diff --git a/charts/nextcloud-mcp-server/dashboards/README.md b/charts/nextcloud-mcp-server/dashboards/README.md
new file mode 100644
index 0000000..ff6f6f1
--- /dev/null
+++ b/charts/nextcloud-mcp-server/dashboards/README.md
@@ -0,0 +1,90 @@
+# Grafana Dashboards
+
+This directory contains example Grafana dashboards for monitoring the Nextcloud MCP Server.
+
+## Dashboards
+
+### nextcloud-mcp-server.json
+
+Comprehensive dashboard with the following panels:
+
+- **Request Rate**: HTTP requests per second by method and endpoint
+- **Error Rate**: Percentage of 5xx errors
+- **Request Latency**: P50 and P95 latency by endpoint
+- **Top MCP Tools**: Most frequently called tools
+- **Nextcloud API Latency**: API call latency by app (notes, calendar, etc.)
+- **Vector Sync Queue**: Queue size for background document processing
+
+## Importing to Grafana
+
+### Manual Import
+
+1. Open Grafana UI
+2. Navigate to Dashboards → Import
+3. Upload `nextcloud-mcp-server.json`
+4. Select your Prometheus data source
+5. Click "Import"
+
+### Automated Import (Kubernetes)
+
+If using the Grafana Operator or kube-prometheus-stack, you can create a ConfigMap:
+
+```bash
+kubectl create configmap nextcloud-mcp-dashboards \
+  --from-file=nextcloud-mcp-server.json \
+  -n monitoring
+
+# Add label for Grafana sidecar to discover
+kubectl label configmap nextcloud-mcp-dashboards \
+  grafana_dashboard=1 \
+  -n monitoring
+```
+
+Or add to your Helm values:
+
+```yaml
+# values.yaml for kube-prometheus-stack
+grafana:
+  dashboardProviders:
+    dashboardproviders.yaml:
+      apiVersion: 1
+      providers:
+        - name: 'nextcloud-mcp'
+          orgId: 1
+          folder: 'Nextcloud MCP'
+          type: file
+          disableDeletion: false
+          editable: true
+          options:
+            path: /var/lib/grafana/dashboards/nextcloud-mcp
+
+  dashboardsConfigMaps:
+    nextcloud-mcp: nextcloud-mcp-dashboards
+```
+
+## Dashboard Variables
+
+The dashboard includes two variables:
+
+- **Data Source**: Select your Prometheus data source
+- **Namespace**: Filter metrics by Kubernetes namespace
+
+## Customization
+
+You can customize the dashboard by:
+
+1. Adjusting refresh rate (default: 30s)
+2. Modifying time range (default: last 6 hours)
+3. Adding new panels for specific metrics
+4. Adjusting thresholds in existing panels
+
+## Metrics Reference
+
+All metrics are documented in `/docs/observability.md`. Key metric prefixes:
+
+- `mcp_http_*` - HTTP server metrics
+- `mcp_tool_*` - MCP tool invocation metrics
+- `mcp_nextcloud_api_*` - Nextcloud API call metrics
+- `mcp_oauth_*` - OAuth token validation metrics
+- `mcp_vector_sync_*` - Vector database sync metrics
+- `mcp_db_*` - Database operation metrics
diff --git a/charts/nextcloud-mcp-server/dashboards/nextcloud-mcp-server.json b/charts/nextcloud-mcp-server/dashboards/nextcloud-mcp-server.json
new file mode 100644
index 0000000..3a5e33c
--- /dev/null
+++ b/charts/nextcloud-mcp-server/dashboards/nextcloud-mcp-server.json
@@ -0,0 +1,630 @@
+{
+  "annotations": {
+    "list": [
+      {
+        "builtIn": 1,
+        "datasource": {
+          "type": "grafana",
+          "uid": "-- Grafana --"
+        },
+        "enable": true,
+        "hide": true,
+        "iconColor": "rgba(0, 211, 255, 1)",
+        "name": "Annotations & Alerts",
+        "type": "dashboard"
+      }
+    ]
+  },
+  "editable": true,
+  "fiscalYearStartMonth": 0,
+  "graphTooltip": 0,
+  "id": null,
+  "links": [],
+  "liveNow": false,
+  "panels": [
+    {
+      "datasource": {
+        "type": "prometheus",
+        "uid": "${datasource}"
+      },
+      "fieldConfig": {
+        "defaults": {
+          "color": {
+            "mode": "palette-classic"
+          },
+          "custom": {
+            "axisCenteredZero": false,
+            "axisColorMode": "text",
+            "axisLabel": "",
+            "axisPlacement": "auto",
+            "barAlignment": 0,
+            "drawStyle": "line",
+            "fillOpacity": 10,
+            "gradientMode": "none",
+            "hideFrom": {
+              "tooltip": false,
+              "viz": false,
+              "legend": false
+            },
+            "lineInterpolation": "linear",
+            "lineWidth": 1,
+            "pointSize": 5,
+            "scaleDistribution": {
+              "type": "linear"
+            },
+            "showPoints": "never",
+            "spanNulls": false,
+            "stacking": {
+              "group": "A",
+              "mode": "none"
+            },
+            "thresholdsStyle": {
+              "mode": "off"
+            }
+          },
+          "mappings": [],
+          "thresholds": {
+            "mode": "absolute",
+            "steps": [
+              {
+                "color": "green",
+                "value": null
+              }
+            ]
+          },
+          "unit": "reqps"
+        },
+        "overrides": []
+      },
+      "gridPos": {
+        "h": 8,
+        "w": 12,
+        "x": 0,
+        "y": 0
+      },
+      "id": 1,
+      "options": {
+        "legend": {
+          "calcs": ["mean", "max"],
+          "displayMode": "table",
+          "placement": "bottom",
+          "showLegend": true
+        },
+        "tooltip": {
+          "mode": "multi",
+          "sort": "none"
+        }
+      },
+      "targets": [
+        {
+          "datasource": {
+            "type": "prometheus",
+            "uid": "${datasource}"
+          },
+          "expr": "sum(rate(mcp_http_requests_total{namespace=\"$namespace\"}[5m])) by (method, endpoint)",
+          "legendFormat": "{{method}} {{endpoint}}",
+          "refId": "A"
+        }
+      ],
+      "title": "Request Rate",
+      "type": "timeseries"
+    },
+    {
+      "datasource": {
+        "type": "prometheus",
+        "uid": "${datasource}"
+      },
+      "fieldConfig": {
+        "defaults": {
+          "color": {
+            "mode": "thresholds"
+          },
+          "custom": {
+            "axisCenteredZero": false,
+            "axisColorMode": "text",
+            "axisLabel": "",
+            "axisPlacement": "auto",
+            "barAlignment": 0,
+            "drawStyle": "line",
+            "fillOpacity": 10,
+            "gradientMode": "none",
+            "hideFrom": {
+              "tooltip": false,
+              "viz": false,
+              "legend": false
+            },
+            "lineInterpolation": "linear",
+            "lineWidth": 1,
+            "pointSize": 5,
+            "scaleDistribution": {
+              "type": "linear"
+            },
+            "showPoints": "never",
+            "spanNulls": false,
+            "stacking": {
+              "group": "A",
+              "mode": "none"
+            },
+            "thresholdsStyle": {
+              "mode": "line"
+            }
+          },
+          "mappings": [],
+          "max": 100,
+          "min": 0,
+          "thresholds": {
+            "mode": "absolute",
+            "steps": [
+              {
+                "color": "green",
+                "value": null
+              },
+              {
+                "color": "yellow",
+                "value": 1
+              },
+              {
+                "color": "red",
+                "value": 5
+              }
+            ]
+          },
+          "unit": "percent"
+        },
+        "overrides": []
+      },
+      "gridPos": {
+        "h": 8,
+        "w": 12,
+        "x": 12,
+        "y": 0
+      },
+      "id": 2,
+      "options": {
+        "legend": {
+          "calcs": ["mean", "max"],
+          "displayMode": "table",
+          "placement": "bottom",
+          "showLegend": true
+        },
+        "tooltip": {
+          "mode": "multi",
+          "sort": "none"
+        }
+      },
+      "targets": [
+        {
+          "datasource": {
+            "type": "prometheus",
+            "uid": "${datasource}"
+          },
+          "expr": "sum(rate(mcp_http_requests_total{status_code=~\"5..\", namespace=\"$namespace\"}[5m])) / sum(rate(mcp_http_requests_total{namespace=\"$namespace\"}[5m])) * 100",
+          "legendFormat": "Error Rate",
+          "refId": "A"
+        }
+      ],
+      "title": "Error Rate (%)",
+      "type": "timeseries"
+    },
+    {
+      "datasource": {
+        "type": "prometheus",
+        "uid": "${datasource}"
+      },
+      "fieldConfig": {
+        "defaults": {
+          "color": {
+            "mode": "palette-classic"
+          },
+          "custom": {
+            "axisCenteredZero": false,
+            "axisColorMode": "text",
+            "axisLabel": "",
+            "axisPlacement": "auto",
+            "barAlignment": 0,
+            "drawStyle": "line",
+            "fillOpacity": 10,
+            "gradientMode": "none",
+            "hideFrom": {
+              "tooltip": false,
+              "viz": false,
+              "legend": false
+            },
+            "lineInterpolation": "linear",
+            "lineWidth": 1,
+            "pointSize": 5,
+            "scaleDistribution": {
+              "type": "linear"
+            },
+            "showPoints": "never",
+            "spanNulls": false,
+            "stacking": {
+              "group": "A",
+              "mode": "none"
+            },
+            "thresholdsStyle": {
+              "mode": "off"
+            }
+          },
+          "mappings": [],
+          "thresholds": {
+            "mode": "absolute",
+            "steps": [
+              {
+                "color": "green",
+                "value": null
+              }
+            ]
+          },
+          "unit": "s"
+        },
+        "overrides": []
+      },
+      "gridPos": {
+        "h": 8,
+        "w": 12,
+        "x": 0,
+        "y": 8
+      },
+      "id": 3,
+      "options": {
+        "legend": {
+          "calcs": ["mean", "max"],
+          "displayMode": "table",
+          "placement": "bottom",
+          "showLegend": true
+        },
+        "tooltip": {
+          "mode": "multi",
+          "sort": "none"
+        }
+      },
+      "targets": [
+        {
+          "datasource": {
+            "type": "prometheus",
+            "uid": "${datasource}"
+          },
+          "expr": "histogram_quantile(0.95, sum(rate(mcp_http_request_duration_seconds_bucket{namespace=\"$namespace\"}[5m])) by (le, endpoint))",
+          "legendFormat": "{{endpoint}} (p95)",
+          "refId": "A"
+        },
+        {
+          "datasource": {
+            "type": "prometheus",
+            "uid": "${datasource}"
+          },
+          "expr": "histogram_quantile(0.50, sum(rate(mcp_http_request_duration_seconds_bucket{namespace=\"$namespace\"}[5m])) by (le, endpoint))",
+          "legendFormat": "{{endpoint}} (p50)",
+          "refId": "B"
+        }
+      ],
+      "title": "Request Latency (P50/P95)",
+      "type": "timeseries"
+    },
+    {
+      "datasource": {
+        "type": "prometheus",
+        "uid": "${datasource}"
+      },
+      "fieldConfig": {
+        "defaults": {
+          "color": {
+            "mode": "palette-classic"
+          },
+          "custom": {
+            "axisCenteredZero": false,
+            "axisColorMode": "text",
+            "axisLabel": "",
+            "axisPlacement": "auto",
+            "barAlignment": 0,
+            "drawStyle": "line",
+            "fillOpacity": 10,
+            "gradientMode": "none",
+            "hideFrom": {
+              "tooltip": false,
+              "viz": false,
+              "legend": false
+            },
+            "lineInterpolation": "linear",
+            "lineWidth": 1,
+            "pointSize": 5,
+            "scaleDistribution": {
+              "type": "linear"
+            },
+            "showPoints": "never",
+            "spanNulls": false,
+            "stacking": {
+              "group": "A",
+              "mode": "none"
+            },
+            "thresholdsStyle": {
+              "mode": "off"
