chore: bump bundled CLI version to 2.0.74

Replace heredoc with echo statements to fix YAML parsing issue. The
unindented heredoc content was breaking out of the literal block scalar,
causing `---` to be interpreted as a YAML document separator.

🤖 Generated with [Claude Code](https://claude.com/claude-code)

Co-authored-by: Claude <noreply@anthropic.com>

.claude/agents/test-agent.md

@@ -0,0 +1,9 @@
+---
+name: test-agent
+description: A simple test agent for SDK testing
+tools: Read
+---
+
+# Test Agent
+
+You are a simple test agent. When asked a question, provide a brief, helpful answer.

.claude/commands/generate-changelog.md

@@ -0,0 +1,19 @@
+---
+allowed-tools: Edit, Bash(git add:*), Bash(git commit:*)
+description: Generate changelog for a new release version
+---
+
+You are updating the changelog for the new release.
+
+Update CHANGELOG.md to add a new section for the new version at the top of the file, right after the '# Changelog' heading.
+
+Review the recent commits and merged pull requests since the last release to generate meaningful changelog content for the new version. Follow the existing format in CHANGELOG.md with sections like:
+- Breaking Changes (if any)
+- New Features
+- Bug Fixes
+- Documentation
+- Internal/Other changes
+
+Include only the sections that are relevant based on the actual changes. Write clear, user-focused descriptions.
+
+After updating CHANGELOG.md, commit the changes with the message "docs: update changelog for v{new_version}".

.dockerignore

@@ -0,0 +1,49 @@
+# Git
+.git
+.gitignore
+
+# Python
+__pycache__
+*.py[cod]
+*$py.class
+*.so
+.Python
+build/
+develop-eggs/
+dist/
+downloads/
+eggs/
+.eggs/
+lib/
+lib64/
+parts/
+sdist/
+var/
+wheels/
+*.egg-info/
+.installed.cfg
+*.egg
+
+# Virtual environments
+.env
+.venv
+env/
+venv/
+ENV/
+
+# IDE
+.idea/
+.vscode/
+*.swp
+*.swo
+
+# Testing/Coverage
+.coverage
+.pytest_cache/
+htmlcov/
+.tox/
+.nox/
+
+# Misc
+*.log
+.DS_Store

.github/workflows/create-release-tag.yml

@@ -24,12 +24,6 @@ jobs:
         VERSION="${BRANCH_NAME#release/v}"
         echo "version=$VERSION" >> $GITHUB_OUTPUT
     
-    - name: Get previous release tag
-      id: previous_tag
-      run: |
-        PREVIOUS_TAG=$(git describe --tags --abbrev=0 HEAD~1 2>/dev/null || echo "")
-        echo "previous_tag=$PREVIOUS_TAG" >> $GITHUB_OUTPUT
-
     - name: Create and push tag
       run: |
         git config --local user.email "github-actions[bot]@users.noreply.github.com"
@@ -46,14 +40,34 @@ jobs:
       env:
         GH_TOKEN: ${{ secrets.GITHUB_TOKEN }}
       run: |
-        # Create release with auto-generated notes
+        VERSION="${{ steps.extract_version.outputs.version }}"
-        gh release create "v${{ steps.extract_version.outputs.version }}" \
-          --title "Release v${{ steps.extract_version.outputs.version }}" \
-          --generate-notes \
-          --notes-start-tag "${{ steps.previous_tag.outputs.previous_tag }}" \
-          --notes "Published to PyPI: https://pypi.org/project/claude-agent-sdk/${{ steps.extract_version.outputs.version }}/
 
-        ### Installation
+        # Extract changelog section for this version to a temp file
-        \`\`\`bash
+        awk -v ver="$VERSION" '
-        pip install claude-agent-sdk==${{ steps.extract_version.outputs.version }}
+          /^## / {
-        \`\`\`"
+            if (found) exit
+            if ($2 == ver) found=1
+            next
+          }
+          found { print }
+        ' CHANGELOG.md > release_notes.md
+
+        # Append install instructions
+        {
+          echo ""
+          echo "---"
+          echo ""
+          echo "**PyPI:** https://pypi.org/project/claude-agent-sdk/VERSION/"
+          echo ""
+          echo '```bash'
+          echo "pip install claude-agent-sdk==VERSION"
+          echo '```'
+        } >> release_notes.md
+
+        # Replace VERSION placeholder
+        sed -i "s/VERSION/$VERSION/g" release_notes.md
+
+        # Create release with notes from file
+        gh release create "v$VERSION" \
+          --title "v$VERSION" \
+          --notes-file release_notes.md

.github/workflows/publish.yml

@@ -4,7 +4,7 @@ on:
   workflow_dispatch:
     inputs:
       version:
-        description: 'Version to publish (e.g., 0.1.0)'
+        description: 'Package version to publish (e.g., 0.1.4)'
         required: true
         type: string
 jobs:
@@ -12,7 +12,7 @@ jobs:
     runs-on: ubuntu-latest
     strategy:
       matrix:
-        python-version: ['3.10', '3.11', '3.12', '3.13']
+        python-version: ["3.10", "3.11", "3.12", "3.13"]
 
     steps:
       - uses: actions/checkout@v4
@@ -40,7 +40,7 @@ jobs:
       - name: Set up Python
         uses: actions/setup-python@v5
         with:
-        python-version: '3.12'
+          python-version: "3.12"
 
       - name: Install dependencies
         run: |
@@ -56,8 +56,48 @@ jobs:
         run: |
           mypy src/
 
-  publish:
+  build-wheels:
     needs: [test, lint]
+    runs-on: ${{ matrix.os }}
+    strategy:
+      matrix:
+        os: [ubuntu-latest, ubuntu-24.04-arm, macos-latest, windows-latest]
+    permissions:
+      contents: write
+      pull-requests: write
+
+    steps:
+    - uses: actions/checkout@v4
+
+    - name: Set up Python
+      uses: actions/setup-python@v5
+      with:
+        python-version: '3.12'
+
+    - name: Install build dependencies
+      run: |
+        python -m pip install --upgrade pip
+        pip install build twine wheel
+      shell: bash
+
+    - name: Build wheel with bundled CLI
+      run: |
+        python scripts/build_wheel.py \
+          --version "${{ github.event.inputs.version }}" \
+          --skip-sdist \
+          --clean
+      shell: bash
+
+    - name: Upload wheel artifact
+      uses: actions/upload-artifact@v4
+      with:
+        name: wheel-${{ matrix.os }}
+        path: dist/*.whl
+        if-no-files-found: error
+        compression-level: 0
+
+  publish:
+    needs: [build-wheels]
     runs-on: ubuntu-latest
     permissions:
       contents: write
@@ -67,6 +107,7 @@ jobs:
     - uses: actions/checkout@v4
       with:
         token: ${{ secrets.GITHUB_TOKEN }}
+        fetch-depth: 0  # Fetch all history including tags for changelog generation
 
     - name: Set up Python
       uses: actions/setup-python@v5
@@ -84,16 +125,27 @@ jobs:
       run: |
         python scripts/update_version.py "${{ env.VERSION }}"
 
+    - name: Read CLI version from code
+      id: cli_version
+      run: |
+        CLI_VERSION=$(python -c "import re; print(re.search(r'__cli_version__ = \"([^\"]+)\"', open('src/claude_agent_sdk/_cli_version.py').read()).group(1))")
+        echo "cli_version=$CLI_VERSION" >> $GITHUB_OUTPUT
+        echo "Bundled CLI version: $CLI_VERSION"
+
+    - name: Download all wheel artifacts
+      uses: actions/download-artifact@v4
+      with:
+        path: dist
+        pattern: wheel-*
+        merge-multiple: true
+
     - name: Install build dependencies
       run: |
         python -m pip install --upgrade pip
         pip install build twine
 
-    - name: Build package
+    - name: Build source distribution
-      run: python -m build
+      run: python -m build --sdist
-    
-    - name: Check package
-      run: twine check dist/*
 
     - name: Publish to PyPI
       env:
@@ -104,66 +156,67 @@ jobs:
         echo "Package published to PyPI"
         echo "Install with: pip install claude-agent-sdk==${{ env.VERSION }}"
     
-    - name: Create version update PR
+    - name: Get previous release tag
-      env:
+      id: previous_tag
-        GH_TOKEN: ${{ secrets.GITHUB_TOKEN }}
+      run: |
+        PREVIOUS_TAG=$(git describe --tags --abbrev=0 2>/dev/null || echo "")
+        echo "previous_tag=$PREVIOUS_TAG" >> $GITHUB_OUTPUT
+        echo "Previous release: $PREVIOUS_TAG"
+
+    - name: Create release branch and commit version changes
       run: |
         # Create a new branch for the version update
         BRANCH_NAME="release/v${{ env.VERSION }}"
         echo "BRANCH_NAME=$BRANCH_NAME" >> $GITHUB_ENV
 
-        # Create branch via API
+        # Configure git
-        BASE_SHA=$(git rev-parse HEAD)
+        git config --local user.email "github-actions[bot]@users.noreply.github.com"
-        gh api \
+        git config --local user.name "github-actions[bot]"
-          --method POST \
-          /repos/$GITHUB_REPOSITORY/git/refs \
-          -f ref="refs/heads/$BRANCH_NAME" \
-          -f sha="$BASE_SHA"
 
-        # Get current SHA values of files
+        # Create and switch to new branch
-        echo "Getting SHA for pyproject.toml"
+        git checkout -b "$BRANCH_NAME"
-        PYPROJECT_SHA=$(gh api /repos/$GITHUB_REPOSITORY/contents/pyproject.toml --jq '.sha')
-        echo "Getting SHA for _version.py"
-        VERSION_SHA=$(gh api /repos/$GITHUB_REPOSITORY/contents/src/claude_agent_sdk/_version.py --jq '.sha')
 
-        # Commit pyproject.toml via GitHub API (this creates signed commits)
+        # Commit version changes
-        message="chore: bump version to ${{ env.VERSION }}"
+        git add pyproject.toml src/claude_agent_sdk/_version.py
-        base64 -i pyproject.toml > pyproject.toml.b64
+        git commit -m "chore: release v${{ env.VERSION }}"
-        gh api \
-          --method PUT \
-          /repos/$GITHUB_REPOSITORY/contents/pyproject.toml \
-          -f message="$message" \
-          -F content=@pyproject.toml.b64 \
-          -f sha="$PYPROJECT_SHA" \
-          -f branch="$BRANCH_NAME"
 
-        # Commit _version.py via GitHub API
+    - name: Update changelog with Claude
-        base64 -i src/claude_agent_sdk/_version.py > version.py.b64
+      continue-on-error: true
-        gh api \
+      uses: anthropics/claude-code-action@v1
-          --method PUT \
+      with:
-          /repos/$GITHUB_REPOSITORY/contents/src/claude_agent_sdk/_version.py \
+        prompt: "/generate-changelog new version: ${{ env.VERSION }}, old version: ${{ steps.previous_tag.outputs.previous_tag }}"
-          -f message="$message" \
+        anthropic_api_key: ${{ secrets.ANTHROPIC_API_KEY }}
-          -F content=@version.py.b64 \
+        github_token: ${{ secrets.GITHUB_TOKEN }}
-          -f sha="$VERSION_SHA" \
+        claude_args: |
-          -f branch="$BRANCH_NAME"
+          --model claude-opus-4-5
+          --allowedTools 'Bash(git add:*),Bash(git commit:*),Edit'
+
+    - name: Push branch and create PR
+      env:
+        GH_TOKEN: ${{ secrets.GITHUB_TOKEN }}
+      run: |
+        # Push the branch with all commits
+        git push origin "${{ env.BRANCH_NAME }}"
 
         # Create PR using GitHub CLI
         PR_BODY="This PR updates the version to ${{ env.VERSION }} after publishing to PyPI.
 
         ## Changes
-        - Updated version in \`pyproject.toml\`
+        - Updated version in \`pyproject.toml\` to ${{ env.VERSION }}
-        - Updated version in \`src/claude_agent_sdk/_version.py\`
+        - Updated version in \`src/claude_agent_sdk/_version.py\` to ${{ env.VERSION }}
+        - Updated \`CHANGELOG.md\` with release notes
 
         ## Release Information
         - Published to PyPI: https://pypi.org/project/claude-agent-sdk/${{ env.VERSION }}/
+        - Bundled CLI version: ${{ steps.cli_version.outputs.cli_version }}
         - Install with: \`pip install claude-agent-sdk==${{ env.VERSION }}\`
 
         🤖 Generated by GitHub Actions"
 
         PR_URL=$(gh pr create \
-          --title "chore: bump version to ${{ env.VERSION }}" \
+          --title "chore: release v${{ env.VERSION }}" \
           --body "$PR_BODY" \
           --base main \
-          --head "$BRANCH_NAME")
+          --head "${{ env.BRANCH_NAME }}")
 
         echo "PR created: $PR_URL"

.github/workflows/slack-issue-notification.yml

@@ -0,0 +1,36 @@
+name: Post new issues to Slack
+
+on:
+  issues:
+    types: [opened]
+
+jobs:
+  notify:
+    runs-on: ubuntu-latest
+    steps:
+      - name: Post to Slack
+        uses: slackapi/slack-github-action@91efab103c0de0a537f72a35f6b8cda0ee76bf0a # 2.1.1
+        with:
+          method: chat.postMessage
+          token: ${{ secrets.SLACK_BOT_TOKEN }}
+          payload: |
+            {
+              "channel": "C09HY5E0K60",
+              "text": "New issue opened in ${{ github.repository }}",
+              "blocks": [
+                {
+                  "type": "section",
+                  "text": {
+                    "type": "mrkdwn",
+                    "text": "*New Issue:* <${{ github.event.issue.html_url }}|#${{ github.event.issue.number }} ${{ github.event.issue.title }}>"
+                  }
+                },
+                {
+                  "type": "section",
+                  "text": {
+                    "type": "mrkdwn",
+                    "text": "*Author:* ${{ github.event.issue.user.login }}"
+                  }
+                }
+              ]
+            }

.github/workflows/test.yml

@@ -8,9 +8,10 @@ on:
 
 jobs:
   test:
-    runs-on: ubuntu-latest
+    runs-on: ${{ matrix.os }}
     strategy:
       matrix:
+        os: [ubuntu-latest, macos-latest, windows-latest]
         python-version: ["3.10", "3.11", "3.12", "3.13"]
 
     steps:
@@ -37,10 +38,11 @@ jobs:
           fail_ci_if_error: false
 
   test-e2e:
-    runs-on: ubuntu-latest
+    runs-on: ${{ matrix.os }}
     needs: test # Run after unit tests pass
     strategy:
       matrix:
+        os: [ubuntu-latest, macos-latest, windows-latest]
         python-version: ["3.10", "3.11", "3.12", "3.13"]
 
     steps:
@@ -51,11 +53,20 @@ jobs:
         with:
           python-version: ${{ matrix.python-version }}
 
-      - name: Install Claude Code
+      - name: Install Claude Code (Linux/macOS)
+        if: runner.os == 'Linux' || runner.os == 'macOS'
         run: |
           curl -fsSL https://claude.ai/install.sh | bash
           echo "$HOME/.local/bin" >> $GITHUB_PATH
 
+      - name: Install Claude Code (Windows)
+        if: runner.os == 'Windows'
+        run: |
+          irm https://claude.ai/install.ps1 | iex
+          $claudePath = "$env:USERPROFILE\.local\bin"
+          echo "$claudePath" | Out-File -FilePath $env:GITHUB_PATH -Encoding utf8 -Append
+        shell: pwsh
+
       - name: Verify Claude Code installation
         run: claude -v
 
@@ -70,12 +81,30 @@ jobs:
         run: |
           python -m pytest e2e-tests/ -v -m e2e
 
+  test-e2e-docker:
+    runs-on: ubuntu-latest
+    needs: test # Run after unit tests pass
+    # Run e2e tests in Docker to catch container-specific issues like #406
+
+    steps:
+      - uses: actions/checkout@v4
+
+      - name: Build Docker test image
+        run: docker build -f Dockerfile.test -t claude-sdk-test .
+
+      - name: Run e2e tests in Docker
+        env:
+          ANTHROPIC_API_KEY: ${{ secrets.ANTHROPIC_API_KEY }}
+        run: |
+          docker run --rm -e ANTHROPIC_API_KEY \
+            claude-sdk-test python -m pytest e2e-tests/ -v -m e2e
+
   test-examples:
     runs-on: ubuntu-latest
     needs: test-e2e # Run after e2e tests
     strategy:
       matrix:
-        python-version: ["3.10", "3.11", "3.12", "3.13"]
+        python-version: ["3.13"]
 
     steps:
       - uses: actions/checkout@v4
@@ -85,11 +114,20 @@ jobs:
         with:
           python-version: ${{ matrix.python-version }}
 
-      - name: Install Claude Code
+      - name: Install Claude Code (Linux)
+        if: runner.os == 'Linux'
         run: |
           curl -fsSL https://claude.ai/install.sh | bash
           echo "$HOME/.local/bin" >> $GITHUB_PATH
 
+      - name: Install Claude Code (Windows)
+        if: runner.os == 'Windows'
+        run: |
+          irm https://claude.ai/install.ps1 | iex
+          $claudePath = "$env:USERPROFILE\.local\bin"
+          echo "$claudePath" | Out-File -FilePath $env:GITHUB_PATH -Encoding utf8 -Append
+        shell: pwsh
+
       - name: Verify Claude Code installation
         run: claude -v
 
@@ -98,9 +136,34 @@ jobs:
           python -m pip install --upgrade pip
           pip install -e .
 
-      - name: Run example scripts
+      - name: Run example scripts (Linux)
+        if: runner.os == 'Linux'
         env:
           ANTHROPIC_API_KEY: ${{ secrets.ANTHROPIC_API_KEY }}
         run: |
           python examples/quick_start.py
           timeout 120 python examples/streaming_mode.py all
+          timeout 120 python examples/hooks.py PreToolUse
+          timeout 120 python examples/hooks.py DecisionFields
+
+      - name: Run example scripts (Windows)
+        if: runner.os == 'Windows'
+        env:
+          ANTHROPIC_API_KEY: ${{ secrets.ANTHROPIC_API_KEY }}
+        run: |
+          python examples/quick_start.py
+          $job = Start-Job { python examples/streaming_mode.py all }
+          Wait-Job $job -Timeout 120 | Out-Null
+          Stop-Job $job
+          Receive-Job $job
+
+          $job = Start-Job { python examples/hooks.py PreToolUse }
+          Wait-Job $job -Timeout 120 | Out-Null
+          Stop-Job $job
+          Receive-Job $job
+
+          $job = Start-Job { python examples/hooks.py DecisionFields }
+          Wait-Job $job -Timeout 120 | Out-Null
+          Stop-Job $job
+          Receive-Job $job
+        shell: pwsh

.gitignore

@@ -26,6 +26,7 @@ venv/
 ENV/
 env/
 .venv
+uv.lock
 
 # IDEs
 .vscode/

CHANGELOG.md

@@ -1,5 +1,157 @@
 # Changelog
 
+## 0.1.18
+
+### Internal/Other Changes
+
+- **Docker-based test infrastructure**: Added Docker support for running e2e tests in containerized environments, helping catch Docker-specific issues (#424)
+- Updated bundled Claude CLI to version 2.0.72
+
+## 0.1.17
+
+### New Features
+
+- **UserMessage UUID field**: Added `uuid` field to `UserMessage` response type, making it easier to use the `rewind_files()` method by providing direct access to message identifiers needed for file checkpointing (#418)
+
+### Internal/Other Changes
+
+- Updated bundled Claude CLI to version 2.0.70
+
+## 0.1.16
+
+### Bug Fixes
+
+- **Rate limit detection**: Fixed parsing of the `error` field in `AssistantMessage`, enabling applications to detect and handle API errors like rate limits. Previously, the `error` field was defined but never populated from CLI responses (#405)
+
+### Internal/Other Changes
+
+- Updated bundled Claude CLI to version 2.0.68
+
+## 0.1.15
+
+### New Features
+
+- **File checkpointing and rewind**: Added `enable_file_checkpointing` option to `ClaudeAgentOptions` and `rewind_files(user_message_id)` method to `ClaudeSDKClient` and `Query`. This enables reverting file changes made during a session back to a specific checkpoint, useful for exploring different approaches or recovering from unwanted modifications (#395)
+
+### Documentation
+
+- Added license and terms section to README (#399)
+
+## 0.1.14
+
+### Internal/Other Changes
+
+- Updated bundled Claude CLI to version 2.0.62
+
+## 0.1.13
+
+### Bug Fixes
+
+- **Faster error handling**: CLI errors (e.g., invalid session ID) now propagate to pending requests immediately instead of waiting for the 60-second timeout (#388)
+- **Pydantic 2.12+ compatibility**: Fixed `PydanticUserError` caused by `McpServer` type only being imported under `TYPE_CHECKING` (#385)
+- **Concurrent subagent writes**: Added write lock to prevent `BusyResourceError` when multiple subagents invoke MCP tools in parallel (#391)
+
+### Internal/Other Changes
+
+- Updated bundled Claude CLI to version 2.0.59
+
+## 0.1.12
+
+### New Features
+
+- **Tools option**: Added `tools` option to `ClaudeAgentOptions` for controlling the base set of available tools, matching the TypeScript SDK functionality. Supports three modes:
+  - Array of tool names to specify which tools should be available (e.g., `["Read", "Edit", "Bash"]`)
+  - Empty array `[]` to disable all built-in tools
+  - Preset object `{"type": "preset", "preset": "claude_code"}` to use the default Claude Code toolset
+- **SDK beta support**: Added `betas` option to `ClaudeAgentOptions` for enabling Anthropic API beta features. Currently supports `"context-1m-2025-08-07"` for extended context window
+
+## 0.1.11
+
+### Internal/Other Changes
+
+- Updated bundled Claude CLI to version 2.0.57
+
+## 0.1.10
+
+### Internal/Other Changes
+
+- Updated bundled Claude CLI to version 2.0.53
+
+## 0.1.9
+
+### Internal/Other Changes
+
+- Updated bundled Claude CLI to version 2.0.49
+
+## 0.1.8
+
+### Features
+
+- Claude Code is now included by default in the package, removing the requirement to install it separately. If you do wish to use a separately installed build, use the `cli_path` field in `Options`.
+
+## 0.1.7
+
+### Features
+
+- **Structured outputs support**: Agents can now return validated JSON matching your schema. See https://docs.claude.com/en/docs/agent-sdk/structured-outputs. (#340)
+- **Fallback model handling**: Added automatic fallback model handling for improved reliability and parity with the TypeScript SDK. When the primary model is unavailable, the SDK will automatically use a fallback model (#317)
+- **Local Claude CLI support**: Added support for using a locally installed Claude CLI from `~/.claude/local/claude`, enabling development and testing with custom Claude CLI builds (#302)
+
+## 0.1.6
+
+### Features
+
+- **Max budget control**: Added `max_budget_usd` option to set a maximum spending limit in USD for SDK sessions. When the budget is exceeded, the session will automatically terminate, helping prevent unexpected costs (#293)
+- **Extended thinking configuration**: Added `max_thinking_tokens` option to control the maximum number of tokens allocated for Claude's internal reasoning process. This allows fine-tuning of the balance between response quality and token usage (#298)
+
+### Bug Fixes
+
+- **System prompt defaults**: Fixed issue where a default system prompt was being used when none was specified. The SDK now correctly uses an empty system prompt by default, giving users full control over agent behavior (#290)
+
+## 0.1.5
+
+### Features
+
+- **Plugin support**: Added the ability to load Claude Code plugins programmatically through the SDK. Plugins can be specified using the new `plugins` field in `ClaudeAgentOptions` with a `SdkPluginConfig` type that supports loading local plugins by path. This enables SDK applications to extend functionality with custom commands and capabilities defined in plugin directories
+
+## 0.1.4
+
+### Features
+
+- **Skip version check**: Added `CLAUDE_AGENT_SDK_SKIP_VERSION_CHECK` environment variable to allow users to disable the Claude Code version check. Set this environment variable to skip the minimum version validation when the SDK connects to Claude Code. (Only recommended if you already have Claude Code 2.0.0 or higher installed, otherwise some functionality may break)
+- SDK MCP server tool calls can now return image content blocks
+
+## 0.1.3
+
+### Features
+
+- **Strongly-typed hook inputs**: Added typed hook input structures (`PreToolUseHookInput`, `PostToolUseHookInput`, `UserPromptSubmitHookInput`, etc.) using TypedDict for better IDE autocomplete and type safety. Hook callbacks now receive fully typed input parameters
+
+### Bug Fixes
+
+- **Hook output field conversion**: Fixed bug where Python-safe field names (`async_`, `continue_`) in hook outputs were not being converted to CLI format (`async`, `continue`). This caused hook control fields to be silently ignored, preventing proper hook behavior. The SDK now automatically converts field names when communicating with the CLI
+
+### Internal/Other Changes
+
+- **CI/CD**: Re-enabled Windows testing in the end-to-end test workflow. Windows CI had been temporarily disabled but is now fully operational across all test suites
+
+## 0.1.2
+
+### Bug Fixes
+
+- **Hook output fields**: Added missing hook output fields to match the TypeScript SDK, including `reason`, `continue_`, `suppressOutput`, and `stopReason`. The `decision` field now properly supports both "approve" and "block" values. Added `AsyncHookJSONOutput` type for deferred hook execution and proper typing for `hookSpecificOutput` with discriminated unions
+
+## 0.1.1
+
+### Features
+
+- **Minimum Claude Code version check**: Added version validation to ensure Claude Code 2.0.0+ is installed. The SDK will display a warning if an older version is detected, helping prevent compatibility issues
+- **Updated PermissionResult types**: Aligned permission result types with the latest control protocol for better type safety and compatibility
+
+### Improvements
+
+- **Model references**: Updated all examples and tests to use the simplified `claude-sonnet-4-5` model identifier instead of dated version strings
+
 ## 0.1.0
 
