diff --git a/pkg/handlers/response.go b/pkg/handlers/response.go
index 7d2d7cc..7e35eb4 100644
--- a/pkg/handlers/response.go
+++ b/pkg/handlers/response.go
@@ -17,8 +17,10 @@ limitations under the License.
 package handlers
 
 import (
+	"bytes"
 	"context"
 	"encoding/json"
+	"errors"
 	"fmt"
 	"strconv"
 	"time"
@@ -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{
@@ -64,8 +66,15 @@ func (s *Server) HandleResponseBody(ctx context.Context, reqCtx *RequestContext,
 	}
 
 	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
+		// Try parsing as SSE (Server-Sent Events) — streaming responses from providers
+		// like Anthropic use SSE format which isn't valid JSON.
+		if sseBody, sseErr := parseSSEResponseBody(responseBodyBytes); sseErr == nil && sseBody != nil {
+			reqCtx.Response.Body = sseBody
+			logger.V(logutil.VERBOSE).Info("parsed SSE response body for response plugins")
+		} else {
+			logger.Error(err, "Failed to parse response body as JSON or SSE, skipping response plugins")
+			return s.generateEmptyResponseBodyResponse(responseBodyBytes), nil
+		}
 	}
 
 	if err := s.runResponsePlugins(ctx, reqCtx.CycleState, reqCtx.Response); err != nil {
@@ -130,6 +139,71 @@ 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.
+// parseSSEResponseBody extracts a composite response body from an SSE (Server-Sent Events)
+// stream. It parses by SSE event boundaries instead of individual lines because one logical
+// event may legally contain multiple consecutive `data:` lines that must be joined before JSON decoding.
+func parseSSEResponseBody(body []byte) (map[string]any, error) {
+	result := map[string]any{}
+	lines := bytes.Split(body, []byte("\n"))
+	eventDataLines := make([][]byte, 0)
+
+	// flushEvent keeps the SSE framing logic local to this parser because the bug happens
+	// exactly at event boundaries: we must join all `data:` lines for one event before parsing.
+	flushEvent := func() {
+		if len(eventDataLines) == 0 {
+			return
+		}
+
+		data := bytes.Join(eventDataLines, []byte("\n"))
+		eventDataLines = eventDataLines[:0]
+
+		data = bytes.TrimSpace(data)
+		if len(data) == 0 || bytes.Equal(data, []byte("[DONE]")) {
+			return
+		}
+
+		var event map[string]any
+		if err := json.Unmarshal(data, &event); err != nil {
+			return
+		}
+
+		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, errors.New("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 ffc90c2..75940d1 100644
--- a/pkg/handlers/server.go
+++ b/pkg/handlers/server.go
@@ -146,6 +146,16 @@ func (s *Server) Process(srv extProcPb.ExternalProcessor_ProcessServer) error {
 			}
 			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
 			}
 			reqCtx.ResponseCompleteTimestamp = time.Now()
diff --git a/pkg/handlers/server_test.go b/pkg/handlers/server_test.go
index 406195a..421b12c 100644
--- a/pkg/handlers/server_test.go
+++ b/pkg/handlers/server_test.go
@@ -177,6 +177,10 @@ func TestHandleResponseBody_Streaming(t *testing.T) {
 			if err := process.Send(request); err != nil {
 				t.Fatalf("send response headers: %v", err)
 			}
+			// Discard the immediate header ack (HandleResponseHeaders always responds now).
+			if _, err := process.Recv(); err != nil {
+				t.Fatalf("recv header ack: %v", err)
+			}
 
 			for _, c := range tc.chunks {
 				request = &extProcPb.ProcessingRequest{
@@ -190,6 +194,12 @@ func TestHandleResponseBody_Streaming(t *testing.T) {
 				if err := process.Send(request); err != nil {
 					t.Fatalf("send response body chunk: %v", err)
 				}
+				// Discard the immediate ack for non-EoS chunks.
+				if !c.endOfStream {
+					if _, err := process.Recv(); err != nil {
+						t.Fatalf("recv chunk ack: %v", err)
+					}
+				}
 			}
 
 			got := make([]*extProcPb.ProcessingResponse, 0, len(want))