Function calling agents powered by Large Language Models (LLMs) select external tools to automate complex tasks. On-device agents typically use a retrieval module to select relevant tools, improving performance and reducing context length. However, existing retrieval methods rely on static and limited inputs, failing to capture multi-step tool dependencies and evolving task context. This limitation often introduces irrelevant tools that mislead the agent, degrading efficiency and accuracy. We propose Dynamic Tool Dependency Retrieval (DTDR), a lightweight retrieval method that conditions on both the initial query and the evolving tool calling plan. DTDR models tool dependencies from function calling demonstrations, enabling adaptive retrieval as plans unfold. We benchmark DTDR against state-of-the-art retrieval methods across multiple datasets and LLM backbones, evaluating retrieval precision, downstream task accuracy, and computational efficiency. Additionally, we explore strategies to integrate retrieved tools into prompts. Our results show that DTDR improves function calling success rates between 23% and 104% compared to state-of-the-art static retrievers.

Digital tool-based agents, powered by Large Language Models (LLMs), that invoke external Application Programming Interfaces (APIs) often rely on documentation to understand API functionality. However, such documentation is frequently missing, outdated, privatized, or inconsistent—hindering the development of reliable, general-purpose agents. In this work, we propose a new research direction: learning of API functionality directly from in-context demonstrations. This task is a new paradigm applicable in scenarios without documentation. Using API benchmarks, we collect demonstrations from both expert agents and from self-exploration. To understand what information demonstrations must convey for successful task completion, we extensively study how the number of demonstrations and the use of LLM-generated summaries and evaluations affect the task success rate of the API-based agent. Our experiments across 3 datasets and 6 models show that learning functionality from in-context demonstrations remains a non-trivial challenge, even for state-of-the-art LLMs. We find that providing explicit function calls and natural language critiques significantly improves the agent’s task success rate due to more accurate parameter filling. We analyze failure modes, identify sources of error, and highlight key open challenges for future work in documentation-free, self-improving, API-based agents.