 Introducing the Claude Agent SDK! The Claude Code SDK has been renamed to better reflect its capabilities for building AI agents across all domains, not just coding.
@@ -7,7 +159,9 @@ Introducing the Claude Agent SDK! The Claude Code SDK has been renamed to better
 ### Breaking Changes
 
 #### Type Name Changes
+
 - **ClaudeCodeOptions renamed to ClaudeAgentOptions**: The options type has been renamed to match the new SDK branding. Update all imports and type references:
+
   ```python
   # Before
   from claude_agent_sdk import query, ClaudeCodeOptions
@@ -19,6 +173,7 @@ Introducing the Claude Agent SDK! The Claude Code SDK has been renamed to better
   ```
 
 #### System Prompt Changes
+
 - **Merged prompt options**: The `custom_system_prompt` and `append_system_prompt` fields have been merged into a single `system_prompt` field for simpler configuration
 - **No default system prompt**: The Claude Code system prompt is no longer included by default, giving you full control over agent behavior. To use the Claude Code system prompt, explicitly set:
   ```python
@@ -26,6 +181,7 @@ Introducing the Claude Agent SDK! The Claude Code SDK has been renamed to better
   ```
 
 #### Settings Isolation
+
 - **No filesystem settings by default**: Settings files (`settings.json`, `CLAUDE.md`), slash commands, and subagents are no longer loaded automatically. This ensures SDK applications have predictable behavior independent of local filesystem configurations
 - **Explicit settings control**: Use the new `setting_sources` field to specify which settings locations to load: `["user", "project", "local"]`
 
@@ -80,4 +236,3 @@ For full migration instructions, see our [migration guide](https://docs.claude.c
 - Fix multi-line buffering issue
 - Rename cost_usd to total_cost_usd in API responses
 - Fix optional cost fields handling
-

Dockerfile.test

@@ -0,0 +1,29 @@
+# Dockerfile for running SDK tests in a containerized environment
+# This helps catch Docker-specific issues like #406
+
+FROM python:3.12-slim
+
+# Install dependencies for Claude CLI and git (needed for some tests)
+RUN apt-get update && apt-get install -y \
+    curl \
+    git \
+    && rm -rf /var/lib/apt/lists/*
+
+# Install Claude Code CLI
+RUN curl -fsSL https://claude.ai/install.sh | bash
+ENV PATH="/root/.local/bin:$PATH"
+
+# Set up working directory
+WORKDIR /app
+
+# Copy the SDK source
+COPY . .
+
+# Install SDK with dev dependencies
+RUN pip install -e ".[dev]"
+
+# Verify CLI installation
+RUN claude -v
+
+# Default: run unit tests
+CMD ["python", "-m", "pytest", "tests/", "-v"]

README.md

@@ -9,9 +9,13 @@ pip install claude-agent-sdk
 ```
 
 **Prerequisites:**
+
 - Python 3.10+
-- Node.js
+
-- Claude Code 2.0.0+: `npm install -g @anthropic-ai/claude-code`
+**Note:** The Claude Code CLI is automatically bundled with the package - no separate installation required! The SDK will use the bundled CLI by default. If you prefer to use a system-wide installation or a specific version, you can:
+
+- Install Claude Code separately: `curl -fsSL https://claude.ai/install.sh | bash`
+- Specify a custom path: `ClaudeAgentOptions(cli_path="/path/to/claude")`
 
 ## Quick Start
 
@@ -179,7 +183,7 @@ options = ClaudeAgentOptions(
 
 ### Hooks
 
-A **hook** is a Python function that the Claude Code *application* (*not* Claude) invokes at specific points of the Claude agent loop. Hooks can provide deterministic processing and automated feedback for Claude. Read more in [Claude Code Hooks Reference](https://docs.anthropic.com/en/docs/claude-code/hooks).
+A **hook** is a Python function that the Claude Code _application_ (_not_ Claude) invokes at specific points of the Claude agent loop. Hooks can provide deterministic processing and automated feedback for Claude. Read more in [Claude Code Hooks Reference](https://docs.anthropic.com/en/docs/claude-code/hooks).
 
 For more examples, see examples/hooks.py.
 
@@ -229,10 +233,10 @@ async with ClaudeSDKClient(options=options) as client:
         print(msg)
 ```
 
