diff --git a/.mcp.json b/.mcp.json
index 0ae7b42..eab346c 100644
--- a/.mcp.json
+++ b/.mcp.json
@@ -1,11 +1,10 @@
 {
   "mcpServers": {
     "knowledge-graph": {
-      "command": "npx",
-      "args": ["tsx", "${CLAUDE_PLUGIN_ROOT}/src/mcp/index.ts"],
+      "command": "${CLAUDE_PLUGIN_ROOT}/node_modules/.bin/tsx",
+      "args": ["${CLAUDE_PLUGIN_ROOT}/src/mcp/index.ts"],
       "env": {
-        "KG_VAULT_PATH": "${KG_VAULT_PATH}",
-        "KG_DATA_DIR": "${KG_DATA_DIR}"
+        "KG_VAULT_PATH": "${KG_VAULT_PATH}"
       }
     }
   }
diff --git a/src/lib/config.ts b/src/lib/config.ts
index c2c37b4..05ed0b8 100644
--- a/src/lib/config.ts
+++ b/src/lib/config.ts
@@ -1,5 +1,5 @@
 import { homedir } from 'os';
-import { join } from 'path';
+import { isAbsolute, join } from 'path';
 
 export interface KGConfig {
   vaultPath: string;
@@ -12,9 +12,34 @@ export interface ConfigOverrides {
   dataDir?: string;
 }
 
+const UNRESOLVED_TEMPLATE = /^\$\{[A-Z0-9_]+\}$/;
+
+/** True when an MCP host left a ${VAR} placeholder unexpanded. */
+export function isUnresolvedTemplate(value: string | undefined): boolean {
+  return !!value && UNRESOLVED_TEMPLATE.test(value);
+}
+
+function resolveEnvValue(value: string | undefined): string | undefined {
+  if (!value || isUnresolvedTemplate(value)) return undefined;
+  return value;
+}
+
+function resolveEnvDataDir(
+  value: string | undefined,
+  defaultDataDir: string,
+): string {
+  const resolved = resolveEnvValue(value);
+  if (!resolved || !isAbsolute(resolved)) return defaultDataDir;
+  return resolved;
+}
+
 export function resolveConfig(overrides: ConfigOverrides): KGConfig {
+  const xdgData = process.env.XDG_DATA_HOME
+    ?? join(homedir(), '.local', 'share');
+  const defaultDataDir = join(xdgData, 'knowledge-graph');
+
   const vaultPath = overrides.vaultPath
-    ?? process.env.KG_VAULT_PATH;
+    ?? resolveEnvValue(process.env.KG_VAULT_PATH);
 
   if (!vaultPath) {
     throw new Error(
@@ -22,12 +47,8 @@ export function resolveConfig(overrides: ConfigOverrides): KGConfig {
     );
   }
 
-  const xdgData = process.env.XDG_DATA_HOME
-    ?? join(homedir(), '.local', 'share');
-
   const dataDir = overrides.dataDir
-    ?? process.env.KG_DATA_DIR
-    ?? join(xdgData, 'knowledge-graph');
+    ?? resolveEnvDataDir(process.env.KG_DATA_DIR, defaultDataDir);
 
   return {
     vaultPath,
diff --git a/test/config.test.ts b/test/config.test.ts
index 4cda375..eda8f6a 100644
--- a/test/config.test.ts
+++ b/test/config.test.ts
@@ -47,4 +47,26 @@ describe('resolveConfig', () => {
     const config = resolveConfig({});
     expect(config.dataDir).toContain('.local/share/knowledge-graph');
   });
+
+  it('ignores unexpanded KG_DATA_DIR template and uses XDG default', () => {
+    process.env.KG_VAULT_PATH = '/tmp/vault';
+    process.env.XDG_DATA_HOME = '/tmp/xdg';
+    process.env.KG_DATA_DIR = '${KG_DATA_DIR}';
+    const config = resolveConfig({});
+    expect(config.dataDir).toBe('/tmp/xdg/knowledge-graph');
+  });
+
+  it('throws when KG_VAULT_PATH is an unexpanded template', () => {
+    process.env.KG_VAULT_PATH = '${KG_VAULT_PATH}';
+    delete process.env.KG_DATA_DIR;
+    expect(() => resolveConfig({})).toThrow(/vault/i);
+  });
+
+  it('ignores relative KG_DATA_DIR env paths and uses XDG default', () => {
+    process.env.KG_VAULT_PATH = '/tmp/vault';
+    process.env.XDG_DATA_HOME = '/tmp/xdg';
+    process.env.KG_DATA_DIR = 'relative/path';
+    const config = resolveConfig({});
+    expect(config.dataDir).toBe('/tmp/xdg/knowledge-graph');
+  });
 });