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@@ -165,6 +165,73 @@ public String onlyContext(ToolInvocation invocation) { ... }
 public String report(@CopilotToolParam("Phase") String phase, ToolInvocation invocation, @CopilotToolParam("Limit") int limit) { ... }
 ```
 
+## Inline lambda tool definitions (experimental)
+
+For inline tool authoring at the session construction site, use `ToolDefinition.from(...)` with explicit parameter metadata:
+
+```java
+import com.github.copilot.rpc.ToolDefinition;
+import com.github.copilot.rpc.ToolDefer;
+import com.github.copilot.tool.Param;
+
+ToolDefinition search = ToolDefinition
+    .from(
+        "search_items",
+        "Searches indexed items by keyword",
+        Param.of(String.class, "keyword", "Search keyword"),
+        keyword -> "Searching for: " + keyword)
+    .skipPermission(true)
+    .defer(ToolDefer.AUTO);
+```
+
+### Parameter metadata with `Param.of(...)`
+
+`Param.of(type, name, description)` creates a required parameter. For optional parameters with defaults:
+
+```java
+Param<Integer> limit = Param.of(Integer.class, "limit", "Max results", false, "10");
+```
+
+### Async handlers
+
+Use `fromAsync` for asynchronous tool handlers:
+
+```java
+import java.util.concurrent.CompletableFuture;
+
+ToolDefinition fetchData = ToolDefinition.fromAsync(
+    "fetch_data",
+    "Fetches data from remote source",
+    Param.of(String.class, "url", "Data source URL"),
+    url -> CompletableFuture.supplyAsync(() -> fetchRemote(url))
+);
+```
+
+### ToolInvocation context injection
+
+Inline tools can access `ToolInvocation` runtime context using `fromWithToolInvocation`:
+
+```java
+ToolDefinition reportPhase = ToolDefinition.fromWithToolInvocation(
+    "report_phase",
+    "Reports the current phase with invocation context",
+    Param.of(String.class, "phase", "The current phase"),
+    (phase, invocation) -> "phase=" + phase + ", toolCallId=" + invocation.getToolCallId()
+);
+```
+
+For async with `ToolInvocation`, use `fromAsyncWithToolInvocation`.
+
+### Fluent option modifiers
+
+Chain fluent modifiers to set tool options:
+
+- `.skipPermission(boolean)` — bypass permission prompts
+- `.defer(ToolDefer)` — control deferred execution (`AUTO`, `NEVER`)
+- `.overridesBuiltInTool(boolean)` — shadow built-in tools
+
+For design context and decision rationale, see [ADR-006](docs/adr/adr-006-tool-definition-inline.md).
+
 ## Memory
 
 Sessions can opt into persistent memory, allowing the agent to read and write memory across turns. Memory is configured per session and applies to both `createSession` and `resumeSession`.
 
@@ -0,0 +1,118 @@
+# ADR-006: Inline tool definition with lambdas
+
+## Context and problem statement
+
+[ADR-005](adr-005-tool-definition.md) introduced an ergonomic Java tools API based on `@CopilotTool` method annotations, `@CopilotToolParam` parameter annotations, and `ToolDefinition.fromObject(...)` for reflection-based tool registration. That model works well when teams define tools as methods on a class.
+
+The next ergonomics goal is an inline style comparable to C# `CopilotTool.DefineTool(...)`, where developers can define a tool at the call site without creating a separate tool container class.
+
+For this decision, we evaluated two alternatives:
+
+* Method-reference registration (`ToolDefinition.from(tools::setCurrentPhase)`)
+* Inline lambda registration (`ToolDefinition.from(..., phase -> ...)`)
+
+The key factor is metadata quality: tool name, description, parameter names, parameter descriptions, required/default semantics, and schema stability.
+
+## Considered options
+
+### Option 1: Method-reference API
+
+Example:
+
+```java
+ToolDefinition setPhase = ToolDefinition.from(tools::setCurrentPhase);
+```
+
+In this model, metadata is sourced from existing method-level annotations (`@CopilotTool`, `@Param`) on the referenced method.
