# Closed-World Resolution Against Tool Hallucination in LLM Agents

arXiv: https://arxiv.org/abs/2609.19425 · HTML: https://mlsanity.com/paper/2609.19425/

## Key facts

- No citing papers in the map yet (data through 14 Oct 2026).
- Placed in Medical and scientific domain agents, one of 16 directions in LLM agents and tool use.
- Builds on 12 of its 15 references that are in the map.
- First posted on arXiv 16 Sep 2026.

## Placed in

- LLM agents and tool use / [Medical and scientific domain agents](https://mlsanity.com/agents/medical-and-scientific-domain-agents/)

## Builds on (most cited first, 12 of 12)

- [ReAct: Synergizing Reasoning and Acting in Language Models](https://mlsanity.com/paper/2210.03629/) (2022)
- [Toolformer: Language Models Can Teach Themselves to Use Tools](https://mlsanity.com/paper/2302.04761/) (2023)
- [ToolLLM: Facilitating Large Language Models to Master 16000+ Real-world APIs](https://mlsanity.com/paper/2307.16789/) (2023)
- [A Survey on Hallucination in Large Language Models: Principles, Taxonomy, Challenges, and Open Questions](https://mlsanity.com/paper/2311.05232/) (2023)
- [Not what you've signed up for: Compromising Real-World LLM-Integrated Applications with Indirect Prompt Injection](https://mlsanity.com/paper/2302.12173/) (2023)
- [Gorilla: Large Language Model Connected with Massive APIs](https://mlsanity.com/paper/2305.15334/) (2023)
- [API-Bank: A Comprehensive Benchmark for Tool-Augmented LLMs](https://mlsanity.com/paper/2304.08244/) (2023)
- [Model Context Protocol (MCP): Landscape, Security Threats, and Future Research Directions](https://mlsanity.com/paper/2503.23278/) (2025)
- [Efficient Guided Generation for Large Language Models](https://mlsanity.com/paper/2307.09702/) (2023)
- [MCP Safety Audit: LLMs with the Model Context Protocol Allow Major Security Exploits](https://mlsanity.com/paper/2504.03767/) (2025)
- [Enterprise-Grade Security for the Model Context Protocol (MCP): Frameworks and Mitigation Strategies](https://mlsanity.com/paper/2504.08623/) (2025)
- [ToolBeHonest: A Multi-level Hallucination Diagnostic Benchmark for Tool-Augmented Large Language Models](https://mlsanity.com/paper/2406.20015/) (2024)

## Abstract (arXiv)

Tool-augmented large language model (LLM) agents fail in a way no tool-selection or tool-security method addresses: they call tools that do not exist and pass arguments no schema declares. Existing defenses either pick the right tool (selection) or constrain what an agent may do with real tools (gating), both of which presuppose the emitted call refers to a real tool at all. We show this is a structural blind spot: a hallucinated call is by construction not a decision any gate made, so no gate can reject it. This paper is primarily a measurement and benchmark study. We give a five-class taxonomy of tool hallucination (H1-H5) and, as a reference point, the Resolution Rung: a training-free, closed-world resolver (registry membership plus a signature check) whose interest is where it must sit, not what it computes. We prove hallucination defense must precede any causal gate, and characterize the one irreducible residue (borrowed arguments schema-indistinguishable from a valid call). Across ten hosted models under two invocation surfaces we measure 322 genuine hallucinations; fabricated-tool calls concentrate on the unconstrained raw-JSON surface (34 vs. 3), and model scale does not help (a 675B model matches a 7-8B one). We then extend to the Model Context Protocol, where merging several servers into one namespace creates hallucination surfaces a single registry cannot express (a second taxonomy, M1-M5); on the live MCP surface we measure 154 hallucinations, including from frontier models that were clean on the single-registry surface, because collisions and shadowing are structural to the merge. We release the versioned Hallucinated-Tools Benchmark (HTB) so any resolver is comparable across submissions.