feat: adds cwd to the MCP yaml as an option.

core/config/types.ts

@@ -1004,6 +1004,8 @@ declare global {
     type: "stdio";
     command: string;
     args: string[];
+    env?: Record<string, string>;
+    cwd?: string;
   }
 
   interface WebSocketOptions {

core/config/yaml/loadYaml.ts

@@ -69,6 +69,7 @@ function convertYamlMcpToContinueMcp(
       command: server.command,
       args: server.args ?? [],
       env: server.env,
+      cwd: server.cwd,
     } as any, // TODO: Fix the mcpServers types in config-yaml (discriminated union)
     timeout: server.connectionTimeout,
   };

core/config/yaml/loadYaml.vitest.ts

@@ -0,0 +1,128 @@
+import { describe, it, expect } from "vitest";
+import {
+  validateConfigYaml,
+  AssistantUnrolledNonNullable,
+} from "@continuedev/config-yaml";
+
+describe("MCP Server cwd configuration", () => {
+  describe("YAML schema validation", () => {
+    it("should accept valid MCP server with cwd", () => {
+      const config: AssistantUnrolledNonNullable = {
+        name: "test-assistant",
+        version: "1.0.0",
+        mcpServers: [
+          {
+            name: "test-server",
+            command: "node",
+            args: ["server.js"],
+            env: { NODE_ENV: "production" },
+            cwd: "/path/to/project",
+            connectionTimeout: 5000,
+          },
+        ],
+      };
+
+      const errors = validateConfigYaml(config);
+      expect(errors).toHaveLength(0);
+    });
+
+    it("should accept MCP server without cwd", () => {
+      const config: AssistantUnrolledNonNullable = {
+        name: "test-assistant",
+        version: "1.0.0",
+        mcpServers: [
+          {
+            name: "test-server",
+            command: "python",
+            args: ["-m", "server"],
+          },
+        ],
+      };
+
+      const errors = validateConfigYaml(config);
+      expect(errors).toHaveLength(0);
+    });
+
+    it("should accept relative paths in cwd", () => {
+      const config: AssistantUnrolledNonNullable = {
+        name: "test-assistant",
+        version: "1.0.0",
+        mcpServers: [
+          {
+            name: "test-server",
+            command: "cargo",
+            args: ["run"],
+            cwd: "./rust-project",
+          },
+        ],
+      };
+
+      const errors = validateConfigYaml(config);
+      expect(errors).toHaveLength(0);
+    });
+
+    it("should accept empty string cwd", () => {
+      const config: AssistantUnrolledNonNullable = {
+        name: "test-assistant",
+        version: "1.0.0",
+        mcpServers: [
+          {
+            name: "test-server",
+            command: "deno",
+            args: ["run", "server.ts"],
+            cwd: "",
+          },
+        ],
+      };
+
+      const errors = validateConfigYaml(config);
+      expect(errors).toHaveLength(0);
+    });
+  });
+
+  describe("MCP server configuration examples", () => {
+    it("should support common MCP server patterns with cwd", () => {
+      const configs = [
+        {
+          name: "Local project MCP server",
+          server: {
+            name: "project-mcp",
+            command: "npm",
+            args: ["run", "mcp-server"],
+            cwd: "/Users/developer/my-project",
+          },
+        },
+        {
+          name: "Python MCP with virtual environment",
+          server: {
+            name: "python-mcp",
+            command: "python",
+            args: ["-m", "my_mcp_server"],
+            env: { PYTHONPATH: "./src" },
+            cwd: "/home/user/python-project",
+          },
+        },
+        {
+          name: "Relative path MCP server",
+          server: {
+            name: "relative-mcp",
+            command: "node",
+            args: ["index.js"],
+            cwd: "../mcp-servers/filesystem",
+          },
+        },
+      ];
+
+      configs.forEach(({ name, server }) => {
+        const config: AssistantUnrolledNonNullable = {
+          name: "test-assistant",
+          version: "1.0.0",
+          mcpServers: [server],
+        };
+
+        const errors = validateConfigYaml(config);
+        expect(errors).toHaveLength(0);
+      });
+    });
+  });
+});

core/context/mcp/MCPConnection.ts

@@ -329,6 +329,7 @@ class MCPConnection {
           command,
           args,
           env,
+          cwd: options.transport.cwd,
           stderr: "pipe",
         });
 

core/context/mcp/MCPConnection.vitest.ts

@@ -1,6 +1,7 @@
 import { Client } from "@modelcontextprotocol/sdk/client/index.js";
 import { beforeEach, describe, expect, it, vi } from "vitest";
 import MCPConnection from "./MCPConnection";
+import { StdioOptions } from "../../index.d.js";
 
 describe("MCPConnection", () => {
   beforeEach(() => {
@@ -25,6 +26,27 @@ describe("MCPConnection", () => {
       expect(conn.status).toBe("not-connected");
     });
 
