diff --git a/xinference/model/llm/tests/test_utils.py b/xinference/model/llm/tests/test_utils.py
index 6b0ccaf05d..5cf252639c 100644
--- a/xinference/model/llm/tests/test_utils.py
+++ b/xinference/model/llm/tests/test_utils.py
@@ -79,7 +79,16 @@ def test_transform_messages_preserves_tool_call_fields():
     assert transformed[1] == {
         "role": "assistant",
         "content": None,
-        "tool_calls": messages[1]["tool_calls"],
+        "tool_calls": [
+            {
+                "id": "call_bed4c5f1",
+                "function": {
+                    "arguments": {"file_path": "README*"},
+                    "name": "view_file_in_detail",
+                },
+                "type": "function",
+            }
+        ],
     }
     assert transformed[2] == {
         "role": "tool",
diff --git a/xinference/model/llm/utils.py b/xinference/model/llm/utils.py
index 700d75cffc..6cd4980da0 100644
--- a/xinference/model/llm/utils.py
+++ b/xinference/model/llm/utils.py
@@ -811,6 +811,26 @@ def _transform_messages(
                         )
             new_message = dict(msg)
             new_message["content"] = new_content if new_content else None
+            # Parse JSON-encoded arguments in tool_calls to dicts,
+            # so Jinja2 templates can iterate them with |items.
+            if new_message.get("tool_calls"):
+                tool_calls = []
+                for tc in new_message["tool_calls"]:
+                    tc = dict(tc)
+                    func = tc.get("function")
+                    if isinstance(func, dict) and isinstance(
+                        func.get("arguments"), str
+                    ):
+                        func = dict(func)
+                        try:
+                            parsed_args = json.loads(func["arguments"])
+                            if isinstance(parsed_args, dict):
+                                func["arguments"] = parsed_args
+                        except (json.JSONDecodeError, TypeError):
+                            pass
+                        tc["function"] = func
+                    tool_calls.append(tc)
+                new_message["tool_calls"] = tool_calls
             transformed_messages.append(new_message)
 
         return transformed_messages