diff --git a/tests/test_tool_parsers.py b/tests/test_tool_parsers.py
index 7caaffbf5..4f3c287d1 100644
--- a/tests/test_tool_parsers.py
+++ b/tests/test_tool_parsers.py
@@ -1163,3 +1163,177 @@ def test_streaming_bare_multi_function_blocks(self):
         assert len(emitted_calls) == 2
         assert emitted_calls[0]["function"]["name"] == "func1"
         assert emitted_calls[1]["function"]["name"] == "func2"
+
+
+class TestQwenFunctionFormat:
+    """Test Qwen parser's <function=name> format support."""
+
+    @pytest.fixture
+    def parser(self):
+        return QwenToolParser()
+
+    def test_function_format_with_parameters(self, parser):
+        """Test <function=name><parameter=key>value</parameter></function>."""
+        text = "<function=get_weather><parameter=city>Prague</parameter></function>"
+        result = parser.extract_tool_calls(text)
+        assert result.tools_called
+        assert result.tool_calls[0]["name"] == "get_weather"
+        args = json.loads(result.tool_calls[0]["arguments"])
+        assert args["city"] == "Prague"
+
+    def test_function_format_with_json(self, parser):
+        """Test <function=name>{"key": "val"}</function>."""
+        text = '<function=get_weather>{"city": "Prague"}</function>'
+        result = parser.extract_tool_calls(text)
+        assert result.tools_called
+        assert result.tool_calls[0]["name"] == "get_weather"
+        args = json.loads(result.tool_calls[0]["arguments"])
+        assert args["city"] == "Prague"
+
+    def test_function_format_multiple(self, parser):
+        """Test multiple <function=...> blocks."""
+        text = (
+            '<function=read_file>{"path": "/a.py"}</function>'
+            '<function=write_file>{"path": "/b.py", "content": "hello"}</function>'
+        )
+        result = parser.extract_tool_calls(text)
+        assert result.tools_called
+        assert len(result.tool_calls) == 2
+        assert result.tool_calls[0]["name"] == "read_file"
+        assert result.tool_calls[1]["name"] == "write_file"
+
+    def test_function_format_with_think_tags(self, parser):
+        """Test <function=...> with think tags."""
+        text = (
+            "<think>I need to check the weather.</think>\n"
+            '<function=get_weather>{"city": "Prague"}</function>'
+        )
+        result = parser.extract_tool_calls(text)
+        assert result.tools_called
+        assert result.tool_calls[0]["name"] == "get_weather"
+
+
+class TestQwenStreamingBuffering:
+    """Test Qwen parser streaming with partial-marker buffering."""
+
+    @pytest.fixture
+    def parser(self):
+        return QwenToolParser()
+
+    def test_streaming_function_format_complete(self, parser):
+        """Test streaming with <function=name>...</function> format."""
+        chunks = [
+            "<function=get_weather>",
+            "<parameter=city>Prague</parameter>",
+            "</function>",
+        ]
+        accumulated = ""
+        tool_calls_found = False
+        for chunk in chunks:
+            prev = accumulated
+            accumulated += chunk
+            r = parser.extract_tool_calls_streaming(
+                previous_text=prev,
+                current_text=accumulated,
+                delta_text=chunk,
+            )
+            if r is not None and "tool_calls" in r:
+                tool_calls_found = True
+                assert r["tool_calls"][0]["function"]["name"] == "get_weather"
+                break
+        assert tool_calls_found
+
+    def test_streaming_partial_marker_buffered(self, parser):
+        """Test that partial '<function' is buffered (not leaked as content)."""
+        r = parser.extract_tool_calls_streaming(
+            previous_text="",
+            current_text="Sure.",
+            delta_text="Sure.",
+        )
+        assert r == {"content": "Sure."}
+
+        # Partial marker "<function" — should be buffered
+        r = parser.extract_tool_calls_streaming(
+            previous_text="Sure.",
+            current_text="Sure.<function",
+            delta_text="<function",
+        )
+        assert r is None  # Buffered, not emitted
+
+        # "=" confirms tool call marker
+        r = parser.extract_tool_calls_streaming(
+            previous_text="Sure.<function",
+            current_text="Sure.<function=get_weather>",
+            delta_text="=get_weather>",
+        )
+        assert r is None  # Inside incomplete function block
+
+    def test_streaming_false_positive_functional(self, parser):
+        """Regression: '<functional' across chunk boundary must NOT be suppressed.
+
+        When a delta contains 'Look at <function', the content before the
+        partial marker ('Look at ') must be emitted immediately. Only the
+        marker suffix is buffered. On recovery, the marker prefix is
+        re-emitted with the next delta so no text is lost.
+        """
+        # Token 1: "Look at <function" — emit "Look at ", buffer "<function"
+        r = parser.extract_tool_calls_streaming(
+            previous_text="",
+            current_text="Look at <function",
+            delta_text="Look at <function",
+        )
+        assert r == {"content": "Look at "}
+
+        # Token 2: "al interface" — confirms it's NOT a tool call
+        r = parser.extract_tool_calls_streaming(
+            previous_text="Look at <function",
+            current_text="Look at <functional interface",
+            delta_text="al interface",
+        )
+        assert r == {"content": "<functional interface"}
+
+    def test_streaming_false_positive_single_angle_bracket(self, parser):
+        """Test that a single '<' followed by non-marker text is recovered."""
+        # "<" alone — partial marker
+        r = parser.extract_tool_calls_streaming(
+            previous_text="Hello",
+            current_text="Hello<",
+            delta_text="<",
+        )
+        assert r is None  # Buffered
+
+        # "div>" — not a tool marker
+        r = parser.extract_tool_calls_streaming(
+            previous_text="Hello<",
+            current_text="Hello<div>",
+            delta_text="div>",
+        )
+        assert r is not None
+        assert "content" in r
+        assert "<" in r["content"]
+        assert "div>" in r["content"]
+
+    def test_streaming_multiple_function_blocks(self, parser):
+        """Test streaming with multiple <function= blocks."""
+        chunks = [
+            '<function=func1>{"a": 1}</function>',
+            "\n",
+            "<function=func2>",
+            "<parameter=b>2</parameter>",
+            "</function>",
+        ]
+        accumulated = ""
+        emitted_calls = []
+        for chunk in chunks:
+            prev = accumulated
+            accumulated += chunk
+            r = parser.extract_tool_calls_streaming(
+                previous_text=prev,
+                current_text=accumulated,
+                delta_text=chunk,
+            )
+            if r is not None and "tool_calls" in r:
+                emitted_calls.extend(r["tool_calls"])
+        assert len(emitted_calls) == 2
+        assert emitted_calls[0]["function"]["name"] == "func1"
+        assert emitted_calls[1]["function"]["name"] == "func2"
diff --git a/vllm_mlx/server.py b/vllm_mlx/server.py
index d4f24de22..e080be8ff 100644
--- a/vllm_mlx/server.py
+++ b/vllm_mlx/server.py
@@ -2590,7 +2590,7 @@ async def stream_chat_completion(
             yield f"data: {chunk.model_dump_json()}\n\n"
 