+            }
+          },
+          "mappings": [],
+          "thresholds": {
+            "mode": "absolute",
+            "steps": [
+              {
+                "color": "green",
+                "value": null
+              }
+            ]
+          },
+          "unit": "short"
+        },
+        "overrides": []
+      },
+      "gridPos": {
+        "h": 8,
+        "w": 12,
+        "x": 12,
+        "y": 8
+      },
+      "id": 4,
+      "options": {
+        "legend": {
+          "calcs": ["mean", "max"],
+          "displayMode": "table",
+          "placement": "bottom",
+          "showLegend": true
+        },
+        "tooltip": {
+          "mode": "multi",
+          "sort": "none"
+        }
+      },
+      "targets": [
+        {
+          "datasource": {
+            "type": "prometheus",
+            "uid": "${datasource}"
+          },
+          "expr": "topk(10, sum(rate(mcp_tool_calls_total{namespace=\"$namespace\"}[5m])) by (tool_name))",
+          "legendFormat": "{{tool_name}}",
+          "refId": "A"
+        }
+      ],
+      "title": "Top MCP Tools by Volume",
+      "type": "timeseries"
+    },
+    {
+      "datasource": {
+        "type": "prometheus",
+        "uid": "${datasource}"
+      },
+      "fieldConfig": {
+        "defaults": {
+          "color": {
+            "mode": "palette-classic"
+          },
+          "custom": {
+            "axisCenteredZero": false,
+            "axisColorMode": "text",
+            "axisLabel": "",
+            "axisPlacement": "auto",
+            "barAlignment": 0,
+            "drawStyle": "line",
+            "fillOpacity": 10,
+            "gradientMode": "none",
+            "hideFrom": {
+              "tooltip": false,
+              "viz": false,
+              "legend": false
+            },
+            "lineInterpolation": "linear",
+            "lineWidth": 1,
+            "pointSize": 5,
+            "scaleDistribution": {
+              "type": "linear"
+            },
+            "showPoints": "never",
+            "spanNulls": false,
+            "stacking": {
+              "group": "A",
+              "mode": "none"
+            },
+            "thresholdsStyle": {
+              "mode": "off"
+            }
+          },
+          "mappings": [],
+          "thresholds": {
+            "mode": "absolute",
+            "steps": [
+              {
+                "color": "green",
+                "value": null
+              }
+            ]
+          },
+          "unit": "s"
+        },
+        "overrides": []
+      },
+      "gridPos": {
+        "h": 8,
+        "w": 12,
+        "x": 0,
+        "y": 16
+      },
+      "id": 5,
+      "options": {
+        "legend": {
+          "calcs": ["mean", "max"],
+          "displayMode": "table",
+          "placement": "bottom",
+          "showLegend": true
+        },
+        "tooltip": {
+          "mode": "multi",
+          "sort": "none"
+        }
+      },
+      "targets": [
+        {
+          "datasource": {
+            "type": "prometheus",
+            "uid": "${datasource}"
+          },
+          "expr": "histogram_quantile(0.95, sum(rate(mcp_nextcloud_api_duration_seconds_bucket{namespace=\"$namespace\"}[5m])) by (le, app))",
+          "legendFormat": "{{app}} (p95)",
+          "refId": "A"
+        }
+      ],
+      "title": "Nextcloud API Latency by App",
+      "type": "timeseries"
+    },
+    {
+      "datasource": {
+        "type": "prometheus",
+        "uid": "${datasource}"
+      },
+      "fieldConfig": {
+        "defaults": {
+          "color": {
+            "mode": "palette-classic"
+          },
+          "custom": {
+            "axisCenteredZero": false,
+            "axisColorMode": "text",
+            "axisLabel": "",
+            "axisPlacement": "auto",
+            "barAlignment": 0,
+            "drawStyle": "line",
+            "fillOpacity": 10,
+            "gradientMode": "none",
+            "hideFrom": {
+              "tooltip": false,
+              "viz": false,
+              "legend": false
+            },
+            "lineInterpolation": "linear",
+            "lineWidth": 1,
+            "pointSize": 5,
+            "scaleDistribution": {
+              "type": "linear"
+            },
+            "showPoints": "never",
+            "spanNulls": false,
+            "stacking": {
+              "group": "A",
+              "mode": "none"
+            },
+            "thresholdsStyle": {
+              "mode": "off"
+            }
+          },
+          "mappings": [],
+          "thresholds": {
+            "mode": "absolute",
+            "steps": [
+              {
+                "color": "green",
+                "value": null
+              }
+            ]
+          },
+          "unit": "short"
+        },
+        "overrides": []
+      },
+      "gridPos": {
+        "h": 8,
+        "w": 12,
+        "x": 12,
+        "y": 16
+      },
+      "id": 6,
+      "options": {
+        "legend": {
+          "calcs": ["mean", "lastNotNull"],
+          "displayMode": "table",
+          "placement": "bottom",
+          "showLegend": true
+        },
+        "tooltip": {
+          "mode": "multi",
+          "sort": "none"
+        }
+      },
+      "targets": [
+        {
+          "datasource": {
+            "type": "prometheus",
+            "uid": "${datasource}"
+          },
+          "expr": "mcp_vector_sync_queue_size{namespace=\"$namespace\"}",
+          "legendFormat": "Queue Size",
+          "refId": "A"
+        }
+      ],
+      "title": "Vector Sync Queue Size",
+      "type": "timeseries"
+    }
+  ],
+  "refresh": "30s",
+  "schemaVersion": 38,
+  "style": "dark",
+  "tags": ["nextcloud", "mcp", "observability"],
+  "templating": {
+    "list": [
+      {
+        "current": {
+          "selected": false,
+          "text": "Prometheus",
+          "value": "Prometheus"
+        },
+        "hide": 0,
+        "includeAll": false,
+        "label": "Data Source",
+        "multi": false,
+        "name": "datasource",
+        "options": [],
+        "query": "prometheus",
+        "refresh": 1,
+        "regex": "",
+        "skipUrlSync": false,
+        "type": "datasource"
+      },
+      {
+        "current": {
+          "selected": false,
+          "text": "default",
+          "value": "default"
+        },
+        "datasource": {
+          "type": "prometheus",
+          "uid": "${datasource}"
+        },
+        "definition": "label_values(mcp_http_requests_total, namespace)",
+        "hide": 0,
+        "includeAll": false,
+        "label": "Namespace",
+        "multi": false,
+        "name": "namespace",
+        "options": [],
+        "query": {
+          "query": "label_values(mcp_http_requests_total, namespace)",
+          "refId": "PrometheusVariableQueryEditor-VariableQuery"
+        },
+        "refresh": 1,
+        "regex": "",
+        "skipUrlSync": false,
+        "sort": 0,
+        "type": "query"
+      }
+    ]
+  },
+  "time": {
+    "from": "now-6h",
+    "to": "now"
+  },
+  "timepicker": {},
+  "timezone": "",
+  "title": "Nextcloud MCP Server",
+  "uid": "nextcloud-mcp-server",
+  "version": 1,
+  "weekStart": ""
+}
diff --git a/charts/nextcloud-mcp-server/templates/deployment.yaml b/charts/nextcloud-mcp-server/templates/deployment.yaml
index 08c14fc..bf969ae 100644
--- a/charts/nextcloud-mcp-server/templates/deployment.yaml
+++ b/charts/nextcloud-mcp-server/templates/deployment.yaml
@@ -56,6 +56,11 @@ spec:
             - name: http
               containerPort: {{ include "nextcloud-mcp-server.port" . }}
               protocol: TCP
+            {{- if .Values.observability.metrics.enabled }}
+            - name: metrics
+              containerPort: {{ .Values.observability.metrics.port }}
+              protocol: TCP
+            {{- end }}
           env:
             # Nextcloud connection
             - name: NEXTCLOUD_HOST
@@ -200,6 +205,27 @@ spec:
               value: {{ .Values.openai.baseUrl | quote }}
             {{- end }}
             {{- end }}
+            # Observability
+            - name: METRICS_ENABLED
+              value: {{ .Values.observability.metrics.enabled | quote }}
+            - name: METRICS_PORT
+              value: {{ .Values.observability.metrics.port | quote }}
+            {{- if .Values.observability.tracing.enabled }}
+            - name: OTEL_ENABLED
+              value: "true"
+            - name: OTEL_EXPORTER_OTLP_ENDPOINT
+              value: {{ .Values.observability.tracing.endpoint | quote }}
+            - name: OTEL_SERVICE_NAME
+              value: {{ .Values.observability.tracing.serviceName | quote }}
+            - name: OTEL_TRACES_SAMPLER_ARG
+              value: {{ .Values.observability.tracing.samplingRate | quote }}
+            {{- end }}
+            - name: LOG_FORMAT
+              value: {{ .Values.observability.logging.format | quote }}
+            - name: LOG_LEVEL
+              value: {{ .Values.observability.logging.level | quote }}
+            - name: LOG_INCLUDE_TRACE_CONTEXT
+              value: {{ .Values.observability.logging.includeTraceContext | quote }}
             {{- with .Values.extraEnv }}
             {{- toYaml . | nindent 12 }}
             {{- end }}
diff --git a/charts/nextcloud-mcp-server/templates/prometheusrule.yaml b/charts/nextcloud-mcp-server/templates/prometheusrule.yaml
new file mode 100644
index 0000000..204d127
--- /dev/null
+++ b/charts/nextcloud-mcp-server/templates/prometheusrule.yaml
@@ -0,0 +1,92 @@
+{{- if and .Values.observability.metrics.enabled .Values.prometheusRule.enabled }}
+apiVersion: monitoring.coreos.com/v1
+kind: PrometheusRule
+metadata:
+  name: {{ include "nextcloud-mcp-server.fullname" . }}
+  namespace: {{ .Release.Namespace }}
+  labels:
+    {{- include "nextcloud-mcp-server.labels" . | nindent 4 }}
+    {{- with .Values.prometheusRule.labels }}
+    {{- toYaml . | nindent 4 }}
+    {{- end }}
+spec:
+  groups:
+    - name: nextcloud-mcp-server.critical
+      interval: 30s
+      rules:
+        - alert: NextcloudMCPServerDown
+          expr: up{job="{{ include "nextcloud-mcp-server.fullname" . }}"} == 0
+          for: 5m
+          labels:
+            severity: critical
+          annotations:
+            summary: "Nextcloud MCP Server is down"
+            description: "{{ `{{` }} $labels.pod {{ `}}` }} has been down for more than 5 minutes."
+
+        - alert: NextcloudMCPHighErrorRate
+          expr: |
+            sum(rate(mcp_http_requests_total{status_code=~"5..", job="{{ include "nextcloud-mcp-server.fullname" . }}"}[5m]))
+            / sum(rate(mcp_http_requests_total{job="{{ include "nextcloud-mcp-server.fullname" . }}"}[5m])) > 0.05
+          for: 5m
+          labels:
+            severity: critical
+          annotations:
+            summary: "High error rate on Nextcloud MCP Server"
+            description: "Error rate is {{ `{{` }} printf \"%.2f%%\" (mul $value 100) {{ `}}` }} (threshold: 5%)"
+
+        - alert: NextcloudMCPHighLatency
+          expr: |
+            histogram_quantile(0.95,
+              sum(rate(mcp_http_request_duration_seconds_bucket{job="{{ include "nextcloud-mcp-server.fullname" . }}"}[5m])) by (le, endpoint)
+            ) > 1
+          for: 5m
+          labels:
+            severity: critical
+          annotations:
+            summary: "High latency on Nextcloud MCP Server"
+            description: "P95 latency is {{ `{{` }} printf \"%.2fs\" $value {{ `}}` }} on {{ `{{` }} $labels.endpoint {{ `}}` }} (threshold: 1s)"
+
+        - alert: NextcloudMCPDependencyDown
+          expr: mcp_dependency_health{job="{{ include "nextcloud-mcp-server.fullname" . }}"} == 0
+          for: 2m
+          labels:
+            severity: critical
+          annotations:
+            summary: "Nextcloud MCP dependency is down"
+            description: "Dependency {{ `{{` }} $labels.dependency {{ `}}` }} has been down for more than 2 minutes."
+
+    - name: nextcloud-mcp-server.warning
+      interval: 30s
+      rules:
+        - alert: NextcloudMCPTokenValidationErrors
+          expr: |
+            sum(rate(mcp_oauth_token_validations_total{result="error", job="{{ include "nextcloud-mcp-server.fullname" . }}"}[10m]))
+            / sum(rate(mcp_oauth_token_validations_total{job="{{ include "nextcloud-mcp-server.fullname" . }}"}[10m])) > 0.01
+          for: 10m
+          labels:
+            severity: warning
+          annotations:
+            summary: "High token validation error rate"
+            description: "Token validation error rate is {{ `{{` }} printf \"%.2f%%\" (mul $value 100) {{ `}}` }} (threshold: 1%)"
+
+        - alert: NextcloudMCPVectorSyncQueueHigh
+          expr: mcp_vector_sync_queue_size{job="{{ include "nextcloud-mcp-server.fullname" . }}"} > 100
+          for: 15m
+          labels:
+            severity: warning
+          annotations:
+            summary: "Vector sync queue is high"
+            description: "Vector sync queue size is {{ `{{` }} $value {{ `}}` }} (threshold: 100)"
+
+        - alert: NextcloudMCPQdrantSlowQueries
+          expr: |
+            histogram_quantile(0.95,
+              sum(rate(mcp_db_operation_duration_seconds_bucket{db="qdrant", job="{{ include "nextcloud-mcp-server.fullname" . }}"}[10m])) by (le)
+            ) > 0.5
+          for: 10m
+          labels:
+            severity: warning
+          annotations:
+            summary: "Qdrant queries are slow"
+            description: "P95 Qdrant query latency is {{ `{{` }} printf \"%.2fs\" $value {{ `}}` }} (threshold: 0.5s)"
+{{- end }}
diff --git a/charts/nextcloud-mcp-server/templates/service.yaml b/charts/nextcloud-mcp-server/templates/service.yaml
index 2f477ba..af245e0 100644
--- a/charts/nextcloud-mcp-server/templates/service.yaml
+++ b/charts/nextcloud-mcp-server/templates/service.yaml
@@ -15,5 +15,11 @@ spec:
       targetPort: http
       protocol: TCP
       name: http
+    {{- if .Values.observability.metrics.enabled }}
+    - port: {{ .Values.observability.metrics.port }}
+      targetPort: metrics
+      protocol: TCP
+      name: metrics
+    {{- end }}
   selector:
     {{- include "nextcloud-mcp-server.selectorLabels" . | nindent 4 }}
diff --git a/charts/nextcloud-mcp-server/templates/servicemonitor.yaml b/charts/nextcloud-mcp-server/templates/servicemonitor.yaml
new file mode 100644
index 0000000..13bd34c
--- /dev/null
+++ b/charts/nextcloud-mcp-server/templates/servicemonitor.yaml
@@ -0,0 +1,32 @@
+{{- if and .Values.observability.metrics.enabled .Values.serviceMonitor.enabled }}
+apiVersion: monitoring.coreos.com/v1
+kind: ServiceMonitor
+metadata:
+  name: {{ include "nextcloud-mcp-server.fullname" . }}
+  namespace: {{ .Release.Namespace }}
+  labels:
+    {{- include "nextcloud-mcp-server.labels" . | nindent 4 }}
+    {{- with .Values.serviceMonitor.labels }}
+    {{- toYaml . | nindent 4 }}
+    {{- end }}
+spec:
+  selector:
+    matchLabels:
+      {{- include "nextcloud-mcp-server.selectorLabels" . | nindent 6 }}
+  endpoints:
+    - port: metrics
+      path: {{ .Values.observability.metrics.path }}
+      interval: {{ .Values.serviceMonitor.interval }}
+      scrapeTimeout: {{ .Values.serviceMonitor.scrapeTimeout }}
+      scheme: http
