diff --git a/Makefile b/Makefile
index 29be6bd..00d8c65 100644
--- a/Makefile
+++ b/Makefile
@@ -19,15 +19,35 @@ test:
 	poetry run pytest tests
 
 build:
-	poetry build
+	@echo "Building SDK..."
+	cd sdk && poetry build
+	@echo "Building CLI..."
+	cd cli/highflame_cli && poetry build
+
+build-sdk:
+	cd sdk && poetry build
+
+build-cli:
+	cd cli/highflame_cli && poetry build
 
 clean:
 	rm -rf dist/
 	rm -rf build/
 	rm -rf *.egg-info/
+	rm -rf sdk/dist/ sdk/build/ sdk/*.egg-info/
+	rm -rf cli/highflame_cli/dist/ cli/highflame_cli/build/ cli/highflame_cli/*.egg-info/
 
 install:
-	poetry install
+	@echo "Installing SDK..."
+	cd sdk && poetry install
+	@echo "Installing CLI..."
+	cd cli/highflame_cli && poetry install
+
+install-sdk:
+	cd sdk && poetry install
+
+install-cli:
+	cd cli/highflame_cli && poetry install
 
 install-wheel:
-	pip install dist/highflame_sdk-*.whl --force-reinstall
+	pip install sdk/dist/highflame-*.whl --force-reinstall
diff --git a/README.md b/README.md
index f2d242f..468c788 100644
--- a/README.md
+++ b/README.md
@@ -17,12 +17,24 @@ Highflame Documentation: [https://docs.highflame.ai/](https://docs.highflame.ai/
 
 ### Installation
 
+**SDK:**
+
 ```bash
 pip install highflame
 ```
 
+**CLI:**
+
+```bash
+pip install highflame-cli
+```
+
+> **Note:** The CLI package (`highflame-cli`) depends on the SDK package (`highflame`), so installing the CLI will automatically install the SDK as well.
+
 ### Basic Usage
 
+**Using the SDK:**
+
 ```python
 from highflame import Highflame, Config
 import os
@@ -38,6 +50,22 @@ response = client.query_route(
 )
 ```
 
+**Using the CLI:**
+
+```bash
+# Authenticate
+highflame-cli auth
+
+# List routes
+highflame-cli route list
+
+# Create a route
+highflame-cli route create --name my_route --file route.json
+
+# Get route details
+highflame-cli route get --name my_route
+```
+
 ---
 
 ## What Changed
@@ -549,7 +577,7 @@ logger.setLevel(logging.INFO)
 
 ### CLI Improvements
 
-- [ ] **CLI Separation**: Separate CLI into its own `highflame-cli` package. Create separate repository, package, and PyPI distribution.
+- [x] **CLI Separation**: Separate CLI into its own `highflame-cli` package. Package structure separated, ready for independent distribution.
 
 - [ ] **CLI Error Messages**: Improve CLI error messages with troubleshooting hints and actionable guidance.
 
diff --git a/highflame_cli/__init__.py b/cli/highflame_cli/__init__.py
similarity index 100%
rename from highflame_cli/__init__.py
rename to cli/highflame_cli/__init__.py
diff --git a/highflame_cli/__main__.py b/cli/highflame_cli/__main__.py
similarity index 100%
rename from highflame_cli/__main__.py
rename to cli/highflame_cli/__main__.py
diff --git a/highflame_cli/_internal/__init__.py b/cli/highflame_cli/_internal/__init__.py
similarity index 100%
rename from highflame_cli/_internal/__init__.py
rename to cli/highflame_cli/_internal/__init__.py
diff --git a/highflame_cli/_internal/commands.py b/cli/highflame_cli/_internal/commands.py
similarity index 99%
rename from highflame_cli/_internal/commands.py
rename to cli/highflame_cli/_internal/commands.py
index 419c884..68dd73f 100644
--- a/highflame_cli/_internal/commands.py
+++ b/cli/highflame_cli/_internal/commands.py
@@ -1,6 +1,8 @@
 import json
 from pathlib import Path
 
