diff --git a/.changeset/azure-ai-sdk-migration.md b/.changeset/azure-ai-sdk-migration.md
new file mode 100644
index 0000000000..9b6fe14452
--- /dev/null
+++ b/.changeset/azure-ai-sdk-migration.md
@@ -0,0 +1,13 @@
+---
+"roo-cline": minor
+"@roo-code/types": minor
+---
+
+Add dedicated Azure OpenAI provider using @ai-sdk/azure package
+
+- Add new "azure" provider type to support Azure OpenAI deployments via the AI SDK
+- Implement AzureHandler following the established pattern from DeepSeek, Groq, and Fireworks migrations
+- Add azureSchema with Azure-specific options: azureApiKey, azureResourceName, azureDeploymentName, azureApiVersion
+- Use streamText/generateText from the AI SDK for cleaner streaming implementation
+- Support tool calling via tool-input-start/delta/end events
+- Include cache metrics extraction from providerMetadata
diff --git a/packages/types/src/provider-settings.ts b/packages/types/src/provider-settings.ts
index 555513500b..f8d0a5556b 100644
--- a/packages/types/src/provider-settings.ts
+++ b/packages/types/src/provider-settings.ts
@@ -119,6 +119,7 @@ export const providerNames = [
 	...customProviders,
 	...fauxProviders,
 	"anthropic",
+	"azure",
 	"bedrock",
 	"baseten",
 	"cerebras",
@@ -413,12 +414,20 @@ const basetenSchema = apiModelIdProviderModelSchema.extend({
 	basetenApiKey: z.string().optional(),
 })
 
+const azureSchema = apiModelIdProviderModelSchema.extend({
+	azureApiKey: z.string().optional(),
+	azureResourceName: z.string().optional(),
+	azureDeploymentName: z.string().optional(),
+	azureApiVersion: z.string().optional(),
+})
+
 const defaultSchema = z.object({
 	apiProvider: z.undefined(),
 })
 
 export const providerSettingsSchemaDiscriminated = z.discriminatedUnion("apiProvider", [
 	anthropicSchema.merge(z.object({ apiProvider: z.literal("anthropic") })),
+	azureSchema.merge(z.object({ apiProvider: z.literal("azure") })),
 	openRouterSchema.merge(z.object({ apiProvider: z.literal("openrouter") })),
 	bedrockSchema.merge(z.object({ apiProvider: z.literal("bedrock") })),
 	vertexSchema.merge(z.object({ apiProvider: z.literal("vertex") })),
@@ -460,6 +469,7 @@ export const providerSettingsSchemaDiscriminated = z.discriminatedUnion("apiProv
 export const providerSettingsSchema = z.object({
 	apiProvider: providerNamesSchema.optional(),
 	...anthropicSchema.shape,
+	...azureSchema.shape,
 	...openRouterSchema.shape,
 	...bedrockSchema.shape,
 	...vertexSchema.shape,
@@ -548,6 +558,7 @@ export const isTypicalProvider = (key: unknown): key is TypicalProvider =>
 
 export const modelIdKeysByProvider: Record<TypicalProvider, ModelIdKey> = {
 	anthropic: "apiModelId",
+	azure: "apiModelId",
 	openrouter: "openRouterModelId",
 	bedrock: "apiModelId",
 	vertex: "apiModelId",
@@ -624,6 +635,11 @@ export const MODELS_BY_PROVIDER: Record<
 		label: "Anthropic",
 		models: Object.keys(anthropicModels),
 	},
+	azure: {
+		id: "azure",
+		label: "Azure OpenAI",
+		models: [], // Azure uses deployment names configured by the user
+	},
 	bedrock: {
 		id: "bedrock",
 		label: "Amazon Bedrock",
diff --git a/src/api/index.ts b/src/api/index.ts
index 0e25a739a6..1b0aaf4480 100644
--- a/src/api/index.ts
+++ b/src/api/index.ts
@@ -8,6 +8,7 @@ import { ApiStream } from "./transform/stream"
 import {
 	AnthropicHandler,
 	AwsBedrockHandler,
+	AzureHandler,
 	CerebrasHandler,
 	OpenRouterHandler,