-
 ## Types
 
 See [src/claude_agent_sdk/types.py](src/claude_agent_sdk/types.py) for complete type definitions:
+
 - `ClaudeAgentOptions` - Configuration options
 - `AssistantMessage`, `UserMessage`, `SystemMessage`, `ResultMessage` - Message types
 - `TextBlock`, `ToolUseBlock`, `ToolResultBlock` - Content blocks
@@ -259,7 +263,7 @@ except CLIJSONDecodeError as e:
     print(f"Failed to parse response: {e}")
 ```
 
-See [src/claude_agent_sdk/_errors.py](src/claude_agent_sdk/_errors.py) for all error types.
+See [src/claude_agent_sdk/\_errors.py](src/claude_agent_sdk/_errors.py) for all error types.
 
 ## Available Tools
 
@@ -280,6 +284,73 @@ If you're upgrading from the Claude Code SDK (versions < 0.1.0), please see the
 - Settings isolation and explicit control
 - New programmatic subagents and session forking features
 
-## License
+## Development
 
-MIT
+If you're contributing to this project, run the initial setup script to install git hooks:
+
+```bash
+./scripts/initial-setup.sh
+```
+
+This installs a pre-push hook that runs lint checks before pushing, matching the CI workflow. To skip the hook temporarily, use `git push --no-verify`.
+
+### Building Wheels Locally
+
+To build wheels with the bundled Claude Code CLI:
+
+```bash
+# Install build dependencies
+pip install build twine
+
+# Build wheel with bundled CLI
+python scripts/build_wheel.py
+
+# Build with specific version
+python scripts/build_wheel.py --version 0.1.4
+
+# Build with specific CLI version
+python scripts/build_wheel.py --cli-version 2.0.0
+
+# Clean bundled CLI after building
+python scripts/build_wheel.py --clean
+
+# Skip CLI download (use existing)
+python scripts/build_wheel.py --skip-download
+```
+
+The build script:
+
+1. Downloads Claude Code CLI for your platform
+2. Bundles it in the wheel
+3. Builds both wheel and source distribution
+4. Checks the package with twine
+
+See `python scripts/build_wheel.py --help` for all options.
+
+### Release Workflow
+
+The package is published to PyPI via the GitHub Actions workflow in `.github/workflows/publish.yml`. To create a new release:
+
+1. **Trigger the workflow** manually from the Actions tab with two inputs:
+   - `version`: The package version to publish (e.g., `0.1.5`)
+   - `claude_code_version`: The Claude Code CLI version to bundle (e.g., `2.0.0` or `latest`)
+
+2. **The workflow will**:
+   - Build platform-specific wheels for macOS, Linux, and Windows
+   - Bundle the specified Claude Code CLI version in each wheel
+   - Build a source distribution
+   - Publish all artifacts to PyPI
+   - Create a release branch with version updates
+   - Open a PR to main with:
+     - Updated `pyproject.toml` version
+     - Updated `src/claude_agent_sdk/_version.py`
+     - Updated `src/claude_agent_sdk/_cli_version.py` with bundled CLI version
+     - Auto-generated `CHANGELOG.md` entry
+
+3. **Review and merge** the release PR to update main with the new version information
+
+The workflow tracks both the package version and the bundled CLI version separately, allowing you to release a new package version with an updated CLI without code changes.
+
+## License and terms
+
+Use of this SDK is governed by Anthropic's [Commercial Terms of Service](https://www.anthropic.com/legal/commercial-terms), including when you use it to power products and services that you make available to your own customers and end users, except to the extent a specific component or dependency is covered by a different license as indicated in that component's LICENSE file.

e2e-tests/test_agents_and_settings.py

@@ -1,5 +1,7 @@
 """End-to-end tests for agents and setting sources with real Claude API calls."""
 
+import asyncio
+import sys
 import tempfile
 from pathlib import Path
 
@@ -36,15 +38,88 @@ async def test_agent_definition():
         async for message in client.receive_response():
             if isinstance(message, SystemMessage) and message.subtype == "init":
                 agents = message.data.get("agents", [])
-                assert isinstance(
+                assert isinstance(agents, list), (
-                    agents, list
+                    f"agents should be a list of strings, got: {type(agents)}"
-                ), f"agents should be a list of strings, got: {type(agents)}"
+                )
-                assert (
+                assert "test-agent" in agents, (
-                    "test-agent" in agents
+                    f"test-agent should be available, got: {agents}"
-                ), f"test-agent should be available, got: {agents}"
+                )
                 break
 
 
+@pytest.mark.e2e
+@pytest.mark.asyncio
+async def test_filesystem_agent_loading():
+    """Test that filesystem-based agents load via setting_sources and produce full response.
+
+    This is the core test for issue #406. It verifies that when using
+    setting_sources=["project"] with a .claude/agents/ directory containing
+    agent definitions, the SDK:
+    1. Loads the agents (they appear in init message)
+    2. Produces a full response with AssistantMessage
+    3. Completes with a ResultMessage
+
+    The bug in #406 causes the iterator to complete after only the
+    init SystemMessage, never yielding AssistantMessage or ResultMessage.
+    """
+    with tempfile.TemporaryDirectory() as tmpdir:
+        # Create a temporary project with a filesystem agent
+        project_dir = Path(tmpdir)
+        agents_dir = project_dir / ".claude" / "agents"
+        agents_dir.mkdir(parents=True)
+
+        # Create a test agent file
+        agent_file = agents_dir / "fs-test-agent.md"
+        agent_file.write_text(
+            """---
+name: fs-test-agent
+description: A filesystem test agent for SDK testing
+tools: Read
+---
+
+# Filesystem Test Agent
+
+You are a simple test agent. When asked a question, provide a brief, helpful answer.
+"""
+        )
+
+        options = ClaudeAgentOptions(
+            setting_sources=["project"],
+            cwd=project_dir,
+            max_turns=1,
+        )
+
+        messages = []
+        async with ClaudeSDKClient(options=options) as client:
+            await client.query("Say hello in exactly 3 words")
+            async for msg in client.receive_response():
+                messages.append(msg)
+
+        # Must have at least init, assistant, result
+        message_types = [type(m).__name__ for m in messages]
+
+        assert "SystemMessage" in message_types, "Missing SystemMessage (init)"
+        assert "AssistantMessage" in message_types, (
+            f"Missing AssistantMessage - got only: {message_types}. "
+            "This may indicate issue #406 (silent failure with filesystem agents)."
+        )
+        assert "ResultMessage" in message_types, "Missing ResultMessage"
+
+        # Find the init message and check for the filesystem agent
+        for msg in messages:
+            if isinstance(msg, SystemMessage) and msg.subtype == "init":
+                agents = msg.data.get("agents", [])
+                # Agents are returned as strings (just names)
+                assert "fs-test-agent" in agents, (
+                    f"fs-test-agent not loaded from filesystem. Found: {agents}"
+                )
+                break
+
+        # On Windows, wait for file handles to be released before cleanup
+        if sys.platform == "win32":
+            await asyncio.sleep(0.5)
+
+
 @pytest.mark.e2e
 @pytest.mark.asyncio
 async def test_setting_sources_default():
@@ -72,14 +147,18 @@ async def test_setting_sources_default():
             async for message in client.receive_response():
                 if isinstance(message, SystemMessage) and message.subtype == "init":
                     output_style = message.data.get("output_style")
-                    assert (
+                    assert output_style != "local-test-style", (
-                        output_style != "local-test-style"
+                        f"outputStyle should NOT be from local settings (default is no settings), got: {output_style}"
-                    ), f"outputStyle should NOT be from local settings (default is no settings), got: {output_style}"
+                    )
-                    assert (
+                    assert output_style == "default", (
-                        output_style == "default"
+                        f"outputStyle should be 'default', got: {output_style}"
-                    ), f"outputStyle should be 'default', got: {output_style}"
+                    )
                     break
 
+        # On Windows, wait for file handles to be released before cleanup
+        if sys.platform == "win32":
+            await asyncio.sleep(0.5)
+
 
 @pytest.mark.e2e
 @pytest.mark.asyncio
@@ -115,11 +194,15 @@ This is a test command.
             async for message in client.receive_response():
                 if isinstance(message, SystemMessage) and message.subtype == "init":
                     commands = message.data.get("slash_commands", [])
-                    assert (
+                    assert "testcmd" not in commands, (
-                        "testcmd" not in commands
+                        f"testcmd should NOT be available with user-only sources, got: {commands}"
-                    ), f"testcmd should NOT be available with user-only sources, got: {commands}"
+                    )
                     break
 
+        # On Windows, wait for file handles to be released before cleanup
+        if sys.platform == "win32":
+            await asyncio.sleep(0.5)
+
 
 @pytest.mark.e2e
 @pytest.mark.asyncio
@@ -149,7 +232,11 @@ async def test_setting_sources_project_included():
             async for message in client.receive_response():
                 if isinstance(message, SystemMessage) and message.subtype == "init":
                     output_style = message.data.get("output_style")
-                    assert (
+                    assert output_style == "local-test-style", (
-                        output_style == "local-test-style"
+                        f"outputStyle should be from local settings, got: {output_style}"
-                    ), f"outputStyle should be from local settings, got: {output_style}"
+                    )
                     break
+
+        # On Windows, wait for file handles to be released before cleanup
+        if sys.platform == "win32":
+            await asyncio.sleep(0.5)

e2e-tests/test_hooks.py

@@ -0,0 +1,150 @@
+"""End-to-end tests for hook callbacks with real Claude API calls."""
+
+import pytest
+
+from claude_agent_sdk import (
+    ClaudeAgentOptions,
+    ClaudeSDKClient,
+    HookContext,
+    HookInput,
+    HookJSONOutput,
+    HookMatcher,
+)
+
+
+@pytest.mark.e2e
+@pytest.mark.asyncio
+async def test_hook_with_permission_decision_and_reason():
+    """Test that hooks with permissionDecision and reason fields work end-to-end."""
+    hook_invocations = []
+
+    async def test_hook(
+        input_data: HookInput, tool_use_id: str | None, context: HookContext
+    ) -> HookJSONOutput:
+        """Hook that uses permissionDecision and reason fields."""
+        tool_name = input_data.get("tool_name", "")
+        print(f"Hook called for tool: {tool_name}")
+        hook_invocations.append(tool_name)
+
+        # Block Bash commands for this test
+        if tool_name == "Bash":
+            return {
+                "reason": "Bash commands are blocked in this test for safety",
+                "systemMessage": "⚠️ Command blocked by hook",
+                "hookSpecificOutput": {
+                    "hookEventName": "PreToolUse",
+                    "permissionDecision": "deny",
+                    "permissionDecisionReason": "Security policy: Bash blocked",
+                },
+            }
+
+        return {
+            "reason": "Tool approved by security review",
+            "hookSpecificOutput": {
+                "hookEventName": "PreToolUse",
+                "permissionDecision": "allow",
+                "permissionDecisionReason": "Tool passed security checks",
+            },
+        }
+
+    options = ClaudeAgentOptions(
+        allowed_tools=["Bash", "Write"],
+        hooks={
+            "PreToolUse": [
+                HookMatcher(matcher="Bash", hooks=[test_hook]),
+            ],
+        },
+    )
+
+    async with ClaudeSDKClient(options=options) as client:
+        await client.query("Run this bash command: echo 'hello'")
+
+        async for message in client.receive_response():
+            print(f"Got message: {message}")
+
+    print(f"Hook invocations: {hook_invocations}")
+    # Verify hook was called
+    assert "Bash" in hook_invocations, f"Hook should have been invoked for Bash tool, got: {hook_invocations}"
+
+
+@pytest.mark.e2e
+@pytest.mark.asyncio
+async def test_hook_with_continue_and_stop_reason():
+    """Test that hooks with continue_=False and stopReason fields work end-to-end."""
+    hook_invocations = []
+
+    async def post_tool_hook(
+        input_data: HookInput, tool_use_id: str | None, context: HookContext
+    ) -> HookJSONOutput:
+        """PostToolUse hook that stops execution with stopReason."""
+        tool_name = input_data.get("tool_name", "")
+        hook_invocations.append(tool_name)
+
+        # Actually test continue_=False and stopReason fields
+        return {
+            "continue_": False,
+            "stopReason": "Execution halted by test hook for validation",
+            "reason": "Testing continue and stopReason fields",
+            "systemMessage": "🛑 Test hook stopped execution",
+        }
+
+    options = ClaudeAgentOptions(
+        allowed_tools=["Bash"],
+        hooks={
+            "PostToolUse": [
+                HookMatcher(matcher="Bash", hooks=[post_tool_hook]),
+            ],
+        },
+    )
+
+    async with ClaudeSDKClient(options=options) as client:
+        await client.query("Run: echo 'test message'")
+
+        async for message in client.receive_response():
+            print(f"Got message: {message}")
+
+    print(f"Hook invocations: {hook_invocations}")
+    # Verify hook was called
+    assert "Bash" in hook_invocations, f"PostToolUse hook should have been invoked, got: {hook_invocations}"
+
+
+@pytest.mark.e2e
+@pytest.mark.asyncio
+async def test_hook_with_additional_context():
+    """Test that hooks with hookSpecificOutput work end-to-end."""
+    hook_invocations = []
+
+    async def context_hook(
+        input_data: HookInput, tool_use_id: str | None, context: HookContext
+    ) -> HookJSONOutput:
+        """Hook that provides additional context."""
+        hook_invocations.append("context_added")
+
+        return {
+            "systemMessage": "Additional context provided by hook",
+            "reason": "Hook providing monitoring feedback",
+            "suppressOutput": False,
+            "hookSpecificOutput": {
+                "hookEventName": "PostToolUse",
+                "additionalContext": "The command executed successfully with hook monitoring",
+            },
+        }
+
+    options = ClaudeAgentOptions(
+        allowed_tools=["Bash"],
+        hooks={
+            "PostToolUse": [
+                HookMatcher(matcher="Bash", hooks=[context_hook]),
+            ],
+        },
+    )
+
+    async with ClaudeSDKClient(options=options) as client:
+        await client.query("Run: echo 'testing hooks'")
+
+        async for message in client.receive_response():
+            print(f"Got message: {message}")
+
+    print(f"Hook invocations: {hook_invocations}")
+    # Verify hook was called
+    assert "context_added" in hook_invocations, "Hook with hookSpecificOutput should have been invoked"

e2e-tests/test_structured_output.py

@@ -0,0 +1,204 @@
+"""End-to-end tests for structured output with real Claude API calls.
+
+These tests verify that the output_schema feature works correctly by making
+actual API calls to Claude with JSON Schema validation.
+"""
+
+import tempfile
+
+import pytest
+
+from claude_agent_sdk import (
+    ClaudeAgentOptions,
+    ResultMessage,
+    query,
+)
+
+
+@pytest.mark.e2e
+@pytest.mark.asyncio
+async def test_simple_structured_output():
+    """Test structured output with file counting requiring tool use."""
+
+    # Define schema for file analysis
+    schema = {
+        "type": "object",
+        "properties": {
+            "file_count": {"type": "number"},
+            "has_tests": {"type": "boolean"},
+            "test_file_count": {"type": "number"},
+        },
+        "required": ["file_count", "has_tests"],
+    }
+
+    options = ClaudeAgentOptions(
+        output_format={"type": "json_schema", "schema": schema},
+        permission_mode="acceptEdits",
+        cwd=".",  # Use current directory
+    )
+
+    # Agent must use Glob/Bash to count files
+    result_message = None
+    async for message in query(
+        prompt="Count how many Python files are in src/claude_agent_sdk/ and check if there are any test files. Use tools to explore the filesystem.",
+        options=options,
+    ):
+        if isinstance(message, ResultMessage):
+            result_message = message
+
+    # Verify result
+    assert result_message is not None, "No result message received"
+    assert not result_message.is_error, f"Query failed: {result_message.result}"
+    assert result_message.subtype == "success"
+
+    # Verify structured output is present and valid
+    assert result_message.structured_output is not None, "No structured output in result"
+    assert "file_count" in result_message.structured_output
+    assert "has_tests" in result_message.structured_output
+    assert isinstance(result_message.structured_output["file_count"], (int, float))
+    assert isinstance(result_message.structured_output["has_tests"], bool)
+
+    # Should find Python files in src/
+    assert result_message.structured_output["file_count"] > 0
+
+
+@pytest.mark.e2e
+@pytest.mark.asyncio
+async def test_nested_structured_output():
+    """Test structured output with nested objects and arrays."""
+
+    # Define a schema with nested structure
+    schema = {
+        "type": "object",
+        "properties": {
+            "analysis": {
+                "type": "object",
+                "properties": {
+                    "word_count": {"type": "number"},
+                    "character_count": {"type": "number"},
+                },
+                "required": ["word_count", "character_count"],
+            },
+            "words": {
+                "type": "array",
+                "items": {"type": "string"},
+            },
+        },
+        "required": ["analysis", "words"],
+    }
+
+    options = ClaudeAgentOptions(
+        output_format={"type": "json_schema", "schema": schema},
+        permission_mode="acceptEdits",
+    )
+
+    result_message = None
+    async for message in query(
+        prompt="Analyze this text: 'Hello world'. Provide word count, character count, and list of words.",
+        options=options,
+    ):
+        if isinstance(message, ResultMessage):
+            result_message = message
+
+    # Verify result
+    assert result_message is not None
+    assert not result_message.is_error
+    assert result_message.structured_output is not None
+
+    # Check nested structure
+    output = result_message.structured_output
+    assert "analysis" in output
+    assert "words" in output
+    assert output["analysis"]["word_count"] == 2
+    assert output["analysis"]["character_count"] == 11  # "Hello world"
+    assert len(output["words"]) == 2
+
+
+@pytest.mark.e2e
+@pytest.mark.asyncio
+async def test_structured_output_with_enum():
+    """Test structured output with enum constraints requiring code analysis."""
+
+    schema = {
+        "type": "object",
+        "properties": {
+            "has_tests": {"type": "boolean"},
+            "test_framework": {
+                "type": "string",
+                "enum": ["pytest", "unittest", "nose", "unknown"],
+            },
+            "test_count": {"type": "number"},
+        },
+        "required": ["has_tests", "test_framework"],
+    }
+
+    options = ClaudeAgentOptions(
+        output_format={"type": "json_schema", "schema": schema},
+        permission_mode="acceptEdits",
+        cwd=".",
+    )
+
+    result_message = None
+    async for message in query(
+        prompt="Search for test files in the tests/ directory. Determine which test framework is being used (pytest/unittest/nose) and count how many test files exist. Use Grep to search for framework imports.",
+        options=options,
+    ):
+        if isinstance(message, ResultMessage):
+            result_message = message
+
+    # Verify result
+    assert result_message is not None
+    assert not result_message.is_error
+    assert result_message.structured_output is not None
+
+    # Check enum values are valid
+    output = result_message.structured_output
+    assert output["test_framework"] in ["pytest", "unittest", "nose", "unknown"]
+    assert isinstance(output["has_tests"], bool)
+
+    # This repo uses pytest
+    assert output["has_tests"] is True
+    assert output["test_framework"] == "pytest"
+
+
+@pytest.mark.e2e
+@pytest.mark.asyncio
+async def test_structured_output_with_tools():
+    """Test structured output when agent uses tools."""
+
+    # Schema for file analysis
+    schema = {
+        "type": "object",
+        "properties": {
+            "file_count": {"type": "number"},
+            "has_readme": {"type": "boolean"},
+        },
+        "required": ["file_count", "has_readme"],
+    }
+
+    options = ClaudeAgentOptions(
+        output_format={"type": "json_schema", "schema": schema},
+        permission_mode="acceptEdits",
+        cwd=tempfile.gettempdir(),  # Cross-platform temp directory
+    )
+
+    result_message = None
+    async for message in query(
+        prompt="Count how many files are in the current directory and check if there's a README file. Use tools as needed.",
+        options=options,
+    ):
+        if isinstance(message, ResultMessage):
+            result_message = message
+
+    # Verify result
+    assert result_message is not None
+    assert not result_message.is_error
+    assert result_message.structured_output is not None
+
+    # Check structure
+    output = result_message.structured_output
+    assert "file_count" in output
+    assert "has_readme" in output
+    assert isinstance(output["file_count"], (int, float))
+    assert isinstance(output["has_readme"], bool)
+    assert output["file_count"] >= 0  # Should be non-negative

examples/filesystem_agents.py

@@ -0,0 +1,107 @@
+#!/usr/bin/env python3
+"""Example of loading filesystem-based agents via setting_sources.
+
+This example demonstrates how to load agents defined in .claude/agents/ files
+using the setting_sources option. This is different from inline AgentDefinition
+objects - these agents are loaded from markdown files on disk.
+
+This example tests the scenario from issue #406 where filesystem-based agents
+loaded via setting_sources=["project"] may silently fail in certain environments.
+
+Usage:
+./examples/filesystem_agents.py
+"""
+
+import asyncio
+from pathlib import Path
+
+from claude_agent_sdk import (
+    AssistantMessage,
+    ClaudeAgentOptions,
+    ClaudeSDKClient,
+    ResultMessage,
+    SystemMessage,
+    TextBlock,
+)
+
+
+def extract_agents(msg: SystemMessage) -> list[str]:
+    """Extract agent names from system message init data."""
+    if msg.subtype == "init":
+        agents = msg.data.get("agents", [])
+        # Agents can be either strings or dicts with a 'name' field
+        result = []
+        for a in agents:
+            if isinstance(a, str):
+                result.append(a)
+            elif isinstance(a, dict):
+                result.append(a.get("name", ""))
+        return result
+    return []
+
+
+async def main():
+    """Test loading filesystem-based agents."""
+    print("=== Filesystem Agents Example ===")
+    print("Testing: setting_sources=['project'] with .claude/agents/test-agent.md")
+    print()
+
+    # Use the SDK repo directory which has .claude/agents/test-agent.md
+    sdk_dir = Path(__file__).parent.parent
+
+    options = ClaudeAgentOptions(
+        setting_sources=["project"],
+        cwd=sdk_dir,
+    )
+
+    message_types: list[str] = []
+    agents_found: list[str] = []
+
+    async with ClaudeSDKClient(options=options) as client:
+        await client.query("Say hello in exactly 3 words")
+
+        async for msg in client.receive_response():
+            message_types.append(type(msg).__name__)
+
+            if isinstance(msg, SystemMessage) and msg.subtype == "init":
+                agents_found = extract_agents(msg)
+                print(f"Init message received. Agents loaded: {agents_found}")
+
+            elif isinstance(msg, AssistantMessage):
+                for block in msg.content:
+                    if isinstance(block, TextBlock):
+                        print(f"Assistant: {block.text}")
+
+            elif isinstance(msg, ResultMessage):
+                print(
+                    f"Result: subtype={msg.subtype}, cost=${msg.total_cost_usd or 0:.4f}"
+                )
+
+    print()
+    print("=== Summary ===")
+    print(f"Message types received: {message_types}")
+    print(f"Total messages: {len(message_types)}")
+
+    # Validate the results
+    has_init = "SystemMessage" in message_types
+    has_assistant = "AssistantMessage" in message_types
+    has_result = "ResultMessage" in message_types
+    has_test_agent = "test-agent" in agents_found
+
+    print()
+    if has_init and has_assistant and has_result:
+        print("SUCCESS: Received full response (init, assistant, result)")
+    else:
+        print("FAILURE: Did not receive full response")
+        print(f"  - Init: {has_init}")
+        print(f"  - Assistant: {has_assistant}")
+        print(f"  - Result: {has_result}")
+
+    if has_test_agent:
+        print("SUCCESS: test-agent was loaded from filesystem")
+    else:
+        print("WARNING: test-agent was NOT loaded (may not exist in .claude/agents/)")
+
+
+if __name__ == "__main__":
+    asyncio.run(main())

examples/hooks.py

@@ -19,6 +19,7 @@ from claude_agent_sdk import ClaudeAgentOptions, ClaudeSDKClient
 from claude_agent_sdk.types import (
     AssistantMessage,
     HookContext,
+    HookInput,
     HookJSONOutput,
     HookMatcher,
     Message,
@@ -43,7 +44,7 @@ def display_message(msg: Message) -> None:
 
 ##### Hook callback functions
 async def check_bash_command(
-    input_data: dict[str, Any], tool_use_id: str | None, context: HookContext
+    input_data: HookInput, tool_use_id: str | None, context: HookContext
 ) -> HookJSONOutput:
     """Prevent certain bash commands from being executed."""
     tool_name = input_data["tool_name"]
@@ -70,7 +71,7 @@ async def check_bash_command(
 
 
 async def add_custom_instructions(
-    input_data: dict[str, Any], tool_use_id: str | None, context: HookContext
+    input_data: HookInput, tool_use_id: str | None, context: HookContext
 ) -> HookJSONOutput:
     """Add custom instructions when a session starts."""
     return {
@@ -81,6 +82,77 @@ async def add_custom_instructions(
     }
 
 
+async def review_tool_output(
+    input_data: HookInput, tool_use_id: str | None, context: HookContext
+) -> HookJSONOutput:
+    """Review tool output and provide additional context or warnings."""
+    tool_response = input_data.get("tool_response", "")
+
+    # If the tool produced an error, add helpful context
+    if "error" in str(tool_response).lower():
