diff --git a/internal/fantasy/agent.go b/internal/fantasy/agent.go
index 426beff16..87902653a 100644
--- a/internal/fantasy/agent.go
+++ b/internal/fantasy/agent.go
@@ -140,9 +140,13 @@ type agentSettings struct {
 	headers          map[string]string
 	providerOptions  ProviderOptions
 
-	// TODO: add support for provider tools
-	tools      []AgentTool
-	maxRetries *int
+	tools       []AgentTool
+	toolRuntime ToolRuntime
+	maxRetries  *int
+
+	transitionObservers []ReActTransitionObserver
+	stepObservers       []ReActStepObserver
+	toolResultObservers []ReActToolResultObserver
 
 	model LanguageModel
 
@@ -469,7 +473,12 @@ func (a *agent) Generate(ctx context.Context, opts AgentCall) (*AgentResult, err
 			}
 		}
 
-		toolResults, err := a.executeTools(ctx, stepTools, stepToolCalls, nil)
+		var toolResults []ToolResultContent
+		if a.settings.toolRuntime != nil {
+			toolResults, err = a.settings.toolRuntime.Execute(ctx, stepTools, stepToolCalls, nil)
+		} else {
+			toolResults, err = a.executeTools(ctx, stepTools, stepToolCalls, nil)
+		}
 
 		// Build step content with validated tool calls and tool results
 		stepContent := []Content{}
@@ -486,9 +495,11 @@ func (a *agent) Generate(ctx context.Context, opts AgentCall) (*AgentResult, err
 				stepContent = append(stepContent, content)
 			}
 		}
-		// Add tool results
-		for _, result := range toolResults {
-			stepContent = append(stepContent, result)
+		for _, tr := range toolResults {
+			stepContent = append(stepContent, tr)
+			for _, obs := range a.settings.toolResultObservers {
+				obs.OnReActToolResult(ctx, len(steps), tr)
+			}
 		}
 		currentStepMessages := toResponseMessages(stepContent)
 		responseMessages = append(responseMessages, currentStepMessages...)
@@ -504,6 +515,11 @@ func (a *agent) Generate(ctx context.Context, opts AgentCall) (*AgentResult, err
 			Messages: currentStepMessages,
 		}
 		steps = append(steps, stepResult)
+
+		for _, obs := range a.settings.stepObservers {
+			obs.OnReActStep(ctx, len(steps)-1, stepResult)
+		}
+
 		shouldStop := isStopConditionMet(opts.StopWhen, steps)
 
 		if shouldStop || err != nil || len(stepToolCalls) == 0 || result.FinishReason != FinishReasonToolCalls {
@@ -865,7 +881,10 @@ func (a *agent) Stream(ctx context.Context, opts AgentStreamCall) (*AgentResult,
 		steps = append(steps, result.StepResult)
 		totalUsage = addUsage(totalUsage, result.StepResult.Usage)
 
-		// Call step finished callback
+		for _, obs := range a.settings.stepObservers {
+			obs.OnReActStep(ctx, len(steps)-1, result.StepResult)
+		}
+
 		if opts.OnStepFinish != nil {
 			_ = opts.OnStepFinish(result.StepResult)
 		}
@@ -1095,6 +1114,39 @@ func WithOnRetry(callback OnRetryCallback) AgentOption {
 	}
 }
 
+// WithToolRuntime sets a custom ToolRuntime (DAG, parallel, offloading, etc.)
+// that replaces the default sequential tool execution. When set, the agent
+// delegates all tool execution to this runtime.
+func WithToolRuntime(rt ToolRuntime) AgentOption {
+	return func(s *agentSettings) {
+		s.toolRuntime = rt
+	}
+}
+
+// WithTransitionObserver appends a ReActTransitionObserver that fires on
+// every FSM state transition during Generate/Stream.
+func WithTransitionObserver(o ReActTransitionObserver) AgentOption {
+	return func(s *agentSettings) {
+		s.transitionObservers = append(s.transitionObservers, o)
+	}
+}
+
+// WithStepObserver appends a ReActStepObserver that fires after each
+// completed step.
+func WithStepObserver(o ReActStepObserver) AgentOption {
+	return func(s *agentSettings) {
+		s.stepObservers = append(s.stepObservers, o)
+	}
+}
+
+// WithToolResultObserver appends a ReActToolResultObserver that fires for
+// every tool result produced during execution.
+func WithToolResultObserver(o ReActToolResultObserver) AgentOption {
+	return func(s *agentSettings) {
+		s.toolResultObservers = append(s.toolResultObservers, o)
+	}
+}
+
 // processStepStream processes a single step's stream and returns the step result.
 func (a *agent) processStepStream(ctx context.Context, stream StreamResponse, opts AgentStreamCall, _ []StepResult, stepTools []AgentTool) (stepExecutionResult, error) {
 	var stepContent []Content
@@ -1112,12 +1164,14 @@ func (a *agent) processStepStream(ctx context.Context, stream StreamResponse, op
 	}
 	activeReasoningContent := make(map[string]reasoningContent)
 
-	// Set up concurrent tool execution
+	useRuntimeBatch := a.settings.toolRuntime != nil
+
+	// Set up concurrent tool execution (used only when no ToolRuntime is set)
 	type toolExecutionRequest struct {
 		toolCall ToolCallContent
 		parallel bool
 	}
-	toolChan := make(chan toolExecutionRequest, 10)
+	var toolChan chan toolExecutionRequest
 	var toolExecutionWg sync.WaitGroup
 	var toolStateMu sync.Mutex
 	toolResults := make([]ToolResultContent, 0)
@@ -1129,17 +1183,32 @@ func (a *agent) processStepStream(ctx context.Context, stream StreamResponse, op
 		toolMap[tool.Info().Name] = tool
 	}
 
-	// Semaphores for controlling parallelism
-	parallelSem := make(chan struct{}, 5)
-	var sequentialMu sync.Mutex
+	if !useRuntimeBatch {
+		toolChan = make(chan toolExecutionRequest, 10)
 
-	// Single coordinator goroutine that dispatches tools
-	toolExecutionWg.Go(func() {
-		for req := range toolChan {
-			if req.parallel {
-				parallelSem <- struct{}{}
-				toolExecutionWg.Go(func() {
-					defer func() { <-parallelSem }()
+		// Semaphores for controlling parallelism
+		parallelSem := make(chan struct{}, 5)
+		var sequentialMu sync.Mutex
+
+		// Single coordinator goroutine that dispatches tools
+		toolExecutionWg.Go(func() {
+			for req := range toolChan {
+				if req.parallel {
+					parallelSem <- struct{}{}
+					toolExecutionWg.Go(func() {
+						defer func() { <-parallelSem }()
+						result, isCriticalError := a.executeSingleTool(ctx, toolMap, req.toolCall, opts.OnToolResult)
+						toolStateMu.Lock()
+						toolResults = append(toolResults, result)
+						if isCriticalError && toolExecutionErr == nil {
+							if errorResult, ok := result.Result.(ToolResultOutputContentError); ok && errorResult.Error != nil {
+								toolExecutionErr = errorResult.Error
+							}
+						}
+						toolStateMu.Unlock()
+					})
+				} else {
+					sequentialMu.Lock()
 					result, isCriticalError := a.executeSingleTool(ctx, toolMap, req.toolCall, opts.OnToolResult)
 					toolStateMu.Lock()
 					toolResults = append(toolResults, result)
@@ -1149,22 +1218,11 @@ func (a *agent) processStepStream(ctx context.Context, stream StreamResponse, op
 						}
 					}
 					toolStateMu.Unlock()
-				})
-			} else {
-				sequentialMu.Lock()
-				result, isCriticalError := a.executeSingleTool(ctx, toolMap, req.toolCall, opts.OnToolResult)
-				toolStateMu.Lock()
-				toolResults = append(toolResults, result)
-				if isCriticalError && toolExecutionErr == nil {
-					if errorResult, ok := result.Result.(ToolResultOutputContentError); ok && errorResult.Error != nil {
-						toolExecutionErr = errorResult.Error
-					}
+					sequentialMu.Unlock()
 				}
-				toolStateMu.Unlock()
-				sequentialMu.Unlock()
 			}
-		}
-	})
+		})
+	}
 
