diff --git a/crates/goose-cli/Cargo.toml b/crates/goose-cli/Cargo.toml
index 74d1cd02c..15d722fdd 100644
--- a/crates/goose-cli/Cargo.toml
+++ b/crates/goose-cli/Cargo.toml
@@ -39,6 +39,8 @@ rust_decimal_macros = "1.36.0"
 tracing = "0.1"
 chrono = "0.4"
 parking_lot = "0.12.3"
+tracing-subscriber = { version = "0.3", features = ["env-filter", "fmt", "json", "time"] }
+tracing-appender = "0.2"
 
 [dev-dependencies]
 tempfile = "3"
diff --git a/crates/goose-cli/src/logging.rs b/crates/goose-cli/src/logging.rs
new file mode 100644
index 000000000..6d5fe6d9d
--- /dev/null
+++ b/crates/goose-cli/src/logging.rs
@@ -0,0 +1,102 @@
+use anyhow::{Context, Result};
+use std::fs;
+use std::path::PathBuf;
+use tracing_appender::rolling::Rotation;
+use tracing_subscriber::{
+    fmt,
+    Layer,
+    layer::SubscriberExt,
+    util::SubscriberInitExt,
+    EnvFilter,
+    Registry,
+    filter::LevelFilter,
+};
+
+use goose::tracing::langfuse_layer;
+
+/// Returns the directory where log files should be stored.
+/// Creates the directory structure if it doesn't exist.
+fn get_log_directory() -> Result<PathBuf> {
+    let home = std::env::var("HOME").context("HOME environment variable not set")?;
+    let base_log_dir = PathBuf::from(home)
+        .join(".config")
+        .join("goose")
+        .join("logs")
+        .join("cli"); // Add cli-specific subdirectory
+
+    // Create date-based subdirectory
+    let now = chrono::Local::now();
+    let date_dir = base_log_dir.join(now.format("%Y-%m-%d").to_string());
+
+    // Ensure log directory exists
+    fs::create_dir_all(&date_dir).context("Failed to create log directory")?;
+
+    Ok(date_dir)
+}
+
+/// Sets up the logging infrastructure for the application.
+/// This includes:
+/// - File-based logging with JSON formatting (DEBUG level)
+/// - Console output for development (INFO level)
+/// - Optional Langfuse integration (DEBUG level)
+pub fn setup_logging() -> Result<()> {
+    // Set up file appender for goose module logs
+    let log_dir = get_log_directory()?;
+    let timestamp = chrono::Local::now().format("%Y%m%d_%H%M%S").to_string();
+
+    // Create non-rolling file appender for detailed logs
+    let file_appender = tracing_appender::rolling::RollingFileAppender::new(
+        Rotation::NEVER,
+        log_dir,
+        &format!("goose_{}.log", timestamp),
+    );
+
+    // Create JSON file logging layer with all logs (DEBUG and above)
+    let file_layer = fmt::layer()
+        .with_target(true)
+        .with_level(true)
+        .with_writer(file_appender)
+        .with_ansi(false)
+        .with_file(true)
+        .pretty();
+
+    // Create console logging layer for development - INFO and above only
+    let console_layer = fmt::layer()
+        .with_target(true)
+        .with_level(true)
+        .with_ansi(true)
+        .with_file(true)
+        .with_line_number(true)
+        .pretty();
+
+    // Base filter
+    let env_filter = EnvFilter::try_from_default_env().unwrap_or_else(|_| {
+        // Set default levels for different modules
+        EnvFilter::new("")
+            // Set goose module to INFO only
+            .add_directive("goose=debug".parse().unwrap())
+            // Set goose-cli to INFO
+            .add_directive("goose_cli=info".parse().unwrap())
+            // Set everything else to WARN
+            .add_directive(LevelFilter::WARN.into())
+    });
+
+    // Build the subscriber with required layers
+    let subscriber = Registry::default()
+        .with(file_layer.with_filter(env_filter))    // Gets all logs
+        .with(console_layer.with_filter(LevelFilter::INFO));   // Controls log levels
+
+    // Initialize with Langfuse if available
+    if let Some(langfuse) = langfuse_layer::create_langfuse_observer() {
+        subscriber
+            .with(langfuse.with_filter(LevelFilter::DEBUG))
+            .try_init()
+            .context("Failed to set global subscriber")?;
+    } else {
+        subscriber
+            .try_init()
+            .context("Failed to set global subscriber")?;
+    }
+
+    Ok(())
+}
\ No newline at end of file
diff --git a/crates/goose-cli/src/main.rs b/crates/goose-cli/src/main.rs
index 42ffa8617..921a0f123 100644
--- a/crates/goose-cli/src/main.rs
+++ b/crates/goose-cli/src/main.rs
@@ -7,6 +7,7 @@ pub mod agents;
 mod profile;
 mod prompt;
 pub mod session;
+mod logging;
 
 mod systems;
 
