diff --git a/CHANGELOG.md b/CHANGELOG.md
index 938bdb9..911c383 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -5,6 +5,16 @@ All notable changes to this project will be documented in this file.
 The format is based on [Keep a Changelog](https://keepachangelog.com/en/1.0.0/),
 and this project adheres to [Semantic Versioning](https://semver.org/spec/v2.0.0.html).
 
+## [1.0.4] - 2026-04-30
+
+### Fixed
+- **MCP tool discovery**: Fixed `capabilities` declaration in MCP initialization so clients can discover and call tools. Previously sent `capabilities={}` which prevented tool discovery; now correctly sends `capabilities={"tools": {}}` (#3, thanks @johnnyoshika)
+- **Inline formatting in paragraphs**: Bold, italic, and links now render correctly instead of appearing as literal markdown syntax. The paragraph handler was re-serializing the rich AST back to a plain string before sending to Substack; now passes the structured content list directly to `post.paragraph()` (#4, thanks @johnnyoshika)
+- **Captioned images**: Embedded images via `![alt](url)` markdown now render as actual images instead of literal `![alt](url)` text. The handler now uses Substack's native `captionedImage` block type via `post.add()` (#5, thanks @johnnyoshika)
+
+### Infrastructure
+- Synced `pyproject.toml` version field with the released version (was lagging at 1.0.0)
+
 ## [1.0.3] - 2025-07-08
 
 ### Fixed
diff --git a/package.json b/package.json
index 0c0213c..af0ae60 100644
--- a/package.json
+++ b/package.json
@@ -1,6 +1,6 @@
 {
   "name": "substack-mcp-plus",
-  "version": "1.0.3",
+  "version": "1.0.4",
   "description": "Unofficial Substack MCP server. Born from frustration, built with AI. 12 tools, browser auth, rich text support. Not affiliated with Substack Inc.",
   "type": "module",
   "main": "src/index.js",
diff --git a/pyproject.toml b/pyproject.toml
index 5832702..1cc3837 100644
--- a/pyproject.toml
+++ b/pyproject.toml
@@ -4,7 +4,7 @@ build-backend = "setuptools.build_meta"
 
 [project]
 name = "substack-mcp-plus"
-version = "1.0.0"
+version = "1.0.4"
 description = "Unofficial MCP server for Substack with rich text formatting (not affiliated with Substack Inc.)"
 readme = "README.md"
 requires-python = ">=3.10"