diff --git a/pyproject.toml b/pyproject.toml
index 4de5438..4f27221 100644
--- a/pyproject.toml
+++ b/pyproject.toml
@@ -4,7 +4,7 @@ build-backend = "hatchling.build"
 
 [project]
 name = "mcesptool"
-version = "2026.02.23"
+version = "2026.02.25"
 description = "FastMCP server for ESP32/ESP8266 development with esptool integration"
 readme = "README.md"
 requires-python = ">=3.10"
diff --git a/src/mcesptool/components/idf_integration.py b/src/mcesptool/components/idf_integration.py
index eaa5a73..f8c26c4 100644
--- a/src/mcesptool/components/idf_integration.py
+++ b/src/mcesptool/components/idf_integration.py
@@ -68,7 +68,14 @@ def _validate_tool_names(names: list[str]) -> list[str]:
 def _parse_tools_list(output: str) -> list[dict[str, Any]]:
     """Parse ``idf_tools.py list`` text output into structured records.
 
-    The output format is roughly::
+    Handles two output formats:
+
+    **ESP-IDF v5.x** (compact)::
+
+        * xtensa-esp-elf-gdb: GDB for Xtensa
+          - 14.2_20240403 (recommended, installed)
+
+    **Older IDF** (verbose)::
 
         * xtensa-esp-elf-gdb
           - Version 14.2_20240403
@@ -83,20 +90,32 @@ def _parse_tools_list(output: str) -> list[dict[str, Any]]:
         if not stripped:
             continue
 
-        # Tool header: "* tool-name"
+        # Tool header: "* tool-name" or "* tool-name: Description"
         if stripped.startswith("* "):
             if current_tool is not None:
                 if current_version:
                     current_tool["versions"].append(current_version)
                 tools.append(current_tool)
-            current_tool = {"name": stripped[2:].strip(), "versions": []}
+
+            header = stripped[2:].strip()
+            # v5.x format: "tool-name: Description"
+            if ": " in header:
+                name, description = header.split(": ", 1)
+            else:
+                name, description = header, ""
+            current_tool = {
+                "name": name.strip(),
+                "description": description.strip(),
+                "supported_targets": [],
+                "versions": [],
+            }
             current_version = None
             continue
 
         if current_tool is None:
             continue
 
-        # Version line: "- Version X.Y.Z"
+        # Version line: "- Version X.Y.Z" (older format)
         version_match = re.match(r"^-\s+Version\s+(.+)", stripped)
         if version_match:
             if current_version:
@@ -108,17 +127,47 @@ def _parse_tools_list(output: str) -> list[dict[str, Any]]:
             }
             continue
 
-        # Archive line: "- filename.tar.gz (installed)" or just "- filename"
+        # Archive line: "- filename.tar.gz (installed)" (older format)
+        # Must check BEFORE v5.x version lines — archive filenames contain
+        # file extensions (.tar.gz, .zip, etc.) that distinguish them.
         if current_version and stripped.startswith("- "):
-            archive_part = stripped[2:].strip()
-            installed = "(installed)" in archive_part
-            if installed:
-                current_version["installed"] = True
-                archive_part = archive_part.replace("(installed)", "").strip()
-            current_version["archives"].append({
-                "file": archive_part,
-                "installed": installed,
-            })
+            item_text = stripped[2:].strip()
+            # Detect archive by file extension in the first token
+            first_token = item_text.split()[0] if item_text.split() else ""
+            if re.search(r"\.(tar\.gz|tar\.xz|tar\.bz2|zip|dmg|exe)$", first_token):
+                installed = "(installed)" in item_text
+                if installed:
+                    current_version["installed"] = True
+                    item_text = item_text.replace("(installed)", "").strip()
+                current_version["archives"].append({
+                    "file": item_text,
+                    "installed": installed,
+                })
+                continue
+
+        # v5.x version line: "- 14.2_20240403 (recommended, installed)"
+        v5_match = re.match(r"^-\s+(\S+)\s*\(([^)]+)\)", stripped)
+        if v5_match:
+            if current_version:
+                current_tool["versions"].append(current_version)
+            status_text = v5_match.group(2)
+            current_version = {
+                "version": v5_match.group(1),
+                "installed": "installed" in status_text,
+                "status": status_text.strip(),
+                "archives": [],
+            }
+            continue
+
+        # v5.x version line without status: "- 14.2_20240403"
+        v5_bare = re.match(r"^-\s+(\S+)\s*$", stripped)
+        if v5_bare and current_version is None:
+            current_version = {
+                "version": v5_bare.group(1),
+                "installed": False,
+                "archives": [],
+            }
+            continue
 
