diff --git a/.gitignore b/.gitignore
index 203fae4..f16fa57 100644
--- a/.gitignore
+++ b/.gitignore
@@ -12,6 +12,9 @@ build/
 # uv
 uv.lock
 
+# Agent instructions
+AGENTS.md
+
 # IDE
 .idea/
 .vscode/
diff --git a/.python-version b/.python-version
deleted file mode 100644
index 2c07333..0000000
--- a/.python-version
+++ /dev/null
@@ -1 +0,0 @@
-3.11
diff --git a/README.md b/README.md
index 409a037..0ccaea4 100644
--- a/README.md
+++ b/README.md
@@ -181,6 +181,37 @@ docker run -d --name open-terminal -p 8000:8000 \
 
 Each user automatically gets a dedicated Linux account with its own home directory. Files, commands, and terminals are isolated between users via standard Unix permissions.
 
+## MCP Server
+
+Open Terminal ships with an [MCP](https://modelcontextprotocol.io) server that exposes every API endpoint as an MCP tool. Install the optional dependency first:
+
+```bash
+pip install -e ".[mcp]"
+```
+
+### streamable-http (remote)
+
+To run the MCP server as a network service and connect from another machine:
+
+```bash
+open-terminal mcp --transport streamable-http --host 0.0.0.0 --port 8000 --api-key your-secret-key
+```
+
+Then connect from VS Code `mcp.json`:
+
+```json
+{
+  "servers": {
+    "open-terminal": {
+      "url": "http://<server-ip>:8000/mcp",
+      "type": "http"
+    }
+  }
+}
+```
+
+The `--api-key` flag (or `OPEN_TERMINAL_API_KEY` env var, or `api_key` in a config file) is required — it is used for both the MCP server and the underlying REST API.
+
 ## API Docs
 
 Full interactive API documentation is available at [http://localhost:8000/docs](http://localhost:8000/docs) once your instance is running.
diff --git a/open_terminal/cli.py b/open_terminal/cli.py
index 15adb15..4911856 100644
--- a/open_terminal/cli.py
+++ b/open_terminal/cli.py
@@ -156,12 +156,19 @@ def run(
     default=None,
     help="Working directory for the server process.",
 )
+@click.option(
+    "--api-key",
+    default="",
+    envvar="OPEN_TERMINAL_API_KEY",
+    help="Bearer API key (or set OPEN_TERMINAL_API_KEY env var)",
+)
 def mcp(
     transport: str,
     host: str | None,
     port: int | None,
     config_path: str | None,
     cwd: str | None,
+    api_key: str,
 ):
     """Start the MCP server (requires 'pip install open-terminal[mcp]')."""
     from open_terminal import config
@@ -174,6 +181,19 @@ def mcp(
     if cwd:
         os.chdir(cwd)
 
+    # Resolve API key: CLI flag > env var > Docker secret file > config file.
+    # Must be set in os.environ BEFORE importing mcp_server so that env.py
+    # picks it up at module-import time (it captures API_KEY at import).
+    if not api_key:
+        file_path = os.environ.get("OPEN_TERMINAL_API_KEY_FILE")
+        if file_path:
+            with open(file_path) as f:
+                api_key = f.read().strip()
+    if not api_key:
+        api_key = cfg.get("api_key", "")
+    if api_key:
+        os.environ["OPEN_TERMINAL_API_KEY"] = api_key
+
     try:
         from open_terminal.mcp_server import mcp as mcp_server
     except ImportError: