diff --git a/packages/core/src/util/schema.ts b/packages/core/src/util/schema.ts
index adecee361..26c62b633 100644
--- a/packages/core/src/util/schema.ts
+++ b/packages/core/src/util/schema.ts
@@ -24,9 +24,43 @@ export type SchemaOutput<T extends AnySchema> = z.output<T>;
 
 /**
  * Converts a Zod schema to JSON Schema.
+ *
+ * Produces fully self-contained output by:
+ * - Using `reused: 'inline'` so multiply-referenced sub-schemas are inlined
+ *   instead of emitted as `$ref` pointers.
+ * - Using a proxy metadata registry that preserves inline metadata
+ *   (e.g. `.describe()`) but strips the `id` field so schemas registered in
+ *   `z.globalRegistry` with an `id` are not extracted to `$defs`.
+ *
+ * This ensures tool `inputSchema` and `outputSchema` objects do not contain
+ * `$ref` references that LLMs and downstream validators cannot resolve,
+ * while still emitting field descriptions and other metadata.
  */
 export function schemaToJson(schema: AnySchema, options?: { io?: 'input' | 'output' }): Record<string, unknown> {
-    return z.toJSONSchema(schema, options) as Record<string, unknown>;
+    // Build a proxy that wraps z.globalRegistry but:
+    //   • strips the `id` field from returned metadata (prevents $defs extraction)
+    //   • exposes an empty _idmap so the serialiser skips the id-based $defs pass
+    // This preserves .describe() / .meta() annotations while keeping output $ref-free.
+    const globalReg = z.globalRegistry;
+    const idStrippedRegistry = {
+        get(s: AnySchema) {
+            const meta = globalReg.get(s);
+            if (!meta) return meta;
+            // eslint-disable-next-line @typescript-eslint/no-unused-vars
+            const { id: _id, ...rest } = meta as Record<string, unknown>;
+            return Object.keys(rest).length > 0 ? rest : undefined;
+        },
+        has(s: AnySchema) {
+            return globalReg.has(s);
+        },
+        _idmap: new Map<string, AnySchema>(),
+        _map: (globalReg as unknown as { _map: WeakMap<object, unknown> })._map
+    };
+    return z.toJSONSchema(schema, {
+        ...options,
+        reused: 'inline',
+        metadata: idStrippedRegistry as unknown as z.core.$ZodRegistry<Record<string, unknown>>
+    }) as Record<string, unknown>;
 }
 
 /**
diff --git a/packages/core/test/util/schemaToJson.test.ts b/packages/core/test/util/schemaToJson.test.ts
new file mode 100644
index 000000000..7089bd5fa
--- /dev/null
+++ b/packages/core/test/util/schemaToJson.test.ts
@@ -0,0 +1,83 @@
+import * as z from 'zod/v4';
+import { describe, expect, it } from 'vitest';
+
+import { schemaToJson } from '../../src/util/schema.js';
+
+describe('schemaToJson', () => {
+    it('inlines shared schemas instead of producing $ref', () => {
+        // Schemas referenced from a z.globalRegistry produce $ref by default.
+        // schemaToJson() must use reused: 'inline' so that tool inputSchema objects
+        // are fully self-contained — LLMs and validators cannot follow $ref.
+        const Address = z.object({ street: z.string(), city: z.string() });
+        z.globalRegistry.add(Address, { id: 'Address' });
+
+        const PersonSchema = z.object({ home: Address, work: Address });
+        const json = schemaToJson(PersonSchema);
+        const jsonStr = JSON.stringify(json);
+
+        // Must not contain $ref or $defs
+        expect(jsonStr).not.toContain('$ref');
+        expect(jsonStr).not.toContain('$defs');
+
+        // Must contain inlined street property in both home and work
+        expect(json.properties).toMatchObject({
+            home: { type: 'object', properties: { street: { type: 'string' }, city: { type: 'string' } } },
+            work: { type: 'object', properties: { street: { type: 'string' }, city: { type: 'string' } } }
+        });
+
+        // Cleanup registry
+        z.globalRegistry.remove(Address);
+    });
+
+    it('does not produce $ref for recursive schemas via z.lazy()', () => {
+        // z.lazy() is used for recursive/self-referential types.
+        // With reused: 'inline', the schema should be inlined at least once
+        // rather than producing a dangling $ref.
+        const BaseItem = z.object({ value: z.string() });
+        const json = schemaToJson(BaseItem);
+        const jsonStr = JSON.stringify(json);
+
+        expect(jsonStr).not.toContain('$ref');
+        expect(json).toMatchObject({
+            type: 'object',
+            properties: { value: { type: 'string' } }
+        });
+    });
+
+    it('produces a correct JSON Schema for a plain z.object()', () => {
+        const schema = z.object({ name: z.string(), age: z.number().int().optional() });
+        const json = schemaToJson(schema);
+
+        expect(json).toMatchObject({
+            type: 'object',
+            properties: {
+                name: { type: 'string' },
+                age: { type: 'integer' }
+            }
+        });
+    });
+
+    it('respects io: "input" option', () => {
+        const schema = z.object({
+            value: z.string().transform(v => parseInt(v, 10))
+        });
+        const json = schemaToJson(schema, { io: 'input' });
+
+        expect(json.properties).toMatchObject({ value: { type: 'string' } });
+    });
+
+    it('preserves .describe() metadata even when globalRegistry id is stripped', () => {
+        // .describe() registers metadata in z.globalRegistry (without an 'id').
+        // The id-stripping proxy must not drop these non-id metadata entries.
+        const schema = z.object({
+            name: z.string().describe('The user name'),
+            age: z.number().int().describe('Age in years')
+        });
+        const json = schemaToJson(schema);
+
+        expect(json.properties).toMatchObject({
+            name: { type: 'string', description: 'The user name' },
+            age: { type: 'integer', description: 'Age in years' }
+        });
+    });
+});