     # Flush final tool
     if current_tool is not None:
diff --git a/src/mcesptool/server.py b/src/mcesptool/server.py
index b220d25..b52d7f3 100644
--- a/src/mcesptool/server.py
+++ b/src/mcesptool/server.py
@@ -126,7 +126,7 @@ class ESPToolServer:
 
             return {
                 "server_name": "MCP ESPTool Server",
-                "version": "2026.02.23",
+                "version": "2026.02.25",
                 "uptime_seconds": round(uptime, 2),
                 "configuration": self.config.to_dict(),
                 "components": list(self.components.keys()),
@@ -402,29 +402,23 @@ class ESPToolServer:
 
 # CLI interface
 @click.command()
-@click.option("--config", "-c", help="Configuration file path")
 @click.option("--debug", "-d", is_flag=True, help="Enable debug logging")
 @click.option("--production", "-p", is_flag=True, help="Run in production mode")
-@click.option("--port", default=8080, help="Server port (for future HTTP interface)")
-@click.version_option(version="2026.02.23")
-def main(config: str | None, debug: bool, production: bool, port: int) -> None:
+@click.version_option(version="2026.02.25")
+def main(debug: bool, production: bool) -> None:
     """
     FastMCP ESP Development Server
 
-    Provides AI-powered ESP32/ESP8266 development workflows through natural language.
+    Provides ESP32/ESP8266 development workflows through MCP.
+    Configure via environment variables (see reference docs).
     """
     # Configure logging level
     if debug:
         logging.getLogger().setLevel(logging.DEBUG)
         logger.info("🐛 Debug logging enabled")
 
-    # Load configuration
-    if config:
-        logger.info(f"📁 Loading configuration from: {config}")
-        # TODO: Implement configuration file loading
-        server_config = ESPToolServerConfig.from_environment()
-    else:
-        server_config = ESPToolServerConfig.from_environment()
+    # Load configuration from environment
+    server_config = ESPToolServerConfig.from_environment()
 
     # Override production mode if specified
     if production:
@@ -434,7 +428,7 @@ def main(config: str | None, debug: bool, production: bool, port: int) -> None:
     # Display startup banner
     console.print("\n[bold blue]🚀 FastMCP ESP Development Server[/bold blue]")
     console.print("[dim]AI-powered ESP32/ESP8266 development workflows[/dim]")
-    console.print("[dim]Version: 2026.02.23[/dim]")
+    console.print("[dim]Version: 2026.02.25[/dim]")
     console.print()
 
     # Create and run server
diff --git a/tests/test_idf_integration.py b/tests/test_idf_integration.py
index c9572a4..cb55938 100644
--- a/tests/test_idf_integration.py
+++ b/tests/test_idf_integration.py
@@ -166,6 +166,63 @@ class TestParseToolsList:
         assert tools[0]["name"] == "lonely-tool"
         assert tools[0]["versions"][0]["archives"] == []
 
