While integrating external tools into large language models (LLMs) enhances their ability to access real-time information and domain-specific services, existing approaches focus narrowly on functional tool selection following user instructions while overlooking the critical role of context-aware personalization in tool selection. This oversight leads to suboptimal user satisfaction and inefficient tool utilization, particularly when overlapping toolsets require nuanced selection based on contextual factors. To bridge this gap, we introduce ToolSpectrum, a benchmark designed to evaluate LLMs’ capabilities in personalized tool utilization. Specifically, we formalize two key dimensions of personalization, user profile and environmental factors, and analyze their individual and synergistic impacts on tool selection. Through extensive experiments on ToolSpectrum, we demonstrate that personalized tool selection significantly improves user experience across diverse scenarios. However, even state-of-the-art LLMs exhibit the limited ability to reason jointly about user profiles and environmental factors, often prioritizing one dimension at the expense of the other. Our findings underscore the necessity of context-aware personalization in tool-augmented LLMs and reveal critical limitations for current models. Our data and code will be released soon.