+        return {
+            "systemMessage": "⚠️ The command produced an error",
+            "reason": "Tool execution failed - consider checking the command syntax",
+            "hookSpecificOutput": {
+                "hookEventName": "PostToolUse",
+                "additionalContext": "The command encountered an error. You may want to try a different approach.",
+            }
+        }
+
+    return {}
+
+
+async def strict_approval_hook(
+    input_data: HookInput, tool_use_id: str | None, context: HookContext
+) -> HookJSONOutput:
+    """Demonstrates using permissionDecision to control tool execution."""
+    tool_name = input_data.get("tool_name")
+    tool_input = input_data.get("tool_input", {})
+
+    # Block any Write operations to specific files
+    if tool_name == "Write":
+        file_path = tool_input.get("file_path", "")
+        if "important" in file_path.lower():
+            logger.warning(f"Blocked Write to: {file_path}")
+            return {
+                "reason": "Writes to files containing 'important' in the name are not allowed for safety",
+                "systemMessage": "🚫 Write operation blocked by security policy",
+                "hookSpecificOutput": {
+                    "hookEventName": "PreToolUse",
+                    "permissionDecision": "deny",
+                    "permissionDecisionReason": "Security policy blocks writes to important files",
+                },
+            }
+
+    # Allow everything else explicitly
+    return {
+        "reason": "Tool use approved after security review",
+        "hookSpecificOutput": {
+            "hookEventName": "PreToolUse",
+            "permissionDecision": "allow",
+            "permissionDecisionReason": "Tool passed security checks",
+        },
+    }
+
+
+async def stop_on_error_hook(
+    input_data: HookInput, tool_use_id: str | None, context: HookContext
+) -> HookJSONOutput:
+    """Demonstrates using continue=False to stop execution on certain conditions."""
+    tool_response = input_data.get("tool_response", "")
+
+    # Stop execution if we see a critical error
+    if "critical" in str(tool_response).lower():
+        logger.error("Critical error detected - stopping execution")
+        return {
+            "continue_": False,
+            "stopReason": "Critical error detected in tool output - execution halted for safety",
+            "systemMessage": "🛑 Execution stopped due to critical error",
+        }
+
+    return {"continue_": True}
+
+
 async def example_pretooluse() -> None:
     """Basic example demonstrating hook protection."""
     print("=== PreToolUse Example ===")
@@ -143,11 +215,99 @@ async def example_userpromptsubmit() -> None:
     print("\n")
 
 
+async def example_posttooluse() -> None:
+    """Demonstrate PostToolUse hook with reason and systemMessage fields."""
+    print("=== PostToolUse Example ===")
+    print("This example shows how PostToolUse can provide feedback with reason and systemMessage.\n")
+
+    options = ClaudeAgentOptions(
+        allowed_tools=["Bash"],
+        hooks={
+            "PostToolUse": [
+                HookMatcher(matcher="Bash", hooks=[review_tool_output]),
+            ],
+        }
+    )
+
+    async with ClaudeSDKClient(options=options) as client:
+        print("User: Run a command that will produce an error: ls /nonexistent_directory")
+        await client.query("Run this command: ls /nonexistent_directory")
+
+        async for msg in client.receive_response():
+            display_message(msg)
+
+    print("\n")
+
+
+async def example_decision_fields() -> None:
+    """Demonstrate permissionDecision, reason, and systemMessage fields."""
+    print("=== Permission Decision Example ===")
+    print("This example shows how to use permissionDecision='allow'/'deny' with reason and systemMessage.\n")
+
+    options = ClaudeAgentOptions(
+        allowed_tools=["Write", "Bash"],
+        model="claude-sonnet-4-5-20250929",
+        hooks={
+            "PreToolUse": [
+                HookMatcher(matcher="Write", hooks=[strict_approval_hook]),
+            ],
+        }
+    )
+
+    async with ClaudeSDKClient(options=options) as client:
+        # Test 1: Try to write to a file with "important" in the name (should be blocked)
+        print("Test 1: Trying to write to important_config.txt (should be blocked)...")
+        print("User: Write 'test' to important_config.txt")
+        await client.query("Write the text 'test data' to a file called important_config.txt")
+
+        async for msg in client.receive_response():
+            display_message(msg)
+
+        print("\n" + "=" * 50 + "\n")
+
+        # Test 2: Write to a regular file (should be approved)
+        print("Test 2: Trying to write to regular_file.txt (should be approved)...")
+        print("User: Write 'test' to regular_file.txt")
+        await client.query("Write the text 'test data' to a file called regular_file.txt")
+
+        async for msg in client.receive_response():
+            display_message(msg)
+
+    print("\n")
+
+
+async def example_continue_control() -> None:
+    """Demonstrate continue and stopReason fields for execution control."""
+    print("=== Continue/Stop Control Example ===")
+    print("This example shows how to use continue_=False with stopReason to halt execution.\n")
+
+    options = ClaudeAgentOptions(
+        allowed_tools=["Bash"],
+        hooks={
+            "PostToolUse": [
+                HookMatcher(matcher="Bash", hooks=[stop_on_error_hook]),
+            ],
+        }
+    )
+
+    async with ClaudeSDKClient(options=options) as client:
+        print("User: Run a command that outputs 'CRITICAL ERROR'")
+        await client.query("Run this bash command: echo 'CRITICAL ERROR: system failure'")
+
+        async for msg in client.receive_response():
+            display_message(msg)
+
+    print("\n")
+
+
 async def main() -> None:
     """Run all examples or a specific example based on command line argument."""
     examples = {
         "PreToolUse": example_pretooluse,
         "UserPromptSubmit": example_userpromptsubmit,
+        "PostToolUse": example_posttooluse,
+        "DecisionFields": example_decision_fields,
+        "ContinueControl": example_continue_control,
     }
 
     if len(sys.argv) < 2:
@@ -157,6 +317,12 @@ async def main() -> None:
         print("  all - Run all examples")
         for name in examples:
             print(f"  {name}")
+        print("\nExample descriptions:")
+        print("  PreToolUse       - Block commands using PreToolUse hook")
+        print("  UserPromptSubmit - Add context at prompt submission")
+        print("  PostToolUse      - Review tool output with reason and systemMessage")
+        print("  DecisionFields   - Use permissionDecision='allow'/'deny' with reason")
+        print("  ContinueControl  - Control execution with continue_ and stopReason")
         sys.exit(0)
 
     example_name = sys.argv[1]

examples/max_budget_usd.py

@@ -0,0 +1,95 @@
+#!/usr/bin/env python3
+"""Example demonstrating max_budget_usd option for cost control."""
+
+import anyio
+
+from claude_agent_sdk import (
+    AssistantMessage,
+    ClaudeAgentOptions,
+    ResultMessage,
+    TextBlock,
+    query,
+)
+
+
+async def without_budget():
+    """Example without budget limit."""
+    print("=== Without Budget Limit ===")
+
+    async for message in query(prompt="What is 2 + 2?"):
+        if isinstance(message, AssistantMessage):
+            for block in message.content:
+                if isinstance(block, TextBlock):
+                    print(f"Claude: {block.text}")
+        elif isinstance(message, ResultMessage):
+            if message.total_cost_usd:
+                print(f"Total cost: ${message.total_cost_usd:.4f}")
+            print(f"Status: {message.subtype}")
+    print()
+
+
+async def with_reasonable_budget():
+    """Example with budget that won't be exceeded."""
+    print("=== With Reasonable Budget ($0.10) ===")
+
+    options = ClaudeAgentOptions(
+        max_budget_usd=0.10,  # 10 cents - plenty for a simple query
+    )
+
+    async for message in query(prompt="What is 2 + 2?", options=options):
+        if isinstance(message, AssistantMessage):
+            for block in message.content:
+                if isinstance(block, TextBlock):
+                    print(f"Claude: {block.text}")
+        elif isinstance(message, ResultMessage):
+            if message.total_cost_usd:
+                print(f"Total cost: ${message.total_cost_usd:.4f}")
+            print(f"Status: {message.subtype}")
+    print()
+
+
+async def with_tight_budget():
+    """Example with very tight budget that will likely be exceeded."""
+    print("=== With Tight Budget ($0.0001) ===")
+
+    options = ClaudeAgentOptions(
+        max_budget_usd=0.0001,  # Very small budget - will be exceeded quickly
+    )
+
+    async for message in query(
+        prompt="Read the README.md file and summarize it", options=options
+    ):
+        if isinstance(message, AssistantMessage):
+            for block in message.content:
+                if isinstance(block, TextBlock):
+                    print(f"Claude: {block.text}")
+        elif isinstance(message, ResultMessage):
+            if message.total_cost_usd:
+                print(f"Total cost: ${message.total_cost_usd:.4f}")
+            print(f"Status: {message.subtype}")
+
+            # Check if budget was exceeded
+            if message.subtype == "error_max_budget_usd":
+                print("⚠️  Budget limit exceeded!")
+                print(
+                    "Note: The cost may exceed the budget by up to one API call's worth"
+                )
+    print()
+
+
+async def main():
+    """Run all examples."""
+    print("This example demonstrates using max_budget_usd to control API costs.\n")
+
+    await without_budget()
+    await with_reasonable_budget()
+    await with_tight_budget()
+
+    print(
+        "\nNote: Budget checking happens after each API call completes,\n"
+        "so the final cost may slightly exceed the specified budget.\n"
+    )
+
+
+if __name__ == "__main__":
+    anyio.run(main)

examples/plugin_example.py

@@ -0,0 +1,71 @@
+#!/usr/bin/env python3
+"""Example demonstrating how to use plugins with Claude Code SDK.
+
+Plugins allow you to extend Claude Code with custom commands, agents, skills,
+and hooks. This example shows how to load a local plugin and verify it's
+loaded by checking the system message.
+
+The demo plugin is located in examples/plugins/demo-plugin/ and provides
+a custom /greet command.
+"""
+
+from pathlib import Path
+
+import anyio
+
+from claude_agent_sdk import (
+    ClaudeAgentOptions,
+    SystemMessage,
+    query,
+)
+
+
+async def plugin_example():
+    """Example showing plugins being loaded in the system message."""
+    print("=== Plugin Example ===\n")
+
+    # Get the path to the demo plugin
+    # In production, you can use any path to your plugin directory
+    plugin_path = Path(__file__).parent / "plugins" / "demo-plugin"
+
+    options = ClaudeAgentOptions(
+        plugins=[
+            {
+                "type": "local",
+                "path": str(plugin_path),
+            }
+        ],
+        max_turns=1,  # Limit to one turn for quick demo
+    )
+
+    print(f"Loading plugin from: {plugin_path}\n")
+
+    found_plugins = False
+    async for message in query(prompt="Hello!", options=options):
+        if isinstance(message, SystemMessage) and message.subtype == "init":
+            print("System initialized!")
+            print(f"System message data keys: {list(message.data.keys())}\n")
+
+            # Check for plugins in the system message
+            plugins_data = message.data.get("plugins", [])
+            if plugins_data:
+                print("Plugins loaded:")
+                for plugin in plugins_data:
+                    print(f"  - {plugin.get('name')} (path: {plugin.get('path')})")
+                found_plugins = True
+            else:
+                print("Note: Plugin was passed via CLI but may not appear in system message.")
+                print(f"Plugin path configured: {plugin_path}")
+                found_plugins = True
+
+    if found_plugins:
+        print("\nPlugin successfully configured!\n")
+
+
+async def main():
+    """Run all plugin examples."""
+    await plugin_example()
+
+
+if __name__ == "__main__":
+    anyio.run(main)

examples/plugins/demo-plugin/.claude-plugin/plugin.json

@@ -0,0 +1,8 @@
+{
+  "name": "demo-plugin",
+  "description": "A demo plugin showing how to extend Claude Code with custom commands",
+  "version": "1.0.0",
+  "author": {
+    "name": "Claude Code Team"
+  }
+}

examples/plugins/demo-plugin/commands/greet.md

@@ -0,0 +1,5 @@
+# Greet Command
+
+This is a custom greeting command from the demo plugin.
+
+When the user runs this command, greet them warmly and explain that this message came from a custom plugin loaded via the Python SDK. Tell them that plugins can be used to extend Claude Code with custom commands, agents, skills, and hooks.

examples/tools_option.py

@@ -0,0 +1,111 @@
+#!/usr/bin/env python3
+"""Example demonstrating the tools option and verifying tools in system message."""
+
+import anyio
+
+from claude_agent_sdk import (
+    AssistantMessage,
+    ClaudeAgentOptions,
+    ResultMessage,
+    SystemMessage,
+    TextBlock,
+    query,
+)
+
+
+async def tools_array_example():
+    """Example with tools as array of specific tool names."""
+    print("=== Tools Array Example ===")
+    print("Setting tools=['Read', 'Glob', 'Grep']")
+    print()
+
+    options = ClaudeAgentOptions(
+        tools=["Read", "Glob", "Grep"],
+        max_turns=1,
+    )
+
+    async for message in query(
+        prompt="What tools do you have available? Just list them briefly.",
+        options=options,
+    ):
+        if isinstance(message, SystemMessage) and message.subtype == "init":
+            tools = message.data.get("tools", [])
+            print(f"Tools from system message: {tools}")
+            print()
+        elif isinstance(message, AssistantMessage):
+            for block in message.content:
+                if isinstance(block, TextBlock):
+                    print(f"Claude: {block.text}")
+        elif isinstance(message, ResultMessage):
+            if message.total_cost_usd:
+                print(f"\nCost: ${message.total_cost_usd:.4f}")
+    print()
+
+
+async def tools_empty_array_example():
+    """Example with tools as empty array (disables all built-in tools)."""
+    print("=== Tools Empty Array Example ===")
+    print("Setting tools=[] (disables all built-in tools)")
+    print()
+
+    options = ClaudeAgentOptions(
+        tools=[],
+        max_turns=1,
+    )
+
+    async for message in query(
+        prompt="What tools do you have available? Just list them briefly.",
+        options=options,
+    ):
+        if isinstance(message, SystemMessage) and message.subtype == "init":
+            tools = message.data.get("tools", [])
+            print(f"Tools from system message: {tools}")
+            print()
+        elif isinstance(message, AssistantMessage):
+            for block in message.content:
+                if isinstance(block, TextBlock):
+                    print(f"Claude: {block.text}")
+        elif isinstance(message, ResultMessage):
+            if message.total_cost_usd:
+                print(f"\nCost: ${message.total_cost_usd:.4f}")
+    print()
+
+
+async def tools_preset_example():
+    """Example with tools preset (all default Claude Code tools)."""
+    print("=== Tools Preset Example ===")
+    print("Setting tools={'type': 'preset', 'preset': 'claude_code'}")
+    print()
+
+    options = ClaudeAgentOptions(
+        tools={"type": "preset", "preset": "claude_code"},
+        max_turns=1,
+    )
+
+    async for message in query(
+        prompt="What tools do you have available? Just list them briefly.",
+        options=options,
+    ):
+        if isinstance(message, SystemMessage) and message.subtype == "init":
+            tools = message.data.get("tools", [])
+            print(f"Tools from system message ({len(tools)} tools): {tools[:5]}...")
+            print()
+        elif isinstance(message, AssistantMessage):
+            for block in message.content:
+                if isinstance(block, TextBlock):
+                    print(f"Claude: {block.text}")
+        elif isinstance(message, ResultMessage):
+            if message.total_cost_usd:
+                print(f"\nCost: ${message.total_cost_usd:.4f}")
+    print()
+
+
+async def main():
+    """Run all examples."""
+    await tools_array_example()
+    await tools_empty_array_example()
+    await tools_preset_example()
+
+
+if __name__ == "__main__":
+    anyio.run(main)

pyproject.toml

@@ -4,7 +4,7 @@ build-backend = "hatchling.build"
 
 [project]
 name = "claude-agent-sdk"
-version = "0.1.1"
+version = "0.1.18"
 description = "Python SDK for Claude Code"
 readme = "README.md"
 requires-python = ">=3.10"
@@ -47,6 +47,7 @@ Issues = "https://github.com/anthropics/claude-agent-sdk-python/issues"
 
 [tool.hatch.build.targets.wheel]
 packages = ["src/claude_agent_sdk"]
+only-include = ["src/claude_agent_sdk"]
 
 [tool.hatch.build.targets.sdist]
 include = [

scripts/build_wheel.py

@@ -0,0 +1,392 @@
+#!/usr/bin/env python3
+"""Build wheel with bundled Claude Code CLI.
+
+This script handles the complete wheel building process:
+1. Optionally updates version
+2. Downloads Claude Code CLI
+3. Builds the wheel
+4. Optionally cleans up the bundled CLI
+
+Usage:
+    python scripts/build_wheel.py                    # Build with current version
+    python scripts/build_wheel.py --version 0.1.4    # Build with specific version
+    python scripts/build_wheel.py --clean            # Clean bundled CLI after build
+    python scripts/build_wheel.py --skip-download    # Skip CLI download (use existing)
+"""
+
+import argparse
+import os
+import platform
+import re
+import shutil
+import subprocess
+import sys
+from pathlib import Path
+
+try:
+    import twine  # noqa: F401
+
+    HAS_TWINE = True
+except ImportError:
+    HAS_TWINE = False
+
+
+def run_command(cmd: list[str], description: str) -> None:
+    """Run a command and handle errors."""
+    print(f"\n{'=' * 60}")
+    print(f"{description}")
+    print(f"{'=' * 60}")
+    print(f"$ {' '.join(cmd)}")
+    print()
+
+    try:
+        result = subprocess.run(
+            cmd,
+            check=True,
+            stdout=subprocess.PIPE,
+            stderr=subprocess.STDOUT,
+            text=True,
+        )
+        print(result.stdout)
+    except subprocess.CalledProcessError as e:
+        print(f"Error: {description} failed", file=sys.stderr)
+        print(e.stdout, file=sys.stderr)
+        sys.exit(1)
+
+
+def update_version(version: str) -> None:
+    """Update package version."""
+    script_dir = Path(__file__).parent
+    update_script = script_dir / "update_version.py"
+
+    if not update_script.exists():
+        print("Warning: update_version.py not found, skipping version update")
+        return
+
+    run_command(
+        [sys.executable, str(update_script), version],
+        f"Updating version to {version}",
+    )
+
+
+def get_bundled_cli_version() -> str:
+    """Get the CLI version that should be bundled from _cli_version.py."""
+    version_file = Path("src/claude_agent_sdk/_cli_version.py")
+    if not version_file.exists():
+        return "latest"
+
+    content = version_file.read_text()
+    match = re.search(r'__cli_version__ = "([^"]+)"', content)
+    if match:
+        return match.group(1)
+    return "latest"
+
+
+def download_cli(cli_version: str | None = None) -> None:
+    """Download Claude Code CLI."""
+    # Use provided version, or fall back to version from _cli_version.py
+    if cli_version is None:
+        cli_version = get_bundled_cli_version()
+
+    script_dir = Path(__file__).parent
+    download_script = script_dir / "download_cli.py"
+
+    # Set environment variable for download script
+    os.environ["CLAUDE_CLI_VERSION"] = cli_version
+
+    run_command(
+        [sys.executable, str(download_script)],
+        f"Downloading Claude Code CLI ({cli_version})",
+    )
+
+
+def clean_dist() -> None:
+    """Clean dist directory."""
+    dist_dir = Path("dist")
+    if dist_dir.exists():
+        print(f"\n{'=' * 60}")
+        print("Cleaning dist directory")
+        print(f"{'=' * 60}")
+        shutil.rmtree(dist_dir)
+        print("Cleaned dist/")
+
+
+def get_platform_tag() -> str:
+    """Get the appropriate platform tag for the current platform.
+
+    Uses minimum compatible versions for broad compatibility:
+    - macOS: 11.0 (Big Sur) as minimum
+    - Linux: manylinux_2_17 (widely compatible)
+    - Windows: Standard tags
+    """
+    system = platform.system()
+    machine = platform.machine().lower()
+
+    if system == "Darwin":
+        # macOS - use minimum version 11.0 (Big Sur) for broad compatibility
+        if machine == "arm64":
+            return "macosx_11_0_arm64"
+        else:
+            return "macosx_11_0_x86_64"
+    elif system == "Linux":
+        # Linux - use manylinux for broad compatibility
+        if machine in ["x86_64", "amd64"]:
+            return "manylinux_2_17_x86_64"
+        elif machine in ["aarch64", "arm64"]:
+            return "manylinux_2_17_aarch64"
+        else:
+            return f"linux_{machine}"
+    elif system == "Windows":
+        # Windows
+        if machine in ["x86_64", "amd64"]:
+            return "win_amd64"
+        elif machine == "arm64":
+            return "win_arm64"
+        else:
+            return "win32"
+    else:
+        # Unknown platform, use generic
+        return f"{system.lower()}_{machine}"
+
+
+def retag_wheel(wheel_path: Path, platform_tag: str) -> Path:
+    """Retag a wheel with the correct platform tag using wheel package."""
+    print(f"\n{'=' * 60}")
+    print("Retagging wheel as platform-specific")
+    print(f"{'=' * 60}")
+    print(f"Old: {wheel_path.name}")
+
+    # Use wheel package to properly retag (updates both filename and metadata)
+    result = subprocess.run(
+        [
+            sys.executable,
+            "-m",
+            "wheel",
+            "tags",
+            "--platform-tag",
+            platform_tag,
+            "--remove",
+            str(wheel_path),
+        ],
+        capture_output=True,
+        text=True,
+    )
+
+    if result.returncode != 0:
+        print(f"Warning: Failed to retag wheel: {result.stderr}")
+        return wheel_path
+
+    # Find the newly tagged wheel
+    dist_dir = wheel_path.parent
+    # The wheel package creates a new file with the platform tag
+    new_wheels = list(dist_dir.glob(f"*{platform_tag}.whl"))
+
+    if new_wheels:
+        new_path = new_wheels[0]
+        print(f"New: {new_path.name}")
+        print("Wheel retagged successfully")
+
+        # Remove the old wheel
+        if wheel_path.exists() and wheel_path != new_path:
+            wheel_path.unlink()
+
+        return new_path
+    else:
+        print("Warning: Could not find retagged wheel")
+        return wheel_path
+
+
+def build_wheel() -> None:
+    """Build the wheel."""
+    run_command(
+        [sys.executable, "-m", "build", "--wheel"],
+        "Building wheel",
+    )
+
+    # Check if we have a bundled CLI - if so, retag the wheel as platform-specific
+    bundled_cli = Path("src/claude_agent_sdk/_bundled/claude")
+    bundled_cli_exe = Path("src/claude_agent_sdk/_bundled/claude.exe")
+
+    if bundled_cli.exists() or bundled_cli_exe.exists():
+        # Find the built wheel
+        dist_dir = Path("dist")
+        wheels = list(dist_dir.glob("*.whl"))
+
+        if wheels:
+            # Get platform tag
+            platform_tag = get_platform_tag()
+
+            # Retag each wheel (should only be one)
+            for wheel in wheels:
+                if "-any.whl" in wheel.name:
+                    retag_wheel(wheel, platform_tag)
+        else:
+            print("Warning: No wheel found to retag")
+    else:
+        print("\nNo bundled CLI found - wheel will be platform-independent")
+
+
+def build_sdist() -> None:
+    """Build the source distribution."""
+    run_command(
+        [sys.executable, "-m", "build", "--sdist"],
+        "Building source distribution",
+    )
+
+
+def check_package() -> None:
+    """Check package with twine."""
+    if not HAS_TWINE:
+        print("\nWarning: twine not installed, skipping package check")
+        print("Install with: pip install twine")
+        return
+
+    print(f"\n{'=' * 60}")
+    print("Checking package with twine")
+    print(f"{'=' * 60}")
+    print(f"$ {sys.executable} -m twine check dist/*")
+    print()
+
+    try:
+        result = subprocess.run(
+            [sys.executable, "-m", "twine", "check", "dist/*"],
+            check=False,
+            stdout=subprocess.PIPE,
+            stderr=subprocess.STDOUT,
+            text=True,
+        )
+        print(result.stdout)
+
+        if result.returncode != 0:
+            print("\nWarning: twine check reported issues")
+            print("Note: 'License-File' warnings are false positives from twine 6.x")
+            print("PyPI will accept these packages without issues")
+        else:
+            print("Package check passed")
+    except Exception as e:
+        print(f"Warning: Failed to run twine check: {e}")
+
+
+def clean_bundled_cli() -> None:
+    """Clean bundled CLI."""
+    bundled_dir = Path("src/claude_agent_sdk/_bundled")
+    cli_files = list(bundled_dir.glob("claude*"))
+
+    if cli_files:
+        print(f"\n{'=' * 60}")
+        print("Cleaning bundled CLI")
+        print(f"{'=' * 60}")
+        for cli_file in cli_files:
+            if cli_file.name != ".gitignore":
+                cli_file.unlink()
+                print(f"Removed {cli_file}")
+    else:
+        print("\nNo bundled CLI to clean")
+
+
+def list_artifacts() -> None:
+    """List built artifacts."""
+    dist_dir = Path("dist")
+    if not dist_dir.exists():
+        return
+
+    print(f"\n{'=' * 60}")
+    print("Built Artifacts")
+    print(f"{'=' * 60}")
+
+    artifacts = sorted(dist_dir.iterdir())
+    if not artifacts:
+        print("No artifacts found")
+        return
+
+    for artifact in artifacts:
+        size_mb = artifact.stat().st_size / (1024 * 1024)
+        print(f"  {artifact.name:<50} {size_mb:>8.2f} MB")
+
+    total_size = sum(f.stat().st_size for f in artifacts) / (1024 * 1024)
+    print(f"\n  {'Total:':<50} {total_size:>8.2f} MB")
+
+
+def main() -> None:
+    """Main entry point."""
+    parser = argparse.ArgumentParser(
+        description="Build wheel with bundled Claude Code CLI"
+    )
+    parser.add_argument(
+        "--version",
+        help="Version to set before building (e.g., 0.1.4)",
+    )
+    parser.add_argument(
+        "--cli-version",
+        default=None,
+        help="Claude Code CLI version to download (default: read from _cli_version.py)",
+    )
+    parser.add_argument(
+        "--skip-download",
+        action="store_true",
+        help="Skip downloading CLI (use existing bundled CLI)",
+    )
+    parser.add_argument(
+        "--skip-sdist",
+        action="store_true",
+        help="Skip building source distribution",
+    )
+    parser.add_argument(
+        "--clean",
+        action="store_true",
+        help="Clean bundled CLI after building",
+    )
+    parser.add_argument(
+        "--clean-dist",
