diff --git a/packages/agent-core-v2/src/mcpCore/config-schema.ts b/packages/agent-core-v2/src/mcpCore/config-schema.ts
index cebe88eaa3f..d96f509e6b8 100644
--- a/packages/agent-core-v2/src/mcpCore/config-schema.ts
+++ b/packages/agent-core-v2/src/mcpCore/config-schema.ts
@@ -4,6 +4,12 @@
  * Owns the `McpServerConfig` schema and its transport variants. These describe
  * the shape of MCP server entries as they appear in configuration (whether in
  * `config.toml` or an MCP-specific config file).
+ *
+ * Remote variants accept `auth: "oauth"`, mirroring v1: OAuth is still
+ * discovered from a remote server's 401 response; the flag records that the
+ * user explicitly chose OAuth, so static `headers` on the same entry are
+ * treated as plain request headers (capability/identity declarations) rather
+ * than as the server's credentials.
  */
 
 import { z } from 'zod';
@@ -37,6 +43,7 @@ export const McpServerHttpConfigSchema = z.object({
   transport: z.literal('http'),
   url: z.string().url(),
   headers: StringRecordSchema.optional(),
+  auth: z.literal('oauth').optional(),
   bearerTokenEnvVar: z.string().min(1).optional(),
   ...McpServerCommonFields,
 });
@@ -47,6 +54,7 @@ export const McpServerSseConfigSchema = z.object({
   transport: z.literal('sse'),
   url: z.string().url(),
   headers: StringRecordSchema.optional(),
+  auth: z.literal('oauth').optional(),
   bearerTokenEnvVar: z.string().min(1).optional(),
   ...McpServerCommonFields,
 });
diff --git a/packages/agent-core-v2/src/mcpCore/connection-manager.ts b/packages/agent-core-v2/src/mcpCore/connection-manager.ts
index 4e55a902284..f206380efc6 100644
--- a/packages/agent-core-v2/src/mcpCore/connection-manager.ts
+++ b/packages/agent-core-v2/src/mcpCore/connection-manager.ts
@@ -410,7 +410,7 @@ export class McpConnectionManager implements McpConnectionView {
     if (this.oauthService === undefined) return false;
     if (!isRemoteMcpConfig(entry.config)) return false;
     if (entry.config.bearerTokenEnvVar !== undefined) return false;
-    if (entry.config.headers !== undefined) return false;
+    if (entry.config.headers !== undefined && entry.config.auth !== 'oauth') return false;
     return isUnauthorizedLikeError(error);
   }
 
diff --git a/packages/agent-core-v2/test/mcpCore/connection-manager.test.ts b/packages/agent-core-v2/test/mcpCore/connection-manager.test.ts
index c6bd4f92aaf..3ef77f85c4a 100644
--- a/packages/agent-core-v2/test/mcpCore/connection-manager.test.ts
+++ b/packages/agent-core-v2/test/mcpCore/connection-manager.test.ts
@@ -549,6 +549,65 @@ describe('McpConnectionManager', () => {
     }
   }, 15000);
 
+  it('marks an explicitly OAuth HTTP server as needs-auth when non-auth headers accompany a 401', async () => {
+    const server: HttpServer = createHttpServer((_req, res) => {
+      res.writeHead(401, {
+        'content-type': 'application/json',
+        'www-authenticate':
+          'Bearer realm="mcp", resource_metadata="http://x/.well-known/oauth-protected-resource"',
+      });
+      res.end(JSON.stringify({ error: 'unauthorized' }));
+    });
+    await new Promise<void>((resolve) => server.listen(0, '127.0.0.1', resolve));
+    const port = (server.address() as HttpAddress).port;
+    const oauthService = new McpOAuthService({ store: createMemoryMcpOAuthStore() });
+    const cm = new McpConnectionManager({ oauthService });
+    try {
+      await cm.connectAll({
+        gated: {
+          transport: 'http',
+          url: `http://127.0.0.1:${port}/mcp`,
+          headers: { 'X-Tenant': 'example' },
+          auth: 'oauth',
+          startupTimeoutMs: 5_000,
+        },
+      });
+      const entry = cm.get('gated');
+      expect(entry?.status).toBe('needs-auth');
+      expect(entry?.error).toContain('run /mcp-config login gated');
+      expect(entry?.toolCount).toBe(0);
+    } finally {
+      await cm.shutdown();
+      await closeServer(server);
+    }
+  }, 15000);
+
+  it('keeps a headers-only HTTP server failed (not needs-auth) on 401', async () => {
+    const server: HttpServer = createHttpServer((_req, res) => {
+      res.writeHead(401, { 'content-type': 'application/json' });
+      res.end(JSON.stringify({ error: 'unauthorized' }));
+    });
+    await new Promise<void>((resolve) => server.listen(0, '127.0.0.1', resolve));
+    const port = (server.address() as HttpAddress).port;
+    const oauthService = new McpOAuthService({ store: createMemoryMcpOAuthStore() });
+    const cm = new McpConnectionManager({ oauthService });
+    try {
+      await cm.connectAll({
+        keyed: {
+          transport: 'http',
+          url: `http://127.0.0.1:${port}/mcp`,
+          headers: { Authorization: 'Bearer static-key' },
+          startupTimeoutMs: 5_000,
+        },
+      });
+      const entry = cm.get('keyed');
+      expect(entry?.status).toBe('failed');
+    } finally {
+      await cm.shutdown();
+      await closeServer(server);
+    }
+  }, 15000);
+
   it('flips SSE servers into needs-auth when the server returns 401 and no static token is set', async () => {
     const server: HttpServer = createHttpServer((_req, res) => {
       res.writeHead(401, {