How to integrate Dynamics365 MCP with Pydantic AI

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Introduction

This guide walks you through connecting Dynamics365 to Pydantic AI using the Composio tool router. By the end, you'll have a working Dynamics365 agent that can create a new sales lead for acme corp, list all open invoices for this quarter, add a support case for a specific customer, generate a new sales order for an existing account through natural language commands.

This guide will help you understand how to give your Pydantic AI agent real control over a Dynamics365 account through Composio's Dynamics365 MCP server.

Before we dive in, let's take a quick look at the key ideas and tools involved.

TL;DR

Here's what you'll learn:
  • How to set up your Composio API key and User ID
  • How to create a Composio Tool Router session for Dynamics365
  • How to attach an MCP Server to a Pydantic AI agent
  • How to stream responses and maintain chat history
  • How to build a simple REPL-style chat interface to test your Dynamics365 workflows

What is Pydantic AI?

Pydantic AI is a Python framework for building AI agents with strong typing and validation. It leverages Pydantic's data validation capabilities to create robust, type-safe AI applications.

Key features include:

  • Type Safety: Built on Pydantic for automatic data validation
  • MCP Support: Native support for Model Context Protocol servers
  • Streaming: Built-in support for streaming responses
  • Async First: Designed for async/await patterns

What is the Dynamics365 MCP server, and what's possible with it?

The Dynamics365 MCP server is an implementation of the Model Context Protocol that connects your AI agent and assistants like Claude, Cursor, etc directly to your Dynamics365 account. It provides structured and secure access to your CRM data, so your agent can perform actions like managing contacts, creating leads, tracking invoices, and automating sales workflows on your behalf.

  • Automated contact, account, and lead creation: Instantly add new contacts, accounts, or leads to your CRM, ensuring your pipeline stays up to date with zero manual data entry.
  • Sales opportunity and order management: Let your agent create and update opportunities or sales orders, helping your team stay organized and focused on closing deals.
  • Invoice and case tracking: Retrieve, create, or manage invoices and cases directly from Dynamics365, streamlining customer service and billing operations.
  • Real-time CRM record retrieval: Ask your agent to fetch specific leads, invoices, or cases by criteria, so you always have the most relevant customer data at your fingertips.
  • Seamless workflow automation: Combine multiple actions—like creating a lead, generating an invoice, and opening a case—into a single smooth workflow, all triggered by your agent.

Supported Tools & Triggers

Tools
Get all invoices actionGet all invoices action
Create AccountCreates a new account entity record in dynamics crm using the web api.
Create CaseCreates a new case (incident) entity record in dynamics crm using the web api.
Create ContactCreates a new contact entity record in dynamics crm using the web api.
Create InvoiceCreates a new invoice entity record in dynamics crm using the web api.
Create LeadCreates a new lead entity record in dynamics crm using the web api.
Create OpportunityCreates a new opportunity entity record in dynamics crm using the web api.
Create Sales OrderCreates a new sales order entity record in dynamics crm using the web api.
Dynamicscrm get a invoiceDynamicscrm get a invoice
Dynamicscrm get a leadDynamicscrm get a lead
Dynamicscrm get all leadsDynamicscrm get all leads
Update CaseUpdates an existing case (incident) entity record in dynamics crm using the web api.
Update InvoiceUpdates an existing invoice entity record in dynamics crm using the web api.
Update LeadUpdates an existing lead entity record in dynamics crm using the web api.
Update OpportunityUpdates an existing opportunity entity record in dynamics crm using the web api.
Update Sales OrderUpdates an existing sales order entity record in dynamics crm using the web api.

What is the Composio tool router, and how does it fit here?

What is Tool Router?

Composio's Tool Router helps agents find the right tools for a task at runtime. You can plug in multiple toolkits (like Gmail, HubSpot, and GitHub), and the agent will identify the relevant app and action to complete multi-step workflows. This can reduce token usage and improve the reliability of tool calls. Read more here: Getting started with Tool Router

The tool router generates a secure MCP URL that your agents can access to perform actions.

How the Tool Router works

The Tool Router follows a three-phase workflow:

  1. Discovery: Searches for tools matching your task and returns relevant toolkits with their details.
  2. Authentication: Checks for active connections. If missing, creates an auth config and returns a connection URL via Auth Link.
  3. Execution: Executes the action using the authenticated connection.

