diff --git a/pkg/handlers/response.go b/pkg/handlers/response.go
index 7d2d7cc0..7d73f52b 100644
--- a/pkg/handlers/response.go
+++ b/pkg/handlers/response.go
@@ -17,10 +17,12 @@ limitations under the License.
 package handlers
 
 import (
+	"bytes"
 	"context"
 	"encoding/json"
 	"fmt"
 	"strconv"
+	"strings"
 	"time"
 
 	eppb "github.com/envoyproxy/go-control-plane/envoy/service/ext_proc/v3"
@@ -44,9 +46,9 @@ func (s *Server) HandleResponseHeaders(ctx context.Context, reqCtx *RequestConte
 
 	if !headers.GetEndOfStream() {
 		log.FromContext(ctx).V(logutil.VERBOSE).Info("captured response headers, deferring response until body arrives...")
-		return nil
 	}
-	// EndOfStream means no body is expected, return HeadersResponse immediately
+	// Always respond to response headers so Envoy proceeds with body chunks.
+	// In STREAMED/FULL_DUPLEX_STREAMED mode, Envoy blocks until we respond.
 	return []*eppb.ProcessingResponse{
 		{
 			Response: &eppb.ProcessingResponse_ResponseHeaders{
@@ -63,9 +65,22 @@ func (s *Server) HandleResponseBody(ctx context.Context, reqCtx *RequestContext,
 		return s.generateEmptyResponseBodyResponse(responseBodyBytes), nil
 	}
 
-	if err := json.Unmarshal(responseBodyBytes, &reqCtx.Response.Body); err != nil {
-		logger.Error(err, "Failed to parse response body as JSON, skipping response plugins")
-		return s.generateEmptyResponseBodyResponse(responseBodyBytes), nil
+	contentType := reqCtx.Response.Headers["content-type"]
+	isSSE := strings.Contains(contentType, "text/event-stream")
+
+	if isSSE {
+		sseBody, err := parseSSEResponseBody(responseBodyBytes)
+		if err != nil || sseBody == nil {
+			logger.Error(err, "failed to parse SSE response body, skipping response plugins")
+			return s.generateEmptyResponseBodyResponse(responseBodyBytes), nil
+		}
+		reqCtx.Response.Body = sseBody
+		logger.V(logutil.VERBOSE).Info("parsed SSE response body for response plugins")
+	} else {
+		if err := json.Unmarshal(responseBodyBytes, &reqCtx.Response.Body); err != nil {
+			logger.Error(err, "failed to parse response body as JSON, skipping response plugins")
+			return s.generateEmptyResponseBodyResponse(responseBodyBytes), nil
+		}
 	}
 
 	if err := s.runResponsePlugins(ctx, reqCtx.CycleState, reqCtx.Response); err != nil {
@@ -130,6 +145,62 @@ func (s *Server) HandleResponseTrailers(trailers *eppb.HttpTrailers) ([]*eppb.Pr
 	}, nil
 }
 
