Semantic Tool Discovery for Large Language Models: A Vector-Based Approach to MCP Tool Selection

Abstract: LLMs with tool-calling capabilities have demonstrated remarkable potential in executing complex tasks through external tool integration. The Model Context Protocol (MCP) has emerged as a standardized framework for connecting LLMs to diverse toolsets, with individual MCP servers potentially exposing dozens to hundreds of tools. However, current implementations face a critical scalability challenge: providing all available tools to the LLM context results in substantial token overhead, increased costs, reduced accuracy, and context window constraints. We present a semantic tool discovery architecture that addresses these challenges through vector-based retrieval. Our approach indexes MCP tools using dense embeddings that capture semantic relationships between tool capabilities and user intent, dynamically selecting only the most relevant tools (typically 3-5) rather than exposing the entire tool catalog (50-100+). Experimental results demonstrate a 99.6% reduction in tool-related token consumption with a hit rate of 97.1% at K=3 and an MRR of 0.91 on a benchmark of 140 queries across 121 tools from 5 MCP servers, with sub-100ms retrieval latency. Contributions include: (1) a semantic indexing framework for MCP tools, (2) a dynamic tool selection algorithm based on query-tool similarity, (3) comprehensive evaluation demonstrating significant efficiency and accuracy improvements, and (4) extensibility to multi-agent and cross-organizational tool discovery.