diff --git a/core/Azure.Mcp.Core/src/Areas/Server/Commands/ServiceStartCommand.cs b/core/Azure.Mcp.Core/src/Areas/Server/Commands/ServiceStartCommand.cs
index 9380167e4..84ba7d534 100644
--- a/core/Azure.Mcp.Core/src/Areas/Server/Commands/ServiceStartCommand.cs
+++ b/core/Azure.Mcp.Core/src/Areas/Server/Commands/ServiceStartCommand.cs
@@ -19,7 +19,6 @@
 using Microsoft.Extensions.Logging;
 using Microsoft.Extensions.Options;
 using Microsoft.Identity.Web;
-using Microsoft.IdentityModel.Tokens;
 using OpenTelemetry.Logs;
 using OpenTelemetry.Metrics;
 using OpenTelemetry.Trace;
diff --git a/core/Azure.Mcp.Core/src/Extensions/OpenTelemetryExtensions.cs b/core/Azure.Mcp.Core/src/Extensions/OpenTelemetryExtensions.cs
index 70e510cd1..c6fb3803c 100644
--- a/core/Azure.Mcp.Core/src/Extensions/OpenTelemetryExtensions.cs
+++ b/core/Azure.Mcp.Core/src/Extensions/OpenTelemetryExtensions.cs
@@ -3,14 +3,13 @@
 
 using System.Reflection;
 using System.Runtime.InteropServices;
+using Azure.Mcp.Core.Areas.Server.Options;
 using Azure.Mcp.Core.Configuration;
 using Azure.Mcp.Core.Services.Telemetry;
-using Azure.Monitor.OpenTelemetry.Exporter;
 using Microsoft.Extensions.Azure;
 using Microsoft.Extensions.DependencyInjection;
 using Microsoft.Extensions.Logging;
 using Microsoft.Extensions.Options;
-using OpenTelemetry;
 using OpenTelemetry.Logs;
 using OpenTelemetry.Metrics;
 using OpenTelemetry.Resources;
@@ -25,14 +24,21 @@ public static class OpenTelemetryExtensions
     public static void ConfigureOpenTelemetry(this IServiceCollection services)
     {
         services.AddOptions<AzureMcpServerConfiguration>()
-            .Configure(options =>
+            .Configure<IOptions<ServiceStartOptions>>((options, serviceStartOptions) =>
             {
                 options.Version = GetServerVersion(Assembly.GetCallingAssembly());
 
                 var collectTelemetry = Environment.GetEnvironmentVariable("AZURE_MCP_COLLECT_TELEMETRY");
 
-                options.IsTelemetryEnabled = string.IsNullOrEmpty(collectTelemetry)
-                    || (bool.TryParse(collectTelemetry, out var shouldCollect) && shouldCollect);
+                var transport = serviceStartOptions.Value.Transport;
+
+                bool isTelemetryEnabledEnvironment = string.IsNullOrEmpty(collectTelemetry) || (bool.TryParse(collectTelemetry, out var shouldCollect) && shouldCollect);
+
+                bool isStdioTransport = string.IsNullOrEmpty(transport) || string.Equals(transport, "stdio", StringComparison.OrdinalIgnoreCase);
+
+                // if transport is not set (default to stdio) or is set to stdio, enable telemetry
+                // telemetry is disabled for HTTP transport
+                options.IsTelemetryEnabled = isTelemetryEnabledEnvironment && isStdioTransport;
             });
 
         services.AddSingleton<ITelemetryService, TelemetryService>();
diff --git a/servers/Azure.Mcp.Server/CHANGELOG.md b/servers/Azure.Mcp.Server/CHANGELOG.md
index d7eab390e..5f90c310a 100644
--- a/servers/Azure.Mcp.Server/CHANGELOG.md
+++ b/servers/Azure.Mcp.Server/CHANGELOG.md
@@ -23,6 +23,7 @@ The Azure MCP Server updates automatically by default whenever a new release com
 - Updates `AzureMcpServerConfiguration.Version` to use value from `AssemblyInformationalVersionAttribute` rather than file version to support semver conventions such as -beta.1. [[#1040](https://github.com/microsoft/mcp/pull/1040)]
 - Added a `CancellationToken` parameter `IBaseCommand.ExecuteAsync()` [[#1056](https://github.com/microsoft/mcp/pull/1056)]
 - Added a `CancellationToken` parameter to async methods to many, but not yet all, `I[SomeService]` interfaces  [[#1056](https://github.com/microsoft/mcp/pull/1056)]
+- Disabled telemetry for HTTP transport [[#1072](https://github.com/microsoft/mcp/pull/1072)]
 
 ## 2.0.0-beta.1 (2025-10-29)
 
diff --git a/servers/Azure.Mcp.Server/src/Properties/launchSettings.json b/servers/Azure.Mcp.Server/src/Properties/launchSettings.json
index 609c0bbca..6702182ee 100644
--- a/servers/Azure.Mcp.Server/src/Properties/launchSettings.json
+++ b/servers/Azure.Mcp.Server/src/Properties/launchSettings.json
@@ -3,7 +3,7 @@
     "profiles": {
         "debug-remotemcp": {
             "commandName": "Project",
-            "commandLineArgs": "server start --run-as-remote-http-service --outgoing-auth-strategy UseHostingEnvironmentIdentity",
+            "commandLineArgs": "server start --transport http --outgoing-auth-strategy UseHostingEnvironmentIdentity",
             "dotnetRunMessages": true,
             "environmentVariables": {
                 "ASPNETCORE_ENVIRONMENT": "Development",