 	VertexHandler,
@@ -134,6 +135,8 @@ export function buildApiHandler(configuration: ProviderSettings): ApiHandler {
 	switch (apiProvider) {
 		case "anthropic":
 			return new AnthropicHandler(options)
+		case "azure":
+			return new AzureHandler(options)
 		case "openrouter":
 			return new OpenRouterHandler(options)
 		case "bedrock":
diff --git a/src/api/providers/__tests__/azure.spec.ts b/src/api/providers/__tests__/azure.spec.ts
new file mode 100644
index 0000000000..c93fe6ca59
--- /dev/null
+++ b/src/api/providers/__tests__/azure.spec.ts
@@ -0,0 +1,371 @@
+// Use vi.hoisted to define mock functions that can be referenced in hoisted vi.mock() calls
+const { mockStreamText, mockGenerateText } = vi.hoisted(() => ({
+	mockStreamText: vi.fn(),
+	mockGenerateText: vi.fn(),
+}))
+
+vi.mock("ai", async (importOriginal) => {
+	const actual = await importOriginal<typeof import("ai")>()
+	return {
+		...actual,
+		streamText: mockStreamText,
+		generateText: mockGenerateText,
+	}
+})
+
+vi.mock("@ai-sdk/azure", () => ({
+	createAzure: vi.fn(() => {
+		// Return a function that returns a mock language model
+		return vi.fn(() => ({
+			modelId: "gpt-4o",
+			provider: "azure",
+		}))
+	}),
+}))
+
+import type { Anthropic } from "@anthropic-ai/sdk"
+
+import type { ApiHandlerOptions } from "../../../shared/api"
+
+import { AzureHandler } from "../azure"
+
+describe("AzureHandler", () => {
+	let handler: AzureHandler
+	let mockOptions: ApiHandlerOptions
+
+	beforeEach(() => {
+		mockOptions = {
+			azureApiKey: "test-api-key",
+			azureResourceName: "test-resource",
+			azureDeploymentName: "gpt-4o",
+			azureApiVersion: "2024-08-01-preview",
+		}
+		handler = new AzureHandler(mockOptions)
+		vi.clearAllMocks()
+	})
+
+	describe("constructor", () => {
+		it("should initialize with provided options", () => {
+			expect(handler).toBeInstanceOf(AzureHandler)
+			expect(handler.getModel().id).toBe(mockOptions.azureDeploymentName)
+		})
+
+		it("should use apiModelId if azureDeploymentName is not provided", () => {
+			const handlerWithModelId = new AzureHandler({
+				...mockOptions,
+				azureDeploymentName: undefined,
+				apiModelId: "gpt-35-turbo",
+			})
+			expect(handlerWithModelId.getModel().id).toBe("gpt-35-turbo")
+		})
+
+		it("should use empty string if neither azureDeploymentName nor apiModelId is provided", () => {
+			const handlerWithoutModel = new AzureHandler({
+				...mockOptions,
+				azureDeploymentName: undefined,
+				apiModelId: undefined,
+			})
+			expect(handlerWithoutModel.getModel().id).toBe("")
+		})
+
+		it("should use default API version if not provided", () => {
+			const handlerWithoutVersion = new AzureHandler({
+				...mockOptions,
+				azureApiVersion: undefined,
+			})
+			expect(handlerWithoutVersion).toBeInstanceOf(AzureHandler)
+		})
+	})
+
+	describe("getModel", () => {
+		it("should return model info with deployment name as ID", () => {
+			const model = handler.getModel()
+			expect(model.id).toBe(mockOptions.azureDeploymentName)
+			expect(model.info).toBeDefined()
+		})
+
+		it("should include model parameters from getModelParams", () => {
+			const model = handler.getModel()
+			expect(model).toHaveProperty("temperature")
+			expect(model).toHaveProperty("maxTokens")
+		})
+	})
+
+	describe("createMessage", () => {
+		const systemPrompt = "You are a helpful assistant."
