diff --git a/python/packages/autogen-ext/src/autogen_ext/models/ollama/_ollama_client.py b/python/packages/autogen-ext/src/autogen_ext/models/ollama/_ollama_client.py
index 1f4641fa25b0..e8abf67614a9 100644
--- a/python/packages/autogen-ext/src/autogen_ext/models/ollama/_ollama_client.py
+++ b/python/packages/autogen-ext/src/autogen_ext/models/ollama/_ollama_client.py
@@ -646,14 +646,6 @@ async def create(
         content: Union[str, List[FunctionCall]]
         thought: Optional[str] = None
         if result.message.tool_calls is not None:
-            # TODO: What are possible values for done_reason?
-            if result.done_reason != "tool_calls":
-                warnings.warn(
-                    f"Finish reason mismatch: {result.done_reason} != tool_calls "
-                    "when tool_calls are present. Finish reason may not be accurate. "
-                    "This may be due to the API used that is not returning the correct finish reason.",
-                    stacklevel=2,
-                )
             if result.message.content is not None and result.message.content != "":
                 thought = result.message.content
             # NOTE: If OAI response type changes, this will need to be updated
@@ -760,9 +752,8 @@ async def create_stream(
                     content_chunks.append(chunk.message.content)
                     if len(chunk.message.content) > 0:
                         yield chunk.message.content
-                    continue
 
-                # Otherwise, get tool calls
+                # Get tool calls
                 if chunk.message.tool_calls is not None:
                     full_tool_calls.extend(
                         [
@@ -796,9 +787,6 @@ async def create_stream(
         else:
             prompt_tokens = 0
 
-        if stop_reason == "function_call":
-            raise ValueError("Function calls are not supported in this context")
-
         content: Union[str, List[FunctionCall]]
         thought: Optional[str] = None
 
diff --git a/python/packages/autogen-ext/tests/models/test_ollama_chat_completion_client.py b/python/packages/autogen-ext/tests/models/test_ollama_chat_completion_client.py
index 6e7389bdd3fc..7499e31beec3 100644
--- a/python/packages/autogen-ext/tests/models/test_ollama_chat_completion_client.py
+++ b/python/packages/autogen-ext/tests/models/test_ollama_chat_completion_client.py
@@ -206,6 +206,77 @@ async def _mock_chat(*args: Any, **kwargs: Any) -> ChatResponse:
     assert create_result.usage.completion_tokens == 12
 
 
+@pytest.mark.asyncio
+async def test_create_stream_tools(monkeypatch: pytest.MonkeyPatch) -> None:
+    def add(x: int, y: int) -> str:
+        return str(x + y)
+
+    add_tool = FunctionTool(add, description="Add two numbers")
+    model = "llama3.2"
+    content_raw = "Hello world! This is a test response. Test response."
+
+    async def _mock_chat(*args: Any, **kwargs: Any) -> AsyncGenerator[ChatResponse, None]:
+        assert "stream" in kwargs
+        assert kwargs["stream"] is True
+
+        async def _mock_stream() -> AsyncGenerator[ChatResponse, None]:
+            chunks = [content_raw[i : i + 5] for i in range(0, len(content_raw), 5)]
+            # Simulate streaming by yielding chunks of the response
+            for chunk in chunks[:-1]:
+                yield ChatResponse(
+                    model=model,
+                    done=False,
+                    message=Message(
+                        role="assistant",
+                        content=chunk,
+                    ),
+                )
+            yield ChatResponse(
+                model=model,
+                done=True,
+                done_reason="stop",
+                message=Message(
+                    content=chunks[-1],
+                    role="assistant",
+                    tool_calls=[
+                        Message.ToolCall(
+                            function=Message.ToolCall.Function(
+                                name=add_tool.name,
+                                arguments={"x": 2, "y": 2},
+                            ),
+                        ),
+                    ],
+                ),
+                prompt_eval_count=10,
+                eval_count=12,
+            )
+
+        return _mock_stream()
+
+    monkeypatch.setattr(AsyncClient, "chat", _mock_chat)
+    client = OllamaChatCompletionClient(model=model)
+    stream = client.create_stream(
+        messages=[
+            UserMessage(content="hi", source="user"),
+        ],
+        tools=[add_tool],
+    )
+    chunks: List[str | CreateResult] = []
+    async for chunk in stream:
+        chunks.append(chunk)
+    assert len(chunks) > 0
+    assert isinstance(chunks[-1], CreateResult)
+    assert isinstance(chunks[-1].content, list)
+    assert len(chunks[-1].content) > 0
+    assert isinstance(chunks[-1].content[0], FunctionCall)
+    assert chunks[-1].content[0].name == add_tool.name
+    assert chunks[-1].content[0].arguments == json.dumps({"x": 2, "y": 2})
+    assert chunks[-1].finish_reason == "stop"
+    assert chunks[-1].usage is not None
+    assert chunks[-1].usage.prompt_tokens == 10
+    assert chunks[-1].usage.completion_tokens == 12
+
+
 @pytest.mark.asyncio
 async def test_create_structured_output(monkeypatch: pytest.MonkeyPatch) -> None:
     class ResponseType(BaseModel):
@@ -541,7 +612,6 @@ def add(x: int, y: int) -> str:
     assert ResponseType.model_validate_json(create_result.thought)
 
 
-@pytest.mark.skip("TODO: Fix streaming with tools")
 @pytest.mark.asyncio
 @pytest.mark.parametrize("model", ["qwen2.5:0.5b", "llama3.2:1b"])
 async def test_ollama_create_stream_tools(model: str, ollama_client: OllamaChatCompletionClient) -> None:
@@ -569,7 +639,7 @@ def add(x: int, y: int) -> str:
     assert len(create_result.content) > 0
     assert isinstance(create_result.content[0], FunctionCall)
     assert create_result.content[0].name == add_tool.name
-    assert create_result.finish_reason == "function_calls"
+    assert create_result.finish_reason == "stop"
 
     execution_result = FunctionExecutionResult(
         content="4",