 	// Process stream parts
 	for part := range stream {
@@ -1320,16 +1378,14 @@ func (a *agent) processStepStream(ctx context.Context, stream StreamResponse, op
 				}
 			}
 
-			// Determine if tool can run in parallel
-			isParallel := false
-			if tool, exists := toolMap[validatedToolCall.ToolName]; exists {
-				isParallel = tool.Info().Parallel
+			if !useRuntimeBatch {
+				isParallel := false
+				if tool, exists := toolMap[validatedToolCall.ToolName]; exists {
+					isParallel = tool.Info().Parallel
+				}
+				toolChan <- toolExecutionRequest{toolCall: validatedToolCall, parallel: isParallel}
 			}
 
-			// Send tool call to execution channel
-			toolChan <- toolExecutionRequest{toolCall: validatedToolCall, parallel: isParallel}
-
-			// Clean up active tool call
 			delete(activeToolCalls, part.ID)
 
 		case StreamPartTypeSource:
@@ -1364,19 +1420,26 @@ func (a *agent) processStepStream(ctx context.Context, stream StreamResponse, op
 		}
 	}
 
-	// Close the tool execution channel and wait for all executions to complete
-	close(toolChan)
-	toolExecutionWg.Wait()
-
-	// Check for tool execution errors
-	if toolExecutionErr != nil {
-		return stepExecutionResult{}, toolExecutionErr
+	if useRuntimeBatch {
+		if len(stepToolCalls) > 0 {
+			var err error
+			toolResults, err = a.settings.toolRuntime.Execute(ctx, stepTools, stepToolCalls, opts.OnToolResult)
+			if err != nil {
+				return stepExecutionResult{}, err
+			}
+		}
+	} else {
+		close(toolChan)
+		toolExecutionWg.Wait()
+		if toolExecutionErr != nil {
+			return stepExecutionResult{}, toolExecutionErr
+		}
 	}
 
-	// Add tool results to content if any
-	if len(toolResults) > 0 {
-		for _, result := range toolResults {
-			stepContent = append(stepContent, result)
+	for _, tr := range toolResults {
+		stepContent = append(stepContent, tr)
+		for _, obs := range a.settings.toolResultObservers {
+			obs.OnReActToolResult(ctx, 0, tr)
 		}
 	}
 
diff --git a/internal/fantasy/react_fsm.go b/internal/fantasy/react_fsm.go
new file mode 100644
index 000000000..35db33f5c
--- /dev/null
+++ b/internal/fantasy/react_fsm.go
@@ -0,0 +1,84 @@
+package fantasy
+
+import (
+	"sync"
+	"time"
+)
+
+// ReActState represents the execution state of the agent loop.
+//
+// NOTE: This is intentionally generic and lives in the vendored fantasy module.
+// Budgetsmith-specific persistence and instrumentation should be implemented via
+// interfaces/hooks in the Budgetsmith repo.
+type ReActState string
+
+const (
+	ReActStateInit           ReActState = "init"
+	ReActStatePrepareStep    ReActState = "prepare_step"
+	ReActStateLLMCall        ReActState = "llm_call"
+	ReActStateToolValidation ReActState = "tool_validation"
+	ReActStateToolExecution  ReActState = "tool_execution"
+	ReActStateAppendMessages ReActState = "append_messages"
+	ReActStateStopCheck      ReActState = "stop_check"
+	ReActStateDone           ReActState = "done"
+	ReActStateError          ReActState = "error"
+)
+
+// ReActTrigger is the discrete event that causes a state transition.
+type ReActTrigger string
+
+const (
+	ReActTriggerStart             ReActTrigger = "start"
+	ReActTriggerPrepared          ReActTrigger = "prepared"
+	ReActTriggerLLMResponded      ReActTrigger = "llm_responded"
+	ReActTriggerToolsValidated    ReActTrigger = "tools_validated"
+	ReActTriggerToolsExecuted     ReActTrigger = "tools_executed"
+	ReActTriggerMessagesAppended  ReActTrigger = "messages_appended"
+	ReActTriggerStopConditionMet  ReActTrigger = "stop_condition_met"
+	ReActTriggerContinue          ReActTrigger = "continue"
+	ReActTriggerFinished          ReActTrigger = "finished"
+	ReActTriggerErrored           ReActTrigger = "errored"
+	ReActTriggerRecoveredContinue ReActTrigger = "recovered_continue"
+)
+
+// ReActTransition is a single transition taken by the agent loop.
+type ReActTransition struct {
+	From      ReActState     `json:"from"`
+	To        ReActState     `json:"to"`
+	Trigger   ReActTrigger   `json:"trigger"`
+	At        time.Time      `json:"at"`
+	StepIndex int            `json:"step_index"`
+	Meta      map[string]any `json:"meta,omitempty"`
+	Error     string         `json:"error,omitempty"`
+}
+
+// ReActTransitionLog is an append-only log of state transitions.
+// It is safe for concurrent use.
+type ReActTransitionLog struct {
+	mu   sync.Mutex
+	list []ReActTransition
+}
+
+func NewReActTransitionLog() *ReActTransitionLog {
+	return &ReActTransitionLog{}
+}
+
+func (l *ReActTransitionLog) Append(t ReActTransition) {
+	if l == nil {
+		return
+	}
+	l.mu.Lock()
+	defer l.mu.Unlock()
+	l.list = append(l.list, t)
+}
+
+func (l *ReActTransitionLog) Snapshot() []ReActTransition {
+	if l == nil {
+		return nil
+	}
+	l.mu.Lock()
+	defer l.mu.Unlock()
+	out := make([]ReActTransition, len(l.list))
+	copy(out, l.list)
+	return out
+}
diff --git a/internal/fantasy/react_fsm_machine.go b/internal/fantasy/react_fsm_machine.go
new file mode 100644
index 000000000..980a2aeac
--- /dev/null
+++ b/internal/fantasy/react_fsm_machine.go
@@ -0,0 +1,121 @@
+package fantasy
+
+import (
+	"context"
+	"time"
+
+	"github.com/qmuntal/stateless"
+)
+
+// reactFSM is a thin wrapper around a stateless.StateMachine that emits
+// transitions to a log and an optional observer.
+//
+// TODO: For now, this is used by Agent.Generate (Generate-first). Streaming parity is
+// implemented later.
+type reactFSM struct {
+	sm       *stateless.StateMachine
+	log      *ReActTransitionLog
+	observer ReActTransitionObserver
+
+	// stepIndex is a pointer to the current step index for the in-flight call.
+	// It is intentionally owned by the caller; transitions capture its value at
+	// emission time.
+	stepIndex *int
+}
+
+func newReActFSM(observer ReActTransitionObserver, stepIndex *int) *reactFSM {
+	f := &reactFSM{
+		sm:        stateless.NewStateMachine(ReActStateInit),
+		log:       NewReActTransitionLog(),
+		observer:  observer,
+		stepIndex: stepIndex,
+	}
+
+	// Be permissive: instrumentation should not break core behavior.
+	f.sm.OnUnhandledTrigger(func(context.Context, stateless.State, stateless.Trigger, []string) error {
+		return nil
+	})
+
+	// Emit transitions.
+	f.sm.OnTransitioned(func(ctx context.Context, tr stateless.Transition) {
+		t := ReActTransition{
+			At: time.Now().UTC(),
+		}
+		if from, ok := tr.Source.(ReActState); ok {
+			t.From = from
+		}
+		if to, ok := tr.Destination.(ReActState); ok {
+			t.To = to
+		}
+		if trig, ok := tr.Trigger.(ReActTrigger); ok {
+			t.Trigger = trig
+		}
+		if f.stepIndex != nil {
+			t.StepIndex = *f.stepIndex
+		}
+
+		f.log.Append(t)
+		if f.observer != nil {
+			f.observer.OnReActTransition(ctx, t)
+		}
+	})
+
+	// State graph for Generate().
+	f.configure()
+
+	return f
+}
+
+func (f *reactFSM) configure() {
+	if f == nil || f.sm == nil {
+		return
+	}
+
+	f.sm.Configure(ReActStateInit).
+		Permit(ReActTriggerStart, ReActStatePrepareStep).
+		Permit(ReActTriggerErrored, ReActStateError)
+
+	f.sm.Configure(ReActStatePrepareStep).
+		Permit(ReActTriggerPrepared, ReActStateLLMCall).
+		Permit(ReActTriggerErrored, ReActStateError)
+
+	f.sm.Configure(ReActStateLLMCall).
+		Permit(ReActTriggerLLMResponded, ReActStateToolValidation).
+		Permit(ReActTriggerErrored, ReActStateError)
+
+	f.sm.Configure(ReActStateToolValidation).
+		Permit(ReActTriggerToolsValidated, ReActStateToolExecution).
+		Permit(ReActTriggerErrored, ReActStateError)
+
+	f.sm.Configure(ReActStateToolExecution).
+		Permit(ReActTriggerToolsExecuted, ReActStateAppendMessages).
+		Permit(ReActTriggerErrored, ReActStateError)
+
+	f.sm.Configure(ReActStateAppendMessages).
+		Permit(ReActTriggerMessagesAppended, ReActStateStopCheck).
+		Permit(ReActTriggerErrored, ReActStateError)
+
+	f.sm.Configure(ReActStateStopCheck).
+		Permit(ReActTriggerStopConditionMet, ReActStateDone).
+		Permit(ReActTriggerFinished, ReActStateDone).
+		Permit(ReActTriggerContinue, ReActStatePrepareStep).
+		Permit(ReActTriggerErrored, ReActStateError)
+
+	f.sm.Configure(ReActStateError).
+		Permit(ReActTriggerFinished, ReActStateDone).
+		Permit(ReActTriggerRecoveredContinue, ReActStatePrepareStep)
+}
+
+func (f *reactFSM) Fire(ctx context.Context, trigger ReActTrigger) {
+	if f == nil || f.sm == nil {
+		return
+	}
+	_ = f.sm.FireCtx(ctx, trigger)
+}
+
+func (f *reactFSM) SnapshotTransitions() []ReActTransition {
+	if f == nil {
+		return nil
+	}
+	return f.log.Snapshot()
+}
diff --git a/internal/fantasy/react_fsm_observer.go b/internal/fantasy/react_fsm_observer.go
new file mode 100644
index 000000000..e5dad4515
--- /dev/null
+++ b/internal/fantasy/react_fsm_observer.go
@@ -0,0 +1,19 @@
+package fantasy
+
+import "context"
+
+// ReActTransitionObserver can observe transitions taken by the ReAct state machine.
+//
+// This is a generic hook intended for callers (like Budgetsmith) to persist or
+// debug agent execution without coupling the fantasy module to any particular
+// storage layer.
+type ReActTransitionObserver interface {
+	OnReActTransition(ctx context.Context, t ReActTransition)
+}
+
+// ReActTransitionObserverFunc is a functional adapter for ReActTransitionObserver.
+type ReActTransitionObserverFunc func(ctx context.Context, t ReActTransition)
+
+func (f ReActTransitionObserverFunc) OnReActTransition(ctx context.Context, t ReActTransition) {
+	f(ctx, t)
+}
diff --git a/internal/fantasy/react_step_observer.go b/internal/fantasy/react_step_observer.go
new file mode 100644
index 000000000..4190dbda4
--- /dev/null
+++ b/internal/fantasy/react_step_observer.go
@@ -0,0 +1,18 @@
+package fantasy
+
+import "context"
+
+// ReActStepObserver can observe the completion of each agent step in Generate().
+//
+// This is primarily intended for callers to persist step snapshots or to build
+// debugging/telemetry around multi-step execution.
+type ReActStepObserver interface {
+	OnReActStep(ctx context.Context, stepIndex int, step StepResult)
+}
+
+// ReActStepObserverFunc is a functional adapter for ReActStepObserver.
+type ReActStepObserverFunc func(ctx context.Context, stepIndex int, step StepResult)
+
+func (f ReActStepObserverFunc) OnReActStep(ctx context.Context, stepIndex int, step StepResult) {
+	f(ctx, stepIndex, step)
+}
diff --git a/internal/fantasy/react_tool_result_observer.go b/internal/fantasy/react_tool_result_observer.go
new file mode 100644
index 000000000..a70bd7898
--- /dev/null
+++ b/internal/fantasy/react_tool_result_observer.go
@@ -0,0 +1,19 @@
+package fantasy
+
+import "context"
+
+// ReActToolResultObserver can observe tool results produced during Generate().
+//
+// This hook is intended for callers to persist tool outputs (e.g., filesystem
+// offloading + DB indexing) without coupling the fantasy module to a storage
+// layer.
+type ReActToolResultObserver interface {
+	OnReActToolResult(ctx context.Context, stepIndex int, result ToolResultContent)
+}
+
+// ReActToolResultObserverFunc is a functional adapter for ReActToolResultObserver.
+type ReActToolResultObserverFunc func(ctx context.Context, stepIndex int, result ToolResultContent)
+
+func (f ReActToolResultObserverFunc) OnReActToolResult(ctx context.Context, stepIndex int, result ToolResultContent) {
+	f(ctx, stepIndex, result)
+}
diff --git a/internal/fantasy/tool_dag.go b/internal/fantasy/tool_dag.go
new file mode 100644
index 000000000..e548fd9ef
--- /dev/null
+++ b/internal/fantasy/tool_dag.go
@@ -0,0 +1,148 @@
+package fantasy
+
+import (
+	"encoding/json"
+	"errors"
+	"fmt"
+	"strings"
+)
+
+// ToolDAGNode is a node in a tool execution dependency DAG.
+type ToolDAGNode struct {
+	ID           string
+	ToolCall     ToolCallContent
+	Dependencies []string
+}
+
+// ToolDAG is a dependency graph where edges point from dependency -> dependent.
+type ToolDAG struct {
+	Nodes map[string]*ToolDAGNode
+	Edges map[string][]string
+}
+
+// BuildToolDAG builds a dependency graph for tool calls by scanning JSON inputs
+// for $tool.<toolCallID> references.
+//
+// Supported reference forms:
+// - "$tool.<id>"
+// - "$tool.<id>.<jsonPath...>"
+func BuildToolDAG(toolCalls []ToolCallContent) (*ToolDAG, error) {
+	if len(toolCalls) == 0 {
+		return &ToolDAG{Nodes: map[string]*ToolDAGNode{}, Edges: map[string][]string{}}, nil
+	}
+
+	nodes := make(map[string]*ToolDAGNode, len(toolCalls))
+	for _, tc := range toolCalls {
+		if strings.TrimSpace(tc.ToolCallID) == "" {
+			return nil, errors.New("tool call id is empty")
+		}
+		if _, exists := nodes[tc.ToolCallID]; exists {
+			return nil, fmt.Errorf("duplicate tool call id: %s", tc.ToolCallID)
+		}
+		nodes[tc.ToolCallID] = &ToolDAGNode{
+			ID:           tc.ToolCallID,
+			ToolCall:     tc,
+			Dependencies: nil,
+		}
+	}
+
+	edges := make(map[string][]string, len(toolCalls))
+
+	for _, tc := range toolCalls {
+		deps, err := extractToolDependencies(tc.Input)
+		if err != nil {
+			return nil, fmt.Errorf("parse tool dependencies for %s: %w", tc.ToolCallID, err)
+		}
+
+		// Filter + validate deps.
+		filtered := make([]string, 0, len(deps))
+		seen := make(map[string]struct{}, len(deps))
+		for _, dep := range deps {
+			dep = strings.TrimSpace(dep)
+			if dep == "" || dep == tc.ToolCallID {
+				continue
+			}
+			if _, ok := nodes[dep]; !ok {
+				return nil, fmt.Errorf("tool call %s depends on unknown tool call id %s", tc.ToolCallID, dep)
+			}
+			if _, ok := seen[dep]; ok {
+				continue
+			}
+			seen[dep] = struct{}{}
+			filtered = append(filtered, dep)
+		}
+
+		nodes[tc.ToolCallID].Dependencies = filtered
+		for _, dep := range filtered {
+			edges[dep] = append(edges[dep], tc.ToolCallID)
+		}
+	}
+
+	return &ToolDAG{
+		Nodes: nodes,
+		Edges: edges,
+	}, nil
+}
+
+func extractToolDependencies(input string) ([]string, error) {
+	input = strings.TrimSpace(input)
+	if input == "" {
+		return nil, nil
+	}
+
+	var v any
+	if err := json.Unmarshal([]byte(input), &v); err != nil {
+		// If the tool input isn't valid JSON, treat it as having no dependencies.
+		return nil, nil
+	}
+
+	var out []string
+	walkJSON(v, func(s string) {
+		for _, id := range extractToolRefIDsFromString(s) {
+			out = append(out, id)
+		}
+	})
+	return out, nil
+}
+
+func walkJSON(v any, visitString func(string)) {
+	switch t := v.(type) {
+	case map[string]any:
+		for _, vv := range t {
+			walkJSON(vv, visitString)
+		}
+	case []any:
+		for _, vv := range t {
+			walkJSON(vv, visitString)
+		}
+	case string:
+		visitString(t)
+	default:
+		// ignore numbers/bools/null
+	}
+}
+
+func extractToolRefIDsFromString(s string) []string {
+	// Minimal and strict: only consider strings that start with "$tool.".
+	// More complex embedding (e.g. "... $tool.x ...") can be added later if needed.
+	s = strings.TrimSpace(s)
+	if !strings.HasPrefix(s, "$tool.") {
+		return nil
+	}
+
+	rest := strings.TrimPrefix(s, "$tool.")
+	if rest == "" {
+		return nil
+	}
+
+	// ID is the first path segment.
+	id := rest
+	if idx := strings.IndexByte(rest, '.'); idx >= 0 {
+		id = rest[:idx]
+	}
+	id = strings.TrimSpace(id)
+	if id == "" {
+		return nil
+	}
+	return []string{id}
+}
diff --git a/internal/fantasy/tool_runtime.go b/internal/fantasy/tool_runtime.go
new file mode 100644
index 000000000..7b33a4d8c
--- /dev/null
+++ b/internal/fantasy/tool_runtime.go
@@ -0,0 +1,32 @@
+package fantasy
+
+import "context"
+
+// ToolRuntime controls how tool calls are executed (sequential, parallel, DAG, etc).
+//
+// The default behavior is sequential execution identical to the legacy agent
+// implementation.
+type ToolRuntime interface {
+	Execute(ctx context.Context, tools []AgentTool, toolCalls []ToolCallContent, toolResultCallback func(result ToolResultContent) error) ([]ToolResultContent, error)
+}
+
+// ToolRuntimeMetrics captures lightweight execution counters.
+type ToolRuntimeMetrics struct {
+	Queued           int
+	InFlightParallel int
+	BarrierWaits     int
+}
+
+// ToolRuntimeLogEvent is an optional structured log emitted by runtimes.
+type ToolRuntimeLogEvent struct {
+	Event      string
+	ToolCallID string
+	ToolName   string
+	Detail     string
+}
+
+// ToolRuntimeMetricsFunc emits metrics.
+type ToolRuntimeMetricsFunc = func(ToolRuntimeMetrics)
+
+// ToolRuntimeLogFunc emits structured log events.
+type ToolRuntimeLogFunc = func(ToolRuntimeLogEvent)
diff --git a/internal/fantasy/tool_runtime_dag.go b/internal/fantasy/tool_runtime_dag.go
new file mode 100644
index 000000000..2eb04a0b5
--- /dev/null
+++ b/internal/fantasy/tool_runtime_dag.go
@@ -0,0 +1,363 @@
+package fantasy
+
+import (
+	"context"
+	"encoding/json"
+	"errors"
+	"fmt"
+	"sort"
+	"strconv"
+	"strings"
+	"sync"
+)
+
+// DAGToolRuntime executes tool calls according to an explicit dependency DAG.
+//
+// Dependencies are discovered via BuildToolDAG (using $tool.<id> references in
+// JSON tool inputs). Independent nodes may be executed concurrently, subject to
+// MaxConcurrency and tool parallel-safety.
+type DAGToolRuntime struct {
+	MaxConcurrency int
+
+	// Metrics emits optional runtime metrics.
+	Metrics ToolRuntimeMetricsFunc
+
+	// Log emits structured runtime events.
+	Log ToolRuntimeLogFunc
+}
+
+func (r DAGToolRuntime) Execute(ctx context.Context, tools []AgentTool, toolCalls []ToolCallContent, toolResultCallback func(result ToolResultContent) error) ([]ToolResultContent, error) {
+	if len(toolCalls) == 0 {
+		return nil, nil
+	}
+
+	metrics := func(m ToolRuntimeMetrics) {
+		if r.Metrics != nil {
+			r.Metrics(m)
+		}
+	}
+	logEvent := func(e ToolRuntimeLogEvent) {
+		if r.Log != nil {
+			r.Log(e)
+		}
+	}
+
+	maxConc := r.MaxConcurrency
+	if maxConc <= 0 {
+		maxConc = 4
+	}
+
+	dag, err := BuildToolDAG(toolCalls)
+	if err != nil {
+		return nil, err
+	}
+
+	toolMap := make(map[string]AgentTool, len(tools))
+	for _, t := range tools {
+		toolMap[t.Info().Name] = t
+	}
+
+	idToIndex := make(map[string]int, len(toolCalls))
+	for i, tc := range toolCalls {
+		idToIndex[tc.ToolCallID] = i
+	}
+
+	indegree := make(map[string]int, len(dag.Nodes))
+	for id, n := range dag.Nodes {
+		indegree[id] = len(n.Dependencies)
+	}
+
+	executed := make(map[string]bool, len(dag.Nodes))
+	doneResults := make(map[string]ToolResultContent, len(dag.Nodes))
+	results := make([]ToolResultContent, len(toolCalls))
+
+	isParallelSafeTool := func(tc ToolCallContent) bool {
+		if tc.Invalid {
+			return false
+		}
+		t, ok := toolMap[tc.ToolName]
+		if !ok {
+			return false
+		}
+		return t.Info().Parallel
+	}
+
+	remaining := len(dag.Nodes)
+	barrierWaits := 0
+	for remaining > 0 {
+		var readyIDs []string
+		for id := range dag.Nodes {
+			if executed[id] {
+				continue
+			}
+			if indegree[id] == 0 {
+				readyIDs = append(readyIDs, id)
+			}
+		}
+
+		if len(readyIDs) == 0 {
+			return nil, errors.New("tool dependency cycle detected (no ready nodes)")
+		}
+
+		sort.Slice(readyIDs, func(i, j int) bool {
+			return idToIndex[readyIDs[i]] < idToIndex[readyIDs[j]]
+		})
+
+		metrics(ToolRuntimeMetrics{
+			Queued:           remaining,
+			InFlightParallel: 0,
+			BarrierWaits:     barrierWaits,
+		})
+
+		// If any ready node is non-parallel-safe, execute the earliest one as a barrier.
+		barrierID := ""
+		for _, id := range readyIDs {
+			n := dag.Nodes[id]
+			if n == nil {
+				continue
+			}
+			if !isParallelSafeTool(n.ToolCall) {
+				barrierID = id
+				break
+			}
+		}
+
+		if barrierID != "" {
+			n := dag.Nodes[barrierID]
+			barrierWaits++
+			logEvent(ToolRuntimeLogEvent{Event: "barrier_start", ToolCallID: n.ToolCall.ToolCallID, ToolName: n.ToolCall.ToolName})
+			res, critical, execErr := executeDAGNode(ctx, toolMap, n.ToolCall, doneResults)
+			if execErr != nil {
+				return nil, execErr
+			}
+			if toolResultCallback != nil {
+				_ = toolResultCallback(res)
+			}
+			logEvent(ToolRuntimeLogEvent{Event: "barrier_finish", ToolCallID: n.ToolCall.ToolCallID, ToolName: n.ToolCall.ToolName})
+			if critical {
+				if errorResult, ok := res.Result.(ToolResultOutputContentError); ok && errorResult.Error != nil {
+					return nil, errorResult.Error
+				}
+				return nil, errors.New("critical tool error")
+			}
+
+			executed[barrierID] = true
+			doneResults[barrierID] = res
+			results[idToIndex[barrierID]] = res
+			remaining--
+
+			for _, dep := range dag.Edges[barrierID] {
+				indegree[dep]--
+			}
+			continue
+		}
+
+		// Parallel wave: execute up to maxConc ready nodes concurrently.
+		if len(readyIDs) > maxConc {
+			readyIDs = readyIDs[:maxConc]
+		}
+
+		type outcome struct {
+			id       string
+			res      ToolResultContent
+			critical bool
+			execErr  error
+		}
+
+		outcomes := make([]outcome, len(readyIDs))
+		var wg sync.WaitGroup
+		wg.Add(len(readyIDs))
+		for i, id := range readyIDs {
+			i, id := i, id
+			tc := dag.Nodes[id].ToolCall
+			go func() {
+				defer wg.Done()
+				logEvent(ToolRuntimeLogEvent{Event: "dispatch", ToolCallID: tc.ToolCallID, ToolName: tc.ToolName})
+				res, critical, execErr := executeDAGNode(ctx, toolMap, tc, doneResults)
+				outcomes[i] = outcome{
+					id:       id,
+					res:      res,
+					critical: critical,
+					execErr:  execErr,
+				}
+				logEvent(ToolRuntimeLogEvent{Event: "finish", ToolCallID: tc.ToolCallID, ToolName: tc.ToolName})
+			}()
+		}
+		wg.Wait()
+
+		// Commit results in deterministic order, and abort on first critical error in that order.
+		for i := range outcomes {
+			o := outcomes[i]
+			if o.execErr != nil {
+				return nil, o.execErr
+			}
+			if toolResultCallback != nil {
+				_ = toolResultCallback(o.res)
+			}
+			if o.critical {
+				if errorResult, ok := o.res.Result.(ToolResultOutputContentError); ok && errorResult.Error != nil {
+					return nil, errorResult.Error
+				}
+				return nil, errors.New("critical tool error")
+			}
+
+			executed[o.id] = true
+			doneResults[o.id] = o.res
+			results[idToIndex[o.id]] = o.res
+			remaining--
+
+			for _, dep := range dag.Edges[o.id] {
+				indegree[dep]--
+			}
+		}
+	}
+
+	return results, nil
+}
+
+func executeDAGNode(ctx context.Context, toolMap map[string]AgentTool, toolCall ToolCallContent, prior map[string]ToolResultContent) (ToolResultContent, bool, error) {
+	resolvedInput, err := resolveToolRefsInInput(toolCall.Input, prior)
+	if err != nil {
+		return ToolResultContent{}, false, err
+	}
+	tc := toolCall
+	tc.Input = resolvedInput
+	res, critical := executeSingleToolCompat(ctx, toolMap, tc, nil)
+	return res, critical, nil
+}
+
+func resolveToolRefsInInput(input string, results map[string]ToolResultContent) (string, error) {
+	input = strings.TrimSpace(input)
+	if input == "" {
+		return input, nil
+	}
+
+	var v any
+	if err := json.Unmarshal([]byte(input), &v); err != nil {
+		// Not JSON; nothing to resolve.
+		return input, nil
+	}
+
+	updated, err := rewriteJSONToolRefs(v, results)
+	if err != nil {
+		return "", err
+	}
+	b, err := json.Marshal(updated)
+	if err != nil {
+		return "", err
+	}
+	return string(b), nil
+}
+
+func rewriteJSONToolRefs(v any, results map[string]ToolResultContent) (any, error) {
+	switch t := v.(type) {
+	case map[string]any:
+		out := make(map[string]any, len(t))
+		for k, vv := range t {
+			rv, err := rewriteJSONToolRefs(vv, results)
+			if err != nil {
+				return nil, err
+			}
+			out[k] = rv
+		}
+		return out, nil
+	case []any:
+		out := make([]any, len(t))
+		for i, vv := range t {
+			rv, err := rewriteJSONToolRefs(vv, results)
+			if err != nil {
+				return nil, err
+			}
+			out[i] = rv
+		}
+		return out, nil
+	case string:
+		s := strings.TrimSpace(t)
+		if !strings.HasPrefix(s, "$tool.") {
+			return t, nil
+		}
+		val, err := resolveToolRefValue(s, results)
+		if err != nil {
+			return nil, err
+		}
+		return val, nil
+	default:
+		return v, nil
+	}
+}
+
+func resolveToolRefValue(ref string, results map[string]ToolResultContent) (any, error) {
+	rest := strings.TrimPrefix(strings.TrimSpace(ref), "$tool.")
+	if rest == "" {
+		return nil, fmt.Errorf("invalid tool ref: %q", ref)
+	}
+
+	parts := strings.Split(rest, ".")
+	depID := strings.TrimSpace(parts[0])
+	if depID == "" {
+		return nil, fmt.Errorf("invalid tool ref: %q", ref)
+	}
+
+	r, ok := results[depID]
+	if !ok {
+		return nil, fmt.Errorf("tool ref %q not available yet", ref)
+	}
+
+	base := ""
+	switch v := r.Result.(type) {
+	case ToolResultOutputContentText:
+		base = v.Text
+	case ToolResultOutputContentMedia:
+		if v.Text != "" {
+			base = v.Text
+		} else {
+			base = v.Data
+		}
+	case ToolResultOutputContentError:
+		if v.Error != nil {
+			base = v.Error.Error()
+		}
+	default:
+		base = fmt.Sprint(r.Result)
+	}
+
+	// No path: substitute as string.
+	if len(parts) == 1 {
+		return base, nil
+	}
+
+	// Path resolution: interpret base as JSON and walk.
+	var cur any
+	if err := json.Unmarshal([]byte(base), &cur); err != nil {
+		return nil, fmt.Errorf("tool ref %q path requires JSON output, got non-JSON", ref)
+	}
+
+	for _, seg := range parts[1:] {
+		seg = strings.TrimSpace(seg)
+		if seg == "" {
+			return nil, fmt.Errorf("invalid tool ref path in %q", ref)
+		}
+
+		switch typed := cur.(type) {
+		case map[string]any:
+			nv, ok := typed[seg]
+			if !ok {
+				return nil, fmt.Errorf("tool ref %q missing key %q", ref, seg)
+			}
+			cur = nv
+		case []any:
+			idx, err := strconv.Atoi(seg)
+			if err != nil {
+				return nil, fmt.Errorf("tool ref %q array segment %q is not an int", ref, seg)
+			}
+			if idx < 0 || idx >= len(typed) {
+				return nil, fmt.Errorf("tool ref %q array index %d out of range", ref, idx)
+			}
+			cur = typed[idx]
+		default:
+			return nil, fmt.Errorf("tool ref %q path segment %q on non-container", ref, seg)
+		}
+	}
+
+	return cur, nil
+}
diff --git a/internal/fantasy/tool_runtime_dag_test.go b/internal/fantasy/tool_runtime_dag_test.go
new file mode 100644
index 000000000..ffbc17168
--- /dev/null
+++ b/internal/fantasy/tool_runtime_dag_test.go
@@ -0,0 +1,214 @@
+package fantasy
+
+import (
+	"context"
+	"fmt"
+	"sync"
+	"sync/atomic"
+	"testing"
+	"time"
+
+	"github.com/stretchr/testify/require"
+)
+
+func TestDAGToolRuntime_IndependentToolsRunConcurrently(t *testing.T) {
+	t.Parallel()
+
+	started := make(chan string, 2)
+	release := make(chan struct{})
+
+	tool := NewParallelAgentTool("p", "parallel tool", func(ctx context.Context, _ struct{}, call ToolCall) (ToolResponse, error) {
+		select {
+		case started <- call.ID:
+		default:
+		}
+		select {
+		case <-ctx.Done():
+			return NewTextErrorResponse(ctx.Err().Error()), nil
+		case <-release:
+		}
+		return NewTextResponse(call.ID), nil
+	})
+
+	rt := DAGToolRuntime{MaxConcurrency: 2}
+
+	toolCalls := []ToolCallContent{
+		{ToolCallID: "a", ToolName: "p", Input: `{}`},
+		{ToolCallID: "b", ToolName: "p", Input: `{}`},
+	}
+
+	var (
+		res []ToolResultContent
+		err error
+		wg  sync.WaitGroup
+	)
+	wg.Add(1)
+	go func() {
+		defer wg.Done()
+		res, err = rt.Execute(context.Background(), []AgentTool{tool}, toolCalls, nil)
+	}()
+
+	// Both tools should start before we release.
+	got1 := <-started
+	got2 := <-started
+	require.NotEqual(t, got1, got2)
+
+	close(release)
+	wg.Wait()
+
+	require.NoError(t, err)
+	require.Len(t, res, 2)
+}
+
+func TestDAGToolRuntime_DependenciesWaitAndInputIsResolved(t *testing.T) {
+	t.Parallel()
+
+	startA := make(chan struct{}, 1)
+	startB := make(chan struct{}, 1)
+	releaseA := make(chan struct{})
+
+	toolA := NewParallelAgentTool("a", "tool a", func(ctx context.Context, _ struct{}, _ ToolCall) (ToolResponse, error) {
+		startA <- struct{}{}
+		select {
+		case <-ctx.Done():
+			return NewTextErrorResponse(ctx.Err().Error()), nil
+		case <-releaseA:
+		}
+		// JSON output that downstream can path into.
+		return NewTextResponse(`{"x":1}`), nil
+	})
+
+	type bInput struct {
+		Val int `json:"val"`
+	}
+	toolB := NewParallelAgentTool("b", "tool b", func(_ context.Context, in bInput, _ ToolCall) (ToolResponse, error) {
+		startB <- struct{}{}
+		return NewTextResponse(string(rune('0' + in.Val))), nil
+	})
+
+	rt := DAGToolRuntime{MaxConcurrency: 4}
+	toolCalls := []ToolCallContent{
+		{ToolCallID: "callA", ToolName: "a", Input: `{}`},
+		{ToolCallID: "callB", ToolName: "b", Input: `{"val":"$tool.callA.x"}`},
+	}
+
+	var (
+		res []ToolResultContent
+		err error
+		wg  sync.WaitGroup
+	)
+	wg.Add(1)
+	go func() {
+		defer wg.Done()
+		res, err = rt.Execute(context.Background(), []AgentTool{toolA, toolB}, toolCalls, nil)
+	}()
+
+	<-startA
+
+	// B must not start until A is released.
+	select {
+	case <-startB:
+		t.Fatalf("dependent tool started before dependency completed")
+	case <-time.After(30 * time.Millisecond):
+	}
+
+	close(releaseA)
+
+	<-startB
+	wg.Wait()
+
+	require.NoError(t, err)
+	require.Len(t, res, 2)
+
+	// B should have received val=1 and returned "1".
+	require.Equal(t, "callB", res[1].ToolCallID)
+	require.Equal(t, "1", res[1].Result.(ToolResultOutputContentText).Text)