+		const messages: Anthropic.Messages.MessageParam[] = [
+			{
+				role: "user",
+				content: [
+					{
+						type: "text" as const,
+						text: "Hello!",
+					},
+				],
+			},
+		]
+
+		it("should handle streaming responses", async () => {
+			// Mock the fullStream async generator
+			async function* mockFullStream() {
+				yield { type: "text-delta", text: "Test response" }
+			}
+
+			// Mock usage and providerMetadata promises
+			const mockUsage = Promise.resolve({
+				inputTokens: 10,
+				outputTokens: 5,
+			})
+
+			const mockProviderMetadata = Promise.resolve({
+				azure: {
+					promptCacheHitTokens: 2,
+					promptCacheMissTokens: 8,
+				},
+			})
+
+			mockStreamText.mockReturnValue({
+				fullStream: mockFullStream(),
+				usage: mockUsage,
+				providerMetadata: mockProviderMetadata,
+			})
+
+			const stream = handler.createMessage(systemPrompt, messages)
+			const chunks: any[] = []
+			for await (const chunk of stream) {
+				chunks.push(chunk)
+			}
+
+			expect(chunks.length).toBeGreaterThan(0)
+			const textChunks = chunks.filter((chunk) => chunk.type === "text")
+			expect(textChunks).toHaveLength(1)
+			expect(textChunks[0].text).toBe("Test response")
+		})
+
+		it("should include usage information", async () => {
+			async function* mockFullStream() {
+				yield { type: "text-delta", text: "Test response" }
+			}
+
+			const mockUsage = Promise.resolve({
+				inputTokens: 10,
+				outputTokens: 5,
+			})
+
+			const mockProviderMetadata = Promise.resolve({
+				azure: {
+					promptCacheHitTokens: 2,
+					promptCacheMissTokens: 8,
+				},
+			})
+
+			mockStreamText.mockReturnValue({
+				fullStream: mockFullStream(),
+				usage: mockUsage,
+				providerMetadata: mockProviderMetadata,
+			})
+
+			const stream = handler.createMessage(systemPrompt, messages)
+			const chunks: any[] = []
+			for await (const chunk of stream) {
+				chunks.push(chunk)
+			}
+
+			const usageChunks = chunks.filter((chunk) => chunk.type === "usage")
+			expect(usageChunks.length).toBeGreaterThan(0)
+			expect(usageChunks[0].inputTokens).toBe(10)
+			expect(usageChunks[0].outputTokens).toBe(5)
+		})
+
+		it("should include cache metrics in usage information from providerMetadata", async () => {
+			async function* mockFullStream() {
+				yield { type: "text-delta", text: "Test response" }
+			}
+
+			const mockUsage = Promise.resolve({
+				inputTokens: 10,
+				outputTokens: 5,
+			})
+
+			// Azure provides cache metrics via providerMetadata
+			const mockProviderMetadata = Promise.resolve({
+				azure: {
+					promptCacheHitTokens: 2,
+					promptCacheMissTokens: 8,
+				},
+			})
+
+			mockStreamText.mockReturnValue({
+				fullStream: mockFullStream(),
+				usage: mockUsage,
+				providerMetadata: mockProviderMetadata,
+			})
+
+			const stream = handler.createMessage(systemPrompt, messages)
+			const chunks: any[] = []
+			for await (const chunk of stream) {
+				chunks.push(chunk)
+			}
+
+			const usageChunks = chunks.filter((chunk) => chunk.type === "usage")
+			expect(usageChunks.length).toBeGreaterThan(0)
+			expect(usageChunks[0].cacheWriteTokens).toBe(8) // promptCacheMissTokens
+			expect(usageChunks[0].cacheReadTokens).toBe(2) // promptCacheHitTokens
+		})
+
+		it("should handle tool calls via tool-input-start/delta/end events", async () => {
+			async function* mockFullStream() {
+				yield { type: "tool-input-start", id: "tool-1", toolName: "test_tool" }
+				yield { type: "tool-input-delta", id: "tool-1", delta: '{"arg":' }
+				yield { type: "tool-input-delta", id: "tool-1", delta: '"value"}' }
+				yield { type: "tool-input-end", id: "tool-1" }
+			}
+
+			const mockUsage = Promise.resolve({
+				inputTokens: 10,
+				outputTokens: 5,
+			})
+
+			const mockProviderMetadata = Promise.resolve({})
+
+			mockStreamText.mockReturnValue({
+				fullStream: mockFullStream(),
+				usage: mockUsage,
+				providerMetadata: mockProviderMetadata,
+			})
+
+			const stream = handler.createMessage(systemPrompt, messages)
+			const chunks: any[] = []
+			for await (const chunk of stream) {
+				chunks.push(chunk)
+			}
+
+			const toolStartChunks = chunks.filter((chunk) => chunk.type === "tool_call_start")
+			expect(toolStartChunks).toHaveLength(1)
+			expect(toolStartChunks[0].id).toBe("tool-1")