+    # v5.x compact format tests (real ESP-IDF v5.3 output)
+    SAMPLE_V5 = textwrap.dedent("""\
+        * xtensa-esp-elf-gdb: GDB for Xtensa
+          - 14.2_20240403 (recommended, installed)
+        * riscv32-esp-elf-gdb: GDB for RISC-V
+          - 14.2_20240403 (recommended, installed)
+        * xtensa-esp-elf: Toolchain for 32-bit Xtensa based on GCC
+          - esp-13.2.0_20240530 (recommended, installed)
+        * cmake: CMake build system (optional)
+          - 3.24.0 (recommended, installed)
+          - 3.16.3 (supported)
+        * qemu-riscv32: QEMU for RISC-V (optional)
+          - esp_develop_8.2.0_20240122 (recommended)
+    """)
+
+    def test_v5_extracts_tool_names(self):
+        tools = _parse_tools_list(self.SAMPLE_V5)
+        names = [t["name"] for t in tools]
+        assert "xtensa-esp-elf-gdb" in names
+        assert "riscv32-esp-elf-gdb" in names
+        assert "cmake" in names
+        assert "qemu-riscv32" in names
+
+    def test_v5_extracts_descriptions(self):
+        tools = _parse_tools_list(self.SAMPLE_V5)
+        gdb = next(t for t in tools if t["name"] == "xtensa-esp-elf-gdb")
+        assert gdb["description"] == "GDB for Xtensa"
+
+    def test_v5_tool_count(self):
+        tools = _parse_tools_list(self.SAMPLE_V5)
+        assert len(tools) == 5
+
+    def test_v5_installed_status(self):
+        tools = _parse_tools_list(self.SAMPLE_V5)
+        gdb = next(t for t in tools if t["name"] == "xtensa-esp-elf-gdb")
+        assert gdb["versions"][0]["installed"] is True
+        qemu = next(t for t in tools if t["name"] == "qemu-riscv32")
+        assert qemu["versions"][0]["installed"] is False
+
+    def test_v5_version_extracted(self):
+        tools = _parse_tools_list(self.SAMPLE_V5)
+        xtensa = next(t for t in tools if t["name"] == "xtensa-esp-elf")
+        assert xtensa["versions"][0]["version"] == "esp-13.2.0_20240530"
+
+    def test_v5_multiple_versions(self):
+        tools = _parse_tools_list(self.SAMPLE_V5)
+        cmake = next(t for t in tools if t["name"] == "cmake")
+        assert len(cmake["versions"]) == 2
+        assert cmake["versions"][0]["version"] == "3.24.0"
+        assert cmake["versions"][1]["version"] == "3.16.3"
+
+    def test_v5_status_field(self):
+        tools = _parse_tools_list(self.SAMPLE_V5)
+        cmake = next(t for t in tools if t["name"] == "cmake")
+        assert cmake["versions"][0]["status"] == "recommended, installed"
+        assert cmake["versions"][1]["status"] == "supported"
+
 
