diff --git a/src/ModelContextProtocol.Core/Client/AutoDetectingClientSessionTransport.cs b/src/ModelContextProtocol.Core/Client/AutoDetectingClientSessionTransport.cs
index 209d644d2..43f2dd009 100644
--- a/src/ModelContextProtocol.Core/Client/AutoDetectingClientSessionTransport.cs
+++ b/src/ModelContextProtocol.Core/Client/AutoDetectingClientSessionTransport.cs
@@ -73,9 +73,21 @@ private async Task InitializeAsync(JsonRpcMessage message, CancellationToken can
                 LogUsingStreamableHttp(_name);
                 ActiveTransport = streamableHttpTransport;
             }
+            else if (IsAuthError(response.StatusCode))
+            {
+                // Authentication/authorization errors (401, 403) are not transport-related —
+                // the server understood the request but rejected the credentials. Falling back
+                // to SSE would fail with the same credentials and mask the real error.
+                await streamableHttpTransport.DisposeAsync().ConfigureAwait(false);
+
+                LogStreamableHttpAuthError(_name, response.StatusCode);
+
+                await response.EnsureSuccessStatusCodeWithResponseBodyAsync(cancellationToken).ConfigureAwait(false);
+            }
             else
             {
-                // If the status code is not success, fall back to SSE
+                // Non-auth, non-success status codes (404, 405, 501, etc.) suggest the server
+                // may not support Streamable HTTP — fall back to SSE.
                 LogStreamableHttpFailed(_name, response.StatusCode);
 
                 await streamableHttpTransport.DisposeAsync().ConfigureAwait(false);
@@ -91,6 +103,9 @@ private async Task InitializeAsync(JsonRpcMessage message, CancellationToken can
         }
     }
 
+    private static bool IsAuthError(HttpStatusCode statusCode) =>
+        statusCode is HttpStatusCode.Unauthorized or HttpStatusCode.Forbidden;
+
     private async Task InitializeSseTransportAsync(JsonRpcMessage message, CancellationToken cancellationToken)
     {
         if (_options.KnownSessionId is not null)
@@ -139,6 +154,9 @@ public async ValueTask DisposeAsync()
     [LoggerMessage(Level = LogLevel.Information, Message = "{EndpointName} streamable HTTP transport failed with status code {StatusCode}, falling back to SSE transport.")]
     private partial void LogStreamableHttpFailed(string endpointName, HttpStatusCode statusCode);
 
+    [LoggerMessage(Level = LogLevel.Warning, Message = "{EndpointName} streamable HTTP transport received authentication error {StatusCode}. Not falling back to SSE.")]
+    private partial void LogStreamableHttpAuthError(string endpointName, HttpStatusCode statusCode);
+
     [LoggerMessage(Level = LogLevel.Information, Message = "{EndpointName} using Streamable HTTP transport.")]
     private partial void LogUsingStreamableHttp(string endpointName);
 
diff --git a/tests/ModelContextProtocol.Tests/Transport/HttpClientTransportAutoDetectTests.cs b/tests/ModelContextProtocol.Tests/Transport/HttpClientTransportAutoDetectTests.cs
index 768ebf7ea..09c553c26 100644
--- a/tests/ModelContextProtocol.Tests/Transport/HttpClientTransportAutoDetectTests.cs
+++ b/tests/ModelContextProtocol.Tests/Transport/HttpClientTransportAutoDetectTests.cs
@@ -47,6 +47,59 @@ public async Task AutoDetectMode_UsesStreamableHttp_WhenServerSupportsIt()
         Assert.NotNull(session);
     }
 
+    [Theory]
+    [InlineData(HttpStatusCode.Unauthorized)]
+    [InlineData(HttpStatusCode.Forbidden)]
+    public async Task AutoDetectMode_DoesNotFallBackToSse_OnAuthError(HttpStatusCode authStatusCode)
+    {
+        // Auth errors (401, 403) are not transport-related — the server understood the
+        // request but rejected the credentials. The SDK should propagate the error
+        // immediately instead of falling back to SSE, which would mask the real cause.
+        var options = new HttpClientTransportOptions
+        {
+            Endpoint = new Uri("http://localhost"),
+            TransportMode = HttpTransportMode.AutoDetect,
+            Name = "AutoDetect test client"
+        };
+
+        using var mockHttpHandler = new MockHttpHandler();
+        using var httpClient = new HttpClient(mockHttpHandler);
+        await using var transport = new HttpClientTransport(options, httpClient, LoggerFactory);
+
+        var requestMethods = new List<HttpMethod>();
+
+        mockHttpHandler.RequestHandler = (request) =>
+        {
+            requestMethods.Add(request.Method);
+
+            if (request.Method == HttpMethod.Post)
+            {
+                // Streamable HTTP POST returns auth error
+                return Task.FromResult(new HttpResponseMessage
+                {
+                    StatusCode = authStatusCode,
+                    Content = new StringContent($"{{\"error\": \"{authStatusCode}\"}}")
+                });
+            }
+
+            // SSE GET should never be reached
+            throw new InvalidOperationException("Should not fall back to SSE on auth error");
+        };
+
+        // ConnectAsync for AutoDetect mode just creates the transport without sending
+        // any HTTP request. The auto-detection is triggered lazily by the first
+        // SendMessageAsync call, which happens inside McpClient.CreateAsync when it
+        // sends the JSON-RPC "initialize" message.
+        var ex = await Assert.ThrowsAsync<HttpRequestException>(
+            () => McpClient.CreateAsync(transport, cancellationToken: TestContext.Current.CancellationToken));
+
+        Assert.Equal(authStatusCode, ex.StatusCode);
+
+        // Verify only POST was sent — no GET fallback
+        Assert.Single(requestMethods);
+        Assert.Equal(HttpMethod.Post, requestMethods[0]);
+    }
+
     [Fact] 
     public async Task AutoDetectMode_FallsBackToSse_WhenStreamableHttpFails()
     {