+			expect(toolStartChunks[0].name).toBe("test_tool")
+
+			const toolDeltaChunks = chunks.filter((chunk) => chunk.type === "tool_call_delta")
+			expect(toolDeltaChunks).toHaveLength(2)
+
+			const toolEndChunks = chunks.filter((chunk) => chunk.type === "tool_call_end")
+			expect(toolEndChunks).toHaveLength(1)
+		})
+
+		it("should handle errors from AI SDK", async () => {
+			const mockError = new Error("API Error")
+			;(mockError as any).name = "AI_APICallError"
+			;(mockError as any).status = 500
+
+			async function* mockFullStream(): AsyncGenerator<any> {
+				yield { type: "text-delta", text: "" }
+				throw mockError
+			}
+
+			mockStreamText.mockReturnValue({
+				fullStream: mockFullStream(),
+				usage: Promise.resolve({}),
+				providerMetadata: Promise.resolve({}),
+			})
+
+			const stream = handler.createMessage(systemPrompt, messages)
+			await expect(async () => {
+				const chunks: any[] = []
+				for await (const chunk of stream) {
+					chunks.push(chunk)
+				}
+			}).rejects.toThrow("Azure OpenAI")
+		})
+	})
+
+	describe("completePrompt", () => {
+		it("should complete a prompt using generateText", async () => {
+			mockGenerateText.mockResolvedValue({
+				text: "Test completion",
+			})
+
+			const result = await handler.completePrompt("Test prompt")
+
+			expect(result).toBe("Test completion")
+			expect(mockGenerateText).toHaveBeenCalledWith(
+				expect.objectContaining({
+					prompt: "Test prompt",
+				}),
+			)
+		})
+
+		it("should use configured temperature", async () => {
+			const handlerWithTemp = new AzureHandler({
+				...mockOptions,
+				modelTemperature: 0.7,
+			})
+
+			mockGenerateText.mockResolvedValue({
+				text: "Test completion",
+			})
+
+			await handlerWithTemp.completePrompt("Test prompt")
+
+			expect(mockGenerateText).toHaveBeenCalledWith(
+				expect.objectContaining({
+					temperature: 0.7,
+				}),
+			)
+		})
+	})
+
+	describe("tools", () => {
+		const systemPrompt = "You are a helpful assistant."
+		const messages: Anthropic.Messages.MessageParam[] = [
+			{
+				role: "user",
+				content: [{ type: "text" as const, text: "Use a tool" }],
+			},
+		]
+
+		it("should pass tools to streamText", async () => {
+			async function* mockFullStream() {
+				yield { type: "text-delta", text: "Using tool" }
+			}
+
+			mockStreamText.mockReturnValue({
+				fullStream: mockFullStream(),
+				usage: Promise.resolve({ inputTokens: 10, outputTokens: 5 }),
+				providerMetadata: Promise.resolve({}),
+			})
+
+			const tools = [
+				{
+					type: "function" as const,
+					function: {
+						name: "test_tool",
+						description: "A test tool",
+						parameters: {
+							type: "object",
+							properties: {
+								arg: { type: "string" },
+							},
+							required: ["arg"],
+						},
+					},
+				},
+			]
+
+			const stream = handler.createMessage(systemPrompt, messages, {
+				taskId: "test-task",
+				tools,
+			})
+
+			const chunks: any[] = []
+			for await (const chunk of stream) {
+				chunks.push(chunk)
+			}
+
+			expect(mockStreamText).toHaveBeenCalledWith(
+				expect.objectContaining({
+					tools: expect.any(Object),
+				}),
+			)
+		})
+	})
+})
diff --git a/src/api/providers/azure.ts b/src/api/providers/azure.ts
new file mode 100644
index 0000000000..ac8da0d941
--- /dev/null
+++ b/src/api/providers/azure.ts
@@ -0,0 +1,180 @@
+import { Anthropic } from "@anthropic-ai/sdk"
+import { createAzure } from "@ai-sdk/azure"
+import { streamText, generateText, ToolSet } from "ai"
+
+import { azureOpenAiDefaultApiVersion, openAiModelInfoSaneDefaults, type ModelInfo } from "@roo-code/types"
+
+import type { ApiHandlerOptions } from "../../shared/api"
+
+import {
+	convertToAiSdkMessages,
+	convertToolsForAiSdk,
+	processAiSdkStreamPart,
+	mapToolChoice,
+	handleAiSdkError,
+} from "../transform/ai-sdk"
+import { ApiStream, ApiStreamUsageChunk } from "../transform/stream"
+import { getModelParams } from "../transform/model-params"
+
+import { DEFAULT_HEADERS } from "./constants"
+import { BaseProvider } from "./base-provider"
+import type { SingleCompletionHandler, ApiHandlerCreateMessageMetadata } from "../index"
+
+const AZURE_DEFAULT_TEMPERATURE = 0
+
+/**
+ * Azure OpenAI provider using the dedicated @ai-sdk/azure package.