     # Fallback: if tool parser accumulated text but never emitted tool_calls
-    # (e.g., </tool_call> never arrived - incomplete tool call)
+    # (e.g., </tool_call> never arrived, or <function= block still incomplete)
     if (
         tool_parser
         and tool_accumulated_text
@@ -2598,6 +2598,7 @@ async def stream_chat_completion(
         and (
             "<tool_call>" in tool_accumulated_text
             or "<|tool_call>" in tool_accumulated_text
+            or "<function" in tool_accumulated_text
         )
     ):
         result = tool_parser.extract_tool_calls(tool_accumulated_text)
diff --git a/vllm_mlx/tool_parsers/qwen_tool_parser.py b/vllm_mlx/tool_parsers/qwen_tool_parser.py
index fd69b96c0..e235a3c7d 100644
--- a/vllm_mlx/tool_parsers/qwen_tool_parser.py
+++ b/vllm_mlx/tool_parsers/qwen_tool_parser.py
@@ -5,8 +5,10 @@
 Handles Qwen's tool calling formats:
 - XML style: <tool_call>{"name": "func", "arguments": {...}}</tool_call>
 - Bracket style: [Calling tool: func_name({"arg": "value"})]
+- Function style: <function=name><parameter=key>value</parameter></function>
 """
 
