def test_func(x: int) -> int:
             """Test function."""
             return x
@@ -555,7 +555,7 @@ class TestToolConversion:
 
     def test_to_assistant_tools_callable(self) -> None:
         """Test raw callable conversion via normalize_tools."""
-        # normalize_tools converts callables to AIFunction
+        # normalize_tools converts callables to FunctionTool
         normalized = normalize_tools([get_weather])
         api_tools = to_assistant_tools(normalized)
 
@@ -666,12 +666,12 @@ class TestToolValidation:
         # Should not raise
         provider._validate_function_tools(assistant_tools, None)  # type: ignore[reportPrivateUsage]
 
-    def test_validate_with_ai_function(self, mock_async_openai: MagicMock) -> None:
-        """Test validation with AIFunction."""
+    def test_validate_with_tool(self, mock_async_openai: MagicMock) -> None:
+        """Test validation with FunctionTool."""
         provider = OpenAIAssistantProvider(mock_async_openai)
         assistant_tools = [create_function_tool("get_weather")]
 
-        wrapped = ai_function(get_weather)
+        wrapped = tool(get_weather)
 
         # Should not raise
         provider._validate_function_tools(assistant_tools, [wrapped])  # type: ignore[reportPrivateUsage]
@@ -789,6 +789,7 @@ class TestOpenAIAssistantProviderIntegration:
         """Integration test with function tools."""
         provider = OpenAIAssistantProvider()
 
+        @tool(approval_mode="never_require")
         def get_current_time() -> str:
             """Get the current time."""
             from datetime import datetime

python/packages/core/tests/openai/test_openai_assistants_client.py

@@ -23,7 +23,7 @@ from agent_framework import (
     HostedCodeInterpreterTool,
     HostedFileSearchTool,
     Role,
-    ai_function,
+    tool,
 )
 from agent_framework.exceptions import ServiceInitializationError
 from agent_framework.openai import OpenAIAssistantsClient
@@ -709,13 +709,13 @@ def test_prepare_options_basic(mock_async_openai: MagicMock) -> None:
     assert tool_results is None
 
 
-def test_prepare_options_with_ai_function_tool(mock_async_openai: MagicMock) -> None:
-    """Test _prepare_options with AIFunction tool."""
+def test_prepare_options_with_tool_tool(mock_async_openai: MagicMock) -> None:
+    """Test _prepare_options with a FunctionTool."""
 
     chat_client = create_test_openai_assistants_client(mock_async_openai)
 
     # Create a simple function for testing and decorate it
-    @ai_function
+    @tool(approval_mode="never_require")
     def test_function(query: str) -> str:
         """A test function."""
         return f"Result for {query}"
@@ -998,6 +998,7 @@ def test_update_agent_name_and_description_none(mock_async_openai: MagicMock) ->
     assert chat_client.assistant_name is None
 
 
+@tool(approval_mode="never_require")
 def get_weather(
     location: Annotated[str, Field(description="The location to get the weather for.")],
 ) -> str:

python/packages/core/tests/openai/test_openai_chat_client.py

@@ -19,8 +19,8 @@ from agent_framework import (
     Content,
     HostedWebSearchTool,
     ToolProtocol,
-    ai_function,
     prepare_function_call_results,
+    tool,
 )
 from agent_framework.exceptions import ServiceInitializationError, ServiceResponseException
 from agent_framework.openai import OpenAIChatClient
@@ -175,7 +175,7 @@ def test_unsupported_tool_handling(openai_unit_test_env: dict[str, str]) -> None
     """Test that unsupported tool types are handled correctly."""
     client = OpenAIChatClient()
 
-    # Create a mock ToolProtocol that's not an AIFunction
+    # Create a mock ToolProtocol that's not a FunctionTool
     unsupported_tool = MagicMock(spec=ToolProtocol)
     unsupported_tool.__class__.__name__ = "UnsupportedAITool"
 
@@ -189,7 +189,7 @@ def test_unsupported_tool_handling(openai_unit_test_env: dict[str, str]) -> None
     assert result["tools"] == [dict_tool]
 