+// parseSSEResponseBody extracts a composite response body from an SSE (Server-Sent Events)
+// stream. It scans all "data:" lines for JSON objects and merges usage/model fields into
+// a single map that response plugins can process. This enables usage-tracking and metering
+// plugins to work with streaming responses from providers like Anthropic and OpenAI.
+func parseSSEResponseBody(body []byte) (map[string]any, error) {
+	result := map[string]any{}
+	lines := bytes.Split(body, []byte("\n"))
+
+	for _, line := range lines {
+		line = bytes.TrimSpace(line)
+		if !bytes.HasPrefix(line, []byte("data:")) {
+			continue
+		}
+		data := bytes.TrimSpace(line[5:])
+		if len(data) == 0 || bytes.Equal(data, []byte("[DONE]")) {
+			continue
+		}
+
+		var event map[string]any
+		if err := json.Unmarshal(data, &event); err != nil {
+			continue
+		}
+
+		if model, ok := event["model"].(string); ok && model != "" {
+			result["model"] = model
+		}
+
+		// Check for usage at top level (Anthropic) or nested in response (OpenAI Responses API)
+		usage, _ := event["usage"].(map[string]any)
+		if usage == nil {
+			if resp, ok := event["response"].(map[string]any); ok {
+				usage, _ = resp["usage"].(map[string]any)
+				if m, ok := resp["model"].(string); ok && m != "" {
+					result["model"] = m
+				}
+			}
+		}
+		if usage != nil {
+			existing, _ := result["usage"].(map[string]any)
+			if existing == nil {
+				existing = map[string]any{}
+			}
+			for k, v := range usage {
+				existing[k] = v
+			}
+			result["usage"] = existing
+		}
+	}
+
+	if len(result) == 0 {
+		return nil, fmt.Errorf("no parseable SSE data events found")
+	}
+
+	return result, nil
+}
+
 // runResponsePlugins executes response plugins in the order they were registered.
 func (s *Server) runResponsePlugins(ctx context.Context, cycleState *plugin.CycleState, response *requesthandling.InferenceResponse) error {
 	logger := log.FromContext(ctx).V(logutil.DEFAULT)
diff --git a/pkg/handlers/server.go b/pkg/handlers/server.go
index 68a37656..77d1aa69 100644
--- a/pkg/handlers/server.go
+++ b/pkg/handlers/server.go
@@ -141,6 +141,16 @@ func (s *Server) Process(srv extProcPb.ExternalProcessor_ProcessServer) error {
 			loggerVerbose.Info("Incoming response body chunk", "EoS", v.ResponseBody.EndOfStream)
 			responseBody = append(responseBody, v.ResponseBody.Body...)
 			if !v.ResponseBody.EndOfStream {
+				// Send an immediate response for this chunk so Envoy continues
+				// streaming. Without this, Envoy blocks waiting for our response
+				// and stops forwarding subsequent chunks.
+				if sendErr := srv.Send(&extProcPb.ProcessingResponse{
+					Response: &extProcPb.ProcessingResponse_ResponseBody{
+						ResponseBody: &extProcPb.BodyResponse{},
+					},
+				}); sendErr != nil {
+					return status.Errorf(codes.Unknown, "failed to send streaming response ack: %v", sendErr)
+				}
 				continue
 			}
 			responses, err = s.HandleResponseBody(ctx, reqCtx, responseBody)
diff --git a/pkg/handlers/server_test.go b/pkg/handlers/server_test.go
index 406195ad..bd044036 100644
--- a/pkg/handlers/server_test.go
+++ b/pkg/handlers/server_test.go
@@ -167,7 +167,7 @@ func TestHandleResponseBody_Streaming(t *testing.T) {
 			respHeaders := utils.BuildEnvoyGRPCHeaders(map[string]string{
 				"x-test":       "body",
 				":method":      "POST",
-				"content-type": "text/event-stream",
+				"content-type": "application/json",
 			}, true)
 			request := &extProcPb.ProcessingRequest{
 				Request: &extProcPb.ProcessingRequest_ResponseHeaders{
@@ -178,6 +178,12 @@ func TestHandleResponseBody_Streaming(t *testing.T) {
 				t.Fatalf("send response headers: %v", err)
 			}
 
+			// Receive the response header ack before sending body chunks.
+			// HandleResponseHeaders always responds immediately so Envoy proceeds.
+			if _, err := process.Recv(); err != nil {
+				t.Fatalf("recv response headers ack: %v", err)
+			}
+
 			for _, c := range tc.chunks {
 				request = &extProcPb.ProcessingRequest{
 					Request: &extProcPb.ProcessingRequest_ResponseBody{
@@ -190,6 +196,12 @@ func TestHandleResponseBody_Streaming(t *testing.T) {
 				if err := process.Send(request); err != nil {
 					t.Fatalf("send response body chunk: %v", err)
 				}
+				// For non-final chunks, receive the streaming ack
+				if !c.endOfStream {
+					if _, err := process.Recv(); err != nil {
+						t.Fatalf("recv chunk ack: %v", err)
+					}
+				}
 			}
 
 			got := make([]*extProcPb.ProcessingResponse, 0, len(want))