 class TestParseToolsCheck:
     """Tests for _parse_tools_check parser."""
@@ -826,3 +883,366 @@ class TestTargetArch:
         riscv_targets = {k for k, v in TARGET_ARCH.items() if v == "riscv"}
         expected = {"esp32c2", "esp32c3", "esp32c5", "esp32c6", "esp32c61", "esp32h2", "esp32p4"}
         assert riscv_targets == expected
+
+
+# ------------------------------------------------------------------ #
+# 5. Mocked invocation tests (tool / resource / prompt functions)
+# ------------------------------------------------------------------ #
+
+
+class TestIdfBuildProject:
+    """Test idf_build_project tool function execution (mocked subprocess)."""
+
+    @pytest.fixture
+    def project_dir(self, tmp_path):
+        """Create a minimal ESP-IDF project directory with CMakeLists.txt."""
+        proj = tmp_path / "my_project"
+        proj.mkdir()
+        (proj / "CMakeLists.txt").write_text("cmake_minimum_required(VERSION 3.16)\n")
+        return proj
+
+    @pytest.mark.asyncio
+    async def test_build_validates_target(self, mock_app, config, mock_context, project_dir):
+        """Invalid target returns error before any subprocess is spawned."""
+        IDFIntegration(mock_app, config)
+        build_fn = mock_app._registered_tools["idf_build_project"]
+
+        result = await build_fn(mock_context, project_path=str(project_dir), target="esp8266")
+        assert result["success"] is False
+        assert "Unknown target" in result["error"]
+
+    @pytest.mark.asyncio
+    async def test_build_checks_cmakelists_exists(self, mock_app, config, mock_context, tmp_path):
+        """Missing CMakeLists.txt returns error."""
+        empty_dir = tmp_path / "no_cmake"
+        empty_dir.mkdir()
+        # Put the directory inside a project root so path validation passes
+        config.project_roots = [tmp_path]
+        IDFIntegration(mock_app, config)
+        build_fn = mock_app._registered_tools["idf_build_project"]
+
+        result = await build_fn(mock_context, project_path=str(empty_dir), target="esp32")
+        assert result["success"] is False
+        assert "CMakeLists.txt" in result["error"]
+
+    @pytest.mark.asyncio
+    async def test_build_calls_set_target_and_build(
+        self, mock_app, config, mock_context, project_dir
+    ):
+        """Mocks _run_idf_py and verifies set-target + build are called."""
+        config.project_roots = [project_dir.parent]
+        integration = IDFIntegration(mock_app, config)
+        build_fn = mock_app._registered_tools["idf_build_project"]
+
+        calls = []
+
+        async def fake_run_idf_py(args, timeout=300.0):
+            calls.append(args)
+            return {"success": True, "output": "ok", "stderr": ""}
+
+        integration._run_idf_py = fake_run_idf_py
+
+        result = await build_fn(mock_context, project_path=str(project_dir), target="esp32s3")
+        assert result["success"] is True
+
+        # Should have called set-target then build
+        assert len(calls) == 2
+        assert "set-target" in calls[0]
+        assert "esp32s3" in calls[0]
+        assert "build" in calls[1]
+
+    @pytest.mark.asyncio
+    async def test_build_clean_runs_fullclean(
+        self, mock_app, config, mock_context, project_dir
+    ):
+        """When clean=True, verifies fullclean is called before set-target and build."""
+        config.project_roots = [project_dir.parent]
+        integration = IDFIntegration(mock_app, config)
+        build_fn = mock_app._registered_tools["idf_build_project"]
+
+        calls = []
+
+        async def fake_run_idf_py(args, timeout=300.0):
+            calls.append(args)
+            return {"success": True, "output": "ok", "stderr": ""}
+
+        integration._run_idf_py = fake_run_idf_py
+
+        result = await build_fn(
+            mock_context, project_path=str(project_dir), target="esp32", clean=True,
+        )
+        assert result["success"] is True
+
+        # First call should be fullclean, then set-target, then build
+        assert len(calls) == 3
+        assert "fullclean" in calls[0]
+        assert "set-target" in calls[1]
+        assert "build" in calls[2]
+
+    @pytest.mark.asyncio
+    async def test_build_project_path_validation(self, mock_app, config, mock_context, tmp_path):
+        """Path outside project_roots is rejected."""
+        allowed_root = tmp_path / "allowed"
+        allowed_root.mkdir()
+        outside_dir = tmp_path / "outside"
+        outside_dir.mkdir()
+        (outside_dir / "CMakeLists.txt").write_text("# stub")
+
+        config.project_roots = [allowed_root]
+        # Clear idf_path so it can't be used as fallback
+        config.esp_idf_path = None
+        IDFIntegration(mock_app, config)
+        build_fn = mock_app._registered_tools["idf_build_project"]
+
+        result = await build_fn(mock_context, project_path=str(outside_dir), target="esp32")
+        assert result["success"] is False
+        assert "outside" in result["error"].lower() or "roots" in result["error"].lower()