 
-@ai_function
+@tool(approval_mode="never_require")
 def get_story_text() -> str:
     """Returns a story about Emily and David."""
     return (
@@ -200,7 +200,7 @@ def get_story_text() -> str:
     )
 
 
-@ai_function
+@tool(approval_mode="never_require")
 def get_weather(location: str) -> str:
     """Get the current weather for a location."""
     return f"The weather in {location} is sunny and 72°F."

python/packages/core/tests/openai/test_openai_responses_client.py

@@ -40,7 +40,7 @@ from agent_framework import (
     HostedMCPTool,
     HostedWebSearchTool,
     Role,
-    ai_function,
+    tool,
 )
 from agent_framework.exceptions import (
     ServiceInitializationError,
@@ -96,7 +96,7 @@ async def delete_vector_store(client: OpenAIResponsesClient, file_id: str, vecto
     await client.client.files.delete(file_id=file_id)
 
 
-@ai_function
+@tool(approval_mode="never_require")
 async def get_weather(location: Annotated[str, "The location as a city name"]) -> str:
     """Get the current weather in a given location."""
     # Implementation of the tool to get weather
@@ -642,7 +642,7 @@ def test_response_content_creation_with_function_call() -> None:
     assert function_call.arguments == '{"location": "Seattle"}'
 
 
-def test_prepare_content_for_openai_function_approval_response() -> None:
+def test_prepare_content_for_opentool_approval_response() -> None:
     """Test _prepare_content_for_openai with function approval response content."""
     client = OpenAIResponsesClient(model_id="test-model", api_key="test-key")
 

python/packages/core/tests/workflow/test_agent_executor_tool_calls.py

@@ -25,8 +25,8 @@ from agent_framework import (
     WorkflowBuilder,
     WorkflowContext,
     WorkflowOutputEvent,
-    ai_function,
     executor,
+    tool,
     use_function_invocation,
 )
 
@@ -132,7 +132,7 @@ async def test_agent_executor_emits_tool_calls_in_streaming_mode() -> None:
     assert "sunny" in events[3].data.contents[0].text
 
 
-@ai_function(approval_mode="always_require")
+@tool(approval_mode="always_require")
 def mock_tool_requiring_approval(query: str) -> str:
     """Mock tool that requires approval before execution."""
     return f"Executed tool with query: {query}"

python/packages/core/tests/workflow/test_workflow_kwargs.py

@@ -20,7 +20,7 @@ from agent_framework import (
     SequentialBuilder,
     WorkflowRunState,
     WorkflowStatusEvent,
-    ai_function,
+    tool,
 )
 from agent_framework._workflows._const import WORKFLOW_RUN_KWARGS_KEY
 
@@ -28,7 +28,7 @@ from agent_framework._workflows._const import WORKFLOW_RUN_KWARGS_KEY
 _received_kwargs: list[dict[str, Any]] = []
 
 
-@ai_function
+@tool(approval_mode="never_require")
 def tool_with_kwargs(
     action: Annotated[str, "The action to perform"],
     **kwargs: Any,

python/packages/declarative/agent_framework_declarative/_loader.py

@@ -6,7 +6,6 @@ from typing import Any, Literal, TypedDict, cast
 
 import yaml
 from agent_framework import (
-    AIFunction,
     ChatAgent,
     ChatClientProtocol,
     Content,
@@ -17,6 +16,9 @@ from agent_framework import (
     HostedWebSearchTool,
     ToolProtocol,
 )
+from agent_framework import (
+    FunctionTool as AFFunctionTool,
+)
 from agent_framework._tools import _create_model_from_json_schema  # type: ignore
 from agent_framework.exceptions import AgentFrameworkException
 from dotenv import load_dotenv
@@ -719,7 +721,7 @@ class AgentFactory:
                     for binding in tool_resource.bindings:
                         if binding.name and (func := self.bindings.get(binding.name)):
                             break
-                return AIFunction(  # type: ignore
+                return AFFunctionTool(  # type: ignore
                     name=tool_resource.name,  # type: ignore
                     description=tool_resource.description,  # type: ignore
                     input_model=tool_resource.parameters.to_json_schema() if tool_resource.parameters else None,

python/packages/github_copilot/agent_framework_github_copilot/_agent.py

@@ -19,7 +19,7 @@ from agent_framework import (
     Role,
     normalize_messages,
 )
-from agent_framework._tools import AIFunction, ToolProtocol
+from agent_framework._tools import FunctionTool, ToolProtocol
 from agent_framework._types import normalize_tools
 from agent_framework.exceptions import ServiceException, ServiceInitializationError
 from copilot import CopilotClient, CopilotSession
@@ -417,8 +417,8 @@ class GithubCopilotAgent(BaseAgent, Generic[TOptions]):
         for tool in tools:
             if isinstance(tool, ToolProtocol):
                 match tool:
-                    case AIFunction():
-                        copilot_tools.append(self._ai_function_to_copilot_tool(tool))  # type: ignore
+                    case FunctionTool():
+                        copilot_tools.append(self._tool_to_copilot_tool(tool))  # type: ignore
                     case _:
                         logger.debug(f"Unsupported tool type: {type(tool)}")
             elif isinstance(tool, CopilotTool):
@@ -426,8 +426,8 @@ class GithubCopilotAgent(BaseAgent, Generic[TOptions]):
 
         return copilot_tools
 
-    def _ai_function_to_copilot_tool(self, ai_func: AIFunction[Any, Any]) -> CopilotTool:
-        """Convert an AIFunction to a Copilot SDK tool."""
+    def _tool_to_copilot_tool(self, ai_func: FunctionTool[Any, Any]) -> CopilotTool:
+        """Convert an FunctionTool to a Copilot SDK tool."""
 
         async def handler(invocation: ToolInvocation) -> ToolResult:
             args = invocation.get("arguments", {})

python/packages/github_copilot/tests/test_github_copilot_agent.py

@@ -7,7 +7,14 @@ from unittest.mock import AsyncMock, MagicMock, patch
 from uuid import uuid4
 
 import pytest
-from agent_framework import AgentResponse, AgentResponseUpdate, AgentThread, ChatMessage, Content, Role
+from agent_framework import (
+    AgentResponse,
+    AgentResponseUpdate,
+    AgentThread,
+    ChatMessage,
+    Content,
+    Role,
+)
 from agent_framework.exceptions import ServiceException
 from copilot.generated.session_events import Data, SessionEvent, SessionEventType
 
@@ -733,10 +740,10 @@ class TestGithubCopilotAgentToolConversion:
         mock_client: MagicMock,
     ) -> None:
         """Test that mixed tool types are handled correctly."""
-        from agent_framework._tools import ai_function
+        from agent_framework import tool
         from copilot.types import Tool as CopilotTool
 
-        @ai_function
+        @tool(approval_mode="never_require")
         def my_function(arg: str) -> str:
             """A function tool."""
             return arg
@@ -754,7 +761,7 @@ class TestGithubCopilotAgentToolConversion:
         result = agent._prepare_tools([my_function, copilot_tool])  # type: ignore
 
         assert len(result) == 2
-        # First tool is converted AIFunction
+        # First tool is converted FunctionTool
         assert result[0].name == "my_function"
         # Second tool is CopilotTool passthrough
         assert result[1] == copilot_tool

python/packages/lab/tau2/agent_framework_lab_tau2/_tau2_utils.py

@@ -6,7 +6,7 @@ from copy import deepcopy
 from typing import Any
 
 import numpy as np
-from agent_framework._tools import AIFunction
+from agent_framework._tools import FunctionTool
 from agent_framework._types import ChatMessage
 from loguru import logger
 from pydantic import BaseModel
@@ -25,8 +25,8 @@ from tau2.environment.tool import Tool  # type: ignore[import-untyped]
 _original_set_state = Environment.set_state
 
 
-def convert_tau2_tool_to_ai_function(tau2_tool: Tool) -> AIFunction[Any, Any]:
-    """Convert a tau2 Tool to an AIFunction for agent framework compatibility.
+def convert_tau2_tool_to_function_tool(tau2_tool: Tool) -> FunctionTool[Any, Any]:
+    """Convert a tau2 Tool to a FunctionTool for agent framework compatibility.
 