+    it("should create instance with stdio transport including cwd", () => {
+      const options = {
+        name: "test-mcp",
+        id: "test-id",
+        transport: {
+          type: "stdio" as const,
+          command: "test-cmd",
+          args: ["--test"],
+          env: { TEST: "true" },
+          cwd: "/path/to/working/directory",
+        },
+      };
+
+      const conn = new MCPConnection(options);
+      expect(conn).toBeInstanceOf(MCPConnection);
+      expect(conn.status).toBe("not-connected");
+      if (conn.options.transport.type === "stdio") {
+        expect(conn.options.transport.cwd).toBe("/path/to/working/directory");
+      }
+    });
+
     it("should create instance with websocket transport", () => {
       const options = {
         name: "test-mcp",

core/index.d.ts

@@ -1162,6 +1162,7 @@ export interface StdioOptions {
   command: string;
   args: string[];
   env?: Record<string, string>;
+  cwd?: string;
   requestOptions?: RequestOptions;
 }
 

docs/docs/customize/deep-dives/mcp.mdx

@@ -110,6 +110,7 @@ MCP blocks follow the established syntax for blocks, with a few additional prope
 - `type` (optional): The type of the MCP server: `sse`, `stdio`, `streamable-http`
 - `args` (optional): Arguments to pass to the command.
 - `env` (optional): Secrets to be injected into the command as environment variables.
+- `cwd` (optional): Working directory to run the command in. Can be absolute or relative path.
 
 ### Transport Types
 
@@ -132,12 +133,22 @@ For local MCP servers that communicate via standard input and output:
 
 ```yaml
 mcpServers:
-  - name: Name
+  - name: SQLite Server
     type: stdio
     command: npx
     args:
       - "@modelcontextprotocol/server-sqlite"
-      - "/path/to/your/database.db"
+      - "./database.db"
+    cwd: "/path/to/project"
+
+  - name: Local Project Server
+    command: npm
+    args:
+      - "run"
+      - "mcp-server"
+    cwd: "./my-project"
+    env:
+      NODE_ENV: "production"
 ```
 
 #### Streamable HTTP Transport

docs/docs/customize/yaml-migration.mdx

@@ -288,6 +288,7 @@ docs:
 - `command` (**required**): The command used to start the server.
 - `args`: An optional array of arguments for the command.
 - `env`: An optional map of environment variables for the server process.
+- `cwd`: An optional working directory to run the command in. Can be absolute or relative path.
 
 **Before**
 

docs/docs/reference.mdx

@@ -384,6 +384,7 @@ prompts, context, and tool use. Continue supports any MCP server with the MCP co
 - `command` (**required**): The command used to start the server.
 - `args`: An optional array of arguments for the command.
 - `env`: An optional map of environment variables for the server process.
+- `cwd`: An optional working directory to run the command in. Can be absolute or relative path.
 - `connectionTimeout`: An optional connection timeout number to the server in milliseconds.
 
 **Example:**
@@ -395,7 +396,10 @@ mcpServers:
     args:
       - mcp-server-sqlite
       - --db-path
-      - /Users/NAME/test.db
+      - ./test.db
+    cwd: /Users/NAME/project
+    env:
+      NODE_ENV: production
 ```
 
 ### `data`

packages/config-yaml/src/schemas/index.ts

@@ -22,6 +22,7 @@ const mcpServerSchema = z.object({
   faviconUrl: z.string().optional(),
   args: z.array(z.string()).optional(),
   env: z.record(z.string()).optional(),
+  cwd: z.string().optional(),
   connectionTimeout: z.number().gt(0).optional(),
   requestOptions: requestOptionsSchema.optional(),
 });