diff --git a/.env.example b/.env.example
index 56bd2a8..5484389 100644
--- a/.env.example
+++ b/.env.example
@@ -8,7 +8,7 @@ OPENAI_API_KEY=your_openai_api_key_here
 # Provider Settings
 DEFAULT_PROVIDER=claude
 CLAUDE_MODEL=claude-3-5-sonnet-20241022
-OPENAI_MODEL=gpt-4-turbo-preview
+OPENAI_MODEL=gpt-4o-mini
 
 # API Configuration
 MAX_TOKENS=4000
diff --git a/CLAUDE.md b/CLAUDE.md
index 04ec36b..e60c433 100644
--- a/CLAUDE.md
+++ b/CLAUDE.md
@@ -6,7 +6,7 @@ This file provides guidance to Claude Code (claude.ai/code) when working with co
 
 DevDen is a self-hosted AI chat platform that enables organizations to provide AI-powered Q&A based on their own knowledge bases. Users interact through a clean chat interface while administrators manage knowledge bases, AI providers, and user access through a terminal-style dashboard.
 
-**Current Status:** MVP with AI integration complete. Backend FastAPI server with Claude and OpenAI support. Frontend streams responses in real-time.
+**Current Status:** MVP with AI integration and Microsoft Entra ID authentication. Backend FastAPI server with Claude and OpenAI support. Frontend streams responses in real-time.
 
 ## Architecture
 
@@ -26,14 +26,16 @@ DevDen is a self-hosted AI chat platform that enables organizations to provide A
 ## Current Files
 
 **Frontend:**
-- `index.html` - Main chat interface structure with welcome screen
-- `script.js` - Chat interaction logic with SSE streaming
+- `index.html` - Main chat interface with login, welcome, and chat screens
+- `script.js` - Chat interaction logic with SSE streaming and auth handling
 - `style.css` - Catppuccin Mocha theme with pixel aesthetic
 
 **Backend:**
 - `backend/app/main.py` - FastAPI application entry point
-- `backend/app/config.py` - Environment configuration
-- `backend/app/api/chat.py` - Chat endpoints (POST /api/chat, POST /api/chat/stream)
+- `backend/app/config.py` - Environment configuration (AI providers, Entra ID, JWT)
+- `backend/app/api/chat.py` - Chat endpoints (POST /api/chat, POST /api/chat/stream) - protected
+- `backend/app/api/auth.py` - Auth endpoints (login, callback, me, logout, status)
+- `backend/app/middleware/auth.py` - JWT validation middleware
 - `backend/app/services/provider_manager.py` - Provider abstraction and fallback
 - `backend/app/services/provider_claude.py` - Claude implementation
 - `backend/app/services/provider_openai.py` - OpenAI implementation
@@ -77,12 +79,16 @@ docker compose down
 # Health check
 curl http://localhost:8000/health
 
+# Check auth status
+curl http://localhost:8000/api/auth/status
+
 # List available providers
 curl http://localhost:8000/api/chat/providers
 
-# Test chat (non-streaming)
+# Test chat (requires JWT token from auth flow)
 curl -X POST http://localhost:8000/api/chat \
   -H "Content-Type: application/json" \
+  -H "Authorization: Bearer YOUR_JWT_TOKEN" \
   -d '{"message": "Hello!"}'
 ```
 
diff --git a/README.md b/README.md
index 5a9b4fc..3385d3d 100644
--- a/README.md
+++ b/README.md
@@ -9,6 +9,7 @@
 ### Prerequisites
 - Docker and Docker Compose installed
 - API key from [Anthropic](https://console.anthropic.com/) or [OpenAI](https://platform.openai.com/api-keys)
+- Microsoft Entra ID app registration (for authentication)
 
 ### Setup
 
@@ -21,15 +22,22 @@ cd devden
 2. **Configure environment variables**
 ```bash
 cp .env.example .env
-# Edit .env and add your API keys
+# Edit .env and add your API keys and Entra ID credentials
 ```
 
-3. **Start the services**
+3. **Set up Microsoft Entra ID** (Azure AD)
+   - Go to [Azure Portal - App Registrations](https://portal.azure.com/#view/Microsoft_AAD_RegisteredApps)
+   - Create a new app registration
+   - Add redirect URI: `http://localhost:3000/auth/callback`
+   - Generate a client secret under "Certificates & secrets"
+   - Copy Tenant ID, Client ID, and Client Secret to your `.env` file
+
+4. **Start the services**
 ```bash
 docker compose up -d --build
 ```
 
-4. **Access DevDen**
+5. **Access DevDen**
 - Frontend: http://localhost:3000
 - Backend API: http://localhost:8000
 - Health Check: http://localhost:8000/health
@@ -37,10 +45,19 @@ docker compose up -d --build
 ### Environment Variables
 
 Required variables in `.env`:
-```
+```bash
+# AI Providers (at least one required)
 ANTHROPIC_API_KEY=your_key_here    # For Claude
 OPENAI_API_KEY=your_key_here       # For OpenAI
 DEFAULT_PROVIDER=claude            # claude or openai
+
+# Microsoft Entra ID (required for authentication)
+ENTRA_TENANT_ID=your-tenant-id
+ENTRA_CLIENT_ID=your-client-id
+ENTRA_CLIENT_SECRET=your-client-secret
+
+# JWT (change in production)
+JWT_SECRET=generate-a-secure-random-string
 ```
 
 ---