MCP observability setup

MCP Observability provides comprehensive monitoring for Model Context Protocol (MCP) implementations, enabling AI models to securely connect to data sources and interact with external tools.

Install the instrumentation SDK

Install the OpenLIT SDK in your Python environment:

pip install openlit

Configure OTEL environment variables

Get your Grafana Cloud OTEL credentials

If you haven’t already obtained your OTEL credentials during the main AI Observability setup, follow these steps:

Sign in to Grafana Cloud and go to the Grafana Cloud Portal
Select your organization if you have access to multiple
Click your stack from the sidebar or main stack list
Under Manage your stack, click the Configure button in the OpenTelemetry section
Scroll down to the Password / API Token section and click Generate now (if you don’t have a token)
Enter a name for the token and click Create token
Click Close - you don’t need to copy the token manually
Scroll down and copy the OTEL_EXPORTER_OTLP_ENDPOINT and OTEL_EXPORTER_OTLP_HEADERS values from the Environment variables section

Set the environment variables

Set up the OpenTelemetry endpoints using the values you copied:

export OTEL_EXPORTER_OTLP_ENDPOINT="<YOUR_GRAFANA_OTEL_GATEWAY_URL>"
export OTEL_EXPORTER_OTLP_HEADERS="<YOUR_GRAFANA_OTEL_GATEWAY_AUTH>"

Replace the values with those you copied:

Replace <YOUR_GRAFANA_OTEL_GATEWAY_URL> with the OTEL_EXPORTER_OTLP_ENDPOINT value
Example: https://otlp-gateway-<ZONE>.grafana.net/otlp
Replace <YOUR_GRAFANA_OTEL_GATEWAY_AUTH> with the OTEL_EXPORTER_OTLP_HEADERS value
Example: Authorization=Basic%20<BASE64 ENCODED INSTANCE ID AND API TOKEN>

Instrument your application

Add the following two lines to your application code:

import openlit

openlit.init()

The OpenLIT SDK automatically uses the OTEL environment variables to send telemetry data to your Grafana Cloud instance.

Examples by implementation type

MCP client

import openlit
from mcp import Client

openlit.init()

# MCP client operations are automatically instrumented
client = Client("http://mcp-server:8080")
tools = client.list_tools()
result = client.call_tool("search_documents", {"query": "AI observability"})

MCP server

import openlit
from mcp import Server

openlit.init()

# MCP server operations are automatically tracked
server = Server()

@server.tool("search_documents")
def search_documents(query: str):
    # Tool logic is automatically instrumented
    results = document_search(query)
    return results

# Start server - all tool calls are tracked
server.run(host="localhost", port=8080)

Refer to the OpenLIT documentation for more MCP implementations.

Visualize and analyze

With the MCP Observability data now being collected and sent to Grafana Cloud, the next step is to visualize and analyze this data to get insights into your Model Context Protocol usage, performance, and identify areas of improvement.

Navigate to the MCP Observability dashboard in your Grafana Cloud instance to start exploring. The dashboard provides: