In Part 1 of this series, we covered the fundamentals of OAuth 2.1 and OpenID Connect (OIDC) as they apply to AI agents. Now, in Part 2, we focus on integrating an enterprise-hosted MCP server with your organization’s Identity Provider (IdP) for secure authentication and authorization. The Model Context Protocol (MCP) is an open standard that provides a universal way to connect AI systems with data sources, replacing fragmented, custom integrations with a single protocol.
By wiring your MCP stack into your existing IdP using OAuth 2.1 and OIDC, you ensure that AI agents use the same trusted identity and access management frameworks as the rest of your enterprise. This article will explain how to achieve that integration, covering direct OAuth flows, advanced token exchange patterns for delegated access, and the division of responsibilities between the IdP and the MCP resource servers.
Enterprise Identity Integration Overview
In a typical enterprise environment, the Identity Provider (IdP) acts as the OAuth2/OIDC Authorization Server, issuing tokens after authenticating users. The MCP server and its tools, on the other hand, should function as OAuth2 Resource Servers, consuming and validating those tokens. In other words, the IdP remains the single source of truth for identity and access, while the MCP server trusts the IdP’s tokens to authorize agent requests. This separation follows OAuth best practices and avoids making each MCP tool its own mini-IdP.
In fact, if an MCP server tried to implement all the /authorize and /token logic itself, it would essentially be acting as an OAuth provider—something that is “extremely difficult to get right, which is precisely why most organizations rely on dedicated Identity Providers (IdPs) for this task”. Instead, we delegate all authentication to the enterprise IdP and keep the MCP server focused on enforcing access to the data (resource) it fronts.
By using your existing IdP as the authorization server, you can leverage features like single sign-on, multi-factor auth, centralized user management, and compliance auditing for all AI agent interactions. OIDC builds on OAuth 2.0 to provide an identity layer (with ID tokens for user info), enabling SSO between applications. That means when a user or agent authenticates via the IdP, you not only get an access token for calling the MCP API, but also an ID token if needed to know who the user is.
The MCP server doesn’t issue its own credentials; it simply trusts the tokens from the IdP. This aligns with enterprise OAuth patterns—use the existing IdP as the authorization server (supporting flows like authorization code or client credentials) and have MCP servers act solely as resource servers, verifying tokens issued by the IdP. Each component has a clear role: the IdP authenticates and authorizes, while the MCP server (or underlaying APIs) enforces access to the protected resources (databases, repositories, etc.) using the tokens.
Note: In the earliest draft of the Model Context Protocol, the MCP server was expected to function as a “mini OAuth server.” Feedback from the identity-management community prompted a redesign, and the latest draft now introduces a clear separation between MCP and OAuth responsibilities.
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