+
+Advantages:
+
+* Closest Java analog to C# method-group ergonomics
+* High-quality metadata with minimal additional API surface
+* Reuses ADR-005 metadata and invocation behavior directly
+
+Drawbacks:
+
+* Not truly inline: still requires a declared method (and usually annotations) elsewhere
+* Does not solve the "define the whole tool at the call site" use case
+* Method-reference resolution adds runtime/reflection complexity
+
+### Option 2: Inline lambda API with explicit metadata
+
+Example:
+
+```java
+ToolDefinition setPhase = ToolDefinition.from(
+        "set_current_phase",
+        "Sets the current phase of the agent",
+        Param.of(String.class, "phase", "The phase to transition to"),
+        (String phase) -> {
+            currentPhase = phase;
+            return "Phase set to " + phase;
+        });
+```
+
+In this model, handler logic is inline, and metadata is provided explicitly through `Param.of(...)` parameter definitions.
+
+Advantages:
+
+* True inline authoring at the session construction site
+* No dependence on lambda parameter-name reflection or `-parameters`
+* Deterministic metadata and schema generation
+* Independent from annotation processing and generated companion classes
+
+Drawbacks:
+
+* Slightly more verbose than method-reference style because metadata is explicit
+* Introduces new public API types for parameter definitions and typed lambda overloads
+* Requires careful API design to stay concise for common one-parameter tools
+
+## Decision outcome
+
+Chosen: **Option 2 for ADR-006 scope** — inline lambda API with explicit metadata.
+
+Rationale:
+
+1. The primary requirement for this ADR is inline definition. Option 2 satisfies it directly; Option 1 does not.
+1. Metadata quality is the critical requirement. Option 2 keeps metadata explicit and stable, instead of relying on fragile lambda introspection.
+1. Option 2 can ship independently of method-reference support and without changes to annotation processing.
+1. Option 2 preserves behavior parity with existing tool execution by delegating to `ToolDefinition` construction and current invocation semantics.
+
+Option 1 remains valuable and can be added independently as a separate ergonomic layer. It is not blocked by this decision.
+
+## Design constraints and non-goals
+
+Constraints for the inline lambda API:
+
+* Require explicit tool name and description.
+* Require explicit parameter metadata (at minimum name and type, with optional description/required/default).
+* Support both sync and async handlers (`R` and `CompletableFuture<R>`).
+* Keep result semantics aligned with existing behavior (`String` passthrough, `void` maps to `"Success"`, non-string objects serialized to JSON).
+* Keep override/permission/defer flags available through options, consistent with existing `ToolDefinition` fields.
+
+Non-goals for this ADR:
+
+* Replacing `@CopilotTool`/`fromObject` APIs.
+* Defining method-reference registration behavior in detail.
+* Introducing compile-time code generation for lambda metadata.
+
+## Consequences
+
+The SDK now provides an explicit inline path for developers who prefer to keep tool declarations at session creation while preserving high-quality schema metadata. Implemented API families include:
+
+- `ToolDefinition.from(name, description, [params...], handler)` — sync handlers
+- `ToolDefinition.fromAsync(name, description, [params...], asyncHandler)` — async handlers returning `CompletableFuture<R>`
+- `ToolDefinition.fromWithToolInvocation(...)` — sync with `ToolInvocation` context injection
+- `ToolDefinition.fromAsyncWithToolInvocation(...)` — async with `ToolInvocation` context injection
+
+Parameter metadata is defined using `Param.of(type, name, description)` for required parameters and `Param.of(type, name, description, required, defaultValue)` for optional parameters with defaults.
+
+Fluent option modifiers (`.skipPermission(boolean)`, `.defer(ToolDefer)`, `.overridesBuiltInTool(boolean)`) allow post-construction customization.