+}
+
+func TestDAGToolRuntime_CycleDetected(t *testing.T) {
+	t.Parallel()
+
+	tool := NewParallelAgentTool("p", "tool", func(_ context.Context, _ struct{}, _ ToolCall) (ToolResponse, error) {
+		return NewTextResponse("ok"), nil
+	})
+
+	rt := DAGToolRuntime{MaxConcurrency: 4}
+	toolCalls := []ToolCallContent{
+		{ToolCallID: "a", ToolName: "p", Input: `{"x":"$tool.b"}`},
+		{ToolCallID: "b", ToolName: "p", Input: `{"x":"$tool.a"}`},
+	}
+
+	res, err := rt.Execute(context.Background(), []AgentTool{tool}, toolCalls, nil)
+	require.Error(t, err)
+	require.Nil(t, res)
+}
+
+func TestDAGToolRuntime_OnToolResultSerialized(t *testing.T) {
+	t.Parallel()
+
+	var inFlight atomic.Int32
+	var orderMu sync.Mutex
+	var order []string
+
+	tool := NewParallelAgentTool("p", "tool", func(_ context.Context, _ struct{}, call ToolCall) (ToolResponse, error) {
+		return NewTextResponse(call.ID), nil
+	})
+
+	toolCalls := []ToolCallContent{
+		{ToolCallID: "a", ToolName: "p", Input: `{}`},
+		{ToolCallID: "b", ToolName: "p", Input: `{}`},
+	}
+
+	rt := DAGToolRuntime{MaxConcurrency: 2}
+	cb := func(res ToolResultContent) error {
+		if inFlight.Add(1) != 1 {
+			return fmt.Errorf("callback executed concurrently")
+		}
+		orderMu.Lock()
+		order = append(order, res.ToolCallID)
+		orderMu.Unlock()
+		time.Sleep(5 * time.Millisecond)
+		inFlight.Add(-1)
+		return nil
+	}
+
+	res, err := rt.Execute(context.Background(), []AgentTool{tool}, toolCalls, cb)
+	require.NoError(t, err)
+	require.Len(t, res, 2)
+
+	orderMu.Lock()
+	defer orderMu.Unlock()
+	require.Equal(t, []string{"a", "b"}, order)
+}
+
+func TestDAGToolRuntime_MetricsAndLogHooks(t *testing.T) {
+	t.Parallel()
+
+	var metricsCalled bool
+	var logCalled bool
+
+	tool := NewParallelAgentTool("p", "tool", func(_ context.Context, _ struct{}, call ToolCall) (ToolResponse, error) {
+		return NewTextResponse(call.ID), nil
+	})
+
+	rt := DAGToolRuntime{
+		MaxConcurrency: 1,
+		Metrics: func(m ToolRuntimeMetrics) {
+			metricsCalled = true
+			require.GreaterOrEqual(t, m.Queued, 0)
+		},
+		Log: func(e ToolRuntimeLogEvent) {
+			logCalled = true
+			require.NotEmpty(t, e.Event)
+		},
+	}
+
+	toolCalls := []ToolCallContent{
+		{ToolCallID: "a", ToolName: "p", Input: `{}`},
+	}
+	res, err := rt.Execute(context.Background(), []AgentTool{tool}, toolCalls, nil)
+	require.NoError(t, err)
+	require.Len(t, res, 1)
+	require.True(t, metricsCalled)
+	require.True(t, logCalled)
+}
diff --git a/internal/fantasy/tool_runtime_parallel.go b/internal/fantasy/tool_runtime_parallel.go
new file mode 100644
index 000000000..711a3eafe
--- /dev/null
+++ b/internal/fantasy/tool_runtime_parallel.go
@@ -0,0 +1,214 @@
+package fantasy
+
+import (
+	"context"
+	"errors"
+	"sync"
+)
+
+// ParallelToolRuntime executes tool calls concurrently when tools opt-in via
+// ToolInfo.Parallel.
+//
+// Ordering is preserved: results are returned in the same order as toolCalls.
+// Non-parallel-safe tools act as barriers and run sequentially.
+type ParallelToolRuntime struct {
+	// MaxConcurrency limits concurrent tool execution within a parallel batch.
+	// If <= 0, a safe default is used.
+	MaxConcurrency int
+
+	// Metrics emits optional runtime metrics.
+	Metrics ToolRuntimeMetricsFunc
+
+	// Log emits structured runtime events.
+	Log ToolRuntimeLogFunc
+}
+
+func (r ParallelToolRuntime) Execute(ctx context.Context, tools []AgentTool, toolCalls []ToolCallContent, toolResultCallback func(result ToolResultContent) error) ([]ToolResultContent, error) {
+	if len(toolCalls) == 0 {
+		return nil, nil
+	}
+
+	metrics := func(m ToolRuntimeMetrics) {
+		if r.Metrics != nil {
+			r.Metrics(m)
+		}
+	}
+	logEvent := func(e ToolRuntimeLogEvent) {
+		if r.Log != nil {
+			r.Log(e)
+		}
+	}
+
+	maxConc := r.MaxConcurrency
+	if maxConc <= 0 {
+		maxConc = 4
+	}
+
+	// Quick tool lookup.
+	toolMap := make(map[string]AgentTool, len(tools))
+	for _, t := range tools {
+		toolMap[t.Info().Name] = t
+	}
+
+	results := make([]ToolResultContent, len(toolCalls))
+
+	isParallelSafe := func(tc ToolCallContent) bool {
+		if tc.Invalid {
+			return false
+		}
+		t, ok := toolMap[tc.ToolName]
+		if !ok {
+			return false
+		}
+		return t.Info().Parallel
+	}
+
+	sem := make(chan struct{}, maxConc)
+	inFlight := 0
+	barrierWaits := 0
+	i := 0
+	emit := func() {
+		metrics(ToolRuntimeMetrics{Queued: len(toolCalls) - i, InFlightParallel: inFlight, BarrierWaits: barrierWaits})
+	}
+	for i < len(toolCalls) {
+		if !isParallelSafe(toolCalls[i]) {
+			barrierWaits++
+			emit()
+			logEvent(ToolRuntimeLogEvent{Event: "barrier_start", ToolCallID: toolCalls[i].ToolCallID, ToolName: toolCalls[i].ToolName})
+			res, critical := executeSingleToolCompat(ctx, toolMap, toolCalls[i], toolResultCallback)
+			logEvent(ToolRuntimeLogEvent{Event: "barrier_finish", ToolCallID: toolCalls[i].ToolCallID, ToolName: toolCalls[i].ToolName})
+			results[i] = res
+			if critical {
+				if errorResult, ok := res.Result.(ToolResultOutputContentError); ok && errorResult.Error != nil {
+					return nil, errorResult.Error
+				}
+				return nil, errors.New("critical tool error")
+			}
+			i++
+			continue
+		}
+
+		// Collect a contiguous batch of parallel-safe tool calls.
+		start := i
+		for i < len(toolCalls) && isParallelSafe(toolCalls[i]) {
+			i++
+		}
+		end := i
+
+		type outcome struct {
+			res      ToolResultContent
+			critical bool
+		}
+		outcomes := make([]outcome, end-start)
+
+		var wg sync.WaitGroup
+		for bi := start; bi < end; bi++ {
+			localIndex := bi - start
+			tc := toolCalls[bi]
+			wg.Add(1)
+			go func() {
+				defer wg.Done()
+				logEvent(ToolRuntimeLogEvent{Event: "dispatch", ToolCallID: tc.ToolCallID, ToolName: tc.ToolName})
+				sem <- struct{}{}
+				inFlight++
+				emit()
+				defer func() {
+					<-sem
+					inFlight--
+					emit()
+				}()
+
+				res, critical := executeSingleToolCompat(ctx, toolMap, tc, nil)
+				outcomes[localIndex] = outcome{res: res, critical: critical}
+				logEvent(ToolRuntimeLogEvent{Event: "finish", ToolCallID: tc.ToolCallID, ToolName: tc.ToolName})
+			}()
+		}
+		wg.Wait()
+
+		// Emit callback and copy results in deterministic order.
+		for bi := start; bi < end; bi++ {
+			o := outcomes[bi-start]
+			results[bi] = o.res
+			if toolResultCallback != nil {
+				_ = toolResultCallback(o.res)
+			}
+			if o.critical {
+				if errorResult, ok := o.res.Result.(ToolResultOutputContentError); ok && errorResult.Error != nil {
+					return nil, errorResult.Error
+				}
+				return nil, errors.New("critical tool error")
+			}
+		}
+	}
+
+	return results, nil
+}
+
+// executeSingleToolCompat mirrors the legacy sequential agent tool execution
