diff --git a/src/responses/parser.ts b/src/responses/parser.ts
index 2acbe46eec..7c2393bd2e 100644
--- a/src/responses/parser.ts
+++ b/src/responses/parser.ts
@@ -169,6 +169,23 @@ function buildTools(tools: unknown[] | undefined): OcxTool[] | undefined {
     if (namespace) tool.namespace = namespace;
     out.push(tool);
   };
+  const pushCustom = (t: Record<string, unknown>, namespace?: string) => {
+    // Freeform custom tools are lowered to a single string `input` because chat models cannot
+    // emit Responses grammar payloads directly. Keep tool-specific input guidance scoped to the
+    // tool that owns it: leaking apply_patch syntax into `exec` or another freeform tool teaches
+    // routed models that the nested helper name is itself a callable top-level tool.
+    const inputDescription = t.name === "apply_patch"
+      ? "Raw tool input. For apply_patch, begin exactly with `*** Begin Patch` (no trailing `***`), then use its standard patch envelope."
+      : "Raw freeform input for this tool.";
+    const tool: OcxTool = {
+      name: t.name as string,
+      description: (t.description as string) ?? "",
+      parameters: { type: "object", properties: { input: { type: "string", description: inputDescription } }, required: ["input"] },
+      freeform: true,
+    };
+    if (namespace) tool.namespace = namespace;
+    out.push(tool);
+  };
   for (const t of tools) {
     if (!isObj(t)) continue;
     if (t.type === "function" && isObj(t.function) && typeof t.function.name === "string" && t.function.name.length > 0) {
@@ -178,27 +195,19 @@ function buildTools(tools: unknown[] | undefined): OcxTool[] | undefined {
     if (t.type === "function" && typeof t.name === "string") {
       pushFn(t);
     } else if (t.type === "namespace" && Array.isArray(t.tools)) {
-      // MCP tools arrive grouped under a namespace tool; flatten the inner function tools so
-      // chat-completions models receive them (round-trip restores the namespace in the bridge).
-      const ns = typeof t.name === "string" ? t.name : undefined;
+      // Codex 0.147 groups its ordinary client tools under the reserved `functions` namespace,
+      // including freeform custom tools such as code-mode `exec`. Those children are still
+      // top-level Responses tools, so flatten them without a namespace. Other namespace groups
+      // are MCP-style and keep their namespace for round-trip routing.
+      const builtinFunctions = t.name === "functions";
+      const ns = typeof t.name === "string" && !builtinFunctions ? t.name : undefined;
       for (const inner of t.tools as unknown[]) {
         if (isObj(inner) && inner.type === "function" && typeof inner.name === "string") pushFn(inner, ns);
+        else if (builtinFunctions && isObj(inner) && inner.type === "custom" && typeof inner.name === "string") pushCustom(inner);
       }
     }
     else if (t.type === "custom" && typeof t.name === "string") {
-      // Freeform custom tools are lowered to a single string `input` because chat models cannot
-      // emit Responses grammar payloads directly. Keep tool-specific input guidance scoped to the
-      // tool that owns it: leaking apply_patch syntax into `exec` or another freeform tool teaches
-      // routed models that the nested helper name is itself a callable top-level tool.
-      const inputDescription = t.name === "apply_patch"
-        ? "Raw tool input. For apply_patch, begin exactly with `*** Begin Patch` (no trailing `***`), then use its standard patch envelope."
-        : "Raw freeform input for this tool.";
-      out.push({
-        name: t.name,
-        description: (t.description as string) ?? "",
-        parameters: { type: "object", properties: { input: { type: "string", description: inputDescription } }, required: ["input"] },
-        freeform: true,
-      });
+      pushCustom(t);
     }
     else if (t.type === "tool_search") {
       // Client-executed tool discovery — the gateway to deferred tools (subagents, extra MCP tools).
diff --git a/tests/responses-tool-conformance.test.ts b/tests/responses-tool-conformance.test.ts
index 95bf30e550..aa23b3ee52 100644
--- a/tests/responses-tool-conformance.test.ts
+++ b/tests/responses-tool-conformance.test.ts
@@ -1,5 +1,6 @@
 import { describe, expect, it } from "bun:test";
 import { parseRequest } from "../src/responses/parser";
+import { cursorRequestUsesCodeMode } from "../src/adapters/cursor/tool-definitions";
 import type { AdapterEvent } from "../src/types";
 import { jsonItemTypes, jsonToolItems, streamedView } from "./helpers/responses-conformance";
 
@@ -64,6 +65,39 @@ describe("Responses Lite additional_tools declaration merge", () => {
     expect(parsed.context.tools?.find(tool => tool.name === "search")?.namespace).toBe("github");
   });
 
+  it("flattens Codex 0.147 built-in functions and preserves nested custom exec", () => {
+    const parsed = parseRequest(request([
+      {
+        type: "additional_tools",
+        role: "developer",
+        tools: [
+          {
+            type: "namespace",
+            name: "functions",
+            tools: [
+              { type: "custom", name: "exec", description: "Run JavaScript with nested helpers." },
+              { type: "function", name: "wait", parameters: { type: "object", properties: {} } },
+            ],
+          },
+          {
+            type: "namespace",
+            name: "collaboration",
+            tools: [{ type: "function", name: "spawn_agent", parameters: { type: "object", properties: {} } }],
+          },
+        ],
+      },
+    ]));
+
+    const exec = parsed.context.tools?.find(tool => tool.name === "exec");
+    const wait = parsed.context.tools?.find(tool => tool.name === "wait");
+    const spawn = parsed.context.tools?.find(tool => tool.name === "spawn_agent");
+    expect(exec).toMatchObject({ name: "exec", freeform: true });
+    expect(exec?.namespace).toBeUndefined();
+    expect(wait?.namespace).toBeUndefined();
+    expect(spawn?.namespace).toBe("collaboration");
+    expect(cursorRequestUsesCodeMode(parsed.context.tools)).toBe(true);
+  });
+
   it("preserves wire order across multiple additional_tools groups", () => {
     const parsed = parseRequest(request([
       { type: "additional_tools", role: "developer", tools: [fnTool] },