diff --git a/fastmcp_slim/fastmcp/server/providers/proxy.py b/fastmcp_slim/fastmcp/server/providers/proxy.py
index 718516867..cf5284a4c 100644
--- a/fastmcp_slim/fastmcp/server/providers/proxy.py
+++ b/fastmcp_slim/fastmcp/server/providers/proxy.py
@@ -1182,13 +1182,15 @@ class ProxyMetadataMiddleware(Middleware):
             return _UpstreamServerMetadata.from_discover(result)
         return _UpstreamServerMetadata.from_client(client)
 
-    async def _read_upstream(
-        self, context: Context | None
-    ) -> _UpstreamServerMetadata | None:
+    async def _create_client(self) -> Client:
         client = self.client_factory()
         if inspect.isawaitable(client):
             client = cast(Client, await client)
+        return client
 
+    async def _read_upstream(
+        self, client: Client, context: Context | None
+    ) -> _UpstreamServerMetadata | None:
         if context is not None:
             _stash_proxy_request_context(client, context)
 
@@ -1229,10 +1231,11 @@ class ProxyMetadataMiddleware(Middleware):
             mcp_types.InitializeRequest, mcp_types.InitializeResult | None
         ],
     ) -> mcp_types.InitializeResult | None:
+        client = await self._create_client()
         result = await call_next(context)
         if result is None:
             return None
-        upstream = await self._read_upstream(context.fastmcp_context)
+        upstream = await self._read_upstream(client, context.fastmcp_context)
         if upstream is None:
             return result
         return result.model_copy(update=self._updates(result, upstream))
@@ -1248,7 +1251,8 @@ class ProxyMetadataMiddleware(Middleware):
         result = await call_next(context)
         if not isinstance(result, mcp_types.DiscoverResult):
             return result
-        upstream = await self._read_upstream(context.fastmcp_context)
+        client = await self._create_client()
+        upstream = await self._read_upstream(client, context.fastmcp_context)
         if upstream is None:
             return result
         return result.model_copy(update=self._updates(result, upstream))
diff --git a/tests/server/providers/proxy/test_server_metadata.py b/tests/server/providers/proxy/test_server_metadata.py
index ec5fd9dcf..9aa9b711a 100644
--- a/tests/server/providers/proxy/test_server_metadata.py
+++ b/tests/server/providers/proxy/test_server_metadata.py
@@ -387,6 +387,31 @@ async def test_client_factory_errors_are_not_swallowed():
             pass
 
 
+@pytest.mark.parametrize("frontend_mode", ["legacy", "auto"])
+@pytest.mark.parametrize("async_factory", [False, True])
+async def test_client_factory_mcp_errors_are_not_swallowed(
+    frontend_mode: str, async_factory: bool
+):
+    def broken_factory() -> Client:
+        raise MCPError(code=mcp_types.INTERNAL_ERROR, message="broken client factory")
+
+    async def broken_async_factory() -> Client:
+        raise MCPError(code=mcp_types.INTERNAL_ERROR, message="broken client factory")
+
+    factory = broken_async_factory if async_factory else broken_factory
+    provider = ProxyProvider(factory)
+    gateway = FastMCP(
+        "gateway",
+        providers=[provider],
+        middleware=[ProxyMetadataMiddleware(provider)],
+    )
+
+    match = "broken client factory" if frontend_mode == "legacy" else None
+    with pytest.raises(MCPError, match=match):
+        async with Client(gateway, mode=frontend_mode):
+            pass
+
+
 @pytest.mark.parametrize("frontend_mode", ["legacy", "auto"])
 async def test_unavailable_backend_does_not_block_connection(frontend_mode: str):
     port = find_available_port()