+
+The annotation-driven API from [ADR-005](adr-005-tool-definition.md) remains the recommended path for larger tool surfaces where co-locating metadata with method implementations improves maintainability. For usage examples and complete API coverage, see the Java SDK README.
+
+## Related work items
+
+* #1682
+* #1792
+* #1810
@@ -0,0 +1,197 @@
+/*---------------------------------------------------------------------------------------------
+ *  Copyright (c) Microsoft Corporation. All rights reserved.
+ *--------------------------------------------------------------------------------------------*/
+
+package com.github.copilot.rpc;
+
+import java.util.Map;
+
+import com.fasterxml.jackson.databind.ObjectMapper;
+import com.github.copilot.tool.Param;
+
+/**
+ * Internal runtime helper: coerces raw invocation arguments to the typed values
+ * declared by {@link Param} descriptors.
+ *
+ * <p>
+ * Reuses the SDK-configured {@link ObjectMapper} for complex type conversions,
+ * matching the coercion policy applied by existing ergonomic tooling. No
+ * bespoke conversion paths are introduced.
+ *
+ * <p>
+ * Package-private: not part of the public API.
+ */
+class ParamCoercion {
+
+    /** Utility class; do not instantiate. */
+    private ParamCoercion() {
+    }
+
+    /**
+     * Coerces the named argument from an invocation argument map to the Java type
+     * declared by {@code param}.
+     *
+     * <p>
+     * Resolution order:
+     * <ol>
+     * <li>If the argument is present, convert it to {@code T} via
+     * {@link ObjectMapper#convertValue}.</li>
+     * <li>If absent and a default value is set, parse the string default via
+     * {@link #coerceDefault}.</li>
+     * <li>If absent and the parameter is optional ({@code required=false}), return
+     * an empty Optional variant or {@code null}.</li>
+     * <li>If absent and required, throw {@link IllegalArgumentException} with the
+     * parameter name.</li>
+     * </ol>
+     *
+     * @param <T>
+     *            the target Java type
+     * @param args
+     *            the invocation argument map; may be {@code null} for zero-argument
+     *            tools
+     * @param param
+     *            the parameter descriptor
+     * @param mapper
+     *            the configured {@link ObjectMapper} for complex type conversion
+     * @return the coerced argument value
+     * @throws IllegalArgumentException
+     *             if a required parameter is missing or coercion fails
+     */
+    @SuppressWarnings("unchecked")
+    static <T> T coerce(Map<String, Object> args, Param<T> param, ObjectMapper mapper) {
+        Object raw = (args != null) ? args.get(param.name()) : null;
+
+        if (raw == null) {
+            if (param.hasDefaultValue()) {
+                return coerceDefault(param, mapper);
+            } else if (!param.required()) {
+                return (T) emptyOptionalOrNull(param.type());
+            } else {
+                throw new IllegalArgumentException(
+                        "Required parameter '" + param.name() + "' is missing from tool invocation");
+            }
+        }
+
+        Class<T> type = param.type();
+
+        // Handle Optional* types explicitly before delegating to ObjectMapper
+        if (type == java.util.OptionalInt.class) {
+            try {
+                return (T) java.util.OptionalInt.of(((Number) raw).intValue());
+            } catch (ClassCastException ex) {
+                throw new IllegalArgumentException("Parameter '" + param.name()
+                        + "' expected a numeric value for OptionalInt, got: " + raw.getClass().getSimpleName(), ex);
+            }
+        }
+        if (type == java.util.OptionalLong.class) {
+            try {
+                return (T) java.util.OptionalLong.of(((Number) raw).longValue());
+            } catch (ClassCastException ex) {
+                throw new IllegalArgumentException("Parameter '" + param.name()
+                        + "' expected a numeric value for OptionalLong, got: " + raw.getClass().getSimpleName(), ex);
+            }
+        }
+        if (type == java.util.OptionalDouble.class) {
+            try {
+                return (T) java.util.OptionalDouble.of(((Number) raw).doubleValue());
+            } catch (ClassCastException ex) {
+                throw new IllegalArgumentException("Parameter '" + param.name()
+                        + "' expected a numeric value for OptionalDouble, got: " + raw.getClass().getSimpleName(), ex);
+            }
+        }
+
+        try {
+            return mapper.convertValue(raw, type);
+        } catch (IllegalArgumentException ex) {
+            throw new IllegalArgumentException(
+                    "Failed to coerce parameter '" + param.name() + "' to type " + type.getSimpleName(), ex);
+        }
+    }
+
+    /**
+     * Parses a {@link Param}'s string default value into the declared Java type.