+        action="store_true",
+        help="Clean dist directory before building",
+    )
+
+    args = parser.parse_args()
+
+    print("\n" + "=" * 60)
+    print("Claude Agent SDK - Wheel Builder")
+    print("=" * 60)
+
+    # Clean dist if requested
+    if args.clean_dist:
+        clean_dist()
+
+    # Update version if specified
+    if args.version:
+        update_version(args.version)
+
+    # Download CLI unless skipped
+    if not args.skip_download:
+        download_cli(args.cli_version)
+    else:
+        print("\nSkipping CLI download (using existing)")
+
+    # Build wheel
+    build_wheel()
+
+    # Build sdist unless skipped
+    if not args.skip_sdist:
+        build_sdist()
+
+    # Check package
+    check_package()
+
+    # Clean bundled CLI if requested
+    if args.clean:
+        clean_bundled_cli()
+
+    # List artifacts
+    list_artifacts()
+
+    print(f"\n{'=' * 60}")
+    print("Build complete!")
+    print(f"{'=' * 60}")
+    print("\nNext steps:")
+    print("  1. Test the wheel: pip install dist/*.whl")
+    print("  2. Run tests: python -m pytest tests/")
+    print("  3. Publish: twine upload dist/*")
+
+
+if __name__ == "__main__":
+    main()

scripts/download_cli.py

@@ -0,0 +1,157 @@
+#!/usr/bin/env python3
+"""Download Claude Code CLI binary for bundling in wheel.
+
+This script is run during the wheel build process to fetch the Claude Code CLI
+binary using the official install script and place it in the package directory.
+"""
+
+import os
+import platform
+import shutil
+import subprocess
+import sys
+from pathlib import Path
+
+
+def get_cli_version() -> str:
+    """Get the CLI version to download from environment or default."""
+    return os.environ.get("CLAUDE_CLI_VERSION", "latest")
+
+
+def find_installed_cli() -> Path | None:
+    """Find the installed Claude CLI binary."""
+    system = platform.system()
+
+    if system == "Windows":
+        # Windows installation locations (matches test.yml: $USERPROFILE\.local\bin)
+        locations = [
+            Path.home() / ".local" / "bin" / "claude.exe",
+            Path(os.environ.get("LOCALAPPDATA", "")) / "Claude" / "claude.exe",
+        ]
+    else:
+        # Unix installation locations
+        locations = [
+            Path.home() / ".local" / "bin" / "claude",
+            Path("/usr/local/bin/claude"),
+            Path.home() / "node_modules" / ".bin" / "claude",
+        ]
+
+    # Also check PATH
+    cli_path = shutil.which("claude")
+    if cli_path:
+        return Path(cli_path)
+
+    for path in locations:
+        if path.exists() and path.is_file():
+            return path
+
+    return None
+
+
+def download_cli() -> None:
+    """Download Claude Code CLI using the official install script."""
+    version = get_cli_version()
+    system = platform.system()
+
+    print(f"Downloading Claude Code CLI version: {version}")
+
+    # Build install command based on platform
+    if system == "Windows":
+        # Use PowerShell installer on Windows
+        if version == "latest":
+            install_cmd = [
+                "powershell",
+                "-ExecutionPolicy",
+                "Bypass",
+                "-Command",
+                "irm https://claude.ai/install.ps1 | iex",
+            ]
+        else:
+            install_cmd = [
+                "powershell",
+                "-ExecutionPolicy",
+                "Bypass",
+                "-Command",
+                f"& ([scriptblock]::Create((irm https://claude.ai/install.ps1))) {version}",
+            ]
+    else:
+        # Use bash installer on Unix-like systems
+        if version == "latest":
+            install_cmd = ["bash", "-c", "curl -fsSL https://claude.ai/install.sh | bash"]
+        else:
+            install_cmd = [
+                "bash",
+                "-c",
+                f"curl -fsSL https://claude.ai/install.sh | bash -s {version}",
+            ]
+
+    try:
+        subprocess.run(
+            install_cmd,
+            check=True,
+            capture_output=True,
+        )
+    except subprocess.CalledProcessError as e:
+        print(f"Error downloading CLI: {e}", file=sys.stderr)
+        print(f"stdout: {e.stdout.decode()}", file=sys.stderr)
+        print(f"stderr: {e.stderr.decode()}", file=sys.stderr)
+        sys.exit(1)
+
+
+def copy_cli_to_bundle() -> None:
+    """Copy the installed CLI to the package _bundled directory."""
+    # Find project root (parent of scripts directory)
+    script_dir = Path(__file__).parent
+    project_root = script_dir.parent
+    bundle_dir = project_root / "src" / "claude_agent_sdk" / "_bundled"
+
+    # Ensure bundle directory exists
+    bundle_dir.mkdir(parents=True, exist_ok=True)
+
+    # Find installed CLI
+    cli_path = find_installed_cli()
+    if not cli_path:
+        print("Error: Could not find installed Claude CLI binary", file=sys.stderr)
+        sys.exit(1)
+
+    print(f"Found CLI at: {cli_path}")
+
+    # Determine target filename based on platform
+    system = platform.system()
+    target_name = "claude.exe" if system == "Windows" else "claude"
+    target_path = bundle_dir / target_name
+
+    # Copy the binary
+    print(f"Copying CLI to: {target_path}")
+    shutil.copy2(cli_path, target_path)
+
+    # Make it executable (Unix-like systems)
+    if system != "Windows":
+        target_path.chmod(0o755)
+
+    print(f"Successfully bundled CLI binary: {target_path}")
+
+    # Print size info
+    size_mb = target_path.stat().st_size / (1024 * 1024)
+    print(f"Binary size: {size_mb:.2f} MB")
+
+
+def main() -> None:
+    """Main entry point."""
+    print("=" * 60)
+    print("Claude Code CLI Download Script")
+    print("=" * 60)
+
+    # Download CLI
+    download_cli()
+
+    # Copy to bundle directory
+    copy_cli_to_bundle()
+
+    print("=" * 60)
+    print("CLI download and bundling complete!")
+    print("=" * 60)
+
+
+if __name__ == "__main__":
+    main()

scripts/initial-setup.sh

@@ -0,0 +1,22 @@
+#!/bin/bash
+
+# Initial setup script for installing git hooks
+
+set -e
+
+SCRIPT_DIR="$(cd "$(dirname "${BASH_SOURCE[0]}")" && pwd)"
+REPO_ROOT="$(cd "$SCRIPT_DIR/.." && pwd)"
+
+echo "Setting up git hooks..."
+
+# Install pre-push hook
+echo "→ Installing pre-push hook..."
+cp "$SCRIPT_DIR/pre-push" "$REPO_ROOT/.git/hooks/pre-push"
+chmod +x "$REPO_ROOT/.git/hooks/pre-push"
+echo "✓ pre-push hook installed"
+
+echo ""
+echo "✓ Setup complete!"
+echo ""
+echo "The pre-push hook will now run lint checks before each push."
+echo "To skip the hook temporarily, use: git push --no-verify"

scripts/pre-push

@@ -0,0 +1,30 @@
+#!/bin/bash
+
+# Pre-push hook to run lint checks (matches .github/workflows/lint.yml)
+
+echo "Running lint checks before push..."
+echo ""
+
+# Run ruff check
+echo "→ Running ruff check..."
+python -m ruff check src/ tests/
+if [ $? -ne 0 ]; then
+    echo ""
+    echo "❌ ruff check failed. Fix lint issues before pushing."
+    echo "   Run: python -m ruff check src/ tests/ --fix"
+    exit 1
+fi
+
+# Run ruff format check
+echo "→ Running ruff format check..."
+python -m ruff format --check src/ tests/
+if [ $? -ne 0 ]; then
+    echo ""
+    echo "❌ ruff format check failed. Fix formatting before pushing."
+    echo "   Run: python -m ruff format src/ tests/"
+    exit 1
+fi
+
+echo ""
+echo "✓ All lint checks passed!"
+exit 0

scripts/test-docker.sh

@@ -0,0 +1,77 @@
+#!/bin/bash
+# Run SDK tests in a Docker container
+# This helps catch Docker-specific issues like #406
+#
+# Usage:
+#   ./scripts/test-docker.sh [unit|e2e|all]
+#
+# Examples:
+#   ./scripts/test-docker.sh unit                    # Run unit tests only
+#   ANTHROPIC_API_KEY=sk-... ./scripts/test-docker.sh e2e   # Run e2e tests
+#   ANTHROPIC_API_KEY=sk-... ./scripts/test-docker.sh all   # Run all tests
+
+set -e
+
+SCRIPT_DIR="$(cd "$(dirname "${BASH_SOURCE[0]}")" && pwd)"
+PROJECT_DIR="$(dirname "$SCRIPT_DIR")"
+
+cd "$PROJECT_DIR"
+
+usage() {
+    echo "Usage: $0 [unit|e2e|all]"
+    echo ""
+    echo "Commands:"
+    echo "  unit  - Run unit tests only (no API key needed)"
+    echo "  e2e   - Run e2e tests (requires ANTHROPIC_API_KEY)"
+    echo "  all   - Run both unit and e2e tests"
+    echo ""
+    echo "Examples:"
+    echo "  $0 unit"
+    echo "  ANTHROPIC_API_KEY=sk-... $0 e2e"
+    exit 1
+}
+
+echo "Building Docker test image..."
+docker build -f Dockerfile.test -t claude-sdk-test .
+
+case "${1:-unit}" in
+    unit)
+        echo ""
+        echo "Running unit tests in Docker..."
+        docker run --rm claude-sdk-test \
+            python -m pytest tests/ -v
+        ;;
+    e2e)
+        if [ -z "$ANTHROPIC_API_KEY" ]; then
+            echo "Error: ANTHROPIC_API_KEY environment variable is required for e2e tests"
+            echo ""
+            echo "Usage: ANTHROPIC_API_KEY=sk-... $0 e2e"
+            exit 1
+        fi
+        echo ""
+        echo "Running e2e tests in Docker..."
+        docker run --rm -e ANTHROPIC_API_KEY \
+            claude-sdk-test python -m pytest e2e-tests/ -v -m e2e
+        ;;
+    all)
+        echo ""
+        echo "Running unit tests in Docker..."
+        docker run --rm claude-sdk-test \
+            python -m pytest tests/ -v
+
+        echo ""
+        if [ -n "$ANTHROPIC_API_KEY" ]; then
+            echo "Running e2e tests in Docker..."
+            docker run --rm -e ANTHROPIC_API_KEY \
+                claude-sdk-test python -m pytest e2e-tests/ -v -m e2e
+        else
+            echo "Skipping e2e tests (ANTHROPIC_API_KEY not set)"
+        fi
+        ;;
+    *)
+        usage
+        ;;
+esac
+
+echo ""
+echo "Done!"

scripts/update_cli_version.py

@@ -0,0 +1,32 @@
+#!/usr/bin/env python3
+"""Update Claude Code CLI version in _cli_version.py."""
+
+import re
+import sys
+from pathlib import Path
+
+
+def update_cli_version(new_version: str) -> None:
+    """Update CLI version in _cli_version.py."""
+    # Update _cli_version.py
+    version_path = Path("src/claude_agent_sdk/_cli_version.py")
+    content = version_path.read_text()
+
+    content = re.sub(
+        r'__cli_version__ = "[^"]+"',
+        f'__cli_version__ = "{new_version}"',
+        content,
+        count=1,
+        flags=re.MULTILINE,
+    )
+
+    version_path.write_text(content)
+    print(f"Updated {version_path} to {new_version}")
+
+
+if __name__ == "__main__":
+    if len(sys.argv) != 2:
+        print("Usage: python scripts/update_cli_version.py <version>")
+        sys.exit(1)
+
+    update_cli_version(sys.argv[1])

scripts/update_version.py

@@ -1,8 +1,8 @@
 #!/usr/bin/env python3
 """Update version in pyproject.toml and __init__.py files."""
 
-import sys
 import re
+import sys
 from pathlib import Path
 
 
@@ -18,7 +18,7 @@ def update_version(new_version: str) -> None:
         f'version = "{new_version}"',
         content,
         count=1,
-        flags=re.MULTILINE
+        flags=re.MULTILINE,
     )
 
     pyproject_path.write_text(content)
@@ -34,7 +34,7 @@ def update_version(new_version: str) -> None:
         f'__version__ = "{new_version}"',
         content,
         count=1,
-        flags=re.MULTILINE
+        flags=re.MULTILINE,
     )
 
     version_path.write_text(content)

src/claude_agent_sdk/__init__.py

@@ -18,11 +18,14 @@ from .query import query
 from .types import (
     AgentDefinition,
     AssistantMessage,
+    BaseHookInput,
     CanUseTool,
     ClaudeAgentOptions,
     ContentBlock,
     HookCallback,
     HookContext,
+    HookInput,
+    HookJSONOutput,
     HookMatcher,
     McpSdkServerConfig,
     McpServerConfig,
@@ -32,8 +35,18 @@ from .types import (
     PermissionResultAllow,
     PermissionResultDeny,
     PermissionUpdate,
+    PostToolUseHookInput,
+    PreCompactHookInput,
+    PreToolUseHookInput,
     ResultMessage,
+    SandboxIgnoreViolations,
+    SandboxNetworkConfig,
+    SandboxSettings,
+    SdkBeta,
+    SdkPluginConfig,
     SettingSource,
+    StopHookInput,
+    SubagentStopHookInput,
     SystemMessage,
     TextBlock,
     ThinkingBlock,
@@ -41,6 +54,7 @@ from .types import (
     ToolResultBlock,
     ToolUseBlock,
     UserMessage,
+    UserPromptSubmitHookInput,
 )
 
 # MCP Server Support
@@ -194,7 +208,7 @@ def create_sdk_mcp_server(
         - ClaudeAgentOptions: Configuration for using servers with query()
     """
     from mcp.server import Server
-    from mcp.types import TextContent, Tool
+    from mcp.types import ImageContent, TextContent, Tool
 
     # Create MCP server instance
     server = Server(name, version=version)
@@ -205,7 +219,7 @@ def create_sdk_mcp_server(
         tool_map = {tool_def.name: tool_def for tool_def in tools}
 
         # Register list_tools handler to expose available tools
-        @server.list_tools()  # type: ignore[no-untyped-call,misc]
+        @server.list_tools()  # type: ignore[no-untyped-call,untyped-decorator]
         async def list_tools() -> list[Tool]:
             """Return the list of available tools."""
             tool_list = []
@@ -251,7 +265,7 @@ def create_sdk_mcp_server(
             return tool_list
 
         # Register call_tool handler to execute tools
-        @server.call_tool()  # type: ignore[misc]
+        @server.call_tool()  # type: ignore[untyped-decorator]
         async def call_tool(name: str, arguments: dict[str, Any]) -> Any:
             """Execute a tool by name with given arguments."""
             if name not in tool_map:
@@ -264,11 +278,19 @@ def create_sdk_mcp_server(
             # Convert result to MCP format
             # The decorator expects us to return the content, not a CallToolResult
             # It will wrap our return value in CallToolResult
-            content = []
+            content: list[TextContent | ImageContent] = []
             if "content" in result:
                 for item in result["content"]:
                     if item.get("type") == "text":
                         content.append(TextContent(type="text", text=item["text"]))
+                    if item.get("type") == "image":
+                        content.append(
+                            ImageContent(
+                                type="image",
+                                data=item["data"],
+                                mimeType=item["mimeType"],
+                            )
+                        )
 
             # Return just the content list - the decorator wraps it
             return content
@@ -306,12 +328,30 @@ __all__ = [
     "PermissionResultAllow",
     "PermissionResultDeny",
     "PermissionUpdate",
+    # Hook support
     "HookCallback",
     "HookContext",
+    "HookInput",
+    "BaseHookInput",
+    "PreToolUseHookInput",
+    "PostToolUseHookInput",
+    "UserPromptSubmitHookInput",
+    "StopHookInput",
+    "SubagentStopHookInput",
+    "PreCompactHookInput",
+    "HookJSONOutput",
     "HookMatcher",
     # Agent support
     "AgentDefinition",
     "SettingSource",
+    # Plugin support
+    "SdkPluginConfig",
+    # Beta support
+    "SdkBeta",
+    # Sandbox support
+    "SandboxSettings",
+    "SandboxNetworkConfig",
+    "SandboxIgnoreViolations",
     # MCP Server Support
     "create_sdk_mcp_server",
     "tool",

src/claude_agent_sdk/_bundled/.gitignore

@@ -0,0 +1,3 @@
+# Ignore bundled CLI binaries (downloaded during build)
+claude
+claude.exe

src/claude_agent_sdk/_cli_version.py

@@ -0,0 +1,3 @@
+"""Bundled Claude Code CLI version."""
+
+__cli_version__ = "2.0.74"

src/claude_agent_sdk/_internal/client.py

@@ -31,10 +31,12 @@ class InternalClient:
             internal_hooks[event] = []
             for matcher in matchers:
                 # Convert HookMatcher to internal dict format
-                internal_matcher = {
+                internal_matcher: dict[str, Any] = {
                     "matcher": matcher.matcher if hasattr(matcher, "matcher") else None,
                     "hooks": matcher.hooks if hasattr(matcher, "hooks") else [],
                 }
+                if hasattr(matcher, "timeout") and matcher.timeout is not None:
+                    internal_matcher["timeout"] = matcher.timeout
                 internal_hooks[event].append(internal_matcher)
         return internal_hooks
 
@@ -71,7 +73,8 @@ class InternalClient:
             chosen_transport = transport
         else:
             chosen_transport = SubprocessCLITransport(
-                prompt=prompt, options=configured_options
+                prompt=prompt,
+                options=configured_options,
             )
 
         # Connect transport

src/claude_agent_sdk/_internal/message_parser.py

@@ -48,6 +48,7 @@ def parse_message(data: dict[str, Any]) -> Message:
         case "user":
             try:
                 parent_tool_use_id = data.get("parent_tool_use_id")
+                uuid = data.get("uuid")
                 if isinstance(data["message"]["content"], list):
                     user_content_blocks: list[ContentBlock] = []
                     for block in data["message"]["content"]:
@@ -74,10 +75,12 @@ def parse_message(data: dict[str, Any]) -> Message:
                                 )
                     return UserMessage(
                         content=user_content_blocks,
+                        uuid=uuid,
                         parent_tool_use_id=parent_tool_use_id,
                     )
                 return UserMessage(
                     content=data["message"]["content"],
+                    uuid=uuid,
                     parent_tool_use_id=parent_tool_use_id,
                 )
             except KeyError as e:
@@ -120,6 +123,7 @@ def parse_message(data: dict[str, Any]) -> Message:
                     content=content_blocks,
                     model=data["message"]["model"],
                     parent_tool_use_id=data.get("parent_tool_use_id"),
+                    error=data["message"].get("error"),
                 )
             except KeyError as e:
                 raise MessageParseError(
@@ -149,6 +153,7 @@ def parse_message(data: dict[str, Any]) -> Message:
                     total_cost_usd=data.get("total_cost_usd"),
                     usage=data.get("usage"),
                     result=data.get("result"),
+                    structured_output=data.get("structured_output"),
                 )
             except KeyError as e:
                 raise MessageParseError(

src/claude_agent_sdk/_internal/query.py

@@ -31,6 +31,25 @@ if TYPE_CHECKING:
 logger = logging.getLogger(__name__)
 
 
+def _convert_hook_output_for_cli(hook_output: dict[str, Any]) -> dict[str, Any]:
+    """Convert Python-safe field names to CLI-expected field names.
+
+    The Python SDK uses `async_` and `continue_` to avoid keyword conflicts,
+    but the CLI expects `async` and `continue`. This function performs the
+    necessary conversion.
+    """
+    converted = {}
+    for key, value in hook_output.items():
+        # Convert Python-safe names to JavaScript names
+        if key == "async_":
+            converted["async"] = value
+        elif key == "continue_":
+            converted["continue"] = value
+        else:
+            converted[key] = value
+    return converted
+
+
 class Query:
     """Handles bidirectional control protocol on top of Transport.
 
@@ -53,6 +72,7 @@ class Query:
         | None = None,
         hooks: dict[str, list[dict[str, Any]]] | None = None,
         sdk_mcp_servers: dict[str, "McpServer"] | None = None,
+        initialize_timeout: float = 60.0,
     ):
         """Initialize Query with transport and callbacks.
 
@@ -62,7 +82,9 @@ class Query:
             can_use_tool: Optional callback for tool permission requests
             hooks: Optional hook configurations
             sdk_mcp_servers: Optional SDK MCP server instances
+            initialize_timeout: Timeout in seconds for the initialize request
         """
+        self._initialize_timeout = initialize_timeout
         self.transport = transport
         self.is_streaming_mode = is_streaming_mode
         self.can_use_tool = can_use_tool
@@ -85,6 +107,12 @@ class Query:
         self._closed = False
         self._initialization_result: dict[str, Any] | None = None
 
+        # Track first result for proper stream closure with SDK MCP servers
+        self._first_result_event = anyio.Event()
+        self._stream_close_timeout = (
+            float(os.environ.get("CLAUDE_CODE_STREAM_CLOSE_TIMEOUT", "60000")) / 1000.0
+        )  # Convert ms to seconds
+
     async def initialize(self) -> dict[str, Any] | None:
         """Initialize control protocol if in streaming mode.
 
@@ -107,12 +135,13 @@ class Query:
                             self.next_callback_id += 1
                             self.hook_callbacks[callback_id] = callback
                             callback_ids.append(callback_id)
-                        hooks_config[event].append(
+                        hook_matcher_config: dict[str, Any] = {
-                            {
                             "matcher": matcher.get("matcher"),
                             "hookCallbackIds": callback_ids,
                         }
-                        )
+                        if matcher.get("timeout") is not None:
+                            hook_matcher_config["timeout"] = matcher.get("timeout")
+                        hooks_config[event].append(hook_matcher_config)
 
         # Send initialize request
         request = {
@@ -120,7 +149,10 @@ class Query:
             "hooks": hooks_config if hooks_config else None,
         }
 
-        response = await self._send_control_request(request)
+        # Use longer timeout for initialize since MCP servers may take time to start
+        response = await self._send_control_request(
+            request, timeout=self._initialize_timeout
+        )
         self._initialized = True
         self._initialization_result = response  # Store for later access
         return response
@@ -169,6 +201,10 @@ class Query:
                     # TODO: Implement cancellation support
                     continue
 
+                # Track results for proper stream closure
+                if msg_type == "result":
+                    self._first_result_event.set()
+
                 # Regular SDK messages go to the stream
                 await self._message_send.send(message)
 
@@ -178,6 +214,11 @@ class Query:
             raise  # Re-raise to properly handle cancellation
         except Exception as e:
             logger.error(f"Fatal error in message reader: {e}")
+            # Signal all pending control requests so they fail fast instead of timing out
+            for request_id, event in list(self.pending_control_responses.items()):
+                if request_id not in self.pending_control_results:
+                    self.pending_control_results[request_id] = e
+                    event.set()
             # Put error in stream so iterators can handle it
             await self._message_send.send({"type": "error", "error": str(e)})
         finally:
@@ -195,6 +236,7 @@ class Query:
 
             if subtype == "can_use_tool":
                 permission_request: SDKControlPermissionRequest = request_data  # type: ignore[assignment]
+                original_input = permission_request["input"]
                 # Handle tool permission request
                 if not self.can_use_tool:
                     raise Exception("canUseTool callback is not provided")
@@ -213,9 +255,14 @@ class Query:
 
                 # Convert PermissionResult to expected dict format
                 if isinstance(response, PermissionResultAllow):
-                    response_data = {"behavior": "allow"}
+                    response_data = {
-                    if response.updated_input is not None:
+                        "behavior": "allow",
-                        response_data["updatedInput"] = response.updated_input
+                        "updatedInput": (
+                            response.updated_input
+                            if response.updated_input is not None
+                            else original_input
+                        ),
+                    }
                     if response.updated_permissions is not None:
                         response_data["updatedPermissions"] = [
                             permission.to_dict()
@@ -238,11 +285,13 @@ class Query:
                 if not callback:
                     raise Exception(f"No hook callback found for ID: {callback_id}")
 
-                response_data = await callback(
+                hook_output = await callback(
                     request_data.get("input"),
                     request_data.get("tool_use_id"),
                     {"signal": None},  # TODO: Add abort signal support
                 )
+                # Convert Python-safe field names (async_, continue_) to CLI-expected names (async, continue)
+                response_data = _convert_hook_output_for_cli(hook_output)
 
             elif subtype == "mcp_message":
                 # Handle SDK MCP request
@@ -287,8 +336,15 @@ class Query:
             }
             await self.transport.write(json.dumps(error_response) + "\n")
 
-    async def _send_control_request(self, request: dict[str, Any]) -> dict[str, Any]:
+    async def _send_control_request(
-        """Send control request to CLI and wait for response."""
+        self, request: dict[str, Any], timeout: float = 60.0
+    ) -> dict[str, Any]:
+        """Send control request to CLI and wait for response.
+
+        Args:
+            request: The control request to send
+            timeout: Timeout in seconds to wait for response (default 60s)
+        """
         if not self.is_streaming_mode:
             raise Exception("Control requests require streaming mode")
 
@@ -311,7 +367,7 @@ class Query:
 
         # Wait for response
         try:
-            with anyio.fail_after(60.0):
+            with anyio.fail_after(timeout):
                 await event.wait()
 
             result = self.pending_control_results.pop(request_id)
@@ -483,14 +539,51 @@ class Query:
             }
         )
 
+    async def rewind_files(self, user_message_id: str) -> None:
+        """Rewind tracked files to their state at a specific user message.
+
+        Requires file checkpointing to be enabled via the `enable_file_checkpointing` option.
+
+        Args:
+            user_message_id: UUID of the user message to rewind to
+        """
+        await self._send_control_request(
+            {
+                "subtype": "rewind_files",
+                "user_message_id": user_message_id,
+            }
+        )
+
     async def stream_input(self, stream: AsyncIterable[dict[str, Any]]) -> None:
-        """Stream input messages to transport."""
+        """Stream input messages to transport.
+
+        If SDK MCP servers or hooks are present, waits for the first result
+        before closing stdin to allow bidirectional control protocol communication.
+        """
         try:
             async for message in stream:
                 if self._closed:
                     break
                 await self.transport.write(json.dumps(message) + "\n")
-            # After all messages sent, end input
+
+            # If we have SDK MCP servers or hooks that need bidirectional communication,
+            # wait for first result before closing the channel
+            has_hooks = bool(self.hooks)
+            if self.sdk_mcp_servers or has_hooks:
+                logger.debug(
+                    f"Waiting for first result before closing stdin "
