diff --git a/cli/src/__tests__/integration/local-agents.test.ts b/cli/src/__tests__/integration/local-agents.test.ts
index b7444a87b3..712dc9e719 100644
--- a/cli/src/__tests__/integration/local-agents.test.ts
+++ b/cli/src/__tests__/integration/local-agents.test.ts
@@ -21,9 +21,11 @@ import {
   loadAgentDefinitions,
   loadLocalAgents,
   initializeAgentRegistry,
+  reloadLocalAgentRegistry,
   findAgentsDirectory,
   getLoadedAgentsData,
   getLoadedAgentsMessage,
+  getLoadedMCPServers,
   announceLoadedAgents,
   __resetLocalAgentRegistryForTests,
 } from '../../utils/local-agent-registry'
@@ -1184,4 +1186,42 @@ describe('Local Agent Integration', () => {
       ),
     ).toBe(true)
   })
+
+  test('reloads MCP servers from the selected project after a project change', async () => {
+    // Simulates the project picker flow: the CLI is started from an ancestor
+    // directory (no mcp.json in the launch cwd), then the user selects a
+    // project whose .agents/mcp.json defines MCP servers.
+    const projectDir = path.join(tempDir, 'selected-project')
+    const projectAgentsDir = path.join(projectDir, '.agents')
+    mkdirSync(projectAgentsDir, { recursive: true })
+    writeFileSync(
+      path.join(projectAgentsDir, 'mcp.json'),
+      JSON.stringify({
+        mcpServers: {
+          context7: {
+            type: 'http',
+            url: 'https://mcp.context7.com/mcp',
+          },
+        },
+      }),
+      'utf8',
+    )
+
+    // Launch: registry initialized from the ancestor directory, so the
+    // selected project's servers are not present yet
+    await initializeAgentRegistry()
+    expect(getLoadedMCPServers()).not.toHaveProperty('context7')
+
+    // Project change: chdir + setProjectRoot like handleProjectChange does,
+    // then the registry must reload so mcp.json is picked up
+    process.chdir(projectDir)
+    setProjectRoot(projectDir)
+    await reloadLocalAgentRegistry()
+
+    expect(getLoadedMCPServers()).toHaveProperty('context7')
+    expect(getLoadedMCPServers().context7).toMatchObject({
+      type: 'http',
+      url: 'https://mcp.context7.com/mcp',
+    })
+  })
 })
diff --git a/cli/src/index.tsx b/cli/src/index.tsx
index cae4e380eb..9b4b05e740 100644
--- a/cli/src/index.tsx
+++ b/cli/src/index.tsx
@@ -34,7 +34,10 @@ import { getAuthToken, getAuthTokenDetails } from './utils/auth'
 import { resetCodebuffClient } from './utils/codebuff-client'
 import { setApiClientAuthToken } from './utils/codebuff-api'
 import { IS_FREEBUFF } from './utils/constants'
-import { initializeAgentRegistry } from './utils/local-agent-registry'
+import {
+  initializeAgentRegistry,
+  reloadLocalAgentRegistry,
+} from './utils/local-agent-registry'
 import { trimOversizedChatLogs } from './utils/chat-history'
 import { clearLogFile, logger } from './utils/logger'
 import { drainClientLogs } from './utils/log-shipper'
@@ -356,6 +359,11 @@ async function main(): Promise<void> {
         })
         // Update the project root in the module state
         setProjectRoot(newProjectPath)
+        // Reload local agents and MCP servers for the newly selected project.
+        // The registry is initialized once at startup from the launch cwd, so
+        // when the CLI was started from an ancestor directory the selected
+        // project's .agents/mcp.json was never loaded.
+        await reloadLocalAgentRegistry()
         // Reset client to ensure tools use the updated project root
         resetCodebuffClient()
         // Save to recent projects list
diff --git a/cli/src/utils/local-agent-registry.ts b/cli/src/utils/local-agent-registry.ts
index 1781e50db3..65922ed078 100644
--- a/cli/src/utils/local-agent-registry.ts
+++ b/cli/src/utils/local-agent-registry.ts
@@ -89,6 +89,21 @@ export async function initializeAgentRegistry(): Promise<void> {
   }
 }
 
+/**
+ * Reload the local agent registry for the current working directory.
+ *
+ * Called after the project changes at runtime (e.g. the project picker), where
+ * the CLI was started from an ancestor directory so .agents content was read
+ * from the old cwd at startup. Clears the derived caches before re-initializing
+ * so agent listings, the resolved .agents directory, and MCP servers from the
+ * newly selected project's mcp.json all reflect the new working directory.
+ */
+export async function reloadLocalAgentRegistry(): Promise<void> {
+  cachedAgentsByMode.clear()
+  cachedAgentsDir = null
+  await initializeAgentRegistry()
+}
+
 /**
  * Get default agent directories to scan.
  * Matches the SDK's getDefaultAgentDirs() to ensure consistency.