diff --git a/test/install-mcp-server.test.ts b/test/install-mcp-server.test.ts
new file mode 100644
index 00000000..5a93aa60
--- /dev/null
+++ b/test/install-mcp-server.test.ts
@@ -0,0 +1,344 @@
+import { describe, test, expect, beforeEach, afterEach, spyOn } from "bun:test";
+import { prepareMcpConfig } from "../src/mcp/install-mcp-server";
+import * as core from "@actions/core";
+
+describe("prepareMcpConfig", () => {
+  let consoleInfoSpy: any;
+  let consoleWarningSpy: any;
+  let setFailedSpy: any;
+  let processExitSpy: any;
+
+  beforeEach(() => {
+    consoleInfoSpy = spyOn(core, "info").mockImplementation(() => {});
+    consoleWarningSpy = spyOn(core, "warning").mockImplementation(() => {});
+    setFailedSpy = spyOn(core, "setFailed").mockImplementation(() => {});
+    processExitSpy = spyOn(process, "exit").mockImplementation(() => {
+      throw new Error("Process exit");
+    });
+  });
+
+  afterEach(() => {
+    consoleInfoSpy.mockRestore();
+    consoleWarningSpy.mockRestore();
+    setFailedSpy.mockRestore();
+    processExitSpy.mockRestore();
+  });
+
+  test("should return base config when no additional config is provided", async () => {
+    const result = await prepareMcpConfig(
+      "test-token",
+      "test-owner",
+      "test-repo",
+      "test-branch",
+    );
+
+    const parsed = JSON.parse(result);
+    expect(parsed.mcpServers).toBeDefined();
+    expect(parsed.mcpServers.github).toBeDefined();
+    expect(parsed.mcpServers.github_file_ops).toBeDefined();
+    expect(parsed.mcpServers.github.env.GITHUB_PERSONAL_ACCESS_TOKEN).toBe(
+      "test-token",
+    );
+    expect(parsed.mcpServers.github_file_ops.env.GITHUB_TOKEN).toBe(
+      "test-token",
+    );
+    expect(parsed.mcpServers.github_file_ops.env.REPO_OWNER).toBe("test-owner");
+    expect(parsed.mcpServers.github_file_ops.env.REPO_NAME).toBe("test-repo");
+    expect(parsed.mcpServers.github_file_ops.env.BRANCH_NAME).toBe(
+      "test-branch",
+    );
+  });
+
+  test("should return base config when additional config is empty string", async () => {
+    const result = await prepareMcpConfig(
+      "test-token",
+      "test-owner",
+      "test-repo",
+      "test-branch",
+      "",
+    );
+
+    const parsed = JSON.parse(result);
+    expect(parsed.mcpServers).toBeDefined();
+    expect(parsed.mcpServers.github).toBeDefined();
+    expect(parsed.mcpServers.github_file_ops).toBeDefined();
+    expect(consoleWarningSpy).not.toHaveBeenCalled();
+  });
+
+  test("should return base config when additional config is whitespace only", async () => {
+    const result = await prepareMcpConfig(
+      "test-token",
+      "test-owner",
+      "test-repo",
+      "test-branch",
+      "   \n\t  ",
+    );
+
+    const parsed = JSON.parse(result);
+    expect(parsed.mcpServers).toBeDefined();
+    expect(parsed.mcpServers.github).toBeDefined();
+    expect(parsed.mcpServers.github_file_ops).toBeDefined();
+    expect(consoleWarningSpy).not.toHaveBeenCalled();
+  });
+
+  test("should merge valid additional config with base config", async () => {
+    const additionalConfig = JSON.stringify({
+      mcpServers: {
+        custom_server: {
+          command: "custom-command",
+          args: ["arg1", "arg2"],
+          env: {
+            CUSTOM_ENV: "custom-value",
+          },
+        },
+      },
+    });
+
+    const result = await prepareMcpConfig(
+      "test-token",
+      "test-owner",
+      "test-repo",
+      "test-branch",
+      additionalConfig,
+    );
+
+    const parsed = JSON.parse(result);
+    expect(consoleInfoSpy).toHaveBeenCalledWith(
+      "Merging additional MCP server configuration with built-in servers",