+
+
+class TestIdfFlashProject:
+    """Test idf_flash_project tool function execution (mocked subprocess)."""
+
+    @pytest.fixture
+    def built_project(self, tmp_path):
+        """Create a project directory that looks like it has been built."""
+        proj = tmp_path / "built_project"
+        proj.mkdir()
+        (proj / "CMakeLists.txt").write_text("# stub")
+        (proj / "build").mkdir()
+        return proj
+
+    @pytest.mark.asyncio
+    async def test_flash_validates_baud_rate(self, mock_app, config, mock_context, built_project):
+        """Invalid baud rate returns error."""
+        config.project_roots = [built_project.parent]
+        IDFIntegration(mock_app, config)
+        flash_fn = mock_app._registered_tools["idf_flash_project"]
+
+        result = await flash_fn(
+            mock_context,
+            project_path=str(built_project),
+            port="/dev/ttyUSB0",
+            baud=12345,
+        )
+        assert result["success"] is False
+        assert "Invalid baud rate" in result["error"]
+
+    @pytest.mark.asyncio
+    async def test_flash_calls_idf_py_flash(self, mock_app, config, mock_context, built_project):
+        """Mocks _run_idf_py and verifies args include --port and flash."""
+        config.project_roots = [built_project.parent]
+        integration = IDFIntegration(mock_app, config)
+        flash_fn = mock_app._registered_tools["idf_flash_project"]
+
+        calls = []
+
+        async def fake_run_idf_py(args, timeout=300.0):
+            calls.append(args)
+            return {"success": True, "output": "flash ok", "stderr": ""}
+
+        integration._run_idf_py = fake_run_idf_py
+
+        result = await flash_fn(
+            mock_context,
+            project_path=str(built_project),
+            port="/dev/ttyUSB0",
+            baud=460800,
+        )
+        assert result["success"] is True
+        assert len(calls) == 1
+
+        cmd_args = calls[0]
+        assert "flash" in cmd_args
+        assert "-p" in cmd_args
+        assert "/dev/ttyUSB0" in cmd_args
+        assert "-b" in cmd_args
+        assert "460800" in cmd_args
+
+    @pytest.mark.asyncio
+    async def test_flash_project_path_validation(self, mock_app, config, mock_context, tmp_path):
+        """Path outside project_roots is rejected."""
+        allowed_root = tmp_path / "allowed"
+        allowed_root.mkdir()
+        outside_dir = tmp_path / "outside"
+        outside_dir.mkdir()
+        (outside_dir / "build").mkdir()
+
+        config.project_roots = [allowed_root]
+        config.esp_idf_path = None
+        IDFIntegration(mock_app, config)
+        flash_fn = mock_app._registered_tools["idf_flash_project"]
+
+        result = await flash_fn(
+            mock_context,
+            project_path=str(outside_dir),
+            port="/dev/ttyUSB0",
+        )
+        assert result["success"] is False
+        assert "outside" in result["error"].lower() or "roots" in result["error"].lower()
+
+
+class TestIdfMonitor:
+    """Test idf_monitor tool function execution (mocked subprocess)."""
+
+    @pytest.mark.asyncio
+    async def test_monitor_calls_idf_py(self, mock_app, config, mock_context):
+        """Mocks subprocess and verifies monitor command is issued."""
+        config.get_idf_available = MagicMock(return_value=True)
+        integration = IDFIntegration(mock_app, config)
+        monitor_fn = mock_app._registered_tools["idf_monitor"]
+
+        # Mock _build_idf_env to return a valid env
+        integration._build_idf_env = AsyncMock(
+            return_value={"PATH": "/usr/bin", "IDF_PATH": str(config.esp_idf_path)}
+        )
+
+        mock_proc = AsyncMock()
+        mock_proc.communicate = AsyncMock(return_value=(b"serial output here", b""))
+        mock_proc.returncode = 0
+
+        with patch("asyncio.create_subprocess_exec", return_value=mock_proc) as mock_exec:
+            result = await monitor_fn(mock_context, port="/dev/ttyUSB0", duration=5)
+
+        assert result["success"] is True
+        assert result["port"] == "/dev/ttyUSB0"
+        assert result["duration"] == 5
+
+        # Verify the subprocess was called with monitor args
+        exec_args = mock_exec.call_args[0]
+        assert "monitor" in exec_args
+        assert "--no-reset" in exec_args
+        assert "-p" in exec_args
+
+    @pytest.mark.asyncio
+    async def test_monitor_timeout_cleanup(self, mock_app, config, mock_context):
+        """Process is terminated/killed on timeout."""
+        config.get_idf_available = MagicMock(return_value=True)
+        integration = IDFIntegration(mock_app, config)
+        monitor_fn = mock_app._registered_tools["idf_monitor"]
+
+        integration._build_idf_env = AsyncMock(
+            return_value={"PATH": "/usr/bin", "IDF_PATH": str(config.esp_idf_path)}
+        )
+
+        mock_proc = AsyncMock()
+        # First communicate raises TimeoutError, then terminate+communicate also times out
