Function calling is a capability where an AI model recognizes that it needs to call an external function rather than generating a text response. It outputs the appropriate call parameters, the result is fed back to the model, and the model continues its reasoning from there.
A procurement agent that checks whether a vendor is on the approved supplier list by calling a function that queries the vendor master in the ERP — rather than guessing from training data — is using function calling. This is the mechanism that allows AI agents to interact with real systems and access real-time data rather than relying solely on what they learned during training.
