diff --git a/src/tools/create-ui.test.ts b/src/tools/create-ui.test.ts
new file mode 100644
index 0000000..46e2db5
--- /dev/null
+++ b/src/tools/create-ui.test.ts
@@ -0,0 +1,113 @@
+// Mocks must be declared before any imports that use them
+const mockWaitForCallback = jest.fn();
+
+jest.mock("open", () => ({
+  __esModule: true,
+  default: jest.fn(),
+}));
+
+jest.mock("../utils/callback-server.js", () => ({
+  CallbackServer: jest.fn().mockImplementation(() => ({
+    waitForCallback: mockWaitForCallback,
+    getPort: jest.fn().mockReturnValue(9221),
+  })),
+}));
+
+jest.mock("../utils/config.js", () => ({
+  config: { canvas: false, github: false },
+}));
+
+jest.mock("../utils/git-operations.js", () => ({
+  git: jest.fn(),
+}));
+
+import { CreateUiTool } from "./create-ui.js";
+
+describe("CreateUiTool", () => {
+  let tool: CreateUiTool;
+
+  beforeEach(() => {
+    jest.clearAllMocks();
+    tool = new CreateUiTool();
+  });
+
+  describe("callback data parsing", () => {
+    it("should parse JSON string with component field", async () => {
+      const jsonData = JSON.stringify({ component: "export function Button() { return <button>Click</button>; }" });
+      mockWaitForCallback.mockResolvedValue({ data: jsonData });
+
+      const result = await tool.execute({
+        message: "Create a button",
+        searchQuery: "button component",
+        absolutePathToCurrentFile: "/test/file.tsx",
+        absolutePathToProjectDirectory: "/test",
+        standaloneRequestQuery: "Create a button component",
+      });
+
+      // The component code should appear in the response, not [object Object]
+      expect(result.content[0].text).toContain("export function Button()");
+      expect(result.content[0].text).not.toContain("[object Object]");
+    });
+
+    it("should parse JSON string with text field", async () => {
+      const jsonData = JSON.stringify({ text: "export function Input() { return <input />; }" });
+      mockWaitForCallback.mockResolvedValue({ data: jsonData });
+
+      const result = await tool.execute({
+        message: "Create an input",
+        searchQuery: "input component",
+        absolutePathToCurrentFile: "/test/file.tsx",
+        absolutePathToProjectDirectory: "/test",
+        standaloneRequestQuery: "Create an input component",
+      });
+
+      expect(result.content[0].text).toContain("export function Input()");
+      expect(result.content[0].text).not.toContain("[object Object]");
+    });
+
+    it("should fall back to raw string if JSON parse fails", async () => {
+      const rawString = "Plain text component code";
+      mockWaitForCallback.mockResolvedValue({ data: rawString });
+
+      const result = await tool.execute({
+        message: "Create something",
+        searchQuery: "something",
+        absolutePathToCurrentFile: "/test/file.tsx",
+        absolutePathToProjectDirectory: "/test",
+        standaloneRequestQuery: "Create something",
+      });
+
+      expect(result.content[0].text).toContain("Plain text component code");
+    });
+
+    it("should use fallback message when data is empty", async () => {
+      mockWaitForCallback.mockResolvedValue({ data: "" });
+
+      const result = await tool.execute({
+        message: "Create something",
+        searchQuery: "something",
+        absolutePathToCurrentFile: "/test/file.tsx",
+        absolutePathToProjectDirectory: "/test",
+        standaloneRequestQuery: "Create something",
+      });
+
+      expect(result.content[0].text).toContain("No component data received");
+    });
+
+    it("should handle timed out callback gracefully", async () => {
+      // Timeout returns { data: { timedOut: true } } - data is an object, not a string
+      mockWaitForCallback.mockResolvedValue({ data: { timedOut: true } });
+
+      const result = await tool.execute({
+        message: "Create something",
+        searchQuery: "something",
+        absolutePathToCurrentFile: "/test/file.tsx",
+        absolutePathToProjectDirectory: "/test",
+        standaloneRequestQuery: "Create something",
+      });
+
+      // Should fall back to the default message since timedOut object has no component/text
+      expect(result.content[0].text).toContain("No component data received");
+    });
+  });
+});
\ No newline at end of file
diff --git a/src/tools/create-ui.ts b/src/tools/create-ui.ts
index 07e8cf0..b8917f2 100644
--- a/src/tools/create-ui.ts
+++ b/src/tools/create-ui.ts
@@ -135,7 +135,19 @@ export class CreateUiTool extends BaseTool {
 
       const { data } = await callbackPromise;
 
-      const prompt = data || "// No component data received. Please try again.";
+      // data is the raw body string from the callback server.
+      // It may be a JSON string like '{"component": "..."}' or '{"text": "..."}'.
+      // Parse it to extract the actual component code.
+      let prompt = "// No component data received. Please try again.";
+      if (typeof data === "string" && data.trim() !== "") {
+        try {
+          const parsed = JSON.parse(data);
+          prompt = parsed.component || parsed.text || data;
+        } catch {
+          // Not JSON, use as-is
+          prompt = data;
+        }
+      }
 
       const responseToUser = `
 ${prompt}