diff --git a/external/nat/README.md b/external/nat/README.md
index 253dc50d..d5767d9e 100644
--- a/external/nat/README.md
+++ b/external/nat/README.md
@@ -50,6 +50,10 @@ The adapter consumes the routed `capability_plan.native.mcp_servers` entries,
 including the normalized per-server filters. NeMo Fabric MCP tool names remain bare
 server-local names; NAT exposes a selected member as `<server>__<tool>`.
 
+For `stdio` servers, NeMo Fabric expands `$VAR` references in `url`, parses the
+command and inline arguments, appends structured `args`, and forwards `env` to
+NAT. Only `url` supports variable expansion; `args` and `env` values are literal.
+
 | NeMo Fabric server policy | Generated NAT function group |
 | --- | --- |
 | `allowed_tools` omitted and `blocked_tools=[]` | No `include` or `exclude`; expose all discovered tools |
diff --git a/external/nat/src/nemo_fabric_adapters/nat/adapter.py b/external/nat/src/nemo_fabric_adapters/nat/adapter.py
index bc5aec51..a8dfcd32 100644
--- a/external/nat/src/nemo_fabric_adapters/nat/adapter.py
+++ b/external/nat/src/nemo_fabric_adapters/nat/adapter.py
@@ -340,8 +340,11 @@ def nat_mcp_server_config(name: str, server: Any) -> dict[str, Any]:
             "transport": "stdio",
             "command": command[0],
         }
-        if command[1:]:
-            result["args"] = command[1:]
+        args = [*command[1:], *common_utils.normalize_list(server.get("args"))]
+        if args:
+            result["args"] = args
+        if env := server.get("env"):
+            result["env"] = env
         return result
 
     if transport in {"http", "streamablehttp"}:
diff --git a/tests/adapters/test_external_nat_adapter.py b/tests/adapters/test_external_nat_adapter.py
index 5ca19a8d..41806c1c 100644
--- a/tests/adapters/test_external_nat_adapter.py
+++ b/tests/adapters/test_external_nat_adapter.py
@@ -995,7 +995,7 @@ def test_mcp_server_normalizes_streamable_http_aliases(transport: str):
     }
 
 
-def test_mcp_stdio_expands_environment_and_parses_quoted_arguments(
+def test_mcp_stdio_expands_command_and_maps_structured_args_and_env(
     monkeypatch: pytest.MonkeyPatch,
 ):
     monkeypatch.setenv("NAT_TEST_MCP_COMMAND", "/opt/nat/bin/mcp-server")
@@ -1005,13 +1005,23 @@ def test_mcp_stdio_expands_environment_and_parses_quoted_arguments(
         {
             "transport": "stdio",
             "url": "$NAT_TEST_MCP_COMMAND --label 'safe mode' --port 9000",
+            "args": ["--trace", "--request-timeout=10"],
+            "env": {"NAT_MCP_TOKEN": "test-token"},
         },
     )
 
     assert result == {
         "transport": "stdio",
         "command": "/opt/nat/bin/mcp-server",
-        "args": ["--label", "safe mode", "--port", "9000"],
+        "args": [
+            "--label",
+            "safe mode",
+            "--port",
+            "9000",
+            "--trace",
+            "--request-timeout=10",
+        ],
+        "env": {"NAT_MCP_TOKEN": "test-token"},
     }