diff --git a/src/mcp/server/mcpserver/utilities/func_metadata.py b/src/mcp/server/mcpserver/utilities/func_metadata.py
index e5721488f5..fd84067276 100644
--- a/src/mcp/server/mcpserver/utilities/func_metadata.py
+++ b/src/mcp/server/mcpserver/utilities/func_metadata.py
@@ -454,32 +454,31 @@ def func_metadata(
         # structured_output=True still forces one.
         return FuncMetadata(arg_model=arguments_model)
 
-    output_model, wrap_output = _create_output_model(original_annotation, return_type_expr, func.__name__)
-
-    if output_model is not None:
-        try:
+    try:
+        output_model, wrap_output = _create_output_model(original_annotation, return_type_expr, func.__name__)
+        if output_model is not None:
             # FuncMetadata builds the validator and schema on construction, so an unsupported return type
             # surfaces here, at registration, rather than on the first call.
             return FuncMetadata(arg_model=arguments_model, output_model=output_model, wrap_output=wrap_output)
-        except (
-            PydanticUserError,
-            ForbiddenQualifier,
-            NameError,
-            TypeError,
-            ValueError,
-            pydantic_core.SchemaError,
-            pydantic_core.ValidationError,
-        ) as e:
-            # These are expected errors when a type can't be converted to a Pydantic schema
-            # PydanticUserError: When Pydantic can't handle the type (e.g. PydanticInvalidForJsonSchema);
-            #   subclasses TypeError on pydantic <2.13 and RuntimeError on pydantic >=2.13
-            # ForbiddenQualifier, NameError: an invalid qualifier or unresolvable annotation on a TypedDict key,
-            #   met while rebuilding a stdlib TypedDict below 3.12 (pydantic reports both as PydanticUserError)
-            # ValueError: When there are issues with the type definition (including our custom warnings);
-            #   arrives wrapped in a ValidationError when raised during FuncMetadata construction
-            # SchemaError: When Pydantic can't build a schema
-            # ValidationError: When validation fails
-            logger.info(f"Cannot create schema for type {return_type_expr} in {func.__name__}: {type(e).__name__}: {e}")
+    except (
+        PydanticUserError,
+        ForbiddenQualifier,
+        NameError,
+        TypeError,
+        ValueError,
+        pydantic_core.SchemaError,
+        pydantic_core.ValidationError,
+    ) as e:
+        # These are expected errors when a type can't be converted to a Pydantic schema
+        # PydanticUserError: When Pydantic can't handle the type (e.g. PydanticInvalidForJsonSchema);
+        #   subclasses TypeError on pydantic <2.13 and RuntimeError on pydantic >=2.13
+        # ForbiddenQualifier, NameError: an invalid qualifier or unresolvable annotation on a TypedDict key,
+        #   met while rebuilding a stdlib TypedDict below 3.12 (pydantic reports both as PydanticUserError)
+        # ValueError: When there are issues with the type definition (including our custom warnings);
+        #   arrives wrapped in a ValidationError when raised during FuncMetadata construction
+        # SchemaError: When Pydantic can't build a schema
+        # ValidationError: When validation fails
+        logger.info(f"Cannot create schema for type {return_type_expr} in {func.__name__}: {type(e).__name__}: {e}")
 
     if structured_output is True:
         # Model creation failed or produced warnings - no structured output
diff --git a/tests/server/mcpserver/test_func_metadata.py b/tests/server/mcpserver/test_func_metadata.py
index f929fb3954..daccc39836 100644
--- a/tests/server/mcpserver/test_func_metadata.py
+++ b/tests/server/mcpserver/test_func_metadata.py
@@ -6,7 +6,7 @@
 # pyright: reportMissingTypeArgument=false
 # pyright: reportUnknownVariableType=false
 import typing
-from collections.abc import Callable
+from collections.abc import Callable, Iterator
 from dataclasses import dataclass
 from typing import TYPE_CHECKING, Annotated, Any, Final, NamedTuple, NotRequired, Required, TypedDict
 
@@ -1393,6 +1393,15 @@ def func_returning_namedtuple() -> Point:  # pragma: no cover
     assert "Point" in str(exc_info.value)
 
 
+def test_structured_output_iterator_falls_back_to_unstructured() -> None:
+    def search() -> Iterator[str]:
+        yield 'result'
+
+    assert func_metadata(search).output_schema is None
+    with pytest.raises(InvalidSignature, match='is not serializable for structured output'):
+        func_metadata(search, structured_output=True)
+
+
 def test_structured_output_aliases():
     """Test that field aliases are consistent between schema and output"""