Azure MCP Server and Azure Skills: VS Code setup

Scott Hanselman and Sandeep Sen walk through Azure MCP Server installation and its use with GitHub Copilot in VS Code. Sen describes version 1.0 as generally available; 2.0 is an anticipated release at the time of the recording, not a confirmed version in the demonstration. He also covers Visual Studio 2022 and 2026 plugins, Eclipse, JSON configuration for Cursor, and IntelliJ's Azure Toolkit.

The VS Code walkthrough shows how to enable tools by Azure service or specify namespaces in the MCP configuration. The speakers explain that narrower tool selection reduces context usage. A storage-account query demonstrates subscription scoping and permission prompts. Sen distinguishes read operations from tools that create, update, or delete Azure resources, and explains how approval settings affect their execution. He also describes natural-language queries for Log Analytics and Kusto.

Azure Skills supplies Markdown instructions, samples, and references for a coding assistant. According to Sen, the agent initially loads skill names and descriptions, then loads fuller instructions when relevant. Some references can be read without a network call. The server can be self-hosted remotely, but the demonstrated workflow accesses Azure services; the discussion does not establish offline model inference.