diff --git a/libs/designer-v2/src/lib/ui/panel/connectionsPanel/createConnection/createConnection.tsx b/libs/designer-v2/src/lib/ui/panel/connectionsPanel/createConnection/createConnection.tsx
index 5e00d564d51..f28a8977930 100644
--- a/libs/designer-v2/src/lib/ui/panel/connectionsPanel/createConnection/createConnection.tsx
+++ b/libs/designer-v2/src/lib/ui/panel/connectionsPanel/createConnection/createConnection.tsx
@@ -115,6 +115,7 @@ export interface CreateConnectionProps {
   operationManifest?: OperationManifest;
   workflowKind?: string;
   workflowMetadata?: ConsumptionWorkflowMetadata;
+  enableManagedIdentityPicker?: boolean;
 }
 
 export const CreateConnection = (props: CreateConnectionProps) => {
@@ -406,6 +407,15 @@ export const CreateConnection = (props: CreateConnectionProps) => {
     return output ?? {};
   }, [enabledCapabilities, parametersByCapability]);
 
+  // Show MI picker only when explicitly enabled by the caller (e.g. MCP wizard) AND
+  // there are no visible parameters (form would be empty without it).
+  const isMultiAuthManagedIdentitySet = useMemo(() => {
+    if (!props.enableManagedIdentityPicker || !isMultiAuth) {
+      return false;
+    }
+    return Object.keys(capabilityEnabledParameters ?? {}).length === 0;
+  }, [props.enableManagedIdentityPicker, isMultiAuth, capabilityEnabledParameters]);
+
   // Don't show name for simple connections
   const showNameInput = useMemo(() => {
     const isMcpClientConnection = connectorId?.toLowerCase().includes('mcpclient');
@@ -439,6 +449,9 @@ export const CreateConnection = (props: CreateConnectionProps) => {
     if (legacyManagedIdentitySelected && !selectedManagedIdentity) {
       return false;
     }
+    if (isMultiAuthManagedIdentitySet && !selectedManagedIdentity) {
+      return false;
+    }
     if (Object.keys(capabilityEnabledParameters ?? {}).length === 0) {
       return true;
     }
@@ -451,6 +464,7 @@ export const CreateConnection = (props: CreateConnectionProps) => {
     resourceSelectorProps,
     legacyManagedIdentitySelected,
     selectedManagedIdentity,
+    isMultiAuthManagedIdentitySet,
     capabilityEnabledParameters,
     parameterValues,
   ]);
@@ -497,7 +511,7 @@ export const CreateConnection = (props: CreateConnectionProps) => {
     }
 
     const alternativeParameterValues = legacyManagedIdentitySelected ? {} : undefined;
-    const identitySelected = legacyManagedIdentitySelected ? selectedManagedIdentity : undefined;
+    const identitySelected = legacyManagedIdentitySelected || isMultiAuthManagedIdentitySet ? selectedManagedIdentity : undefined;
 
     return createConnectionCallback?.(
       showNameInput ? connectionDisplayName : undefined,
@@ -530,6 +544,7 @@ export const CreateConnection = (props: CreateConnectionProps) => {
     operationParameterValues,
     isUsingDynamicConnection,
     isDynamicConnectionOptionValidForConnector,
+    isMultiAuthManagedIdentitySet,
   ]);
 
   // INTL STRINGS
@@ -919,6 +934,25 @@ export const CreateConnection = (props: CreateConnectionProps) => {
             />
           )}
 