+ * Provides native support for Azure OpenAI deployments with proper resource-based routing.
+ */
+export class AzureHandler extends BaseProvider implements SingleCompletionHandler {
+	protected options: ApiHandlerOptions
+	protected provider: ReturnType<typeof createAzure>
+
+	constructor(options: ApiHandlerOptions) {
+		super()
+		this.options = options
+
+		// Create the Azure provider using AI SDK
+		// The @ai-sdk/azure package uses resourceName-based routing
+		this.provider = createAzure({
+			resourceName: options.azureResourceName ?? "",
+			apiKey: options.azureApiKey ?? "not-provided",
+			apiVersion: options.azureApiVersion ?? azureOpenAiDefaultApiVersion,
+			headers: DEFAULT_HEADERS,
+		})
+	}
+
+	override getModel(): { id: string; info: ModelInfo; maxTokens?: number; temperature?: number } {
+		// Azure uses deployment names as model IDs
+		// Use azureDeploymentName if provided, otherwise fall back to apiModelId
+		const id = this.options.azureDeploymentName ?? this.options.apiModelId ?? ""
+		const info: ModelInfo = openAiModelInfoSaneDefaults
+		const params = getModelParams({
+			format: "openai",
+			modelId: id,
+			model: info,
+			settings: this.options,
+			defaultTemperature: AZURE_DEFAULT_TEMPERATURE,
+		})
+		return { id, info, ...params }
+	}
+
+	/**
+	 * Get the language model for the configured deployment name.
+	 */
+	protected getLanguageModel() {
+		const { id } = this.getModel()
+		return this.provider(id)
+	}
+
+	/**
+	 * Process usage metrics from the AI SDK response.
+	 * Azure OpenAI provides standard OpenAI-compatible usage metrics.
+	 */
+	protected processUsageMetrics(
+		usage: {
+			inputTokens?: number
+			outputTokens?: number
+			details?: {
+				cachedInputTokens?: number
+				reasoningTokens?: number
+			}
+		},
+		providerMetadata?: {
+			azure?: {
+				promptCacheHitTokens?: number
+				promptCacheMissTokens?: number
+			}
+		},
+	): ApiStreamUsageChunk {
+		// Extract cache metrics from Azure's providerMetadata if available
+		const cacheReadTokens = providerMetadata?.azure?.promptCacheHitTokens ?? usage.details?.cachedInputTokens
+		const cacheWriteTokens = providerMetadata?.azure?.promptCacheMissTokens
+
+		return {
+			type: "usage",
+			inputTokens: usage.inputTokens || 0,
+			outputTokens: usage.outputTokens || 0,
+			cacheReadTokens,
+			cacheWriteTokens,
+			reasoningTokens: usage.details?.reasoningTokens,
+		}
+	}
+
+	/**
+	 * Get the max tokens parameter to include in the request.
+	 */
+	protected getMaxOutputTokens(): number | undefined {
+		const { info } = this.getModel()
+		return this.options.modelMaxTokens || info.maxTokens || undefined
+	}
+
+	/**
+	 * Create a message stream using the AI SDK.