+import ast
 import json
 import re
 import uuid
@@ -20,6 +22,24 @@
 )
 
 
+def _parse_param_value(val: str) -> Any:
+    """Parse a parameter value, handling JSON literals and plain strings."""
+    try:
+        return json.loads(val)
+    except (json.JSONDecodeError, ValueError):
+        pass
+    try:
+        python_val = ast.literal_eval(val)
+        if isinstance(python_val, set):
+            python_val = sorted(python_val, key=str)
+        if isinstance(python_val, (complex, bytes)):
+            return val
+        json.dumps(python_val)
+        return python_val
+    except (ValueError, SyntaxError, TypeError):
+        return val
+
+
 def generate_tool_id() -> str:
     """Generate a unique tool call ID."""
     return f"call_{uuid.uuid4().hex[:8]}"
@@ -33,6 +53,7 @@ class QwenToolParser(ToolParser):
     Supports multiple Qwen tool call formats:
     - XML: <tool_call>{"name": "func", "arguments": {...}}</tool_call>
     - Bracket: [Calling tool: func_name({"arg": "value"})]
+    - Function: <function=name><parameter=key>value</parameter></function>
 
     Used when --enable-auto-tool-choice --tool-call-parser qwen are set.
     """
@@ -43,6 +64,12 @@ class QwenToolParser(ToolParser):
     # Pattern for bracket-style: [Calling tool: func_name({...})]
     BRACKET_PATTERN = re.compile(r"\[Calling tool:\s*(\w+)\((\{.*?\})\)\]", re.DOTALL)
 
+    # Pattern for function-style: <function=name>...</function>
+    FUNCTION_PATTERN = re.compile(r"<function=([^>]+)>(.*?)</function>", re.DOTALL)
+
+    # Pattern for parameter extraction: <parameter=key>value</parameter>
+    PARAM_PATTERN = re.compile(r"<parameter=([^>]+)>\s*(.*?)\s*</parameter>", re.DOTALL)
+
     def extract_tool_calls(
         self, model_output: str, request: dict[str, Any] | None = None
     ) -> ExtractedToolCallInformation:
@@ -101,6 +128,41 @@ def extract_tool_calls(
         if xml_matches:
             cleaned_text = self.XML_PATTERN.sub("", cleaned_text).strip()
 
+        # Try function-style: <function=name><parameter=key>value</parameter></function>
+        # Qwen3.5 generates this format natively.
+        if not tool_calls:
+            func_matches = self.FUNCTION_PATTERN.findall(cleaned_text)
+            for name, params_block in func_matches:
+                # Try JSON arguments first (e.g. <function=name>{"key": "val"}</function>)
+                params_block_stripped = params_block.strip()
+                if params_block_stripped.startswith("{"):
+                    try:
+                        arguments = json.loads(params_block_stripped)
+                        tool_calls.append(
+                            {
+                                "id": generate_tool_id(),
+                                "name": name.strip(),
+                                "arguments": json.dumps(arguments, ensure_ascii=False),
+                            }
+                        )
+                        continue
+                    except json.JSONDecodeError:
+                        pass
+                # Parse <parameter=key>value</parameter> tags
+                params = self.PARAM_PATTERN.findall(params_block)
+                arguments = {}
+                for p_name, p_value in params:
+                    arguments[p_name.strip()] = _parse_param_value(p_value.strip())
+                tool_calls.append(
+                    {
+                        "id": generate_tool_id(),
+                        "name": name.strip(),
+                        "arguments": json.dumps(arguments, ensure_ascii=False),
+                    }
+                )
+            if func_matches:
+                cleaned_text = self.FUNCTION_PATTERN.sub("", cleaned_text).strip()
+
         if tool_calls:
             return ExtractedToolCallInformation(
                 tools_called=True,
@@ -112,6 +174,30 @@ def extract_tool_calls(
                 tools_called=False, tool_calls=[], content=model_output
             )
 