+        mock_proc.communicate = AsyncMock(side_effect=asyncio.TimeoutError)
+        mock_proc.returncode = None
+        mock_proc.terminate = MagicMock()
+        mock_proc.kill = MagicMock()
+        mock_proc.wait = AsyncMock()
+
+        with patch("asyncio.create_subprocess_exec", return_value=mock_proc):
+            with patch("asyncio.wait_for", side_effect=asyncio.TimeoutError):
+                result = await monitor_fn(mock_context, port="/dev/ttyUSB0", duration=1)
+
+        assert result["success"] is True
+        # Process should have been killed (terminate or kill called)
+        assert mock_proc.kill.called or mock_proc.terminate.called
+
+
+class TestIdfStatusResource:
+    """Test esp://idf/status resource function."""
+
+    @pytest.mark.asyncio
+    async def test_status_resource_returns_valid_json(self, mock_app, config):
+        """Call the registered resource function; verify it returns dict with expected keys."""
+        integration = IDFIntegration(mock_app, config)
+        status_fn = mock_app._registered_resources["esp://idf/status"]
+
+        # Mock _run_idf_tools so it doesn't actually run subprocess
+        integration._run_idf_tools = AsyncMock(
+            return_value={
+                "success": True,
+                "output": "xtensa-esp-elf 14.2.0: found\ncmake 3.24.0: not found\n",
+                "stderr": "",
+            }
+        )
+        # Mock _load_tools_json to skip disk I/O
+        integration._load_tools_json = AsyncMock(return_value=None)
+
+        # Write a version.txt so the resource can read it
+        version_file = config.esp_idf_path / "version.txt"
+        version_file.write_text("v5.3\n")
+
+        result = await status_fn()
+
+        assert isinstance(result, dict)
+        assert result["available"] is True
+        assert "idf_path" in result
+        assert "idf_version" in result
+        assert result["idf_version"] == "v5.3"
+        assert "installed_tools" in result
+        assert "missing_tools" in result
+        assert "missing_tool_names" in result
+
+    @pytest.mark.asyncio
+    async def test_status_with_no_idf_path(self, mock_app, config):
+        """config.esp_idf_path = None returns graceful response."""
+        config.esp_idf_path = None
+        IDFIntegration(mock_app, config)
+        status_fn = mock_app._registered_resources["esp://idf/status"]
+
+        result = await status_fn()
+
+        assert isinstance(result, dict)
+        assert result["available"] is False
+        assert "error" in result
+
+
+class TestIdfSetupTargetPrompt:
+    """Test idf_setup_target prompt function."""
+
+    @pytest.mark.asyncio
+    async def test_prompt_returns_markdown(self, mock_app, config):
+        """Call registered prompt with target='esp32p4'; verify non-empty output."""
+        integration = IDFIntegration(mock_app, config)
+        prompt_fn = mock_app._registered_prompts["idf_setup_target"]
+
+        # Mock _run_idf_tools to return something parseable
+        integration._run_idf_tools = AsyncMock(
+            return_value={
+                "success": True,
+                "output": "riscv32-esp-elf 14.2.0: found\ncmake 3.24.0: found\n",
+                "stderr": "",
+            }
+        )
+        integration._load_tools_json = AsyncMock(return_value={
+            "tools": [
+                {
+                    "name": "riscv32-esp-elf",
+                    "description": "RISC-V compiler",
+                    "supported_targets": ["esp32c3", "esp32c6", "esp32h2", "esp32p4"],
+                    "versions": [{"name": "14.2.0", "status": "recommended"}],
+                },
+            ]
+        })
+
+        result = await prompt_fn(target="esp32p4")
+
+        assert isinstance(result, str)
+        assert len(result) > 0
+        assert "esp32p4" in result
+        assert "riscv" in result.lower()
+
+    @pytest.mark.asyncio
+    async def test_prompt_invalid_target(self, mock_app, config):
+        """Call with bad target; verify architecture shows 'unknown'."""
+        integration = IDFIntegration(mock_app, config)
+        prompt_fn = mock_app._registered_prompts["idf_setup_target"]
+
+        # Mock _run_idf_tools -- the prompt still runs check even for unknown targets
+        integration._run_idf_tools = AsyncMock(
+            return_value={
+                "success": True,
+                "output": "",
+                "stderr": "",
+            }
+        )
+        integration._load_tools_json = AsyncMock(return_value={"tools": []})
+
+        result = await prompt_fn(target="badchip")
+
+        assert isinstance(result, str)
+        assert "badchip" in result
+        assert "unknown" in result.lower()
diff --git a/uv.lock b/uv.lock
index 40eb50b..d25f179 100644
--- a/uv.lock
+++ b/uv.lock
@@ -888,7 +888,7 @@ wheels = [
 
 [[package]]
 name = "mcesptool"
-version = "2026.2.23"
+version = "2026.2.25"
 source = { editable = "." }
 dependencies = [
     { name = "click" },