What
Claude Code can run as an MCP server, meaning other programs connect to it using the Model Context Protocol and use its tools. A new environment variable, CLAUDE_CODE_MCP_SERVE_TOOL_OUTPUT, has been added to the same internal list as CLAUDE_CODE_MCP_SERVE_AUTH_TOKEN and CLAUDE_CODE_MCP_SERVE_SETTINGS. An environment variable is a named value set in your shell before a program starts.
Why
The name suggests a new control over tool output in MCP server mode. It sits in a list of sensitive or internal variables, so it is probably not meant for everyday use.
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What this variable does, and whether the list it joins hides it from programs Claude Code starts, is not known.