     Creates a wrapper that preserves the tool's interface while ensuring
     results are deep-copied to prevent unintended mutations.
@@ -37,7 +37,7 @@ def convert_tau2_tool_to_ai_function(tau2_tool: Tool) -> AIFunction[Any, Any]:
         # Deep copy to prevent mutations of returned data
         return result.model_copy(deep=True) if isinstance(result, BaseModel) else deepcopy(result)
 
-    return AIFunction(
+    return FunctionTool(
         name=tau2_tool.name,
         description=tau2_tool._get_description(),
         func=wrapped_func,

python/packages/lab/tau2/agent_framework_lab_tau2/runner.py

@@ -32,7 +32,7 @@ from tau2.utils.utils import get_now  # type: ignore[import-untyped]
 
 from ._message_utils import flip_messages, log_messages
 from ._sliding_window import SlidingWindowChatMessageStore
-from ._tau2_utils import convert_agent_framework_messages_to_tau2_messages, convert_tau2_tool_to_ai_function
+from ._tau2_utils import convert_agent_framework_messages_to_tau2_messages, convert_tau2_tool_to_function_tool
 
 __all__ = ["ASSISTANT_AGENT_ID", "ORCHESTRATOR_ID", "USER_SIMULATOR_ID", "TaskRunner"]
 
@@ -179,9 +179,9 @@ class TaskRunner:
             f"Environment has {len(env.get_tools())} tools: {', '.join([tool.name for tool in env.get_tools()])}"
         )
 
-        # Convert tau2 tools to agent framework AIFunction format
+        # Convert tau2 tools to agent framework FunctionTool format
         # This bridges the gap between tau2's tool system and agent framework's expectations
-        ai_functions = [convert_tau2_tool_to_ai_function(tool) for tool in tools]
+        tools = [convert_tau2_tool_to_function_tool(tool) for tool in tools]
 
         # Combines general customer service behavior with specific policy guidelines
         assistant_system_prompt = f"""<instructions>
@@ -198,7 +198,7 @@ class TaskRunner:
         return ChatAgent(
             chat_client=assistant_chat_client,
             instructions=assistant_system_prompt,
-            tools=ai_functions,
+            tools=tools,
             temperature=self.assistant_sampling_temperature,
             chat_message_store_factory=lambda: SlidingWindowChatMessageStore(
                 system_message=assistant_system_prompt,

python/packages/lab/tau2/tests/test_tau2_utils.py

@@ -6,11 +6,10 @@ import urllib.request
 from pathlib import Path
 
 import pytest
-from agent_framework._tools import AIFunction
-from agent_framework._types import ChatMessage, Content, Role
+from agent_framework import ChatMessage, Content, FunctionTool, Role
 from agent_framework_lab_tau2._tau2_utils import (
     convert_agent_framework_messages_to_tau2_messages,
-    convert_tau2_tool_to_ai_function,
+    convert_tau2_tool_to_function_tool,
 )
 from tau2.data_model.message import AssistantMessage, SystemMessage, ToolCall, ToolMessage, UserMessage
 from tau2.domains.airline.data_model import FlightDB
@@ -51,8 +50,8 @@ def tau2_airline_environment() -> Environment:
     )
 
 
-def test_convert_tau2_tool_to_ai_function_basic(tau2_airline_environment):
-    """Test basic conversion from tau2 tool to AIFunction."""
+def test_convert_tau2_tool_to_function_tool_basic(tau2_airline_environment):
+    """Test basic conversion from tau2 tool to FunctionTool."""
     # Get real tools from tau2 environment
     tools = tau2_airline_environment.get_tools()
 
@@ -61,33 +60,33 @@ def test_convert_tau2_tool_to_ai_function_basic(tau2_airline_environment):
     tau2_tool = tools[0]
 
     # Convert the tool
-    ai_function = convert_tau2_tool_to_ai_function(tau2_tool)
+    tool = convert_tau2_tool_to_function_tool(tau2_tool)
 
     # Verify the conversion
-    assert isinstance(ai_function, AIFunction)
-    assert ai_function.name == tau2_tool.name
-    assert ai_function.description == tau2_tool._get_description()
-    assert ai_function.input_model == tau2_tool.params
+    assert isinstance(tool, FunctionTool)
+    assert tool.name == tau2_tool.name
+    assert tool.description == tau2_tool._get_description()
+    assert tool.input_model == tau2_tool.params
 
     # Test that the function is callable (we won't call it with real params to avoid side effects)
-    assert callable(ai_function.func)
+    assert callable(tool.func)
 
 
-def test_convert_tau2_tool_to_ai_function_multiple_tools(tau2_airline_environment):
+def test_convert_tau2_tool_to_function_tool_multiple_tools(tau2_airline_environment):
     """Test conversion with multiple tau2 tools."""
     # Get real tools from tau2 environment
     tools = tau2_airline_environment.get_tools()
 
     # Convert multiple tools
-    ai_functions = [convert_tau2_tool_to_ai_function(tool) for tool in tools[:3]]  # Test first 3 tools
+    function_tools = [convert_tau2_tool_to_function_tool(tool) for tool in tools[:3]]  # Test first 3 tools
 
     # Verify all conversions
-    for ai_function, tau2_tool in zip(ai_functions, tools[:3], strict=False):
-        assert isinstance(ai_function, AIFunction)
-        assert ai_function.name == tau2_tool.name
-        assert ai_function.description == tau2_tool._get_description()
-        assert ai_function.input_model == tau2_tool.params
-        assert callable(ai_function.func)
+    for tool, tau2_tool in zip(function_tools, tools[:3], strict=False):
+        assert isinstance(tool, FunctionTool)
+        assert tool.name == tau2_tool.name
+        assert tool.description == tau2_tool._get_description()
+        assert tool.input_model == tau2_tool.params
+        assert callable(tool.func)
 
 
 def test_convert_agent_framework_messages_to_tau2_messages_system():

python/packages/ollama/agent_framework_ollama/_chat_client.py

@@ -14,13 +14,13 @@ from itertools import chain
 from typing import Any, ClassVar, Generic, TypedDict
 
 from agent_framework import (
-    AIFunction,
     BaseChatClient,
     ChatMessage,
     ChatOptions,
     ChatResponse,
     ChatResponseUpdate,
     Content,
+    FunctionTool,
     Role,
     ToolProtocol,
     UsageDetails,
@@ -545,13 +545,13 @@ class OllamaChatClient(BaseChatClient[TOllamaChatOptions], Generic[TOllamaChatOp
         for tool in tools:
             if isinstance(tool, ToolProtocol):
                 match tool:
-                    case AIFunction():
+                    case FunctionTool():
                         chat_tools.append(tool.to_json_schema_spec())
                     case _:
                         raise ServiceInvalidRequestError(
                             "Unsupported tool type '"
                             f"{type(tool).__name__}"
-                            "' for Ollama client. Supported tool types: AIFunction."
+                            "' for Ollama client. Supported tool types: FunctionTool."
                         )
             else:
                 chat_tools.append(tool if isinstance(tool, dict) else dict(tool))

python/packages/ollama/tests/test_ollama_chat_client.py

@@ -11,8 +11,8 @@ from agent_framework import (
     ChatResponseUpdate,
     Content,
     HostedWebSearchTool,
-    ai_function,
     chat_middleware,
+    tool,
 )
 from agent_framework.exceptions import (
     ServiceInitializationError,
@@ -109,7 +109,7 @@ def mock_chat_completion_tool_call() -> OllamaChatResponse:
     )
 
 
-@ai_function
+@tool(approval_mode="never_require")
 def hello_world(arg1: str) -> str:
     return "Hello World"