diff --git a/.changeset/fix-server-protocol-version.md b/.changeset/fix-server-protocol-version.md
new file mode 100644
index 000000000..02100923e
--- /dev/null
+++ b/.changeset/fix-server-protocol-version.md
@@ -0,0 +1,5 @@
+---
+'@modelcontextprotocol/server': patch
+---
+
+fix(server): propagate negotiated protocol version to transport in _oninitialize
diff --git a/packages/server/src/server/server.ts b/packages/server/src/server/server.ts
index f1a1851f4..46105fb10 100644
--- a/packages/server/src/server/server.ts
+++ b/packages/server/src/server/server.ts
@@ -434,6 +434,8 @@ export class Server extends Protocol<ServerContext> {
             ? requestedVersion
             : (this._supportedProtocolVersions[0] ?? LATEST_PROTOCOL_VERSION);
 
+        this.transport?.setProtocolVersion?.(protocolVersion);
+
         return {
             protocolVersion,
             capabilities: this.getCapabilities(),
diff --git a/packages/server/test/server/server.test.ts b/packages/server/test/server/server.test.ts
new file mode 100644
index 000000000..fdb8214c5
--- /dev/null
+++ b/packages/server/test/server/server.test.ts
@@ -0,0 +1,42 @@
+import type { JSONRPCMessage } from '@modelcontextprotocol/core';
+import { InMemoryTransport, LATEST_PROTOCOL_VERSION } from '@modelcontextprotocol/core';
+import { Server } from '../../src/server/server.js';
+
+describe('Server', () => {
+    describe('_oninitialize', () => {
+        it('should propagate negotiated protocol version to transport', async () => {
+            const server = new Server({ name: 'test', version: '1.0.0' }, { capabilities: {} });
+
+            const [clientTransport, serverTransport] = InMemoryTransport.createLinkedPair();
+
+            const setProtocolVersion = vi.fn();
+            (serverTransport as { setProtocolVersion?: (version: string) => void }).setProtocolVersion = setProtocolVersion;
+
+            await server.connect(serverTransport);
+
+            // Collect response from the server
+            const responsePromise = new Promise<JSONRPCMessage>(resolve => {
+                clientTransport.onmessage = msg => resolve(msg);
+            });
+            await clientTransport.start();
+
+            // Send initialize request directly
+            await clientTransport.send({
+                jsonrpc: '2.0',
+                id: 1,
+                method: 'initialize',
+                params: {
+                    protocolVersion: LATEST_PROTOCOL_VERSION,
+                    capabilities: {},
+                    clientInfo: { name: 'test-client', version: '1.0.0' }
+                }
+            } as JSONRPCMessage);
+
+            await responsePromise;
+
+            expect(setProtocolVersion).toHaveBeenCalledWith(LATEST_PROTOCOL_VERSION);
+
+            await server.close();
+        });
+    });
+});