diff --git a/letta/server/server.py b/letta/server/server.py
index 4a48b2a2..8c3a4312 100644
--- a/letta/server/server.py
+++ b/letta/server/server.py
@@ -820,13 +820,13 @@ class SyncServer(Server):
         actor: User,
     ) -> AgentState:
         """Update the agents core memory block, return the new state"""
+        # Update agent state in the db first
+        self.agent_manager.update_agent(agent_id=agent_id, agent_update=request, actor=actor)
+
         # Get the agent object (loaded in memory)
         letta_agent = self.load_agent(agent_id=agent_id, actor=actor)
 
-        # Update tags
-        if request.tags is not None:  # Allow for empty list
-            letta_agent.agent_state.tags = request.tags
-
+        # TODO: Everything below needs to get removed, no updating anything in memory
         # update the system prompt
         if request.system:
             letta_agent.update_system_prompt(request.system)
@@ -840,42 +840,10 @@ class SyncServer(Server):
 
         # tools
         if request.tool_ids:
-            # Replace tools and also re-link
+            letta_agent.link_tools(letta_agent.agent_state.tools)
 
-            # (1) get tools + make sure they exist
-            # Current and target tools as sets of tool names
-            current_tools = letta_agent.agent_state.tools
-            current_tool_ids = set([t.id for t in current_tools])
-            target_tool_ids = set(request.tool_ids)
+        letta_agent.update_state()
 
-            # Calculate tools to add and remove
-            tool_ids_to_add = target_tool_ids - current_tool_ids
-            tools_ids_to_remove = current_tool_ids - target_tool_ids
-
-            # update agent tool list
-            for tool_id in tools_ids_to_remove:
-                self.remove_tool_from_agent(agent_id=agent_id, tool_id=tool_id, user_id=actor.id)
-            for tool_id in tool_ids_to_add:
-                self.add_tool_to_agent(agent_id=agent_id, tool_id=tool_id, user_id=actor.id)
-
-            # reload agent
-            letta_agent = self.load_agent(agent_id=agent_id, actor=actor)
-
-        # configs
-        if request.llm_config:
-            letta_agent.agent_state.llm_config = request.llm_config
-        if request.embedding_config:
-            letta_agent.agent_state.embedding_config = request.embedding_config
-
-        # other minor updates
-        if request.name:
-            letta_agent.agent_state.name = request.name
-        if request.metadata_:
-            letta_agent.agent_state.metadata_ = request.metadata_
-
-        # save the agent
-        save_agent(letta_agent)
-        # TODO: probably reload the agent somehow?
         return letta_agent.agent_state
 
     def get_tools_from_agent(self, agent_id: str, user_id: Optional[str]) -> List[Tool]:
diff --git a/tests/test_server.py b/tests/test_server.py
index 0718e6ce..56c132ec 100644
--- a/tests/test_server.py
+++ b/tests/test_server.py
@@ -21,7 +21,7 @@ from letta.schemas.user import User
 
 utils.DEBUG = True
 from letta.config import LettaConfig
-from letta.schemas.agent import CreateAgent
+from letta.schemas.agent import CreateAgent, UpdateAgent
 from letta.schemas.embedding_config import EmbeddingConfig
 from letta.schemas.job import Job as PydanticJob
 from letta.schemas.llm_config import LLMConfig
@@ -393,9 +393,7 @@ def test_load_data(server, user_id, agent_id):
     user = server.user_manager.get_user_or_default(user_id=user_id)
 
     # create source
-    passages_before = server.agent_manager.list_passages(
-        actor=user, agent_id=agent_id, cursor=None, limit=10000
-    )
+    passages_before = server.agent_manager.list_passages(actor=user, agent_id=agent_id, cursor=None, limit=10000)
     assert len(passages_before) == 0
 
     source = server.source_manager.create_source(
@@ -494,7 +492,7 @@ def test_get_archival_memory(server, user_id, agent_id):
     assert len(passages_2) in [3, 4]  # NOTE: exact size seems non-deterministic, so loosen test
     assert len(passages_3) in [4, 5]  # NOTE: exact size seems non-deterministic, so loosen test
 
-    latest   = passages_1[0]
+    latest = passages_1[0]
     earliest = passages_2[-1]
 
     # test archival memory
@@ -966,7 +964,6 @@ def test_load_file_to_source(server: SyncServer, user_id: str, agent_id: str, ot
     initial_passage_count = server.agent_manager.passage_size(agent_id=agent_id, actor=actor)
     assert initial_passage_count == 0
 
-
     # Create a source
     source = server.source_manager.create_source(
         PydanticSource(
@@ -1079,3 +1076,26 @@ def test_load_file_to_source(server: SyncServer, user_id: str, agent_id: str, ot
     assert len(passages2) == len(passages)
     assert any("chicken" in passage.text.lower() for passage in passages2)
     assert any("Anna".lower() in passage.text.lower() for passage in passages2)
+
+
+def test_add_tools_update_agent(server: SyncServer, user_id: str, base_tools):
+    """Test that the memory rebuild is generating the correct number of role=system messages"""
+    actor = server.user_manager.get_user_or_default(user_id)
+    # create agent
+    agent_state = server.create_agent(
+        request=CreateAgent(
+            name="memory_rebuild_test_agent",
+            tool_ids=[],
+            memory_blocks=[
+                CreateBlock(label="human", value="The human's name is Bob."),
+                CreateBlock(label="persona", value="My name is Alice."),
+            ],
+            llm_config=LLMConfig.default_config("gpt-4"),
+            embedding_config=EmbeddingConfig.default_config(provider="openai"),
+            include_base_tools=False,
+        ),
+        actor=actor,
+    )
+    assert len(agent_state.tools) == 0
+    agent_state = server.update_agent(agent_state.id, request=UpdateAgent(tool_ids=[b.id for b in base_tools]), actor=actor)
+    assert len(agent_state.tools) == len(base_tools)