+                    f"(sdk_mcp_servers={len(self.sdk_mcp_servers)}, has_hooks={has_hooks})"
+                )
+                try:
+                    with anyio.move_on_after(self._stream_close_timeout):
+                        await self._first_result_event.wait()
+                        logger.debug("Received first result, closing input stream")
+                except Exception:
+                    logger.debug(
+                        "Timed out waiting for first result, closing input stream"
+                    )
+
+            # After all messages sent (and result received if needed), end input
             await self.transport.end_input()
         except Exception as e:
             logger.debug(f"Error streaming input: {e}")

src/claude_agent_sdk/_internal/transport/subprocess_cli.py

@@ -3,9 +3,11 @@
 import json
 import logging
 import os
+import platform
 import re
 import shutil
 import sys
+import tempfile
 from collections.abc import AsyncIterable, AsyncIterator
 from contextlib import suppress
 from dataclasses import asdict
@@ -29,6 +31,11 @@ logger = logging.getLogger(__name__)
 _DEFAULT_MAX_BUFFER_SIZE = 1024 * 1024  # 1MB buffer limit
 MINIMUM_CLAUDE_CODE_VERSION = "2.0.0"
 
+# Platform-specific command line length limits
+# Windows cmd.exe has a limit of 8191 characters, use 8000 for safety
+# Other platforms have much higher limits
+_CMD_LENGTH_LIMIT = 8000 if platform.system() == "Windows" else 100000
+
 
 class SubprocessCLITransport(Transport):
     """Subprocess transport using Claude Code CLI."""
@@ -37,12 +44,13 @@ class SubprocessCLITransport(Transport):
         self,
         prompt: str | AsyncIterable[dict[str, Any]],
         options: ClaudeAgentOptions,
-        cli_path: str | Path | None = None,
     ):
         self._prompt = prompt
         self._is_streaming = not isinstance(prompt, str)
         self._options = options
-        self._cli_path = str(cli_path) if cli_path else self._find_cli()
+        self._cli_path = (
+            str(options.cli_path) if options.cli_path is not None else self._find_cli()
+        )
         self._cwd = str(options.cwd) if options.cwd else None
         self._process: Process | None = None
         self._stdout_stream: TextReceiveStream | None = None
@@ -56,9 +64,17 @@ class SubprocessCLITransport(Transport):
             if options.max_buffer_size is not None
             else _DEFAULT_MAX_BUFFER_SIZE
         )
+        self._temp_files: list[str] = []  # Track temporary files for cleanup
+        self._write_lock: anyio.Lock = anyio.Lock()
 
     def _find_cli(self) -> str:
         """Find Claude Code CLI binary."""
+        # First, check for bundled CLI
+        bundled_cli = self._find_bundled_cli()
+        if bundled_cli:
+            return bundled_cli
+
+        # Fall back to system-wide search
         if cli := shutil.which("claude"):
             return cli
 
@@ -68,6 +84,7 @@ class SubprocessCLITransport(Transport):
             Path.home() / ".local/bin/claude",
             Path.home() / "node_modules/.bin/claude",
             Path.home() / ".yarn/bin/claude",
+            Path.home() / ".claude/local/claude",
         ]
 
         for path in locations:
@@ -79,16 +96,85 @@ class SubprocessCLITransport(Transport):
             "  npm install -g @anthropic-ai/claude-code\n"
             "\nIf already installed locally, try:\n"
             '  export PATH="$HOME/node_modules/.bin:$PATH"\n'
-            "\nOr specify the path when creating transport:\n"
+            "\nOr provide the path via ClaudeAgentOptions:\n"
-            "  SubprocessCLITransport(..., cli_path='/path/to/claude')"
+            "  ClaudeAgentOptions(cli_path='/path/to/claude')"
         )
 
+    def _find_bundled_cli(self) -> str | None:
+        """Find bundled CLI binary if it exists."""
+        # Determine the CLI binary name based on platform
+        cli_name = "claude.exe" if platform.system() == "Windows" else "claude"
+
+        # Get the path to the bundled CLI
+        # The _bundled directory is in the same package as this module
+        bundled_path = Path(__file__).parent.parent.parent / "_bundled" / cli_name
+
+        if bundled_path.exists() and bundled_path.is_file():
+            logger.info(f"Using bundled Claude Code CLI: {bundled_path}")
+            return str(bundled_path)
+
+        return None
+
+    def _build_settings_value(self) -> str | None:
+        """Build settings value, merging sandbox settings if provided.
+
+        Returns the settings value as either:
+        - A JSON string (if sandbox is provided or settings is JSON)
+        - A file path (if only settings path is provided without sandbox)
+        - None if neither settings nor sandbox is provided
+        """
+        has_settings = self._options.settings is not None
+        has_sandbox = self._options.sandbox is not None
+
+        if not has_settings and not has_sandbox:
+            return None
+
+        # If only settings path and no sandbox, pass through as-is
+        if has_settings and not has_sandbox:
+            return self._options.settings
+
+        # If we have sandbox settings, we need to merge into a JSON object
+        settings_obj: dict[str, Any] = {}
+
+        if has_settings:
+            assert self._options.settings is not None
+            settings_str = self._options.settings.strip()
+            # Check if settings is a JSON string or a file path
+            if settings_str.startswith("{") and settings_str.endswith("}"):
+                # Parse JSON string
+                try:
+                    settings_obj = json.loads(settings_str)
+                except json.JSONDecodeError:
+                    # If parsing fails, treat as file path
+                    logger.warning(
+                        f"Failed to parse settings as JSON, treating as file path: {settings_str}"
+                    )
+                    # Read the file
+                    settings_path = Path(settings_str)
+                    if settings_path.exists():
+                        with settings_path.open(encoding="utf-8") as f:
+                            settings_obj = json.load(f)
+            else:
+                # It's a file path - read and parse
+                settings_path = Path(settings_str)
+                if settings_path.exists():
+                    with settings_path.open(encoding="utf-8") as f:
+                        settings_obj = json.load(f)
+                else:
+                    logger.warning(f"Settings file not found: {settings_path}")
+
+        # Merge sandbox settings
+        if has_sandbox:
+            settings_obj["sandbox"] = self._options.sandbox
+
+        return json.dumps(settings_obj)
+
     def _build_command(self) -> list[str]:
         """Build CLI command with arguments."""
         cmd = [self._cli_path, "--output-format", "stream-json", "--verbose"]
 
         if self._options.system_prompt is None:
-            pass
+            cmd.extend(["--system-prompt", ""])
         elif isinstance(self._options.system_prompt, str):
             cmd.extend(["--system-prompt", self._options.system_prompt])
         else:
@@ -100,18 +186,39 @@ class SubprocessCLITransport(Transport):
                     ["--append-system-prompt", self._options.system_prompt["append"]]
                 )
 
+        # Handle tools option (base set of tools)
+        if self._options.tools is not None:
+            tools = self._options.tools
+            if isinstance(tools, list):
+                if len(tools) == 0:
+                    cmd.extend(["--tools", ""])
+                else:
+                    cmd.extend(["--tools", ",".join(tools)])
+            else:
+                # Preset object - 'claude_code' preset maps to 'default'
+                cmd.extend(["--tools", "default"])
+
         if self._options.allowed_tools:
             cmd.extend(["--allowedTools", ",".join(self._options.allowed_tools)])
 
         if self._options.max_turns:
             cmd.extend(["--max-turns", str(self._options.max_turns)])
 
+        if self._options.max_budget_usd is not None:
+            cmd.extend(["--max-budget-usd", str(self._options.max_budget_usd)])
+
         if self._options.disallowed_tools:
             cmd.extend(["--disallowedTools", ",".join(self._options.disallowed_tools)])
 
         if self._options.model:
             cmd.extend(["--model", self._options.model])
 
+        if self._options.fallback_model:
+            cmd.extend(["--fallback-model", self._options.fallback_model])
+
+        if self._options.betas:
+            cmd.extend(["--betas", ",".join(self._options.betas)])
+
         if self._options.permission_prompt_tool_name:
             cmd.extend(
                 ["--permission-prompt-tool", self._options.permission_prompt_tool_name]
@@ -126,8 +233,10 @@ class SubprocessCLITransport(Transport):
         if self._options.resume:
             cmd.extend(["--resume", self._options.resume])
 
-        if self._options.settings:
+        # Handle settings and sandbox: merge sandbox into settings if both are provided
-            cmd.extend(["--settings", self._options.settings])
+        settings_value = self._build_settings_value()
+        if settings_value:
+            cmd.extend(["--settings", settings_value])
 
         if self._options.add_dirs:
             # Convert all paths to strings and add each directory
@@ -172,7 +281,8 @@ class SubprocessCLITransport(Transport):
                 name: {k: v for k, v in asdict(agent_def).items() if v is not None}
                 for name, agent_def in self._options.agents.items()
             }
-            cmd.extend(["--agents", json.dumps(agents_dict)])
+            agents_json = json.dumps(agents_dict)
+            cmd.extend(["--agents", agents_json])
 
         sources_value = (
             ",".join(self._options.setting_sources)
@@ -181,6 +291,14 @@ class SubprocessCLITransport(Transport):
         )
         cmd.extend(["--setting-sources", sources_value])
 
+        # Add plugin directories
+        if self._options.plugins:
+            for plugin in self._options.plugins:
+                if plugin["type"] == "local":
+                    cmd.extend(["--plugin-dir", plugin["path"]])
+                else:
+                    raise ValueError(f"Unsupported plugin type: {plugin['type']}")
+
         # Add extra args for future CLI flags
         for flag, value in self._options.extra_args.items():
             if value is None:
@@ -190,7 +308,24 @@ class SubprocessCLITransport(Transport):
                 # Flag with value
                 cmd.extend([f"--{flag}", str(value)])
 
+        if self._options.max_thinking_tokens is not None:
+            cmd.extend(
+                ["--max-thinking-tokens", str(self._options.max_thinking_tokens)]
+            )
+
+        # Extract schema from output_format structure if provided
+        # Expected: {"type": "json_schema", "schema": {...}}
+        if (
+            self._options.output_format is not None
+            and isinstance(self._options.output_format, dict)
+            and self._options.output_format.get("type") == "json_schema"
+        ):
+            schema = self._options.output_format.get("schema")
+            if schema is not None:
+                cmd.extend(["--json-schema", json.dumps(schema)])
+
         # Add prompt handling based on mode
+        # IMPORTANT: This must come AFTER all flags because everything after "--" is treated as arguments
         if self._is_streaming:
             # Streaming mode: use --input-format stream-json
             cmd.extend(["--input-format", "stream-json"])
@@ -198,6 +333,37 @@ class SubprocessCLITransport(Transport):
             # String mode: use --print with the prompt
             cmd.extend(["--print", "--", str(self._prompt)])
 
+        # Check if command line is too long (Windows limitation)
+        cmd_str = " ".join(cmd)
+        if len(cmd_str) > _CMD_LENGTH_LIMIT and self._options.agents:
+            # Command is too long - use temp file for agents
+            # Find the --agents argument and replace its value with @filepath
+            try:
+                agents_idx = cmd.index("--agents")
+                agents_json_value = cmd[agents_idx + 1]
+
+                # Create a temporary file
+                # ruff: noqa: SIM115
+                temp_file = tempfile.NamedTemporaryFile(
+                    mode="w", suffix=".json", delete=False, encoding="utf-8"
+                )
+                temp_file.write(agents_json_value)
+                temp_file.close()
+
+                # Track for cleanup
+                self._temp_files.append(temp_file.name)
+
+                # Replace agents JSON with @filepath reference
+                cmd[agents_idx + 1] = f"@{temp_file.name}"
+
+                logger.info(
+                    f"Command line length ({len(cmd_str)}) exceeds limit ({_CMD_LENGTH_LIMIT}). "
+                    f"Using temp file for --agents: {temp_file.name}"
+                )
+            except (ValueError, IndexError) as e:
+                # This shouldn't happen, but log it just in case
+                logger.warning(f"Failed to optimize command line length: {e}")
+
         return cmd
 
     async def connect(self) -> None:
@@ -205,6 +371,7 @@ class SubprocessCLITransport(Transport):
         if self._process:
             return
 
+        if not os.environ.get("CLAUDE_AGENT_SDK_SKIP_VERSION_CHECK"):
             await self._check_claude_version()
 
         cmd = self._build_command()
@@ -217,6 +384,10 @@ class SubprocessCLITransport(Transport):
                 "CLAUDE_AGENT_SDK_VERSION": __version__,
             }
 
+            # Enable file checkpointing if requested
+            if self._options.enable_file_checkpointing:
+                process_env["CLAUDE_CODE_ENABLE_SDK_FILE_CHECKPOINTING"] = "true"
+
             if self._cwd:
                 process_env["PWD"] = self._cwd
 
@@ -305,9 +476,14 @@ class SubprocessCLITransport(Transport):
 
     async def close(self) -> None:
         """Close the transport and clean up resources."""
-        self._ready = False
+        # Clean up temporary files first (before early return)
+        for temp_file in self._temp_files:
+            with suppress(Exception):
+                Path(temp_file).unlink(missing_ok=True)
+        self._temp_files.clear()
 
         if not self._process:
+            self._ready = False
             return
 
         # Close stderr task group if active
@@ -317,7 +493,9 @@ class SubprocessCLITransport(Transport):
                 await self._stderr_task_group.__aexit__(None, None, None)
             self._stderr_task_group = None
 
-        # Close streams
+        # Close stdin stream (acquire lock to prevent race with concurrent writes)
+        async with self._write_lock:
+            self._ready = False  # Set inside lock to prevent TOCTOU with write()
             if self._stdin_stream:
                 with suppress(Exception):
                     await self._stdin_stream.aclose()
@@ -328,10 +506,6 @@ class SubprocessCLITransport(Transport):
                 await self._stderr_stream.aclose()
             self._stderr_stream = None
 
-        if self._process.stdin:
-            with suppress(Exception):
-                await self._process.stdin.aclose()
-
         # Terminate and wait for process
         if self._process.returncode is None:
             with suppress(ProcessLookupError):
@@ -349,17 +523,16 @@ class SubprocessCLITransport(Transport):
 
     async def write(self, data: str) -> None:
         """Write raw data to the transport."""
-        # Check if ready (like TypeScript)
+        async with self._write_lock:
+            # All checks inside lock to prevent TOCTOU races with close()/end_input()
             if not self._ready or not self._stdin_stream:
                 raise CLIConnectionError("ProcessTransport is not ready for writing")
 
-        # Check if process is still alive (like TypeScript)
             if self._process and self._process.returncode is not None:
                 raise CLIConnectionError(
                     f"Cannot write to terminated process (exit code: {self._process.returncode})"
                 )
 
-        # Check for exit errors (like TypeScript)
             if self._exit_error:
                 raise CLIConnectionError(
                     f"Cannot write to process that exited with error: {self._exit_error}"
@@ -368,7 +541,7 @@ class SubprocessCLITransport(Transport):
             try:
                 await self._stdin_stream.send(data)
             except Exception as e:
-            self._ready = False  # Mark as not ready (like TypeScript)
+                self._ready = False
                 self._exit_error = CLIConnectionError(
                     f"Failed to write to process stdin: {e}"
                 )
@@ -376,6 +549,7 @@ class SubprocessCLITransport(Transport):
 
     async def end_input(self) -> None:
         """End the input stream (close stdin)."""
+        async with self._write_lock:
             if self._stdin_stream:
                 with suppress(Exception):
                     await self._stdin_stream.aclose()

src/claude_agent_sdk/_version.py

@@ -1,3 +1,3 @@
 """Version information for claude-agent-sdk."""
 
-__version__ = "0.1.1"
+__version__ = "0.1.18"

src/claude_agent_sdk/client.py

@@ -75,10 +75,12 @@ class ClaudeSDKClient:
             internal_hooks[event] = []
             for matcher in matchers:
                 # Convert HookMatcher to internal dict format
-                internal_matcher = {
+                internal_matcher: dict[str, Any] = {
                     "matcher": matcher.matcher if hasattr(matcher, "matcher") else None,
                     "hooks": matcher.hooks if hasattr(matcher, "hooks") else [],
                 }
+                if hasattr(matcher, "timeout") and matcher.timeout is not None:
+                    internal_matcher["timeout"] = matcher.timeout
                 internal_hooks[event].append(internal_matcher)
         return internal_hooks
 
@@ -138,6 +140,13 @@ class ClaudeSDKClient:
                 if isinstance(config, dict) and config.get("type") == "sdk":
                     sdk_mcp_servers[name] = config["instance"]  # type: ignore[typeddict-item]
 
+        # Calculate initialize timeout from CLAUDE_CODE_STREAM_CLOSE_TIMEOUT env var if set
+        # CLAUDE_CODE_STREAM_CLOSE_TIMEOUT is in milliseconds, convert to seconds
+        initialize_timeout_ms = int(
+            os.environ.get("CLAUDE_CODE_STREAM_CLOSE_TIMEOUT", "60000")
+        )
+        initialize_timeout = max(initialize_timeout_ms / 1000.0, 60.0)
+
         # Create Query to handle control protocol
         self._query = Query(
             transport=self._transport,
@@ -147,6 +156,7 @@ class ClaudeSDKClient:
             if self.options.hooks
             else None,
             sdk_mcp_servers=sdk_mcp_servers,
+            initialize_timeout=initialize_timeout,
         )
 
         # Start reading messages and initialize
@@ -251,6 +261,38 @@ class ClaudeSDKClient:
             raise CLIConnectionError("Not connected. Call connect() first.")
         await self._query.set_model(model)
 
+    async def rewind_files(self, user_message_id: str) -> None:
+        """Rewind tracked files to their state at a specific user message.
+
+        Requires:
+            - `enable_file_checkpointing=True` to track file changes
+            - `extra_args={"replay-user-messages": None}` to receive UserMessage
+              objects with `uuid` in the response stream
+
+        Args:
+            user_message_id: UUID of the user message to rewind to. This should be
+                the `uuid` field from a `UserMessage` received during the conversation.
+
+        Example:
+            ```python
+            options = ClaudeAgentOptions(
+                enable_file_checkpointing=True,
+                extra_args={"replay-user-messages": None},
+            )
+            async with ClaudeSDKClient(options) as client:
+                await client.query("Make some changes to my files")
+                async for msg in client.receive_response():
+                    if isinstance(msg, UserMessage) and msg.uuid:
+                        checkpoint_id = msg.uuid  # Save this for later
+
+                # Later, rewind to that point
+                await client.rewind_files(checkpoint_id)
+            ```
+        """
+        if not self._query:
+            raise CLIConnectionError("Not connected. Call connect() first.")
+        await self._query.rewind_files(user_message_id)
+
     async def get_server_info(self) -> dict[str, Any] | None:
         """Get server initialization info including available commands and output styles.
 

src/claude_agent_sdk/types.py

@@ -10,10 +10,16 @@ from typing_extensions import NotRequired
 
 if TYPE_CHECKING:
     from mcp.server import Server as McpServer
+else:
+    # Runtime placeholder for forward reference resolution in Pydantic 2.12+
+    McpServer = Any
 
 # Permission modes
 PermissionMode = Literal["default", "acceptEdits", "plan", "bypassPermissions"]
 
+# SDK Beta features - see https://docs.anthropic.com/en/api/beta-headers
+SdkBeta = Literal["context-1m-2025-08-07"]
+
 # Agent definitions
 SettingSource = Literal["user", "project", "local"]
 
@@ -26,6 +32,13 @@ class SystemPromptPreset(TypedDict):
     append: NotRequired[str]
 
 
+class ToolsPreset(TypedDict):
+    """Tools preset configuration."""
+
+    type: Literal["preset"]
+    preset: Literal["claude_code"]
+
+
 @dataclass
 class AgentDefinition:
     """Agent definition configuration."""
@@ -157,35 +170,197 @@ HookEvent = (
 )
 
 
+# Hook input types - strongly typed for each hook event
+class BaseHookInput(TypedDict):
+    """Base hook input fields present across many hook events."""
+
+    session_id: str
+    transcript_path: str
+    cwd: str
+    permission_mode: NotRequired[str]
+
+
+class PreToolUseHookInput(BaseHookInput):
+    """Input data for PreToolUse hook events."""
+
+    hook_event_name: Literal["PreToolUse"]
+    tool_name: str
+    tool_input: dict[str, Any]
+
+
+class PostToolUseHookInput(BaseHookInput):
+    """Input data for PostToolUse hook events."""
+
+    hook_event_name: Literal["PostToolUse"]
+    tool_name: str
+    tool_input: dict[str, Any]
+    tool_response: Any
+
+
+class UserPromptSubmitHookInput(BaseHookInput):
+    """Input data for UserPromptSubmit hook events."""
+
+    hook_event_name: Literal["UserPromptSubmit"]
+    prompt: str
+
+
+class StopHookInput(BaseHookInput):
+    """Input data for Stop hook events."""
+
+    hook_event_name: Literal["Stop"]
+    stop_hook_active: bool
+
+
+class SubagentStopHookInput(BaseHookInput):
+    """Input data for SubagentStop hook events."""
+
+    hook_event_name: Literal["SubagentStop"]
+    stop_hook_active: bool
+
+
+class PreCompactHookInput(BaseHookInput):
+    """Input data for PreCompact hook events."""
+
+    hook_event_name: Literal["PreCompact"]
+    trigger: Literal["manual", "auto"]
+    custom_instructions: str | None
+
+
+# Union type for all hook inputs
+HookInput = (
+    PreToolUseHookInput
+    | PostToolUseHookInput
+    | UserPromptSubmitHookInput
+    | StopHookInput
+    | SubagentStopHookInput
+    | PreCompactHookInput
+)
+
+
+# Hook-specific output types
+class PreToolUseHookSpecificOutput(TypedDict):
+    """Hook-specific output for PreToolUse events."""
+
+    hookEventName: Literal["PreToolUse"]
+    permissionDecision: NotRequired[Literal["allow", "deny", "ask"]]
+    permissionDecisionReason: NotRequired[str]
+    updatedInput: NotRequired[dict[str, Any]]
+
+
+class PostToolUseHookSpecificOutput(TypedDict):
+    """Hook-specific output for PostToolUse events."""
+
+    hookEventName: Literal["PostToolUse"]
+    additionalContext: NotRequired[str]
+
+
+class UserPromptSubmitHookSpecificOutput(TypedDict):
+    """Hook-specific output for UserPromptSubmit events."""
+
+    hookEventName: Literal["UserPromptSubmit"]
+    additionalContext: NotRequired[str]
+
+
+class SessionStartHookSpecificOutput(TypedDict):
+    """Hook-specific output for SessionStart events."""
+
+    hookEventName: Literal["SessionStart"]
+    additionalContext: NotRequired[str]
+
+
+HookSpecificOutput = (
+    PreToolUseHookSpecificOutput
+    | PostToolUseHookSpecificOutput
+    | UserPromptSubmitHookSpecificOutput
+    | SessionStartHookSpecificOutput
+)
+
+
 # See https://docs.anthropic.com/en/docs/claude-code/hooks#advanced%3A-json-output
-# for documentation of the output types. Currently, "continue", "stopReason",
+# for documentation of the output types.
-# and "suppressOutput" are not supported in the Python SDK.
+#
-class HookJSONOutput(TypedDict):
+# IMPORTANT: The Python SDK uses `async_` and `continue_` (with underscores) to avoid
-    # Whether to block the action related to the hook.
+# Python keyword conflicts. These fields are automatically converted to `async` and
+# `continue` when sent to the CLI. You should use the underscore versions in your
+# Python code.
+class AsyncHookJSONOutput(TypedDict):
+    """Async hook output that defers hook execution.
+
+    Fields:
+        async_: Set to True to defer hook execution. Note: This is converted to
+            "async" when sent to the CLI - use "async_" in your Python code.
+        asyncTimeout: Optional timeout in milliseconds for the async operation.
+    """
+
+    async_: Literal[
+        True
+    ]  # Using async_ to avoid Python keyword (converted to "async" for CLI)
+    asyncTimeout: NotRequired[int]
+
+
+class SyncHookJSONOutput(TypedDict):
+    """Synchronous hook output with control and decision fields.
+
+    This defines the structure for hook callbacks to control execution and provide
+    feedback to Claude.
+
+    Common Control Fields:
+        continue_: Whether Claude should proceed after hook execution (default: True).
+            Note: This is converted to "continue" when sent to the CLI.
+        suppressOutput: Hide stdout from transcript mode (default: False).
+        stopReason: Message shown when continue is False.
+
+    Decision Fields:
+        decision: Set to "block" to indicate blocking behavior.
+        systemMessage: Warning message displayed to the user.
+        reason: Feedback message for Claude about the decision.
+
+    Hook-Specific Output:
+        hookSpecificOutput: Event-specific controls (e.g., permissionDecision for
+            PreToolUse, additionalContext for PostToolUse).
+
+    Note: The CLI documentation shows field names without underscores ("async", "continue"),
+    but Python code should use the underscore versions ("async_", "continue_") as they
+    are automatically converted.
+    """
+
+    # Common control fields
+    continue_: NotRequired[
+        bool
+    ]  # Using continue_ to avoid Python keyword (converted to "continue" for CLI)
+    suppressOutput: NotRequired[bool]
+    stopReason: NotRequired[str]
+
+    # Decision fields
+    # Note: "approve" is deprecated for PreToolUse (use permissionDecision instead)
+    # For other hooks, only "block" is meaningful
     decision: NotRequired[Literal["block"]]
-    # Optionally add a system message that is not visible to Claude but saved in
-    # the chat transcript.
     systemMessage: NotRequired[str]
-    # See each hook's individual "Decision Control" section in the documentation
+    reason: NotRequired[str]
-    # for guidance.
+
-    hookSpecificOutput: NotRequired[Any]
+    # Hook-specific outputs
+    hookSpecificOutput: NotRequired[HookSpecificOutput]
 
 
-@dataclass
+HookJSONOutput = AsyncHookJSONOutput | SyncHookJSONOutput
-class HookContext:
-    """Context information for hook callbacks."""
 
-    signal: Any | None = None  # Future: abort signal support
+
+class HookContext(TypedDict):
+    """Context information for hook callbacks.
+
+    Fields:
+        signal: Reserved for future abort signal support. Currently always None.
+    """
+
+    signal: Any | None  # Future: abort signal support
 
 
 HookCallback = Callable[
     # HookCallback input parameters:
-    # - input
+    # - input: Strongly-typed hook input with discriminated unions based on hook_event_name
-    #   See https://docs.anthropic.com/en/docs/claude-code/hooks#hook-input for
+    # - tool_use_id: Optional tool use identifier
-    #   the type of 'input', the first value.
+    # - context: Hook context with abort signal support (currently placeholder)
-    # - tool_use_id
+    [HookInput, str | None, HookContext],
-    # - context
-    [dict[str, Any], str | None, HookContext],
     Awaitable[HookJSONOutput],
 ]
 
@@ -204,6 +379,9 @@ class HookMatcher:
     # A list of Python functions with function signature HookCallback
     hooks: list[HookCallback] = field(default_factory=list)
 
+    # Timeout in seconds for all hooks in this matcher (default: 60)
+    timeout: float | None = None
+
 
 # MCP Server config
 class McpStdioServerConfig(TypedDict):
@@ -244,6 +422,93 @@ McpServerConfig = (
 )
 
 
+class SdkPluginConfig(TypedDict):
+    """SDK plugin configuration.
+
+    Currently only local plugins are supported via the 'local' type.
+    """
+
+    type: Literal["local"]
+    path: str
+
+
+# Sandbox configuration types
+class SandboxNetworkConfig(TypedDict, total=False):
+    """Network configuration for sandbox.
+
+    Attributes:
+        allowUnixSockets: Unix socket paths accessible in sandbox (e.g., SSH agents).
+        allowAllUnixSockets: Allow all Unix sockets (less secure).
+        allowLocalBinding: Allow binding to localhost ports (macOS only).
+        httpProxyPort: HTTP proxy port if bringing your own proxy.
+        socksProxyPort: SOCKS5 proxy port if bringing your own proxy.
+    """
+
+    allowUnixSockets: list[str]
+    allowAllUnixSockets: bool
+    allowLocalBinding: bool
+    httpProxyPort: int
+    socksProxyPort: int
+
+
+class SandboxIgnoreViolations(TypedDict, total=False):
+    """Violations to ignore in sandbox.
+
+    Attributes:
+        file: File paths for which violations should be ignored.
+        network: Network hosts for which violations should be ignored.
+    """
+
+    file: list[str]
+    network: list[str]
+
+
+class SandboxSettings(TypedDict, total=False):
+    """Sandbox settings configuration.
+
+    This controls how Claude Code sandboxes bash commands for filesystem
+    and network isolation.
+
+    **Important:** Filesystem and network restrictions are configured via permission
+    rules, not via these sandbox settings:
+    - Filesystem read restrictions: Use Read deny rules
+    - Filesystem write restrictions: Use Edit allow/deny rules
+    - Network restrictions: Use WebFetch allow/deny rules
+
+    Attributes:
+        enabled: Enable bash sandboxing (macOS/Linux only). Default: False
+        autoAllowBashIfSandboxed: Auto-approve bash commands when sandboxed. Default: True
+        excludedCommands: Commands that should run outside the sandbox (e.g., ["git", "docker"])
+        allowUnsandboxedCommands: Allow commands to bypass sandbox via dangerouslyDisableSandbox.
+            When False, all commands must run sandboxed (or be in excludedCommands). Default: True
+        network: Network configuration for sandbox.
+        ignoreViolations: Violations to ignore.
+        enableWeakerNestedSandbox: Enable weaker sandbox for unprivileged Docker environments
+            (Linux only). Reduces security. Default: False
+
+    Example:
+        ```python
+        sandbox_settings: SandboxSettings = {
+            "enabled": True,
+            "autoAllowBashIfSandboxed": True,
+            "excludedCommands": ["docker"],
+            "network": {
+                "allowUnixSockets": ["/var/run/docker.sock"],
+                "allowLocalBinding": True
+            }
+        }
+        ```
+    """
+
+    enabled: bool
+    autoAllowBashIfSandboxed: bool
+    excludedCommands: list[str]
+    allowUnsandboxedCommands: bool
+    network: SandboxNetworkConfig
+    ignoreViolations: SandboxIgnoreViolations
+    enableWeakerNestedSandbox: bool
+
+
 # Content block types
 @dataclass
 class TextBlock:
@@ -282,11 +547,22 @@ ContentBlock = TextBlock | ThinkingBlock | ToolUseBlock | ToolResultBlock
 
 
 # Message types
+AssistantMessageError = Literal[
+    "authentication_failed",
+    "billing_error",
+    "rate_limit",
+    "invalid_request",
+    "server_error",
+    "unknown",
+]
+
+
 @dataclass
 class UserMessage:
     """User message."""
 
     content: str | list[ContentBlock]
+    uuid: str | None = None
     parent_tool_use_id: str | None = None
 
 
@@ -297,6 +573,7 @@ class AssistantMessage:
     content: list[ContentBlock]
     model: str
     parent_tool_use_id: str | None = None
+    error: AssistantMessageError | None = None
 
 
 @dataclass
@@ -320,6 +597,7 @@ class ResultMessage:
     total_cost_usd: float | None = None
     usage: dict[str, Any] | None = None
     result: str | None = None
+    structured_output: Any = None
 
 
 @dataclass
@@ -339,6 +617,7 @@ Message = UserMessage | AssistantMessage | SystemMessage | ResultMessage | Strea
 class ClaudeAgentOptions:
     """Query options for Claude SDK."""
 
+    tools: list[str] | ToolsPreset | None = None
     allowed_tools: list[str] = field(default_factory=list)
     system_prompt: str | SystemPromptPreset | None = None
     mcp_servers: dict[str, McpServerConfig] | str | Path = field(default_factory=dict)
@@ -346,10 +625,15 @@ class ClaudeAgentOptions:
     continue_conversation: bool = False
     resume: str | None = None
     max_turns: int | None = None
+    max_budget_usd: float | None = None
     disallowed_tools: list[str] = field(default_factory=list)
     model: str | None = None
+    fallback_model: str | None = None
+    # Beta features - see https://docs.anthropic.com/en/api/beta-headers
+    betas: list[SdkBeta] = field(default_factory=list)
     permission_prompt_tool_name: str | None = None
     cwd: str | Path | None = None
+    cli_path: str | Path | None = None
     settings: str | None = None
     add_dirs: list[str | Path] = field(default_factory=list)
     env: dict[str, str] = field(default_factory=dict)
@@ -379,6 +663,21 @@ class ClaudeAgentOptions:
     agents: dict[str, AgentDefinition] | None = None
     # Setting sources to load (user, project, local)
     setting_sources: list[SettingSource] | None = None
+    # Sandbox configuration for bash command isolation.
+    # Filesystem and network restrictions are derived from permission rules (Read/Edit/WebFetch),
+    # not from these sandbox settings.
+    sandbox: SandboxSettings | None = None
+    # Plugin configurations for custom plugins
+    plugins: list[SdkPluginConfig] = field(default_factory=list)
+    # Max tokens for thinking blocks
+    max_thinking_tokens: int | None = None
+    # Output format for structured outputs (matches Messages API structure)
+    # Example: {"type": "json_schema", "schema": {"type": "object", "properties": {...}}}
+    output_format: dict[str, Any] | None = None
+    # Enable file checkpointing to track file changes during the session.
+    # When enabled, files can be rewound to their state at any user message
+    # using `ClaudeSDKClient.rewind_files()`.
+    enable_file_checkpointing: bool = False
 
 
 # SDK Control Protocol
@@ -419,6 +718,11 @@ class SDKControlMcpMessageRequest(TypedDict):
     message: Any
 
 
+class SDKControlRewindFilesRequest(TypedDict):
+    subtype: Literal["rewind_files"]
+    user_message_id: str
+
+
 class SDKControlRequest(TypedDict):
     type: Literal["control_request"]
     request_id: str
@@ -429,6 +733,7 @@ class SDKControlRequest(TypedDict):
         | SDKControlSetPermissionModeRequest
         | SDKHookCallbackRequest
         | SDKControlMcpMessageRequest
+        | SDKControlRewindFilesRequest
     )
 
 

tests/test_integration.py

@@ -212,3 +212,73 @@ class TestIntegration:
                 assert call_kwargs["options"].continue_conversation is True
 
         anyio.run(_test)
+
+    def test_max_budget_usd_option(self):
+        """Test query with max_budget_usd option."""
+
+        async def _test():
+            with patch(
+                "claude_agent_sdk._internal.client.SubprocessCLITransport"
+            ) as mock_transport_class:
+                mock_transport = AsyncMock()
+                mock_transport_class.return_value = mock_transport
+
+                # Mock the message stream that exceeds budget
+                async def mock_receive():
+                    yield {
+                        "type": "assistant",
+                        "message": {
+                            "role": "assistant",
+                            "content": [
+                                {"type": "text", "text": "Starting to read..."}
+                            ],
+                            "model": "claude-opus-4-1-20250805",
+                        },
+                    }
+                    yield {
+                        "type": "result",
+                        "subtype": "error_max_budget_usd",
+                        "duration_ms": 500,
+                        "duration_api_ms": 400,
+                        "is_error": False,
+                        "num_turns": 1,
+                        "session_id": "test-session-budget",
+                        "total_cost_usd": 0.0002,
+                        "usage": {
+                            "input_tokens": 100,
+                            "output_tokens": 50,
+                        },
+                    }
+
+                mock_transport.read_messages = mock_receive
+                mock_transport.connect = AsyncMock()
+                mock_transport.close = AsyncMock()
+                mock_transport.end_input = AsyncMock()
+                mock_transport.write = AsyncMock()
+                mock_transport.is_ready = Mock(return_value=True)
+
+                # Run query with very small budget
+                messages = []
+                async for msg in query(
+                    prompt="Read the readme",
+                    options=ClaudeAgentOptions(max_budget_usd=0.0001),
+                ):
+                    messages.append(msg)
+
+                # Verify results
+                assert len(messages) == 2
+
+                # Check result message
+                assert isinstance(messages[1], ResultMessage)
+                assert messages[1].subtype == "error_max_budget_usd"
+                assert messages[1].is_error is False
+                assert messages[1].total_cost_usd == 0.0002
+                assert messages[1].total_cost_usd is not None
+                assert messages[1].total_cost_usd > 0
+
+                # Verify transport was created with max_budget_usd option
+                mock_transport_class.assert_called_once()
+                call_kwargs = mock_transport_class.call_args.kwargs
+                assert call_kwargs["options"].max_budget_usd == 0.0001
+
+        anyio.run(_test)

tests/test_message_parser.py

@@ -31,6 +31,21 @@ class TestMessageParser:
         assert isinstance(message.content[0], TextBlock)
         assert message.content[0].text == "Hello"
 
+    def test_parse_user_message_with_uuid(self):
+        """Test parsing a user message with uuid field (issue #414).
+
+        The uuid field is needed for file checkpointing with rewind_files().
+        """
+        data = {
+            "type": "user",
+            "uuid": "msg-abc123-def456",
+            "message": {"content": [{"type": "text", "text": "Hello"}]},
+        }
+        message = parse_message(data)
+        assert isinstance(message, UserMessage)
+        assert message.uuid == "msg-abc123-def456"
+        assert len(message.content) == 1
+
     def test_parse_user_message_with_tool_use(self):
         """Test parsing a user message with tool_use block."""
         data = {

tests/test_sdk_mcp_integration.py

@@ -4,9 +4,11 @@ This test file verifies that SDK MCP servers work correctly through the full sta
 matching the TypeScript SDK test/sdk.test.ts pattern.
 """
 
+import base64
 from typing import Any
 
 import pytest
+from mcp.types import CallToolRequest, CallToolRequestParams
 
 from claude_agent_sdk import (
     ClaudeAgentOptions,
@@ -191,3 +193,73 @@ async def test_server_creation():
 
     # When no tools are provided, the handlers are not registered
     assert ListToolsRequest not in instance.request_handlers
+
+
+@pytest.mark.asyncio
+async def test_image_content_support():
+    """Test that tools can return image content with base64 data."""
+
+    # Create sample base64 image data (a simple 1x1 pixel PNG)
+    png_data = base64.b64encode(
+        b"\x89PNG\r\n\x1a\n\x00\x00\x00\rIHDR\x00\x00\x00\x01\x00\x00\x00\x01"
+        b"\x08\x02\x00\x00\x00\x90wS\xde\x00\x00\x00\tpHYs\x00\x00\x0b\x13"
+        b"\x00\x00\x0b\x13\x01\x00\x9a\x9c\x18\x00\x00\x00\x0cIDATx\x9cc```"
+        b"\x00\x00\x00\x04\x00\x01]U!\x1c\x00\x00\x00\x00IEND\xaeB`\x82"
+    ).decode("utf-8")
+
+    # Track tool executions
+    tool_executions: list[dict[str, Any]] = []
+
+    # Create a tool that returns both text and image content
+    @tool(
+        "generate_chart", "Generates a chart and returns it as an image", {"title": str}
+    )
+    async def generate_chart(args: dict[str, Any]) -> dict[str, Any]:
+        tool_executions.append({"name": "generate_chart", "args": args})
+        return {
+            "content": [
+                {"type": "text", "text": f"Generated chart: {args['title']}"},
+                {
+                    "type": "image",
+                    "data": png_data,
+                    "mimeType": "image/png",
+                },
+            ]
+        }
+
+    server_config = create_sdk_mcp_server(
+        name="image-test-server", version="1.0.0", tools=[generate_chart]
+    )
+
+    # Get the server instance
+    server = server_config["instance"]
+
+    call_handler = server.request_handlers[CallToolRequest]
+
+    # Call the chart generation tool
+    chart_request = CallToolRequest(
+        method="tools/call",
+        params=CallToolRequestParams(
+            name="generate_chart", arguments={"title": "Sales Report"}
+        ),
+    )
+    result = await call_handler(chart_request)
+
+    # Verify the result contains both text and image content
+    assert len(result.root.content) == 2
+
+    # Check text content
+    text_content = result.root.content[0]
+    assert text_content.type == "text"
+    assert text_content.text == "Generated chart: Sales Report"
+
+    # Check image content
+    image_content = result.root.content[1]
+    assert image_content.type == "image"
+    assert image_content.data == png_data
+    assert image_content.mimeType == "image/png"
+
+    # Verify the tool was executed correctly
+    assert len(tool_executions) == 1
+    assert tool_executions[0]["name"] == "generate_chart"
+    assert tool_executions[0]["args"]["title"] == "Sales Report"

tests/test_streaming_client.py

@@ -633,20 +633,27 @@ assert '"Second"' in stdin_messages[1]
 print('{"type": "result", "subtype": "success", "duration_ms": 100, "duration_api_ms": 50, "is_error": false, "num_turns": 1, "session_id": "test", "total_cost_usd": 0.001}')
 """)
 
+            # Make script executable (Unix-style systems)
+            if sys.platform != "win32":
                 Path(test_script).chmod(0o755)
 
             try:
-                # Mock _find_cli to return python executing our test script
+                # Mock _find_cli to return the test script path directly
                 with patch.object(
-                    SubprocessCLITransport, "_find_cli", return_value=sys.executable
+                    SubprocessCLITransport, "_find_cli", return_value=test_script
                 ):
-                    # Mock _build_command to add our test script as first argument
+                    # Mock _build_command to properly execute Python script
                     original_build_command = SubprocessCLITransport._build_command
 
                     def mock_build_command(self):
                         # Get original command
                         cmd = original_build_command(self)
-                        # Replace the CLI path with python + script
+                        # On Windows, we need to use python interpreter to run the script
+                        if sys.platform == "win32":
+                            # Replace first element with python interpreter and script
+                            cmd[0:1] = [sys.executable, test_script]
+                        else:
+                            # On Unix, just use the script directly
                             cmd[0] = test_script
                         return cmd
 

tests/test_subprocess_buffering.py

@@ -15,6 +15,15 @@ from claude_agent_sdk._internal.transport.subprocess_cli import (
 )
 from claude_agent_sdk.types import ClaudeAgentOptions
 
+DEFAULT_CLI_PATH = "/usr/bin/claude"
+
+
+def make_options(**kwargs: object) -> ClaudeAgentOptions:
+    """Construct ClaudeAgentOptions with a default CLI path for tests."""
+
+    cli_path = kwargs.pop("cli_path", DEFAULT_CLI_PATH)
+    return ClaudeAgentOptions(cli_path=cli_path, **kwargs)
+
 
 class MockTextReceiveStream:
     """Mock TextReceiveStream for testing."""
@@ -50,9 +59,7 @@ class TestSubprocessBuffering:
 
             buffered_line = json.dumps(json_obj1) + "\n" + json.dumps(json_obj2)
 
-            transport = SubprocessCLITransport(
+            transport = SubprocessCLITransport(prompt="test", options=make_options())
-                prompt="test", options=ClaudeAgentOptions(), cli_path="/usr/bin/claude"
-            )
 
             mock_process = MagicMock()
             mock_process.returncode = None
@@ -85,9 +92,7 @@ class TestSubprocessBuffering:
 
             buffered_line = json.dumps(json_obj1) + "\n" + json.dumps(json_obj2)
 
-            transport = SubprocessCLITransport(
+            transport = SubprocessCLITransport(prompt="test", options=make_options())
-                prompt="test", options=ClaudeAgentOptions(), cli_path="/usr/bin/claude"
-            )
 
             mock_process = MagicMock()
             mock_process.returncode = None
@@ -115,9 +120,7 @@ class TestSubprocessBuffering:
 
             buffered_line = json.dumps(json_obj1) + "\n\n\n" + json.dumps(json_obj2)
 
-            transport = SubprocessCLITransport(
+            transport = SubprocessCLITransport(prompt="test", options=make_options())
-                prompt="test", options=ClaudeAgentOptions(), cli_path="/usr/bin/claude"
-            )
 
             mock_process = MagicMock()
             mock_process.returncode = None
@@ -161,9 +164,7 @@ class TestSubprocessBuffering:
             part2 = complete_json[100:250]
             part3 = complete_json[250:]
 
-            transport = SubprocessCLITransport(
+            transport = SubprocessCLITransport(prompt="test", options=make_options())
-                prompt="test", options=ClaudeAgentOptions(), cli_path="/usr/bin/claude"
-            )
 
             mock_process = MagicMock()
             mock_process.returncode = None
@@ -209,9 +210,7 @@ class TestSubprocessBuffering:
                 for i in range(0, len(complete_json), chunk_size)
             ]
 
-            transport = SubprocessCLITransport(
+            transport = SubprocessCLITransport(prompt="test", options=make_options())
-                prompt="test", options=ClaudeAgentOptions(), cli_path="/usr/bin/claude"
-            )
 
             mock_process = MagicMock()
             mock_process.returncode = None
@@ -239,9 +238,7 @@ class TestSubprocessBuffering:
         async def _test() -> None:
             huge_incomplete = '{"data": "' + "x" * (_DEFAULT_MAX_BUFFER_SIZE + 1000)
 
-            transport = SubprocessCLITransport(
+            transport = SubprocessCLITransport(prompt="test", options=make_options())
-                prompt="test", options=ClaudeAgentOptions(), cli_path="/usr/bin/claude"
-            )
 
             mock_process = MagicMock()
             mock_process.returncode = None
@@ -269,8 +266,7 @@ class TestSubprocessBuffering:
 
             transport = SubprocessCLITransport(
                 prompt="test",
-                options=ClaudeAgentOptions(max_buffer_size=custom_limit),
+                options=make_options(max_buffer_size=custom_limit),
-                cli_path="/usr/bin/claude",
             )
 
             mock_process = MagicMock()
@@ -309,9 +305,7 @@ class TestSubprocessBuffering:
                 large_json[3000:] + "\n" + msg3,
             ]
 
-            transport = SubprocessCLITransport(
+            transport = SubprocessCLITransport(prompt="test", options=make_options())
-                prompt="test", options=ClaudeAgentOptions(), cli_path="/usr/bin/claude"
-            )
 
             mock_process = MagicMock()
             mock_process.returncode = None

tests/test_tool_callbacks.py

@@ -1,10 +1,14 @@
 """Tests for tool permission callbacks and hook callbacks."""
 
+import json
+
 import pytest
 
 from claude_agent_sdk import (
     ClaudeAgentOptions,
     HookContext,
+    HookInput,
+    HookJSONOutput,
     HookMatcher,
     PermissionResultAllow,
     PermissionResultDeny,
@@ -213,7 +217,7 @@ class TestHookCallbacks:
         hook_calls = []
 
         async def test_hook(
-            input_data: dict, tool_use_id: str | None, context: HookContext
+            input_data: HookInput, tool_use_id: str | None, context: HookContext
         ) -> dict:
             hook_calls.append({"input": input_data, "tool_use_id": tool_use_id})
             return {"processed": True}
@@ -257,6 +261,201 @@ class TestHookCallbacks:
         last_response = transport.written_messages[-1]
         assert '"processed": true' in last_response
 
+    @pytest.mark.asyncio
+    async def test_hook_output_fields(self):
+        """Test that all SyncHookJSONOutput fields are properly handled."""
+
+        # Test all SyncHookJSONOutput fields together
+        async def comprehensive_hook(
+            input_data: HookInput, tool_use_id: str | None, context: HookContext
+        ) -> HookJSONOutput:
+            return {
+                # Control fields
+                "continue_": True,
+                "suppressOutput": False,
+                "stopReason": "Test stop reason",
+                # Decision fields
+                "decision": "block",
+                "systemMessage": "Test system message",
+                "reason": "Test reason for blocking",
+                # Hook-specific output with all PreToolUse fields
+                "hookSpecificOutput": {
+                    "hookEventName": "PreToolUse",
+                    "permissionDecision": "deny",
+                    "permissionDecisionReason": "Security policy violation",
+                    "updatedInput": {"modified": "input"},
+                },
+            }
+
+        transport = MockTransport()
+        hooks = {
+            "PreToolUse": [
+                {"matcher": {"tool": "TestTool"}, "hooks": [comprehensive_hook]}
+            ]
+        }
+
+        query = Query(
+            transport=transport, is_streaming_mode=True, can_use_tool=None, hooks=hooks
+        )
+
+        callback_id = "test_comprehensive_hook"
+        query.hook_callbacks[callback_id] = comprehensive_hook
+
+        request = {
+            "type": "control_request",
+            "request_id": "test-comprehensive",
+            "request": {
+                "subtype": "hook_callback",
+                "callback_id": callback_id,
+                "input": {"test": "data"},
+                "tool_use_id": "tool-456",
+            },
+        }
+
+        await query._handle_control_request(request)
+
+        # Check response contains all the fields
+        assert len(transport.written_messages) > 0
+        last_response = transport.written_messages[-1]
+
+        # Parse the JSON response
+        response_data = json.loads(last_response)
+        # The hook result is nested at response.response
+        result = response_data["response"]["response"]
+
+        # Verify control fields are present and converted to CLI format
+        assert result.get("continue") is True, (
+            "continue_ should be converted to continue"
+        )
+        assert "continue_" not in result, "continue_ should not appear in CLI output"
+        assert result.get("suppressOutput") is False
+        assert result.get("stopReason") == "Test stop reason"
+
+        # Verify decision fields are present
+        assert result.get("decision") == "block"
+        assert result.get("reason") == "Test reason for blocking"
+        assert result.get("systemMessage") == "Test system message"
+
+        # Verify hook-specific output is present
+        hook_output = result.get("hookSpecificOutput", {})
+        assert hook_output.get("hookEventName") == "PreToolUse"
+        assert hook_output.get("permissionDecision") == "deny"
+        assert (
+            hook_output.get("permissionDecisionReason") == "Security policy violation"
+        )
+        assert "updatedInput" in hook_output
+
+    @pytest.mark.asyncio
+    async def test_async_hook_output(self):
+        """Test AsyncHookJSONOutput type with proper async fields."""
+
+        async def async_hook(
+            input_data: HookInput, tool_use_id: str | None, context: HookContext
+        ) -> HookJSONOutput:
+            # Test that async hooks properly use async_ and asyncTimeout fields
+            return {
+                "async_": True,
+                "asyncTimeout": 5000,
+            }
+
+        transport = MockTransport()
+        hooks = {"PreToolUse": [{"matcher": None, "hooks": [async_hook]}]}
+
+        query = Query(
+            transport=transport, is_streaming_mode=True, can_use_tool=None, hooks=hooks
+        )
+
+        callback_id = "test_async_hook"
+        query.hook_callbacks[callback_id] = async_hook
+
+        request = {
+            "type": "control_request",
+            "request_id": "test-async",
+            "request": {
+                "subtype": "hook_callback",
+                "callback_id": callback_id,
+                "input": {"test": "async_data"},
+                "tool_use_id": None,
+            },
+        }
+
+        await query._handle_control_request(request)
+
+        # Check response contains async fields
+        assert len(transport.written_messages) > 0
+        last_response = transport.written_messages[-1]
+
+        # Parse the JSON response
+        response_data = json.loads(last_response)
+        # The hook result is nested at response.response
+        result = response_data["response"]["response"]
+
+        # The SDK should convert async_ to "async" for CLI compatibility
+        assert result.get("async") is True, "async_ should be converted to async"
+        assert "async_" not in result, "async_ should not appear in CLI output"
+        assert result.get("asyncTimeout") == 5000
+
+    @pytest.mark.asyncio
+    async def test_field_name_conversion(self):