+    );
+    expect(parsed.mcpServers.github).toBeDefined();
+    expect(parsed.mcpServers.github_file_ops).toBeDefined();
+    expect(parsed.mcpServers.custom_server).toBeDefined();
+    expect(parsed.mcpServers.custom_server.command).toBe("custom-command");
+    expect(parsed.mcpServers.custom_server.args).toEqual(["arg1", "arg2"]);
+    expect(parsed.mcpServers.custom_server.env.CUSTOM_ENV).toBe("custom-value");
+  });
+
+  test("should override built-in servers when additional config has same server names", async () => {
+    const additionalConfig = JSON.stringify({
+      mcpServers: {
+        github: {
+          command: "overridden-command",
+          args: ["overridden-arg"],
+          env: {
+            OVERRIDDEN_ENV: "overridden-value",
+          },
+        },
+      },
+    });
+
+    const result = await prepareMcpConfig(
+      "test-token",
+      "test-owner",
+      "test-repo",
+      "test-branch",
+      additionalConfig,
+    );
+
+    const parsed = JSON.parse(result);
+    expect(consoleInfoSpy).toHaveBeenCalledWith(
+      "Merging additional MCP server configuration with built-in servers",
+    );
+    expect(parsed.mcpServers.github.command).toBe("overridden-command");
+    expect(parsed.mcpServers.github.args).toEqual(["overridden-arg"]);
+    expect(parsed.mcpServers.github.env.OVERRIDDEN_ENV).toBe(
+      "overridden-value",
+    );
+    expect(
+      parsed.mcpServers.github.env.GITHUB_PERSONAL_ACCESS_TOKEN,
+    ).toBeUndefined();
+    expect(parsed.mcpServers.github_file_ops).toBeDefined();
+  });
+
+  test("should merge additional root-level properties", async () => {
+    const additionalConfig = JSON.stringify({
+      customProperty: "custom-value",
+      anotherProperty: {
+        nested: "value",
+      },
+      mcpServers: {
+        custom_server: {
+          command: "custom",
+        },
+      },
+    });
+
+    const result = await prepareMcpConfig(
+      "test-token",
+      "test-owner",
+      "test-repo",
+      "test-branch",
+      additionalConfig,
+    );
+
+    const parsed = JSON.parse(result);
+    expect(parsed.customProperty).toBe("custom-value");
+    expect(parsed.anotherProperty).toEqual({ nested: "value" });
+    expect(parsed.mcpServers.github).toBeDefined();
+    expect(parsed.mcpServers.custom_server).toBeDefined();
+  });
+
+  test("should handle invalid JSON gracefully", async () => {
+    const invalidJson = "{ invalid json }";
+
+    const result = await prepareMcpConfig(
+      "test-token",
+      "test-owner",
+      "test-repo",
+      "test-branch",
+      invalidJson,
+    );
+
+    const parsed = JSON.parse(result);
+    expect(consoleWarningSpy).toHaveBeenCalledWith(
+      expect.stringContaining("Failed to parse additional MCP config:"),
+    );
+    expect(parsed.mcpServers.github).toBeDefined();
+    expect(parsed.mcpServers.github_file_ops).toBeDefined();
+  });
+
+  test("should handle non-object JSON values", async () => {
+    const nonObjectJson = JSON.stringify("string value");
+
+    const result = await prepareMcpConfig(
+      "test-token",
+      "test-owner",
+      "test-repo",
+      "test-branch",
+      nonObjectJson,
+    );
+
+    const parsed = JSON.parse(result);
+    expect(consoleWarningSpy).toHaveBeenCalledWith(
+      expect.stringContaining("Failed to parse additional MCP config:"),
+    );
+    expect(consoleWarningSpy).toHaveBeenCalledWith(
+      expect.stringContaining("MCP config must be a valid JSON object"),
+    );
+    expect(parsed.mcpServers.github).toBeDefined();
+    expect(parsed.mcpServers.github_file_ops).toBeDefined();
+  });
+
+  test("should handle null JSON value", async () => {
+    const nullJson = JSON.stringify(null);
+
+    const result = await prepareMcpConfig(
+      "test-token",
+      "test-owner",
+      "test-repo",
+      "test-branch",
+      nullJson,
+    );
+
+    const parsed = JSON.parse(result);
+    expect(consoleWarningSpy).toHaveBeenCalledWith(
+      expect.stringContaining("Failed to parse additional MCP config:"),
+    );
+    expect(consoleWarningSpy).toHaveBeenCalledWith(
+      expect.stringContaining("MCP config must be a valid JSON object"),
+    );
+    expect(parsed.mcpServers.github).toBeDefined();
+    expect(parsed.mcpServers.github_file_ops).toBeDefined();
+  });
+
+  test("should handle array JSON value", async () => {
+    const arrayJson = JSON.stringify([1, 2, 3]);
+
+    const result = await prepareMcpConfig(
+      "test-token",
+      "test-owner",
+      "test-repo",
+      "test-branch",
+      arrayJson,
+    );
+
+    const parsed = JSON.parse(result);
+    // Arrays are objects in JavaScript, so they pass the object check
+    // But they'll fail when trying to spread or access mcpServers property
+    expect(consoleInfoSpy).toHaveBeenCalledWith(
+      "Merging additional MCP server configuration with built-in servers",
+    );
+    expect(parsed.mcpServers.github).toBeDefined();
+    expect(parsed.mcpServers.github_file_ops).toBeDefined();
+    // The array will be spread into the config (0: 1, 1: 2, 2: 3)
+    expect(parsed[0]).toBe(1);
+    expect(parsed[1]).toBe(2);
+    expect(parsed[2]).toBe(3);
+  });
+
+  test("should merge complex nested configurations", async () => {
+    const additionalConfig = JSON.stringify({
+      mcpServers: {
+        server1: {
+          command: "cmd1",
+          env: { KEY1: "value1" },
+        },
+        server2: {
+          command: "cmd2",
+          env: { KEY2: "value2" },
+        },
+        github_file_ops: {
+          command: "overridden",
+          env: { CUSTOM: "value" },
+        },
+      },
+      otherConfig: {
+        nested: {
+          deeply: "value",
+        },
+      },
+    });
+
+    const result = await prepareMcpConfig(
+      "test-token",
+      "test-owner",
+      "test-repo",
+      "test-branch",
+      additionalConfig,
+    );
+
+    const parsed = JSON.parse(result);
+    expect(parsed.mcpServers.server1).toBeDefined();
+    expect(parsed.mcpServers.server2).toBeDefined();
+    expect(parsed.mcpServers.github).toBeDefined();
+    expect(parsed.mcpServers.github_file_ops.command).toBe("overridden");
+    expect(parsed.mcpServers.github_file_ops.env.CUSTOM).toBe("value");
+    expect(parsed.otherConfig.nested.deeply).toBe("value");
+  });
+
+  test("should preserve GITHUB_ACTION_PATH in file_ops server args", async () => {
+    const oldEnv = process.env.GITHUB_ACTION_PATH;
+    process.env.GITHUB_ACTION_PATH = "/test/action/path";
+
+    const result = await prepareMcpConfig(
+      "test-token",
+      "test-owner",
+      "test-repo",
+      "test-branch",
+    );
+
+    const parsed = JSON.parse(result);
+    expect(parsed.mcpServers.github_file_ops.args[1]).toBe(
+      "/test/action/path/src/mcp/github-file-ops-server.ts",
+    );
+
+    process.env.GITHUB_ACTION_PATH = oldEnv;
+  });
+
+  test("should use process.cwd() when GITHUB_WORKSPACE is not set", async () => {
+    const oldEnv = process.env.GITHUB_WORKSPACE;
+    delete process.env.GITHUB_WORKSPACE;
+
+    const result = await prepareMcpConfig(
+      "test-token",
+      "test-owner",
+      "test-repo",
+      "test-branch",
+    );
+
+    const parsed = JSON.parse(result);
+    expect(parsed.mcpServers.github_file_ops.env.REPO_DIR).toBe(process.cwd());
+
+    process.env.GITHUB_WORKSPACE = oldEnv;
+  });
+});