+     *
+     * <p>
+     * Handles primitives, boxed types, {@link String}, {@link Boolean}, and enums
+     * explicitly, mirroring the validation logic in {@link Param}. The
+     * {@link ObjectMapper#readValue} fallback exists as a safety net but is not
+     * expected to be reached in practice, since {@link Param} construction rejects
+     * defaults for non-primitive/boxed/String/Boolean/enum types.
+     *
+     * @param <T>
+     *            the target Java type
+     * @param param
+     *            the parameter descriptor carrying the default value
+     * @param mapper
+     *            the configured {@link ObjectMapper} used as fallback for complex
+     *            types
+     * @return the parsed default value
+     * @throws IllegalArgumentException
+     *             if parsing fails
+     */
+    @SuppressWarnings({"rawtypes", "unchecked"})
+    static <T> T coerceDefault(Param<T> param, ObjectMapper mapper) {
+        String defaultValue = param.defaultValue();
+        Class<T> type = param.type();
+        try {
+            if (type == String.class) {
+                return type.cast(defaultValue);
+            }
+            if (type == Integer.class || type == int.class) {
+                return (T) Integer.valueOf(defaultValue);
+            }
+            if (type == Long.class || type == long.class) {
+                return (T) Long.valueOf(defaultValue);
+            }
+            if (type == Double.class || type == double.class) {
+                return (T) Double.valueOf(defaultValue);
+            }
+            if (type == Float.class || type == float.class) {
+                return (T) Float.valueOf(defaultValue);
+            }
+            if (type == Short.class || type == short.class) {
+                return (T) Short.valueOf(defaultValue);
+            }
+            if (type == Byte.class || type == byte.class) {
+                return (T) Byte.valueOf(defaultValue);
+            }
+            if (type == Boolean.class || type == boolean.class) {
+                return (T) Boolean.valueOf(defaultValue);
+            }
+            if (type.isEnum()) {
+                Class<? extends Enum> enumType = (Class<? extends Enum>) type;
+                return type.cast(Enum.valueOf(enumType, defaultValue));
+            }
+            // Fallback: let ObjectMapper parse the JSON-encoded default string
+            return mapper.readValue(defaultValue, type);
+        } catch (IllegalArgumentException ex) {
+            throw ex;
+        } catch (Exception ex) {
+            throw new IllegalArgumentException("Failed to apply default value '" + defaultValue + "' for parameter '"
+                    + param.name() + "' of type " + type.getSimpleName(), ex);
+        }
+    }
+
+    /**
+     * Returns an empty Optional variant for Optional primitive types, or
+     * {@code null} for all other types.
+     *
+     * @param type
+     *            the declared parameter type
+     * @return {@link java.util.OptionalInt#empty()},
+     *         {@link java.util.OptionalLong#empty()},
+     *         {@link java.util.OptionalDouble#empty()}, or {@code null}
+     */
+    static Object emptyOptionalOrNull(Class<?> type) {
+        if (type == java.util.OptionalInt.class) {
+            return java.util.OptionalInt.empty();
+        }
+        if (type == java.util.OptionalLong.class) {
+            return java.util.OptionalLong.empty();
+        }
+        if (type == java.util.OptionalDouble.class) {
+            return java.util.OptionalDouble.empty();
+        }
+        return null;
+    }
+}