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What is function calling? Definition and business implications
Function calling is the ability of an AI model to invoke predefined functions or tools to execute actions in an external system. The model returns a structured object (JSON) rather than text, allowing the application to call the function and reinject the result into the conversation.
Function calling (also called tool use at Anthropic) was introduced by OpenAI in June 2023. The principle: the developer describes, in the request sent to the model, a list of available functions (name, description, parameters in JSON Schema format). The model, by analysing the user prompt, decides whether to call one of these functions and with which arguments. It does not execute it itself: it returns a structured object indicating the function to call. The application executes the function, captures the result, and reinjects it into the conversation for the model to continue. Function calling is the underlying mechanism that enables an LLM to send an email, create a calendar event, query a database, or orchestrate several tools in cascade. It foreshadowed the arrival of AI agents and was largely absorbed by the MCP protocol in 2025.
Concrete example
An insurance company deploys an AI assistant to handle reimbursement requests. Three functions are defined in the API: verifier_eligibilite, calculer_remboursement, envoyer_decision. When a customer asks “is my dermatologist consultation reimbursed?”, the assistant identifies the contract, calls verifier_eligibilite, receives the response, calls calculer_remboursement if eligible, then responds to the customer with the amount. Three chained function calls, piloted by the model, executed by the application. Without function calling, this use case would require specific development for each possible scenario, multiplying cost and maintenance by five or ten.
See also
Further reading
Sources
- Tool use overview, Anthropic documentation, 2026. https://docs.anthropic.com/en/docs/build-with-claude/tool-use
- Function calling, OpenAI documentation, 2026. https://platform.openai.com/docs/guides/function-calling