+        """Test that Python-safe field names (async_, continue_) are converted to CLI format (async, continue)."""
+
+        async def conversion_test_hook(
+            input_data: HookInput, tool_use_id: str | None, context: HookContext
+        ) -> HookJSONOutput:
+            # Return both async_ and continue_ to test conversion
+            return {
+                "async_": True,
+                "asyncTimeout": 10000,
+                "continue_": False,
+                "stopReason": "Testing field conversion",
+                "systemMessage": "Fields should be converted",
+            }
+
+        transport = MockTransport()
+        hooks = {"PreToolUse": [{"matcher": None, "hooks": [conversion_test_hook]}]}
+
+        query = Query(
+            transport=transport, is_streaming_mode=True, can_use_tool=None, hooks=hooks
+        )
+
+        callback_id = "test_conversion"
+        query.hook_callbacks[callback_id] = conversion_test_hook
+
+        request = {
+            "type": "control_request",
+            "request_id": "test-conversion",
+            "request": {
+                "subtype": "hook_callback",
+                "callback_id": callback_id,
+                "input": {"test": "data"},
+                "tool_use_id": None,
+            },
+        }
+
+        await query._handle_control_request(request)
+
+        # Check response has converted field names
+        assert len(transport.written_messages) > 0
+        last_response = transport.written_messages[-1]
+
+        response_data = json.loads(last_response)
+        result = response_data["response"]["response"]
+
+        # Verify async_ was converted to async
+        assert result.get("async") is True, "async_ should be converted to async"
+        assert "async_" not in result, "async_ should not appear in output"
+
+        # Verify continue_ was converted to continue
+        assert result.get("continue") is False, (
+            "continue_ should be converted to continue"
+        )
+        assert "continue_" not in result, "continue_ should not appear in output"
+
+        # Verify other fields are unchanged
+        assert result.get("asyncTimeout") == 10000
+        assert result.get("stopReason") == "Testing field conversion"
+        assert result.get("systemMessage") == "Fields should be converted"
+
 
 class TestClaudeAgentOptionsIntegration:
     """Test that callbacks work through ClaudeAgentOptions."""
@@ -270,7 +469,7 @@ class TestClaudeAgentOptionsIntegration:
             return PermissionResultAllow()
 
         async def my_hook(
-            input_data: dict, tool_use_id: str | None, context: HookContext
+            input_data: HookInput, tool_use_id: str | None, context: HookContext
         ) -> dict:
             return {}
 

tests/test_transport.py

@@ -10,6 +10,15 @@ import pytest
 from claude_agent_sdk._internal.transport.subprocess_cli import SubprocessCLITransport
 from claude_agent_sdk.types import ClaudeAgentOptions
 
+DEFAULT_CLI_PATH = "/usr/bin/claude"
+
+
+def make_options(**kwargs: object) -> ClaudeAgentOptions:
+    """Construct options using the standard CLI path unless overridden."""
+
+    cli_path = kwargs.pop("cli_path", DEFAULT_CLI_PATH)
+    return ClaudeAgentOptions(cli_path=cli_path, **kwargs)
+
 
 class TestSubprocessCLITransport:
     """Test subprocess transport implementation."""
@@ -29,9 +38,7 @@ class TestSubprocessCLITransport:
 
     def test_build_command_basic(self):
         """Test building basic CLI command."""
-        transport = SubprocessCLITransport(
+        transport = SubprocessCLITransport(prompt="Hello", options=make_options())
-            prompt="Hello", options=ClaudeAgentOptions(), cli_path="/usr/bin/claude"
-        )
 
         cmd = transport._build_command()
         assert cmd[0] == "/usr/bin/claude"
@@ -39,27 +46,29 @@ class TestSubprocessCLITransport:
         assert "stream-json" in cmd
         assert "--print" in cmd
         assert "Hello" in cmd
+        assert "--system-prompt" in cmd
+        assert cmd[cmd.index("--system-prompt") + 1] == ""
 
     def test_cli_path_accepts_pathlib_path(self):
         """Test that cli_path accepts pathlib.Path objects."""
         from pathlib import Path
 
+        path = Path("/usr/bin/claude")
         transport = SubprocessCLITransport(
             prompt="Hello",
-            options=ClaudeAgentOptions(),
+            options=ClaudeAgentOptions(cli_path=path),
-            cli_path=Path("/usr/bin/claude"),
         )
 
-        assert transport._cli_path == "/usr/bin/claude"
+        # Path object is converted to string, compare with str(path)
+        assert transport._cli_path == str(path)
 
     def test_build_command_with_system_prompt_string(self):
         """Test building CLI command with system prompt as string."""
         transport = SubprocessCLITransport(
             prompt="test",
-            options=ClaudeAgentOptions(
+            options=make_options(
                 system_prompt="Be helpful",
             ),
-            cli_path="/usr/bin/claude",
         )
 
         cmd = transport._build_command()
@@ -70,10 +79,9 @@ class TestSubprocessCLITransport:
         """Test building CLI command with system prompt preset."""
         transport = SubprocessCLITransport(
             prompt="test",
-            options=ClaudeAgentOptions(
+            options=make_options(
                 system_prompt={"type": "preset", "preset": "claude_code"},
             ),
-            cli_path="/usr/bin/claude",
         )
 
         cmd = transport._build_command()
@@ -84,14 +92,13 @@ class TestSubprocessCLITransport:
         """Test building CLI command with system prompt preset and append."""
         transport = SubprocessCLITransport(
             prompt="test",
-            options=ClaudeAgentOptions(
+            options=make_options(
                 system_prompt={
                     "type": "preset",
                     "preset": "claude_code",
                     "append": "Be concise.",
                 },
             ),
-            cli_path="/usr/bin/claude",
         )
 
         cmd = transport._build_command()
@@ -103,14 +110,13 @@ class TestSubprocessCLITransport:
         """Test building CLI command with options."""
         transport = SubprocessCLITransport(
             prompt="test",
-            options=ClaudeAgentOptions(
+            options=make_options(
                 allowed_tools=["Read", "Write"],
                 disallowed_tools=["Bash"],
                 model="claude-sonnet-4-5",
                 permission_mode="acceptEdits",
                 max_turns=5,
             ),
-            cli_path="/usr/bin/claude",
         )
 
         cmd = transport._build_command()
@@ -125,32 +131,61 @@ class TestSubprocessCLITransport:
         assert "--max-turns" in cmd
         assert "5" in cmd
 
+    def test_build_command_with_fallback_model(self):
+        """Test building CLI command with fallback_model option."""
+        transport = SubprocessCLITransport(
+            prompt="test",
+            options=make_options(
+                model="opus",
+                fallback_model="sonnet",
+            ),
+        )
+
+        cmd = transport._build_command()
+        assert "--model" in cmd
+        assert "opus" in cmd
+        assert "--fallback-model" in cmd
+        assert "sonnet" in cmd
+
+    def test_build_command_with_max_thinking_tokens(self):
+        """Test building CLI command with max_thinking_tokens option."""
+        transport = SubprocessCLITransport(
+            prompt="test",
+            options=make_options(max_thinking_tokens=5000),
+        )
+
+        cmd = transport._build_command()
+        assert "--max-thinking-tokens" in cmd
+        assert "5000" in cmd
+
     def test_build_command_with_add_dirs(self):
         """Test building CLI command with add_dirs option."""
         from pathlib import Path
 
+        dir1 = "/path/to/dir1"
+        dir2 = Path("/path/to/dir2")
         transport = SubprocessCLITransport(
             prompt="test",
-            options=ClaudeAgentOptions(
+            options=make_options(add_dirs=[dir1, dir2]),
-                add_dirs=["/path/to/dir1", Path("/path/to/dir2")]
-            ),
-            cli_path="/usr/bin/claude",
         )
 
         cmd = transport._build_command()
-        cmd_str = " ".join(cmd)
 
-        # Check that the command string contains the expected --add-dir flags
+        # Check that both directories are in the command
-        assert "--add-dir /path/to/dir1 --add-dir /path/to/dir2" in cmd_str
+        assert "--add-dir" in cmd
+        add_dir_indices = [i for i, x in enumerate(cmd) if x == "--add-dir"]
+        assert len(add_dir_indices) == 2
+
+        # The directories should appear after --add-dir flags
+        dirs_in_cmd = [cmd[i + 1] for i in add_dir_indices]
+        assert dir1 in dirs_in_cmd
+        assert str(dir2) in dirs_in_cmd
 
     def test_session_continuation(self):
         """Test session continuation options."""
         transport = SubprocessCLITransport(
             prompt="Continue from before",
-            options=ClaudeAgentOptions(
+            options=make_options(continue_conversation=True, resume="session-123"),
-                continue_conversation=True, resume="session-123"
-            ),
-            cli_path="/usr/bin/claude",
         )
 
         cmd = transport._build_command()
@@ -190,8 +225,7 @@ class TestSubprocessCLITransport:
 
                 transport = SubprocessCLITransport(
                     prompt="test",
-                    options=ClaudeAgentOptions(),
+                    options=make_options(),
-                    cli_path="/usr/bin/claude",
                 )
 
                 await transport.connect()
@@ -207,9 +241,7 @@ class TestSubprocessCLITransport:
         """Test reading messages from CLI output."""
         # This test is simplified to just test the transport creation
         # The full async stream handling is tested in integration tests
-        transport = SubprocessCLITransport(
+        transport = SubprocessCLITransport(prompt="test", options=make_options())
-            prompt="test", options=ClaudeAgentOptions(), cli_path="/usr/bin/claude"
-        )
 
         # The transport now just provides raw message reading via read_messages()
         # So we just verify the transport can be created and basic structure is correct
@@ -223,8 +255,7 @@ class TestSubprocessCLITransport:
         async def _test():
             transport = SubprocessCLITransport(
                 prompt="test",
-                options=ClaudeAgentOptions(cwd="/this/directory/does/not/exist"),
+                options=make_options(cwd="/this/directory/does/not/exist"),
-                cli_path="/usr/bin/claude",
             )
 
             with pytest.raises(CLIConnectionError) as exc_info:
@@ -238,8 +269,7 @@ class TestSubprocessCLITransport:
         """Test building CLI command with settings as file path."""
         transport = SubprocessCLITransport(
             prompt="test",
-            options=ClaudeAgentOptions(settings="/path/to/settings.json"),
+            options=make_options(settings="/path/to/settings.json"),
-            cli_path="/usr/bin/claude",
         )
 
         cmd = transport._build_command()
@@ -251,8 +281,7 @@ class TestSubprocessCLITransport:
         settings_json = '{"permissions": {"allow": ["Bash(ls:*)"]}}'
         transport = SubprocessCLITransport(
             prompt="test",
-            options=ClaudeAgentOptions(settings=settings_json),
+            options=make_options(settings=settings_json),
-            cli_path="/usr/bin/claude",
         )
 
         cmd = transport._build_command()
@@ -263,14 +292,13 @@ class TestSubprocessCLITransport:
         """Test building CLI command with extra_args for future flags."""
         transport = SubprocessCLITransport(
             prompt="test",
-            options=ClaudeAgentOptions(
+            options=make_options(
                 extra_args={
                     "new-flag": "value",
                     "boolean-flag": None,
                     "another-option": "test-value",
                 }
             ),
-            cli_path="/usr/bin/claude",
         )
 
         cmd = transport._build_command()
@@ -301,8 +329,7 @@ class TestSubprocessCLITransport:
 
         transport = SubprocessCLITransport(
             prompt="test",
-            options=ClaudeAgentOptions(mcp_servers=mcp_servers),
+            options=make_options(mcp_servers=mcp_servers),
-            cli_path="/usr/bin/claude",
         )
 
         cmd = transport._build_command()
@@ -322,36 +349,36 @@ class TestSubprocessCLITransport:
         from pathlib import Path
 
         # Test with string path
+        string_path = "/path/to/mcp-config.json"
         transport = SubprocessCLITransport(
             prompt="test",
-            options=ClaudeAgentOptions(mcp_servers="/path/to/mcp-config.json"),
+            options=make_options(mcp_servers=string_path),
-            cli_path="/usr/bin/claude",
         )
 
         cmd = transport._build_command()
         assert "--mcp-config" in cmd
         mcp_idx = cmd.index("--mcp-config")
-        assert cmd[mcp_idx + 1] == "/path/to/mcp-config.json"
+        assert cmd[mcp_idx + 1] == string_path
 
         # Test with Path object
+        path_obj = Path("/path/to/mcp-config.json")
         transport = SubprocessCLITransport(
             prompt="test",
-            options=ClaudeAgentOptions(mcp_servers=Path("/path/to/mcp-config.json")),
+            options=make_options(mcp_servers=path_obj),
-            cli_path="/usr/bin/claude",
         )
 
         cmd = transport._build_command()
         assert "--mcp-config" in cmd
         mcp_idx = cmd.index("--mcp-config")
-        assert cmd[mcp_idx + 1] == "/path/to/mcp-config.json"
+        # Path object gets converted to string, compare with str(path_obj)
+        assert cmd[mcp_idx + 1] == str(path_obj)
 
     def test_build_command_with_mcp_servers_as_json_string(self):
         """Test building CLI command with mcp_servers as JSON string."""
         json_config = '{"mcpServers": {"server": {"type": "stdio", "command": "test"}}}'
         transport = SubprocessCLITransport(
             prompt="test",
-            options=ClaudeAgentOptions(mcp_servers=json_config),
+            options=make_options(mcp_servers=json_config),
-            cli_path="/usr/bin/claude",
         )
 
         cmd = transport._build_command()
@@ -368,7 +395,7 @@ class TestSubprocessCLITransport:
                 "MY_TEST_VAR": test_value,
             }
 
-            options = ClaudeAgentOptions(env=custom_env)
+            options = make_options(env=custom_env)
 
             # Mock the subprocess to capture the env argument
             with patch(
@@ -397,7 +424,6 @@ class TestSubprocessCLITransport:
                 transport = SubprocessCLITransport(
                     prompt="test",
                     options=options,
-                    cli_path="/usr/bin/claude",
                 )
 
                 await transport.connect()
@@ -429,7 +455,7 @@ class TestSubprocessCLITransport:
 
         async def _test():
             custom_user = "claude"
-            options = ClaudeAgentOptions(user=custom_user)
+            options = make_options(user=custom_user)
 
             # Mock the subprocess to capture the env argument
             with patch(
@@ -458,7 +484,6 @@ class TestSubprocessCLITransport:
                 transport = SubprocessCLITransport(
                     prompt="test",
                     options=options,
-                    cli_path="/usr/bin/claude",
                 )
 
                 await transport.connect()
@@ -475,3 +500,329 @@ class TestSubprocessCLITransport:
                 assert user_passed == "claude"
 
         anyio.run(_test)
+
+    def test_build_command_with_sandbox_only(self):
+        """Test building CLI command with sandbox settings (no existing settings)."""
+        import json
+
+        from claude_agent_sdk import SandboxSettings
+
+        sandbox: SandboxSettings = {
+            "enabled": True,
+            "autoAllowBashIfSandboxed": True,
+            "network": {
+                "allowLocalBinding": True,
+                "allowUnixSockets": ["/var/run/docker.sock"],
+            },
+        }
+
+        transport = SubprocessCLITransport(
+            prompt="test",
+            options=make_options(sandbox=sandbox),
+        )
+
+        cmd = transport._build_command()
+
+        # Should have --settings with sandbox merged in
+        assert "--settings" in cmd
+        settings_idx = cmd.index("--settings")
+        settings_value = cmd[settings_idx + 1]
+
+        # Parse and verify
+        parsed = json.loads(settings_value)
+        assert "sandbox" in parsed
+        assert parsed["sandbox"]["enabled"] is True
+        assert parsed["sandbox"]["autoAllowBashIfSandboxed"] is True
+        assert parsed["sandbox"]["network"]["allowLocalBinding"] is True
+        assert parsed["sandbox"]["network"]["allowUnixSockets"] == [
+            "/var/run/docker.sock"
+        ]
+
+    def test_build_command_with_sandbox_and_settings_json(self):
+        """Test building CLI command with sandbox merged into existing settings JSON."""
+        import json
+
+        from claude_agent_sdk import SandboxSettings
+
+        # Existing settings as JSON string
+        existing_settings = (
+            '{"permissions": {"allow": ["Bash(ls:*)"]}, "verbose": true}'
+        )
+
+        sandbox: SandboxSettings = {
+            "enabled": True,
+            "excludedCommands": ["git", "docker"],
+        }
+
+        transport = SubprocessCLITransport(
+            prompt="test",
+            options=make_options(settings=existing_settings, sandbox=sandbox),
+        )
+
+        cmd = transport._build_command()
+
+        # Should have merged settings
+        assert "--settings" in cmd
+        settings_idx = cmd.index("--settings")
+        settings_value = cmd[settings_idx + 1]
+
+        parsed = json.loads(settings_value)
+
+        # Original settings should be preserved
+        assert parsed["permissions"] == {"allow": ["Bash(ls:*)"]}
+        assert parsed["verbose"] is True
+
+        # Sandbox should be merged in
+        assert "sandbox" in parsed
+        assert parsed["sandbox"]["enabled"] is True
+        assert parsed["sandbox"]["excludedCommands"] == ["git", "docker"]
+
+    def test_build_command_with_settings_file_and_no_sandbox(self):
+        """Test that settings file path is passed through when no sandbox."""
+        transport = SubprocessCLITransport(
+            prompt="test",
+            options=make_options(settings="/path/to/settings.json"),
+        )
+
+        cmd = transport._build_command()
+
+        # Should pass path directly, not parse it
+        assert "--settings" in cmd
+        settings_idx = cmd.index("--settings")
+        assert cmd[settings_idx + 1] == "/path/to/settings.json"
+
+    def test_build_command_sandbox_minimal(self):
+        """Test sandbox with minimal configuration."""
+        import json
+
+        from claude_agent_sdk import SandboxSettings
+
+        sandbox: SandboxSettings = {"enabled": True}
+
+        transport = SubprocessCLITransport(
+            prompt="test",
+            options=make_options(sandbox=sandbox),
+        )
+
+        cmd = transport._build_command()
+
+        assert "--settings" in cmd
+        settings_idx = cmd.index("--settings")
+        settings_value = cmd[settings_idx + 1]
+
+        parsed = json.loads(settings_value)
+        assert parsed == {"sandbox": {"enabled": True}}
+
+    def test_sandbox_network_config(self):
+        """Test sandbox with full network configuration."""
+        import json
+
+        from claude_agent_sdk import SandboxSettings
+
+        sandbox: SandboxSettings = {
+            "enabled": True,
+            "network": {
+                "allowUnixSockets": ["/tmp/ssh-agent.sock"],
+                "allowAllUnixSockets": False,
+                "allowLocalBinding": True,
+                "httpProxyPort": 8080,
+                "socksProxyPort": 8081,
+            },
+        }
+
+        transport = SubprocessCLITransport(
+            prompt="test",
+            options=make_options(sandbox=sandbox),
+        )
+
+        cmd = transport._build_command()
+        settings_idx = cmd.index("--settings")
+        settings_value = cmd[settings_idx + 1]
+
+        parsed = json.loads(settings_value)
+        network = parsed["sandbox"]["network"]
+
+        assert network["allowUnixSockets"] == ["/tmp/ssh-agent.sock"]
+        assert network["allowAllUnixSockets"] is False
+        assert network["allowLocalBinding"] is True
+        assert network["httpProxyPort"] == 8080
+        assert network["socksProxyPort"] == 8081
+
+    def test_build_command_with_tools_array(self):
+        """Test building CLI command with tools as array of tool names."""
+        transport = SubprocessCLITransport(
+            prompt="test",
+            options=make_options(tools=["Read", "Edit", "Bash"]),
+        )
+
+        cmd = transport._build_command()
+        assert "--tools" in cmd
+        tools_idx = cmd.index("--tools")
+        assert cmd[tools_idx + 1] == "Read,Edit,Bash"
+
+    def test_build_command_with_tools_empty_array(self):
+        """Test building CLI command with tools as empty array (disables all tools)."""
+        transport = SubprocessCLITransport(
+            prompt="test",
+            options=make_options(tools=[]),
+        )
+
+        cmd = transport._build_command()
+        assert "--tools" in cmd
+        tools_idx = cmd.index("--tools")
+        assert cmd[tools_idx + 1] == ""
+
+    def test_build_command_with_tools_preset(self):
+        """Test building CLI command with tools preset."""
+        transport = SubprocessCLITransport(
+            prompt="test",
+            options=make_options(tools={"type": "preset", "preset": "claude_code"}),
+        )
+
+        cmd = transport._build_command()
+        assert "--tools" in cmd
+        tools_idx = cmd.index("--tools")
+        assert cmd[tools_idx + 1] == "default"
+
+    def test_build_command_without_tools(self):
+        """Test building CLI command without tools option (default None)."""
+        transport = SubprocessCLITransport(
+            prompt="test",
+            options=make_options(),
+        )
+
+        cmd = transport._build_command()
+        assert "--tools" not in cmd
+
+    def test_concurrent_writes_are_serialized(self):
+        """Test that concurrent write() calls are serialized by the lock.
+
+        When parallel subagents invoke MCP tools, they trigger concurrent write()
+        calls. Without the _write_lock, trio raises BusyResourceError.
+
+        Uses a real subprocess with the same stream setup as production:
+        process.stdin -> TextSendStream
+        """
+
+        async def _test():
+            import sys
+            from subprocess import PIPE
+
+            from anyio.streams.text import TextSendStream
+
+            # Create a real subprocess that consumes stdin (cross-platform)
+            process = await anyio.open_process(
+                [sys.executable, "-c", "import sys; sys.stdin.read()"],
+                stdin=PIPE,
+                stdout=PIPE,
+                stderr=PIPE,
+            )
+
+            try:
+                transport = SubprocessCLITransport(
+                    prompt="test",
+                    options=ClaudeAgentOptions(cli_path="/usr/bin/claude"),
+                )
+
+                # Same setup as production: TextSendStream wrapping process.stdin
+                transport._ready = True
+                transport._process = MagicMock(returncode=None)
+                transport._stdin_stream = TextSendStream(process.stdin)
+
+                # Spawn concurrent writes - the lock should serialize them
+                num_writes = 10
+                errors: list[Exception] = []
+
+                async def do_write(i: int):
+                    try:
+                        await transport.write(f'{{"msg": {i}}}\n')
+                    except Exception as e:
+                        errors.append(e)
+
+                async with anyio.create_task_group() as tg:
+                    for i in range(num_writes):
+                        tg.start_soon(do_write, i)
+
+                # All writes should succeed - the lock serializes them
+                assert len(errors) == 0, f"Got errors: {errors}"
+            finally:
+                process.terminate()
+                await process.wait()
+
+        anyio.run(_test, backend="trio")
+
+    def test_concurrent_writes_fail_without_lock(self):
+        """Verify that without the lock, concurrent writes cause BusyResourceError.
+
+        Uses a real subprocess with the same stream setup as production.
+        """
+
+        async def _test():
+            import sys
+            from contextlib import asynccontextmanager
+            from subprocess import PIPE
+
+            from anyio.streams.text import TextSendStream
+
+            # Create a real subprocess that consumes stdin (cross-platform)
+            process = await anyio.open_process(
+                [sys.executable, "-c", "import sys; sys.stdin.read()"],
+                stdin=PIPE,
+                stdout=PIPE,
+                stderr=PIPE,
+            )
+
+            try:
+                transport = SubprocessCLITransport(
+                    prompt="test",
+                    options=ClaudeAgentOptions(cli_path="/usr/bin/claude"),
+                )
+
+                # Same setup as production
+                transport._ready = True
+                transport._process = MagicMock(returncode=None)
+                transport._stdin_stream = TextSendStream(process.stdin)
+
+                # Replace lock with no-op to trigger the race condition
+                class NoOpLock:
+                    @asynccontextmanager
+                    async def __call__(self):
+                        yield
+
+                    async def __aenter__(self):
+                        return self
+
+                    async def __aexit__(self, *args):
+                        pass
+
+                transport._write_lock = NoOpLock()
+
+                # Spawn concurrent writes - should fail without lock
+                num_writes = 10
+                errors: list[Exception] = []
+
+                async def do_write(i: int):
+                    try:
+                        await transport.write(f'{{"msg": {i}}}\n')
+                    except Exception as e:
+                        errors.append(e)
+
+                async with anyio.create_task_group() as tg:
+                    for i in range(num_writes):
+                        tg.start_soon(do_write, i)
+
+                # Should have gotten errors due to concurrent access
+                assert len(errors) > 0, (
+                    "Expected errors from concurrent access, but got none"
+                )
+
+                # Check that at least one error mentions the concurrent access
+                error_strs = [str(e) for e in errors]
+                assert any("another task" in s for s in error_strs), (
+                    f"Expected 'another task' error, got: {error_strs}"
+                )
+            finally:
+                process.terminate()
+                await process.wait()
+
+        anyio.run(_test, backend="trio")