+	 */
+	override async *createMessage(
+		systemPrompt: string,
+		messages: Anthropic.Messages.MessageParam[],
+		metadata?: ApiHandlerCreateMessageMetadata,
+	): ApiStream {
+		const { temperature } = this.getModel()
+		const languageModel = this.getLanguageModel()
+
+		// Convert messages to AI SDK format
+		const aiSdkMessages = convertToAiSdkMessages(messages)
+
+		// Convert tools to OpenAI format first, then to AI SDK format
+		const openAiTools = this.convertToolsForOpenAI(metadata?.tools)
+		const aiSdkTools = convertToolsForAiSdk(openAiTools) as ToolSet | undefined
+
+		// Build the request options
+		const requestOptions: Parameters<typeof streamText>[0] = {
+			model: languageModel,
+			system: systemPrompt,
+			messages: aiSdkMessages,
+			temperature: this.options.modelTemperature ?? temperature ?? AZURE_DEFAULT_TEMPERATURE,
+			maxOutputTokens: this.getMaxOutputTokens(),
+			tools: aiSdkTools,
+			toolChoice: mapToolChoice(metadata?.tool_choice),
+		}
+
+		// Use streamText for streaming responses
+		const result = streamText(requestOptions)
+
+		try {
+			// Process the full stream to get all events including reasoning
+			for await (const part of result.fullStream) {
+				for (const chunk of processAiSdkStreamPart(part)) {
+					yield chunk
+				}
+			}
+
+			// Yield usage metrics at the end, including cache metrics from providerMetadata
+			const usage = await result.usage
+			const providerMetadata = await result.providerMetadata
+			if (usage) {
+				yield this.processUsageMetrics(usage, providerMetadata as any)
+			}
+		} catch (error) {
+			// Handle AI SDK errors (AI_RetryError, AI_APICallError, etc.)
+			throw handleAiSdkError(error, "Azure OpenAI")
+		}
+	}
+
+	/**
+	 * Complete a prompt using the AI SDK generateText.
+	 */
+	async completePrompt(prompt: string): Promise<string> {
+		const { temperature } = this.getModel()
+		const languageModel = this.getLanguageModel()
+
+		const { text } = await generateText({
+			model: languageModel,
+			prompt,
+			maxOutputTokens: this.getMaxOutputTokens(),
+			temperature: this.options.modelTemperature ?? temperature ?? AZURE_DEFAULT_TEMPERATURE,
+		})
+
+		return text
+	}
+}
diff --git a/src/api/providers/index.ts b/src/api/providers/index.ts
index cf49f75f18..3212e267cb 100644
--- a/src/api/providers/index.ts
+++ b/src/api/providers/index.ts
@@ -1,5 +1,6 @@
 export { AnthropicVertexHandler } from "./anthropic-vertex"
 export { AnthropicHandler } from "./anthropic"
+export { AzureHandler } from "./azure"
 export { AwsBedrockHandler } from "./bedrock"
 export { CerebrasHandler } from "./cerebras"
 export { ChutesHandler } from "./chutes"
diff --git a/src/package.json b/src/package.json
index eb67c0d1d7..89bacc099c 100644
--- a/src/package.json
+++ b/src/package.json
@@ -451,6 +451,7 @@
 	},
 	"dependencies": {
 		"@ai-sdk/amazon-bedrock": "^4.0.50",
+		"@ai-sdk/azure": "^2.0.6",
 		"@ai-sdk/baseten": "^1.0.31",
 		"@ai-sdk/cerebras": "^1.0.0",
 		"@ai-sdk/deepseek": "^2.0.14",
diff --git a/webview-ui/src/components/ui/hooks/useSelectedModel.ts b/webview-ui/src/components/ui/hooks/useSelectedModel.ts
index 5336b63583..8f39bdbac2 100644
--- a/webview-ui/src/components/ui/hooks/useSelectedModel.ts
+++ b/webview-ui/src/components/ui/hooks/useSelectedModel.ts
@@ -387,6 +387,11 @@ function getSelectedModel({
 			const info = routerModels["vercel-ai-gateway"]?.[id]
 			return { id, info }
 		}
+		case "azure": {
+			// Azure uses deployment names configured by the user
+			const id = apiConfiguration.azureDeploymentName ?? apiConfiguration.apiModelId ?? ""
+			return { id, info: undefined }
+		}
 		// case "anthropic":
 		// case "fake-ai":
 		default: {