+          {/* Multi-auth Managed Identity Selection (for MCP custom connectors with MI parameter set) */}
+          {isMultiAuthManagedIdentitySet && (
+            <div className="param-row">
+              <Label
+                className="label"
+                isRequiredField={true}
+                text={legacyManagedIdentityLabelText}
+                htmlFor={'multi-auth-managed-identity-select'}
+                disabled={isLoading}
+              />
+              <LegacyManagedIdentityDropdown
+                id={'multi-auth-managed-identity-select'}
+                identity={identity}
+                onChange={onLegacyManagedIdentityChange}
+                disabled={isLoading}
+              />
+            </div>
+          )}
+
           {/* OAuth tenant ID selection */}
           {showTenantIdSelection && (
             <TenantPicker
diff --git a/libs/designer-v2/src/lib/ui/panel/connectionsPanel/createConnection/createConnectionInternal.tsx b/libs/designer-v2/src/lib/ui/panel/connectionsPanel/createConnection/createConnectionInternal.tsx
index 8dd64ba0a21..0fd43933260 100644
--- a/libs/designer-v2/src/lib/ui/panel/connectionsPanel/createConnection/createConnectionInternal.tsx
+++ b/libs/designer-v2/src/lib/ui/panel/connectionsPanel/createConnection/createConnectionInternal.tsx
@@ -9,6 +9,7 @@ import { CreateConnection, type CreateButtonTexts } from './createConnection';
 import { Spinner, SpinnerSize } from '@fluentui/react/lib/Spinner';
 import type {
   ConnectionParameterSetValues,
+  ConnectionParameterSets,
   ConnectionMetadata,
   ConnectionCreationInfo,
   ConnectionParametersMetadata,
@@ -46,6 +47,8 @@ export const CreateConnectionInternal = (props: {
   operationManifest?: OperationManifest;
   workflowKind?: string;
   workflowMetadata?: { agentType?: string };
+  connectionParameterSetsOverride?: ConnectionParameterSets;
+  enableManagedIdentityPicker?: boolean;
 }) => {
   const {
     classes,
@@ -68,6 +71,8 @@ export const CreateConnectionInternal = (props: {
     operationManifest,
     workflowKind,
     workflowMetadata,
+    connectionParameterSetsOverride,
+    enableManagedIdentityPicker,
   } = props;
   const dispatch = useDispatch<AppDispatch>();
 
@@ -320,7 +325,7 @@ export const CreateConnectionInternal = (props: {
       classes={classes}
       connector={connector}
       connectionParameterSets={getSupportedParameterSets(
-        connector.properties.connectionParameterSets,
+        connector.properties.connectionParameterSets ?? connectionParameterSetsOverride,
         operationType,
         connector.properties.capabilities
       )}
@@ -345,6 +350,7 @@ export const CreateConnectionInternal = (props: {
       operationManifest={operationManifest}
       workflowKind={workflowKind}
       workflowMetadata={workflowMetadata}
+      enableManagedIdentityPicker={enableManagedIdentityPicker}
     />
   );
 };
diff --git a/libs/designer-v2/src/lib/ui/panel/connectionsPanel/createConnection/formInputs/legacyManagedIdentityPicker.tsx b/libs/designer-v2/src/lib/ui/panel/connectionsPanel/createConnection/formInputs/legacyManagedIdentityPicker.tsx
index 44175422b2d..cf675e42d58 100644
--- a/libs/designer-v2/src/lib/ui/panel/connectionsPanel/createConnection/formInputs/legacyManagedIdentityPicker.tsx
+++ b/libs/designer-v2/src/lib/ui/panel/connectionsPanel/createConnection/formInputs/legacyManagedIdentityPicker.tsx
@@ -4,13 +4,14 @@ import { useEffect, useMemo, useRef } from 'react';
 import { useIntl } from 'react-intl';
 
 interface LegacyManagedIdentityDropdownProps {
+  id?: string;
   identity?: ManagedIdentity;
   onChange: (event: any, item?: IDropdownOption<any>) => void;
   disabled?: boolean;
 }
 
 const LegacyManagedIdentityDropdown = (props: LegacyManagedIdentityDropdownProps) => {
-  const { identity, onChange, disabled } = props;
+  const { id, identity, onChange, disabled } = props;
   const intl = useIntl();
   const dropdownOptions = useMemo(() => getIdentityDropdownOptions(identity, intl), [identity, intl]);
 
@@ -29,6 +30,7 @@ const LegacyManagedIdentityDropdown = (props: LegacyManagedIdentityDropdownProps
 
   return (
     <Dropdown
+      id={id}
       className={'connection-parameter-input'}
       onChange={onChange}
       placeholder={noIdentitiesAvailable ? noIdentityText : undefined}
diff --git a/libs/designer-v2/src/lib/ui/panel/recommendation/browse/mcpToolWizard.tsx b/libs/designer-v2/src/lib/ui/panel/recommendation/browse/mcpToolWizard.tsx
index 1fca4777b28..d88acfacdc3 100644
--- a/libs/designer-v2/src/lib/ui/panel/recommendation/browse/mcpToolWizard.tsx
+++ b/libs/designer-v2/src/lib/ui/panel/recommendation/browse/mcpToolWizard.tsx
@@ -30,10 +30,95 @@ import { isConnectionValid, getAssistedConnectionProps } from '../../../../core/
 import { addOperation } from '../../../../core/actions/bjsworkflow/add';
 import { useMcpToolWizardStyles } from './styles/McpToolWizard.styles';
 import { useConnector } from '../../../../core/state/connection/connectionSelector';
-import type { Connection, DiscoveryOperation, DiscoveryResultTypes } from '@microsoft/logic-apps-shared';
+import type { Connection, ConnectionParameterSets, DiscoveryOperation, DiscoveryResultTypes } from '@microsoft/logic-apps-shared';
 import { useQuery } from '@tanstack/react-query';
 import { MCP_CLIENT_CONNECTOR_ID } from '../helpers';
 