@@ -17,7 +18,7 @@ use commands::session::build_session;
 use commands::version::print_version;
 use profile::has_no_profiles;
 use std::io::{self, Read};
-use goose::logging::setup_logging;
+use logging::setup_logging;
 
 mod log_usage;
 
@@ -196,7 +197,7 @@ enum CliProviderVariant {
 
 #[tokio::main]
 async fn main() -> Result<()> {
-    setup_logging()?;
+    setup_logging();
     
     let cli = Cli::parse();
 
diff --git a/crates/goose-server/Cargo.toml b/crates/goose-server/Cargo.toml
index c410f8e2e..8b00e35dd 100644
--- a/crates/goose-server/Cargo.toml
+++ b/crates/goose-server/Cargo.toml
@@ -18,7 +18,8 @@ serde = { version = "1.0", features = ["derive"] }
 serde_json = "1.0"
 futures = "0.3"
 tracing = "0.1"
-tracing-subscriber = "0.3"
+tracing-subscriber = { version = "0.3", features = ["env-filter", "fmt", "json", "time"] }
+tracing-appender = "0.2"
 tokio-stream = "0.1"
 anyhow = "1.0"
 bytes = "1.5"
@@ -34,4 +35,4 @@ path = "src/main.rs"
 [dev-dependencies]
 serial_test = "3.2.0"
 tower = "0.5"
-async-trait = "0.1"
+async-trait = "0.1"
\ No newline at end of file
diff --git a/crates/goose-server/src/logging.rs b/crates/goose-server/src/logging.rs
new file mode 100644
index 000000000..724c7c414
--- /dev/null
+++ b/crates/goose-server/src/logging.rs
@@ -0,0 +1,103 @@
+use anyhow::{Context, Result};
+use std::fs;
+use std::path::PathBuf;
+use tracing_appender::rolling::Rotation;
+use tracing_subscriber::{
+    fmt,
+    Layer,
+    layer::SubscriberExt,
+    util::SubscriberInitExt,
+    EnvFilter,
+    Registry,
+    filter::LevelFilter,
+};
+
+use goose::tracing::langfuse_layer;
+
+/// Returns the directory where log files should be stored.
+/// Creates the directory structure if it doesn't exist.
+fn get_log_directory() -> Result<PathBuf> {
+    let home = std::env::var("HOME").context("HOME environment variable not set")?;
+    let base_log_dir = PathBuf::from(home)
+        .join(".config")
+        .join("goose")
+        .join("logs")
+        .join("server"); // Add server-specific subdirectory
+
+    // Create date-based subdirectory
+    let now = chrono::Local::now();
+    let date_dir = base_log_dir.join(now.format("%Y-%m-%d").to_string());
+
+    // Ensure log directory exists
+    fs::create_dir_all(&date_dir).context("Failed to create log directory")?;
+
+    Ok(date_dir)
+}
+
+/// Sets up the logging infrastructure for the application.
+/// This includes:
+/// - File-based logging with JSON formatting (DEBUG level)
+/// - Console output for development (INFO level)
+/// - Optional Langfuse integration (DEBUG level)
+pub fn setup_logging() -> Result<()> {
+    // Set up file appender for goose module logs
+    let log_dir = get_log_directory()?;
+    let timestamp = chrono::Local::now().format("%Y%m%d_%H%M%S").to_string();
+
+    // Create non-rolling file appender for detailed logs
+    let file_appender = tracing_appender::rolling::RollingFileAppender::new(
+        Rotation::NEVER,
+        log_dir,
+        &format!("goosed_{}.log", timestamp),
+    );
+
+    // Create JSON file logging layer
+    let file_layer = fmt::layer()
+        .with_target(true)
+        .with_level(true)
+        .with_writer(file_appender)
+        .with_ansi(false)
+        .with_file(true);
+
+    // Create console logging layer for development - INFO and above only
+    let console_layer = fmt::layer()
+        .with_target(true)
+        .with_level(true)
+        .with_ansi(true)
+        .with_file(true)
+        .with_line_number(true)
+        .pretty();
+
+    // Base filter for all logging
+    let env_filter = EnvFilter::try_from_default_env().unwrap_or_else(|_| {
+        // Set default levels for different modules
+        EnvFilter::new("")
+            // Set goose module to INFO only
+            .add_directive("goose=info".parse().unwrap())
+            // Set goose-server to INFO
+            .add_directive("goose_server=info".parse().unwrap())
+            // Set tower-http to INFO for request logging
+            .add_directive("tower_http=info".parse().unwrap())
+            // Set everything else to WARN
+            .add_directive(LevelFilter::WARN.into())
+    });
+
+    // Build the subscriber with required layers
+    let subscriber = Registry::default()
+        .with(file_layer)   
+        .with(console_layer.with_filter(env_filter)); 
+
+    // Initialize with Langfuse if available
+    if let Some(langfuse) = langfuse_layer::create_langfuse_observer() {
+        subscriber
+            .with(langfuse.with_filter(LevelFilter::DEBUG))
+            .try_init()
+            .context("Failed to set global subscriber")?;
+    } else {
+        subscriber
+            .try_init()
+            .context("Failed to set global subscriber")?;
+    }
+
+    Ok(())
+}
\ No newline at end of file
diff --git a/crates/goose-server/src/main.rs b/crates/goose-server/src/main.rs
index d575596a7..703d7ea92 100644
--- a/crates/goose-server/src/main.rs
+++ b/crates/goose-server/src/main.rs
@@ -1,5 +1,6 @@
 mod configuration;
 mod error;
+mod logging;
 mod routes;
 mod state;
 