+    # Partial marker prefixes — when current_text ends with one of these,
+    # we suppress output until the next token confirms or denies a tool call.
+    # These are long enough to avoid false positives on normal text.
+    _PARTIAL_MARKERS = ("<function", "[Calling tool", "<tool_call")
+
+    def _has_partial_marker(self, text: str) -> bool:
+        """Check if text ends with an incomplete tool call marker prefix."""
+        return self._get_partial_marker_len(text) > 0
+
+    def _get_partial_marker_len(self, text: str) -> int:
+        """Return the length of a partial tool call marker suffix at end of text."""
+        tail = text[-20:]
+        best = 0
+        for marker in self._PARTIAL_MARKERS:
+            for length in range(len(marker), 0, -1):
+                if tail.endswith(marker[:length]) and length > best:
+                    best = length
+                    break
+        return best
+
+    def _was_buffering(self, previous_text: str) -> bool:
+        """Check if the previous call was buffering a partial marker."""
+        return self._has_partial_marker(previous_text)
+
     def extract_tool_calls_streaming(
         self,
         previous_text: str,
@@ -125,14 +211,67 @@ def extract_tool_calls_streaming(
         """
         Extract tool calls from streaming Qwen model output.
         """
-        # Check for tool call markers
+        # Check for complete tool call markers
         has_tool_marker = (
-            "<tool_call>" in current_text or "[Calling tool:" in current_text
+            "<tool_call>" in current_text
+            or "[Calling tool:" in current_text
+            or "<function=" in current_text
         )
 
         if not has_tool_marker:
+            # Buffer partial markers (e.g. "<function" before "=" arrives).
+            # Only the marker suffix is buffered; content before it in the
+            # same delta is emitted immediately so no text is lost.
+            if self._has_partial_marker(current_text):
+                marker_len = self._get_partial_marker_len(current_text)
+                marker_start = len(current_text) - marker_len
+                safe_chars = marker_start - len(previous_text)
+                if safe_chars > 0:
+                    return {"content": delta_text[:safe_chars]}
+                return None
+            # If we were buffering before but the marker didn't complete,
+            # emit the buffered marker prefix together with the new delta.
+            if self._was_buffering(previous_text):
+                for marker in self._PARTIAL_MARKERS:
+                    for length in range(len(marker), 0, -1):
+                        prefix = marker[:length]
+                        if previous_text.endswith(prefix):
+                            return {"content": prefix + delta_text}
+                return {"content": delta_text}
             return {"content": delta_text}
 
+        # Handle <function=name>...</function> (Qwen3.5 native format)
+        if "<function=" in current_text:
+            func_close_count = current_text.count("</function>")
+            prev_func_close = previous_text.count("</function>")
+
+            if current_text.count("<function=") > func_close_count:
+                # Inside an incomplete function block, suppress output
+                return None
+
+            if func_close_count > prev_func_close:
+                # New function block(s) completed
+                result = self.extract_tool_calls(current_text)
+                if result.tools_called:
+                    new_calls = result.tool_calls[prev_func_close:]
+                    if new_calls:
+                        return {
+                            "tool_calls": [
+                                {
+                                    "index": prev_func_close + i,
+                                    "id": tc["id"],
+                                    "type": "function",
+                                    "function": {
+                                        "name": tc["name"],
+                                        "arguments": tc["arguments"],
+                                    },
+                                }
+                                for i, tc in enumerate(new_calls)
+                            ]
+                        }
+
+            return None
+
         # If we're in a tool call, accumulate and parse at the end
         # For simplicity, return None during accumulation
         if "</tool_call>" in delta_text or ")]" in delta_text:
diff --git a/vllm_mlx/utils/tokenizer.py b/vllm_mlx/utils/tokenizer.py
index 55dec9577..9d200ab9f 100644
--- a/vllm_mlx/utils/tokenizer.py
+++ b/vllm_mlx/utils/tokenizer.py
@@ -9,6 +9,7 @@
 
 import json
 import logging
+from pathlib import Path
 
 from .chat_templates import DEFAULT_CHATML_TEMPLATE, NEMOTRON_CHAT_TEMPLATE