+/**
+ * Connection parameter sets for MCP servers. Used as a fallback when a custom connector
+ * doesn't have its own connectionParameterSets, so users can select auth type
+ * (None, Basic, Key, or Managed Identity) during connection creation.
+ */
+const mcpConnectionParameterSets: ConnectionParameterSets = {
+  uiDefinition: {
+    displayName: 'Authentication type',
+    description: 'The authentication type to use.',
+  },
+  values: [
+    {
+      name: 'None',
+      parameters: {},
+      uiDefinition: { displayName: 'None', description: 'None' },
+    },
+    {
+      name: 'Basic',
+      parameters: {
+        username: {
+          type: 'string',
+          uiDefinition: {
+            displayName: 'Username',
+            constraints: { propertyPath: ['authentication'], required: 'true' },
+            description: 'Username',
+          },
+        },
+        password: {
+          type: 'securestring',
+          uiDefinition: {
+            displayName: 'Password',
+            constraints: { propertyPath: ['authentication'], required: 'true' },
+            description: 'Password',
+          },
+        },
+      },
+      uiDefinition: { displayName: 'Basic', description: 'Basic authentication' },
+    },
+    {
+      name: 'Key',
+      parameters: {
+        key: {
+          type: 'securestring',
+          uiDefinition: {
+            displayName: 'Key',
+            constraints: { required: 'true', propertyPath: ['authentication'] },
+            description: 'Key',
+          },
+        },
+        keyHeaderName: {
+          type: 'string',
+          uiDefinition: {
+            displayName: 'Key Header Name',
+            constraints: { propertyPath: ['authentication'] },
+            description: 'Key header name',
+          },
+        },
+      },
+      uiDefinition: { displayName: 'Key', description: 'Key authentication' },
+    },
+    {
+      name: 'ManagedServiceIdentity',
+      parameters: {
+        identity: {
+          type: 'string',
+          uiDefinition: {
+            displayName: 'Managed identity',
+            constraints: { required: 'false', editor: 'identitypicker', propertyPath: ['authentication'] },
+            description: 'The managed identity to use for authentication',
+          },
+        },
+        audience: {
+          type: 'string',
+          uiDefinition: {
+            displayName: 'Audience',
+            constraints: { required: 'true', propertyPath: ['authentication'] },
+            description: 'The audience',
+          },
+        },
+      },
+      uiDefinition: { displayName: 'Managed identity', description: 'Managed identity authentication' },
+    },
+  ],
+};
+
 export const McpToolWizard = () => {
   const intl = useIntl();
   const dispatch = useDispatch<AppDispatch>();
@@ -603,6 +688,12 @@ export const McpToolWizard = () => {
     // Managed MCP servers use the default Azure connection flow
     const connectionMetadata = isManagedMcpServer ? undefined : { type: ConnectionType.Mcp, required: true };
 
+    // For managed MCP servers (custom connectors), the connector from Azure API
+    // may not include connectionParameterSets (auth options). Provide MCP auth
+    // parameter sets as a fallback so users can select auth type (None, Basic,
+    // Managed Identity, etc.) when creating a connection.
+    const parameterSetsOverride = isManagedMcpServer ? mcpConnectionParameterSets : undefined;
+
     return (
       <div className={classes.createConnectionContainer}>
         <CreateConnectionInternal
@@ -617,6 +708,8 @@ export const McpToolWizard = () => {
           onConnectionCreated={handleConnectionCreated}
           onConnectionCancelled={handleConnectionCancelled}
           description=" "
+          connectionParameterSetsOverride={parameterSetsOverride}
+          enableManagedIdentityPicker={isManagedMcpServer}
         />
       </div>
     );