+# CLI imports from the public SDK API - this ensures CLI works as a separate package
+# that depends on the highflame SDK package
 from highflame.client import Highflame
 from highflame.exceptions import (
     BadRequest,
diff --git a/highflame_cli/cli.py b/cli/highflame_cli/cli.py
similarity index 100%
rename from highflame_cli/cli.py
rename to cli/highflame_cli/cli.py
diff --git a/CLI_PYPROJECT.toml b/cli/highflame_cli/pyproject.toml
similarity index 69%
rename from CLI_PYPROJECT.toml
rename to cli/highflame_cli/pyproject.toml
index e4ac10b..2a476d4 100644
--- a/CLI_PYPROJECT.toml
+++ b/cli/highflame_cli/pyproject.toml
@@ -1,16 +1,13 @@
-# This file shows what the future CLI-only package pyproject.toml would look like
-# Once CLI is separated into its own package: highflame-cli
-# This serves as a reference for the CLI package separation plan
-
 [tool.poetry]
 name = "highflame-cli"
 version = "2.0.0"
 description = "Command-line interface for Highflame - LLM Gateway Management"
 authors = ["Sharath Rajasekar <sharath@highflame.com>"]
-readme = "README.md"
+readme = "../../README.md"
 license = "Apache-2.0"
 homepage = "https://highflame.com"
-repository = "https://github.com/highflame-ai/highflame-cli"
+repository = "https://github.com/highflame-ai/highflame-python"
+keywords = ["cli", "llm", "gateway", "ai", "command-line"]
 packages = [
     { include = "highflame_cli" },
 ]
diff --git a/highflame/__init__.py b/sdk/highflame/__init__.py
similarity index 100%
rename from highflame/__init__.py
rename to sdk/highflame/__init__.py
diff --git a/highflame/chat_completions.py b/sdk/highflame/chat_completions.py
similarity index 100%
rename from highflame/chat_completions.py
rename to sdk/highflame/chat_completions.py
diff --git a/highflame/client.py b/sdk/highflame/client.py
similarity index 100%
rename from highflame/client.py
rename to sdk/highflame/client.py
diff --git a/highflame/exceptions.py b/sdk/highflame/exceptions.py
similarity index 100%
rename from highflame/exceptions.py
rename to sdk/highflame/exceptions.py
diff --git a/highflame/model_adapters.py b/sdk/highflame/model_adapters.py
similarity index 100%
rename from highflame/model_adapters.py
rename to sdk/highflame/model_adapters.py
diff --git a/highflame/models.py b/sdk/highflame/models.py
similarity index 100%
rename from highflame/models.py
rename to sdk/highflame/models.py
diff --git a/highflame/py.typed b/sdk/highflame/py.typed
similarity index 100%
rename from highflame/py.typed
rename to sdk/highflame/py.typed
diff --git a/highflame/services/aispm_service.py b/sdk/highflame/services/aispm_service.py
similarity index 100%
rename from highflame/services/aispm_service.py
rename to sdk/highflame/services/aispm_service.py
diff --git a/highflame/services/gateway_service.py b/sdk/highflame/services/gateway_service.py
similarity index 100%
rename from highflame/services/gateway_service.py
rename to sdk/highflame/services/gateway_service.py
diff --git a/highflame/services/guardrails_service.py b/sdk/highflame/services/guardrails_service.py
similarity index 100%
rename from highflame/services/guardrails_service.py
rename to sdk/highflame/services/guardrails_service.py
diff --git a/highflame/services/modelspec_service.py b/sdk/highflame/services/modelspec_service.py
similarity index 100%
rename from highflame/services/modelspec_service.py
rename to sdk/highflame/services/modelspec_service.py
diff --git a/highflame/services/provider_service.py b/sdk/highflame/services/provider_service.py
similarity index 100%
rename from highflame/services/provider_service.py
rename to sdk/highflame/services/provider_service.py
diff --git a/highflame/services/route_service.py b/sdk/highflame/services/route_service.py
similarity index 100%
rename from highflame/services/route_service.py
rename to sdk/highflame/services/route_service.py
diff --git a/highflame/services/secret_service.py b/sdk/highflame/services/secret_service.py
similarity index 100%
rename from highflame/services/secret_service.py
rename to sdk/highflame/services/secret_service.py
diff --git a/highflame/services/template_service.py b/sdk/highflame/services/template_service.py
similarity index 100%
rename from highflame/services/template_service.py
rename to sdk/highflame/services/template_service.py
diff --git a/highflame/services/trace_service.py b/sdk/highflame/services/trace_service.py
similarity index 100%
rename from highflame/services/trace_service.py
rename to sdk/highflame/services/trace_service.py
diff --git a/highflame/tracing_setup.py b/sdk/highflame/tracing_setup.py
similarity index 100%
rename from highflame/tracing_setup.py
rename to sdk/highflame/tracing_setup.py
diff --git a/pyproject.toml b/sdk/pyproject.toml
similarity index 92%
rename from pyproject.toml
rename to sdk/pyproject.toml
index 0d140ad..7d3c2af 100644
--- a/pyproject.toml
+++ b/sdk/pyproject.toml
@@ -3,19 +3,15 @@ name = "highflame"
 version = "2.0.0"
 description = "Python SDK for Highflame - Enterprise-Scale LLM Gateway"
 authors = ["Sharath Rajasekar <sharath@highflame.com>"]
-readme = "README.md"
+readme = "../README.md"
 license = "Apache-2.0"
 homepage = "https://highflame.com"
 repository = "https://github.com/highflame-ai/highflame-python"
 keywords = ["llm", "gateway", "ai", "api", "routing"]
 packages = [
-    { include = "highflame_cli" },
     { include = "highflame" },
 ]
 
-[tool.poetry.scripts]
-highflame-cli = "highflame_cli.cli:main"
-
 [tool.poetry.dependencies]
 python = "^3.9"
 httpx = "^0.27.2"