Step-by-step Guide

Prerequisites

Before starting, make sure you have:
  • Python 3.9 or higher
  • A Composio account with an active API key
  • Basic familiarity with Python and async programming

Getting API Keys for OpenAI and Composio

OpenAI API Key
  • Go to the OpenAI dashboard and create an API key. You'll need credits to use the models, or you can connect to another model provider.
  • Keep the API key safe.
Composio API Key
  • Log in to the Composio dashboard.
  • Navigate to your API settings and generate a new API key.
  • Store this key securely as you'll need it for authentication.

Install dependencies

bash
pip install composio pydantic-ai python-dotenv

Install the required libraries.

What's happening:

  • composio connects your agent to external SaaS tools like Dynamics365
  • pydantic-ai lets you create structured AI agents with tool support
  • python-dotenv loads your environment variables securely from a .env file

Set up environment variables

bash
COMPOSIO_API_KEY=your_composio_api_key_here
USER_ID=your_user_id_here
OPENAI_API_KEY=your_openai_api_key

Create a .env file in your project root.

What's happening:

  • COMPOSIO_API_KEY authenticates your agent to Composio's API
  • USER_ID associates your session with your account for secure tool access
  • OPENAI_API_KEY to access OpenAI LLMs

Import dependencies

python
import asyncio
import os
from dotenv import load_dotenv
from composio import Composio
from pydantic_ai import Agent
from pydantic_ai.mcp import MCPServerStreamableHTTP

load_dotenv()
What's happening:
  • We load environment variables and import required modules
  • Composio manages connections to Dynamics365
  • MCPServerStreamableHTTP connects to the Dynamics365 MCP server endpoint
  • Agent from Pydantic AI lets you define and run the AI assistant

Create a Tool Router Session

python
async def main():
    api_key = os.getenv("COMPOSIO_API_KEY")
    user_id = os.getenv("USER_ID")
    if not api_key or not user_id:
        raise RuntimeError("Set COMPOSIO_API_KEY and USER_ID in your environment")

    # Create a Composio Tool Router session for Dynamics365
    composio = Composio(api_key=api_key)
    session = composio.create(
        user_id=user_id,
        toolkits=["dynamics365"],
    )
    url = session.mcp.url
    if not url:
        raise ValueError("Composio session did not return an MCP URL")
What's happening:
  • We're creating a Tool Router session that gives your agent access to Dynamics365 tools
  • The create method takes the user ID and specifies which toolkits should be available
  • The returned session.mcp.url is the MCP server URL that your agent will use

Initialize the Pydantic AI Agent

python
# Attach the MCP server to a Pydantic AI Agent
dynamics365_mcp = MCPServerStreamableHTTP(url, headers={"x-api-key": COMPOSIO_API_KEY})
agent = Agent(
    "openai:gpt-5",
    toolsets=[dynamics365_mcp],
    instructions=(
        "You are a Dynamics365 assistant. Use Dynamics365 tools to help users "
        "with their requests. Ask clarifying questions when needed."
    ),
)
What's happening:
  • The MCP client connects to the Dynamics365 endpoint
  • The agent uses GPT-5 to interpret user commands and perform Dynamics365 operations
  • The instructions field defines the agent's role and behavior

Build the chat interface

python
# Simple REPL with message history
history = []
print("Chat started! Type 'exit' or 'quit' to end.\n")
print("Try asking the agent to help you with Dynamics365.\n")

while True:
    user_input = input("You: ").strip()
    if user_input.lower() in {"exit", "quit", "bye"}:
        print("\nGoodbye!")
        break
    if not user_input:
        continue

    print("\nAgent is thinking...\n", flush=True)

    async with agent.run_stream(user_input, message_history=history) as stream_result:
        collected_text = ""
        async for chunk in stream_result.stream_output():
            text_piece = None
            if isinstance(chunk, str):
                text_piece = chunk
            elif hasattr(chunk, "delta") and isinstance(chunk.delta, str):
                text_piece = chunk.delta
            elif hasattr(chunk, "text"):
                text_piece = chunk.text
            if text_piece:
                collected_text += text_piece
        result = stream_result

    print(f"Agent: {collected_text}\n")
    history = result.all_messages()
What's happening:
  • The agent reads input from the terminal and streams its response
  • Dynamics365 API calls happen automatically under the hood
  • The model keeps conversation history to maintain context across turns

Run the application

python
if __name__ == "__main__":
    asyncio.run(main())
What's happening:
  • The asyncio loop launches the agent and keeps it running until you exit

