diff --git a/.changeset/unwrap-anthropic-parameter.md b/.changeset/unwrap-anthropic-parameter.md
new file mode 100644
index 000000000..96560fdbb
--- /dev/null
+++ b/.changeset/unwrap-anthropic-parameter.md
@@ -0,0 +1,5 @@
+---
+"@browserbasehq/stagehand": patch
+---
+
+fix: unwrap Anthropic $PARAMETER_NAME wrapper in tool responses
diff --git a/packages/core/lib/v3/llm/AnthropicClient.ts b/packages/core/lib/v3/llm/AnthropicClient.ts
index 2ba202686..db2c3514e 100644
--- a/packages/core/lib/v3/llm/AnthropicClient.ts
+++ b/packages/core/lib/v3/llm/AnthropicClient.ts
@@ -17,6 +17,7 @@ import {
 } from "./LLMClient.js";
 import { CreateChatCompletionResponseError } from "../types/public/sdkErrors.js";
 import { toJsonSchema } from "../zodCompat.js";
+import { unwrapToolResponse } from "./unwrapToolResponse.js";
 
 export class AnthropicClient extends LLMClient {
   public type = "anthropic" as const;
@@ -247,7 +248,7 @@ export class AnthropicClient extends LLMClient {
     if (options.response_model) {
       const toolUse = response.content.find((c) => c.type === "tool_use");
       if (toolUse && "input" in toolUse) {
-        const result = toolUse.input;
+        const result = unwrapToolResponse(toolUse.input);
 
         const finalParsedResponse = {
           data: result,
diff --git a/packages/core/lib/v3/llm/aisdk.ts b/packages/core/lib/v3/llm/aisdk.ts
index dd2e097e2..0a55a181a 100644
--- a/packages/core/lib/v3/llm/aisdk.ts
+++ b/packages/core/lib/v3/llm/aisdk.ts
@@ -22,6 +22,7 @@ import {
   extractLlmPromptSummary,
 } from "../flowlogger/FlowLogger.js";
 import { toJsonSchema } from "../zodCompat.js";
+import { unwrapToolResponse } from "./unwrapToolResponse.js";
 
 type ProviderOptionValue = string | number | boolean | null;
 type ProviderOptionMap = Record<string, ProviderOptionValue>;
@@ -293,6 +294,43 @@ You must respond in JSON format. respond WITH JSON. Do not include any other tex
             },
           });
 
+          // Attempt to recover from $PARAMETER_NAME wrapper (common with Anthropic models)
+          if (err.text) {
+            try {
+              const parsed = JSON.parse(err.text);
+              const unwrapped = unwrapToolResponse(parsed);
+              if (unwrapped !== parsed) {
+                const validated = options.response_model.schema.parse(unwrapped);
+                this.logger?.({
+                  category: "aisdk",
+                  message: "recovered from $PARAMETER_NAME wrapper",
+                  level: 1,
+                });
+
+                FlowLogger.logLlmResponse({
+                  requestId: llmRequestId,
+                  model: this.model.modelId,
+                  output: JSON.stringify(validated),
+                  inputTokens: err.usage?.inputTokens,
+                  outputTokens: err.usage?.outputTokens,
+                });
+
+                return {
+                  data: validated,
+                  usage: {
+                    prompt_tokens: err.usage?.inputTokens ?? 0,
+                    completion_tokens: err.usage?.outputTokens ?? 0,
+                    reasoning_tokens: err.usage?.reasoningTokens ?? 0,
+                    cached_input_tokens: err.usage?.cachedInputTokens ?? 0,
+                    total_tokens: err.usage?.totalTokens ?? 0,
+                  },
+                } as T;
+              }
+            } catch {
+              // Recovery failed, throw original error
+            }
+          }
+
           throw err;
         }
         throw err;
diff --git a/packages/core/lib/v3/llm/unwrapToolResponse.ts b/packages/core/lib/v3/llm/unwrapToolResponse.ts
new file mode 100644
index 000000000..6541ecec4
--- /dev/null
+++ b/packages/core/lib/v3/llm/unwrapToolResponse.ts
@@ -0,0 +1,21 @@
+/**
+ * Unwrap Anthropic's $PARAMETER_NAME wrapper from tool responses.
+ *
+ * Some Anthropic models wrap tool_use output in a `{ $PARAMETER_NAME: { ... } }`
+ * envelope. This helper detects and strips that wrapper so downstream Zod
+ * validation sees the expected flat structure.
+ */
+export function unwrapToolResponse<T>(data: T): T {
+  if (
+    data !== null &&
+    typeof data === "object" &&
+    !Array.isArray(data) &&
+    Object.keys(data as Record<string, unknown>).length === 1
+  ) {
+    const key = Object.keys(data as Record<string, unknown>)[0];
+    if (key.startsWith("$")) {
+      return (data as Record<string, unknown>)[key] as T;
+    }
+  }
+  return data;
+}
diff --git a/packages/core/tests/unit/unwrapToolResponse.test.ts b/packages/core/tests/unit/unwrapToolResponse.test.ts
new file mode 100644
index 000000000..3ec7f1c74
--- /dev/null
+++ b/packages/core/tests/unit/unwrapToolResponse.test.ts
@@ -0,0 +1,59 @@
+import { describe, it, expect } from "vitest";
+import { unwrapToolResponse } from "../lib/v3/llm/unwrapToolResponse.js";
+
+describe("unwrapToolResponse", () => {
+  it("unwraps $PARAMETER_NAME wrapper", () => {
+    const wrapped = {
+      $PARAMETER_NAME: {
+        elementId: "11-811",
+        description: "Create Invoice link button",
+        method: "click",
+        arguments: [],
+        twoStep: false,
+      },
+    };
+    const result = unwrapToolResponse(wrapped);
+    expect(result).toEqual({
+      elementId: "11-811",
+      description: "Create Invoice link button",
+      method: "click",
+      arguments: [],
+      twoStep: false,
+    });
+  });
+
+  it("unwraps any $-prefixed single-key wrapper", () => {
+    const wrapped = { $result: { foo: "bar" } };
+    expect(unwrapToolResponse(wrapped)).toEqual({ foo: "bar" });
+  });
+
+  it("does not unwrap non-$ single-key objects", () => {
+    const data = { elementId: "123" };
+    expect(unwrapToolResponse(data)).toBe(data);
+  });
+
+  it("does not unwrap multi-key objects", () => {
+    const data = { $a: 1, $b: 2 };
+    expect(unwrapToolResponse(data)).toBe(data);
+  });
+
+  it("passes through arrays unchanged", () => {
+    const arr = [1, 2, 3];
+    expect(unwrapToolResponse(arr)).toBe(arr);
+  });
+
+  it("passes through null unchanged", () => {
+    expect(unwrapToolResponse(null)).toBe(null);
+  });
+
+  it("passes through primitives unchanged", () => {
+    expect(unwrapToolResponse("hello")).toBe("hello");
+    expect(unwrapToolResponse(42)).toBe(42);
+    expect(unwrapToolResponse(true)).toBe(true);
+  });
+
+  it("passes through empty objects unchanged", () => {
+    const data = {};
+    expect(unwrapToolResponse(data)).toBe(data);
+  });
+});