diff --git a/litellm/proxy/_experimental/mcp_server/mcp_server_manager.py b/litellm/proxy/_experimental/mcp_server/mcp_server_manager.py
index 613f78e0c17..d9533714a81 100644
--- a/litellm/proxy/_experimental/mcp_server/mcp_server_manager.py
+++ b/litellm/proxy/_experimental/mcp_server/mcp_server_manager.py
@@ -5850,10 +5850,10 @@ class MCPServerManager:
             if auth_failure is None and not isinstance(exc, UpstreamSessionClosedError):
                 return MCPClient.error_tool_result(exc)
             if auth_failure is not None:
-                self._drop_upstream_session(persistent_session)
                 spec: Final = to_server_spec(mcp_server)
                 if spec is not None:
                     await self._cred_provider.invalidate_credentials(to_subject(user_api_key_auth, subject_token), spec)
+                self._drop_upstream_session(persistent_session)
             retry_client: Final = await self._create_mcp_client(
                 server=mcp_server,
                 mcp_auth_header=server_auth_header,
diff --git a/tests/test_litellm/proxy/_experimental/mcp_server/test_mcp_server_manager.py b/tests/test_litellm/proxy/_experimental/mcp_server/test_mcp_server_manager.py
index cbc3f288a60..2db8f946475 100644
--- a/tests/test_litellm/proxy/_experimental/mcp_server/test_mcp_server_manager.py
+++ b/tests/test_litellm/proxy/_experimental/mcp_server/test_mcp_server_manager.py
@@ -10243,6 +10243,42 @@ class TestOBOCallToolRetry:
         manager._cred_provider.invalidate_credentials.assert_not_awaited()
         assert first.attempts == 1 and retry.attempts == 1
 
+    @pytest.mark.asyncio
+    async def test_a_401_evicts_the_cached_token_before_releasing_peers_on_the_shared_session(self):
+        """Peers woken by the shared session closing rebuild their client at once, so the stale token
+        must already be gone from the cache when the session closes or they re-exchange the same token."""
+        manager = self._manager()
+        order: list[str] = []
+
+        async def slow_invalidate(*_: object) -> None:
+            await asyncio.sleep(0.01)
+            order.append("invalidate")
+
+        manager._cred_provider.invalidate_credentials = AsyncMock(side_effect=slow_invalidate)
+        shared = MagicMock()
+        shared.close = MagicMock(side_effect=lambda: order.append("close"))
+        manager._upstream_sessions[("gw", "obo-srv", "fp")] = shared
+        first = _RetryFakeClient(raises=_UpstreamAuthError(401))
+        retry = _RetryFakeClient(result=CallToolResult(content=[], isError=False))
+        manager._create_mcp_client = AsyncMock(return_value=retry)
+        manager._upstream_session_for = AsyncMock(return_value=None)
+
+        await manager._obo_call_tool_with_retry(
+            client=first,
+            call_tool_params=MagicMock(),
+            host_progress_callback=None,
+            mcp_server=_obo_server(),
+            server_auth_header=None,
+            extra_headers=None,
+            stdio_env=None,
+            subject_token="caller-jwt",
+            user_api_key_auth=None,
+            persistent_session=shared,
+        )
+
+        assert order == ["invalidate", "close"], order
+        assert ("gw", "obo-srv", "fp") not in manager._upstream_sessions
+
 
 class TestOBOConcurrencyLimit:
     """OBO (token_exchange) tool calls must honor the server's max_concurrent_requests.