+      relabelings:
+        # Add namespace label
+        - sourceLabels: [__meta_kubernetes_namespace]
+          targetLabel: namespace
+        # Add pod label
+        - sourceLabels: [__meta_kubernetes_pod_name]
+          targetLabel: pod
+        # Add service label
+        - sourceLabels: [__meta_kubernetes_service_name]
+          targetLabel: service
+{{- end }}
diff --git a/charts/nextcloud-mcp-server/values.yaml b/charts/nextcloud-mcp-server/values.yaml
index 06a96df..e6fdcf7 100644
--- a/charts/nextcloud-mcp-server/values.yaml
+++ b/charts/nextcloud-mcp-server/values.yaml
@@ -168,6 +168,43 @@ securityContext:
   runAsNonRoot: true
   runAsUser: 1000
 
+# Observability Configuration
+observability:
+  # Prometheus metrics
+  metrics:
+    enabled: true
+    port: 9090
+    path: /metrics
+
+  # OpenTelemetry tracing
+  tracing:
+    enabled: false
+    endpoint: ""  # e.g., "http://opentelemetry-collector:4317"
+    serviceName: "nextcloud-mcp-server"
+    samplingRate: 1.0
+
+  # Logging configuration
+  logging:
+    format: json  # "json" or "text"
+    level: INFO
+    includeTraceContext: true
+
+# Prometheus ServiceMonitor (requires Prometheus Operator)
+serviceMonitor:
+  enabled: false
+  interval: 30s
+  scrapeTimeout: 10s
+  labels: {}
+  # Additional labels for ServiceMonitor (e.g., for Prometheus selector)
+  # Example: { prometheus: kube-prometheus }
+
+# Prometheus alert rules (requires Prometheus Operator)
+prometheusRule:
+  enabled: false
+  labels: {}
+  # Additional labels for PrometheusRule (e.g., for Prometheus selector)
+  # Example: { prometheus: kube-prometheus }
+
 service:
   type: ClusterIP
   port: 8000
diff --git a/nextcloud_mcp_server/app.py b/nextcloud_mcp_server/app.py
index ecb4f79..113dff1 100644
--- a/nextcloud_mcp_server/app.py
+++ b/nextcloud_mcp_server/app.py
@@ -1172,13 +1172,15 @@ def get_app(transport: str = "sse", enabled_apps: list[str] | None = None):
                 checks["auth_configured"] = "error: credentials not set"
                 is_ready = False
 
-        # Check Qdrant status if vector sync is enabled
+        # Check Qdrant status if using network mode (external Qdrant service)
+        # In-memory and persistent modes use embedded Qdrant, no external service to check
         vector_sync_enabled = (
             os.getenv("VECTOR_SYNC_ENABLED", "false").lower() == "true"
         )
-        if vector_sync_enabled:
+        qdrant_url = os.getenv("QDRANT_URL")  # Only set in network mode
+
+        if vector_sync_enabled and qdrant_url:
             try:
-                qdrant_url = os.getenv("QDRANT_URL", "http://qdrant:6333")
                 async with httpx.AsyncClient(timeout=2.0) as client:
                     response = await client.get(f"{qdrant_url}/readyz")
                     if response.status_code == 200:
@@ -1189,6 +1191,9 @@ def get_app(transport: str = "sse", enabled_apps: list[str] | None = None):
             except Exception as e:
                 checks["qdrant"] = f"error: {str(e)}"
                 is_ready = False
+        elif vector_sync_enabled:
+            # Using embedded Qdrant (memory or persistent mode)
+            checks["qdrant"] = "embedded"
 
         status_code = 200 if is_ready else 503
         return JSONResponse(