diff --git a/python/packages/azure-ai/agent_framework_azure_ai/_client.py b/python/packages/azure-ai/agent_framework_azure_ai/_client.py
index 1fc6c7c1c9..1e0ec17a41 100644
--- a/python/packages/azure-ai/agent_framework_azure_ai/_client.py
+++ b/python/packages/azure-ai/agent_framework_azure_ai/_client.py
@@ -486,21 +486,32 @@ def _remove_agent_level_run_options(
         runtime_structured_output = self._get_structured_output_signature(chat_options)
 
         if runtime_tools is not None or runtime_structured_output is not None:
-            tools_changed = runtime_tools is not None
-            structured_output_changed = runtime_structured_output is not None
+            tools_changed = False
+            structured_output_changed = False
 
             if self.warn_runtime_tools_and_structure_changed:
+                # We created the agent ourselves so we can compare tool sets.
                 if runtime_tools is not None:
                     tools_changed = self._extract_tool_names(runtime_tools) != self._created_agent_tool_names
                 if runtime_structured_output is not None:
                     structured_output_changed = (
                         runtime_structured_output != self._created_agent_structured_output_signature
                     )
+            else:
+                # Agent was not created by this client (e.g. use_latest_version
+                # or explicit agent_version).  We have no creation-time baseline
+                # so only warn when non-empty tools or structured_output are
+                # supplied — an empty tool list is just the framework default
+                # and should not trigger a false-positive warning.
+                if runtime_tools:
+                    tools_changed = True
+                if runtime_structured_output is not None:
+                    structured_output_changed = True
 
             if tools_changed or structured_output_changed:
                 logger.warning(
-                    "AzureAIClient does not support runtime tools or structured_output overrides after agent creation. "
-                    "Use AzureOpenAIResponsesClient instead."
+                    "AzureAIClient does not support runtime tools or structured_output overrides "
+                    "after agent creation. Use AzureOpenAIResponsesClient instead."
                 )
 
         agent_level_option_to_run_keys = {
diff --git a/python/packages/azure-ai/tests/test_azure_ai_client.py b/python/packages/azure-ai/tests/test_azure_ai_client.py
index f0246f40b2..7900d439a5 100644
--- a/python/packages/azure-ai/tests/test_azure_ai_client.py
+++ b/python/packages/azure-ai/tests/test_azure_ai_client.py
@@ -914,6 +914,79 @@ async def test_use_latest_version_existing_agent(
     assert client.agent_version == "2.5"
 
 
+async def test_use_latest_version_no_spurious_warning_for_empty_tools(
+    mock_project_client: MagicMock,
+) -> None:
+    """Test that use_latest_version=True does not emit a false-positive tools warning.
+
+    When the agent is fetched via use_latest_version the framework may still
+    pass an empty runtime tools list (``[]``).  The client should not warn
+    about a tool mismatch in this case because no user-supplied tools are
+    actually being overridden.  Regression test for
+    https://github.com/microsoft/agent-framework/issues/4681
+    """
+    client = create_test_azure_ai_client(mock_project_client, agent_name="existing-agent", use_latest_version=True)
+
+    # Mock existing agent
+    mock_existing_agent = MagicMock()
+    mock_existing_agent.name = "existing-agent"
+    mock_existing_agent.versions.latest.version = "2.5"
+    mock_project_client.agents.get = AsyncMock(return_value=mock_existing_agent)
+
+    messages = [Message(role="user", contents=[Content.from_text(text="Hello")])]
+
+    # Patch logger.warning across BOTH calls — neither should warn
+    with (
+        patch(
+            "agent_framework.openai._responses_client.RawOpenAIResponsesClient._prepare_options",
+            return_value={"model": "test-model", "tools": []},
+        ),
+        patch("agent_framework_azure_ai._client.logger.warning") as mock_warning,
+    ):
+        # First call fetches the latest version
+        await client._prepare_options(messages, {})
+        # Subsequent call with empty tools
+        await client._prepare_options(messages, {})
+
+    mock_warning.assert_not_called()
+
+
+async def test_use_latest_version_warns_for_non_empty_tools(
+    mock_project_client: MagicMock,
+) -> None:
+    """Test that use_latest_version=True with non-empty tools DOES emit a warning.
+
+    Companion to the empty-tools test above. When the user supplies actual
+    runtime tools while use_latest_version=True, the client should warn that
+    the tools differ from the agent's creation-time configuration.
+    """
+    client = create_test_azure_ai_client(mock_project_client, agent_name="existing-agent", use_latest_version=True)
+
+    # Mock existing agent
+    mock_existing_agent = MagicMock()
+    mock_existing_agent.name = "existing-agent"
+    mock_existing_agent.versions.latest.version = "2.5"
+    mock_project_client.agents.get = AsyncMock(return_value=mock_existing_agent)
+
+    messages = [Message(role="user", contents=[Content.from_text(text="Hello")])]
+
+    non_empty_tools = [{"type": "function", "function": {"name": "my_tool"}}]
+
+    with (
+        patch(
+            "agent_framework.openai._responses_client.RawOpenAIResponsesClient._prepare_options",
+            return_value={"model": "test-model", "tools": non_empty_tools},
+        ),
+        patch("agent_framework_azure_ai._client.logger.warning") as mock_warning,
+    ):
+        # First call fetches the latest version
+        await client._prepare_options(messages, {})
+        # Subsequent call with non-empty tools — SHOULD warn
+        await client._prepare_options(messages, {})
+
+    mock_warning.assert_called()
+
+
 async def test_use_latest_version_agent_not_found(
     mock_project_client: MagicMock,
 ) -> None: