diff --git a/src/session.test.ts b/src/session.test.ts
new file mode 100644
index 0000000..389a602
--- /dev/null
+++ b/src/session.test.ts
@@ -0,0 +1,129 @@
+import { describe, expect, test, mock } from "bun:test";
+import { Session } from "./session.js";
+
+describe("Session", () => {
+  describe("handleCanUseTool with bypassPermissions", () => {
+    test("auto-approves tools when permissionMode is bypassPermissions", async () => {
+      // Create a session with bypassPermissions
+      const session = new Session({
+        permissionMode: "bypassPermissions",
+      });
+
+      // Access the private method for testing
+      // @ts-expect-error - accessing private method for testing
+      const handleCanUseTool = session.handleCanUseTool.bind(session);
+
+      // Mock the transport.write to capture the response
+      let capturedResponse: unknown;
+      // @ts-expect-error - accessing private property for testing
+      session.transport.write = async (msg: unknown) => {
+        capturedResponse = msg;
+      };
+
+      // Simulate a control_request for tool approval
+      await handleCanUseTool("test-request-id", {
+        subtype: "can_use_tool",
+        tool_name: "Bash",
+        tool_call_id: "test-tool-call-id",
+        input: { command: "ls" },
+        permission_suggestions: [],
+        blocked_path: null,
+      });
+
+      // Verify the response auto-approves
+      expect(capturedResponse).toEqual({
+        type: "control_response",
+        response: {
+          subtype: "success",
+          request_id: "test-request-id",
+          response: {
+            behavior: "allow",
+            updatedInput: null,
+            updatedPermissions: [],
+          },
+        },
+      });
+    });
+
+    test("denies tools by default when no callback and not bypassPermissions", async () => {
+      // Create a session with default permission mode
+      const session = new Session({
+        permissionMode: "default",
+      });
+
+      // @ts-expect-error - accessing private method for testing
+      const handleCanUseTool = session.handleCanUseTool.bind(session);
+
+      let capturedResponse: unknown;
+      // @ts-expect-error - accessing private property for testing
+      session.transport.write = async (msg: unknown) => {
+        capturedResponse = msg;
+      };
+
+      await handleCanUseTool("test-request-id", {
+        subtype: "can_use_tool",
+        tool_name: "Bash",
+        tool_call_id: "test-tool-call-id",
+        input: { command: "ls" },
+        permission_suggestions: [],
+        blocked_path: null,
+      });
+
+      // Verify the response denies (no callback registered)
+      expect(capturedResponse).toEqual({
+        type: "control_response",
+        response: {
+          subtype: "success",
+          request_id: "test-request-id",
+          response: {
+            behavior: "deny",
+            message: "No canUseTool callback registered",
+            interrupt: false,
+          },
+        },
+      });
+    });
+
+    test("uses canUseTool callback when provided and not bypassPermissions", async () => {
+      const session = new Session({
+        permissionMode: "default",
+        canUseTool: async (toolName, input) => {
+          if (toolName === "Bash") {
+            return { behavior: "allow" };
+          }
+          return { behavior: "deny", message: "Tool not allowed" };
+        },
+      });
+
+      // @ts-expect-error - accessing private method for testing
+      const handleCanUseTool = session.handleCanUseTool.bind(session);
+
+      let capturedResponse: unknown;
+      // @ts-expect-error - accessing private property for testing
+      session.transport.write = async (msg: unknown) => {
+        capturedResponse = msg;
+      };
+
+      await handleCanUseTool("test-request-id", {
+        subtype: "can_use_tool",
+        tool_name: "Bash",
+        tool_call_id: "test-tool-call-id",
+        input: { command: "ls" },
+        permission_suggestions: [],
+        blocked_path: null,
+      });
+
+      // Verify callback was used and allowed
+      expect(capturedResponse).toMatchObject({
+        type: "control_response",
+        response: {
+          subtype: "success",
+          request_id: "test-request-id",
+          response: {
+            behavior: "allow",
+          },
+        },
+      });
+    });
+  });
+});
diff --git a/src/session.ts b/src/session.ts
index f38183d..5aceb3f 100644
--- a/src/session.ts
+++ b/src/session.ts
@@ -134,7 +134,14 @@ export class Session implements AsyncDisposable {
   ): Promise<void> {
     let response: CanUseToolResponse;
 
-    if (this.options.canUseTool) {
+    // If bypassPermissions mode, auto-allow all tools
+    if (this.options.permissionMode === "bypassPermissions") {
+      response = {
+        behavior: "allow",
+        updatedInput: null,
+        updatedPermissions: [],
+      } satisfies CanUseToolResponseAllow;
+    } else if (this.options.canUseTool) {
       try {
         const result = await this.options.canUseTool(req.tool_name, req.input);
         if (result.behavior === "allow") {