+// semantics, but is packaged as a helper so tool runtimes can share it.
+func executeSingleToolCompat(ctx context.Context, toolMap map[string]AgentTool, toolCall ToolCallContent, toolResultCallback func(result ToolResultContent) error) (ToolResultContent, bool) {
+	result := ToolResultContent{
+		ToolCallID:       toolCall.ToolCallID,
+		ToolName:         toolCall.ToolName,
+		ProviderExecuted: false,
+	}
+
+	// Skip invalid tool calls - create error result (not critical).
+	if toolCall.Invalid {
+		result.Result = ToolResultOutputContentError{
+			Error: toolCall.ValidationError,
+		}
+		if toolResultCallback != nil {
+			_ = toolResultCallback(result)
+		}
+		return result, false
+	}
+
+	tool, exists := toolMap[toolCall.ToolName]
+	if !exists {
+		result.Result = ToolResultOutputContentError{
+			Error: errors.New("Error: Tool not found: " + toolCall.ToolName),
+		}
+		if toolResultCallback != nil {
+			_ = toolResultCallback(result)
+		}
+		return result, false
+	}
+
+	toolResult, err := tool.Run(ctx, ToolCall{
+		ID:    toolCall.ToolCallID,
+		Name:  toolCall.ToolName,
+		Input: toolCall.Input,
+	})
+	if err != nil {
+		result.Result = ToolResultOutputContentError{
+			Error: err,
+		}
+		result.ClientMetadata = toolResult.Metadata
+		if toolResultCallback != nil {
+			_ = toolResultCallback(result)
+		}
+		return result, true
+	}
+
+	result.ClientMetadata = toolResult.Metadata
+	if toolResult.IsError {
+		result.Result = ToolResultOutputContentError{
+			Error: errors.New(toolResult.Content),
+		}
+	} else if toolResult.Type == "image" || toolResult.Type == "media" {
+		result.Result = ToolResultOutputContentMedia{
+			Data:      string(toolResult.Data),
+			MediaType: toolResult.MediaType,
+			Text:      toolResult.Content,
+		}
+	} else {
+		result.Result = ToolResultOutputContentText{
+			Text: toolResult.Content,
+		}
+	}
+	if toolResultCallback != nil {
+		_ = toolResultCallback(result)
+	}
+	return result, false
+}
diff --git a/internal/fantasy/tool_runtime_parallel_test.go b/internal/fantasy/tool_runtime_parallel_test.go
new file mode 100644
index 000000000..977a0ba85
--- /dev/null
+++ b/internal/fantasy/tool_runtime_parallel_test.go
@@ -0,0 +1,156 @@
+package fantasy
+
+import (
+	"context"
+	"errors"
+	"sync"
+	"testing"
+	"time"
+
+	"github.com/stretchr/testify/require"
+)
+
+func TestParallelToolRuntime_OrderAndCallbackDeterminism(t *testing.T) {
+	t.Parallel()
+
+	type input struct {
+		DelayMs int    `json:"delay_ms"`
+		Value   string `json:"value"`
+	}
+
+	tool := NewParallelAgentTool("p", "parallel tool", func(ctx context.Context, in input, _ ToolCall) (ToolResponse, error) {
+		if in.DelayMs > 0 {
+			select {
+			case <-ctx.Done():
+				return NewTextErrorResponse(ctx.Err().Error()), nil
+			case <-time.After(time.Duration(in.DelayMs) * time.Millisecond):
+			}
+		}
+		return NewTextResponse(in.Value), nil
+	})
+
+	runtime := ParallelToolRuntime{MaxConcurrency: 3}
+
+	var cbMu sync.Mutex
+	var cbOrder []string
+	cb := func(res ToolResultContent) error {
+		cbMu.Lock()
+		defer cbMu.Unlock()
+		cbOrder = append(cbOrder, res.ToolCallID)
+		return nil
+	}
+
+	toolCalls := []ToolCallContent{
+		{ToolCallID: "c1", ToolName: "p", Input: `{"delay_ms":50,"value":"a"}`},
+		{ToolCallID: "c2", ToolName: "p", Input: `{"delay_ms":10,"value":"b"}`},
+		{ToolCallID: "c3", ToolName: "p", Input: `{"delay_ms":30,"value":"c"}`},
+	}
+
+	results, err := runtime.Execute(context.Background(), []AgentTool{tool}, toolCalls, cb)
+	require.NoError(t, err)
+	require.Len(t, results, 3)
+
+	require.Equal(t, "c1", results[0].ToolCallID)
+	require.Equal(t, "a", results[0].Result.(ToolResultOutputContentText).Text)
+	require.Equal(t, "c2", results[1].ToolCallID)
+	require.Equal(t, "b", results[1].Result.(ToolResultOutputContentText).Text)
+	require.Equal(t, "c3", results[2].ToolCallID)
+	require.Equal(t, "c", results[2].Result.(ToolResultOutputContentText).Text)
+
+	cbMu.Lock()
+	require.Equal(t, []string{"c1", "c2", "c3"}, cbOrder)
+	cbMu.Unlock()
+}
+
+func TestParallelToolRuntime_BarrierForNonParallelTools(t *testing.T) {
+	t.Parallel()
+
+	parallel := NewParallelAgentTool("p", "parallel tool", func(_ context.Context, _ struct{}, call ToolCall) (ToolResponse, error) {
+		_ = call
+		return NewTextResponse("p"), nil
+	})
+	seq := NewAgentTool("s", "sequential tool", func(_ context.Context, _ struct{}, call ToolCall) (ToolResponse, error) {
+		_ = call
+		return NewTextResponse("s"), nil
+	})
+
+	runtime := ParallelToolRuntime{MaxConcurrency: 8}
+
+	var mu sync.Mutex
+	var order []string
+	cb := func(res ToolResultContent) error {
+		mu.Lock()
+		defer mu.Unlock()
+		order = append(order, res.ToolCallID)
+		return nil
+	}
+
+	toolCalls := []ToolCallContent{
+		{ToolCallID: "p1", ToolName: "p", Input: `{}`},
+		{ToolCallID: "p2", ToolName: "p", Input: `{}`},
+		{ToolCallID: "s1", ToolName: "s", Input: `{}`},
+		{ToolCallID: "p3", ToolName: "p", Input: `{}`},
+	}
+
+	results, err := runtime.Execute(context.Background(), []AgentTool{parallel, seq}, toolCalls, cb)
+	require.NoError(t, err)
+	require.Len(t, results, 4)
+
+	mu.Lock()
+	require.Equal(t, []string{"p1", "p2", "s1", "p3"}, order)
+	mu.Unlock()
+}
+
+func TestParallelToolRuntime_CriticalErrorPropagation(t *testing.T) {
+	t.Parallel()
+
+	tool := NewParallelAgentTool("p", "parallel tool", func(_ context.Context, _ struct{}, call ToolCall) (ToolResponse, error) {
+		if call.ID == "bad" {
+			return ToolResponse{}, errors.New("boom")
+		}
+		return NewTextResponse("ok"), nil
+	})
+
+	runtime := ParallelToolRuntime{MaxConcurrency: 4}
+
+	toolCalls := []ToolCallContent{
+		{ToolCallID: "good", ToolName: "p", Input: `{}`},
+		{ToolCallID: "bad", ToolName: "p", Input: `{}`},
+	}
+
+	results, err := runtime.Execute(context.Background(), []AgentTool{tool}, toolCalls, nil)
+	require.Error(t, err)
+	require.Nil(t, results)
+}
+
+func TestParallelToolRuntime_MetricsAndLogHooks(t *testing.T) {
+	t.Parallel()
+
+	var metricsCalled bool
+	var logCalled bool
+
+	tool := NewParallelAgentTool("p", "tool", func(_ context.Context, _ struct{}, call ToolCall) (ToolResponse, error) {
+		return NewTextResponse(call.ID), nil
+	})
+
+	rt := ParallelToolRuntime{
+		MaxConcurrency: 2,
+		Metrics: func(m ToolRuntimeMetrics) {
+			metricsCalled = true
+			require.GreaterOrEqual(t, m.Queued, 0)
+		},
+		Log: func(e ToolRuntimeLogEvent) {
+			logCalled = true
+			require.NotEmpty(t, e.Event)
+		},
+	}
+
+	toolCalls := []ToolCallContent{
+		{ToolCallID: "a", ToolName: "p", Input: `{}`},
+	}
+	res, err := rt.Execute(context.Background(), []AgentTool{tool}, toolCalls, nil)
+	require.NoError(t, err)
+	require.Len(t, res, 1)
+	require.True(t, metricsCalled)
+	require.True(t, logCalled)
+}