Complete Code

Here's the complete code to get you started with Dynamics365 and Pydantic AI:

python
import asyncio
import os
from dotenv import load_dotenv
from composio import Composio
from pydantic_ai import Agent
from pydantic_ai.mcp import MCPServerStreamableHTTP

load_dotenv()

async def main():
    api_key = os.getenv("COMPOSIO_API_KEY")
    user_id = os.getenv("USER_ID")
    if not api_key or not user_id:
        raise RuntimeError("Set COMPOSIO_API_KEY and USER_ID in your environment")

    # Create a Composio Tool Router session for Dynamics365
    composio = Composio(api_key=api_key)
    session = composio.create(
        user_id=user_id,
        toolkits=["dynamics365"],
    )
    url = session.mcp.url
    if not url:
        raise ValueError("Composio session did not return an MCP URL")

    # Attach the MCP server to a Pydantic AI Agent
    dynamics365_mcp = MCPServerStreamableHTTP(url, headers={"x-api-key": COMPOSIO_API_KEY})
    agent = Agent(
        "openai:gpt-5",
        toolsets=[dynamics365_mcp],
        instructions=(
            "You are a Dynamics365 assistant. Use Dynamics365 tools to help users "
            "with their requests. Ask clarifying questions when needed."
        ),
    )

    # Simple REPL with message history
    history = []
    print("Chat started! Type 'exit' or 'quit' to end.\n")
    print("Try asking the agent to help you with Dynamics365.\n")

    while True:
        user_input = input("You: ").strip()
        if user_input.lower() in {"exit", "quit", "bye"}:
            print("\nGoodbye!")
            break
        if not user_input:
            continue

        print("\nAgent is thinking...\n", flush=True)

        async with agent.run_stream(user_input, message_history=history) as stream_result:
            collected_text = ""
            async for chunk in stream_result.stream_output():
                text_piece = None
                if isinstance(chunk, str):
                    text_piece = chunk
                elif hasattr(chunk, "delta") and isinstance(chunk.delta, str):
                    text_piece = chunk.delta
                elif hasattr(chunk, "text"):
                    text_piece = chunk.text
                if text_piece:
                    collected_text += text_piece
            result = stream_result

        print(f"Agent: {collected_text}\n")
        history = result.all_messages()

if __name__ == "__main__":
    asyncio.run(main())

Conclusion

You've built a Pydantic AI agent that can interact with Dynamics365 through Composio's Tool Router. With this setup, your agent can perform real Dynamics365 actions through natural language. You can extend this further by:
  • Adding other toolkits like Gmail, HubSpot, or Salesforce
  • Building a web-based chat interface around this agent
  • Using multiple MCP endpoints to enable cross-app workflows (for example, Gmail + Dynamics365 for workflow automation)
This architecture makes your AI agent "agent-native", able to securely use APIs in a unified, composable way without custom integrations.

How to build Dynamics365 MCP Agent with another framework

OpenAI Agents SDK

OpenAI Agents SDK

Use Dynamics365 MCP with OpenAI Agents SDK

Claude Agent SDK

Claude Agent SDK

Use Dynamics365 MCP with Claude Agent SDK

Google ADK

Google ADK

Use Dynamics365 MCP with Google ADK

LangChain

LangChain

Use Dynamics365 MCP with LangChain

Vercel AI SDK

Vercel AI SDK

Use Dynamics365 MCP with Vercel AI SDK

Mastra AI

Mastra AI

Use Dynamics365 MCP with Mastra AI

LlamaIndex

LlamaIndex

Use Dynamics365 MCP with LlamaIndex

CrewAI

CrewAI

Use Dynamics365 MCP with CrewAI

FAQ

What are the differences in Tool Router MCP and Dynamics365 MCP?

With a standalone Dynamics365 MCP server, the agents and LLMs can only access a fixed set of Dynamics365 tools tied to that server. However, with the Composio Tool Router, agents can dynamically load tools from Dynamics365 and many other apps based on the task at hand, all through a single MCP endpoint.

Can I use Tool Router MCP with Pydantic AI?

Yes, you can. Pydantic AI fully supports MCP integration. You get structured tool calling, message history handling, and model orchestration while Tool Router takes care of discovering and serving the right Dynamics365 tools.

Can I manage the permissions and scopes for Dynamics365 while using Tool Router?

Yes, absolutely. You can configure which Dynamics365 scopes and actions are allowed when connecting your account to Composio. You can also bring your own OAuth credentials or API configuration so you keep full control over what the agent can do.

How safe is my data with Composio Tool Router?

All sensitive data such as tokens, keys, and configuration is fully encrypted at rest and in transit. Composio is SOC 2 Type 2 compliant and follows strict security practices so your Dynamics365 data and credentials are handled as safely as possible.

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