@@ -9,7 +10,7 @@ use tracing::info;
 #[tokio::main]
 async fn main() -> anyhow::Result<()> {
     // Initialize tracing for logging
-    tracing_subscriber::fmt::init();
+    logging::setup_logging()?;
 
     // Load configuration
     let settings = configuration::Settings::new()?;
@@ -34,4 +35,4 @@ async fn main() -> anyhow::Result<()> {
     info!("listening on {}", listener.local_addr()?);
     axum::serve(listener, app).await?;
     Ok(())
-}
+}
\ No newline at end of file
diff --git a/crates/goose/Cargo.toml b/crates/goose/Cargo.toml
index b901bebad..a33727a07 100644
--- a/crates/goose/Cargo.toml
+++ b/crates/goose/Cargo.toml
@@ -48,8 +48,8 @@ libc = "=0.2.167"
 lazy_static = "1.5"
 kill_tree = "0.2.4"
 tracing = "0.1"
-tracing-subscriber = { version = "0.3", features = ["env-filter", "fmt", "json", "time"] }
-tracing-appender = "0.2"
+tracing-subscriber = "0.3"
+
 
 keyring = { version = "3.6.1", features = [
     "apple-native",
diff --git a/crates/goose/src/agent.rs b/crates/goose/src/agent.rs
index 327f7f74e..860640804 100644
--- a/crates/goose/src/agent.rs
+++ b/crates/goose/src/agent.rs
@@ -127,8 +127,8 @@ impl Agent {
         let system_tool_call = ToolCall::new(tool_name, call.arguments);
         let result = system.call(system_tool_call.clone()).await;
 
-        tracing::debug!("input"=serde_json::to_string(&system_tool_call).unwrap(),
-                        "output"=serde_json::to_string(&result).unwrap(),
+        debug!("input"=serde_json::to_string(&system_tool_call).unwrap(),
+                "output"=serde_json::to_string(&result).unwrap(),
         );
 
         result 
@@ -350,7 +350,7 @@ impl Agent {
             .and_then(|msg| msg.content.first())
             .and_then(|c| c.as_text()) 
         {
-            reply_span.record("user_message", &content);
+            debug!("user_message"=&content);
         }
 
         let system_prompt = self.get_system_prompt()?;
diff --git a/crates/goose/src/lib.rs b/crates/goose/src/lib.rs
index 46b5a95af..811fbcbf5 100644
--- a/crates/goose/src/lib.rs
+++ b/crates/goose/src/lib.rs
@@ -10,4 +10,3 @@ pub mod providers;
 pub mod systems;
 pub mod token_counter;
 pub mod tracing;
-pub mod logging;
\ No newline at end of file
diff --git a/crates/goose/src/logging.rs b/crates/goose/src/logging.rs
deleted file mode 100644
index 3c6189a90..000000000
--- a/crates/goose/src/logging.rs
+++ /dev/null
@@ -1,100 +0,0 @@
-use anyhow::{Context, Result};
-use serde_json::Value;
-use std::fs;
-use std::path::PathBuf;
-use std::sync::Arc;
-use tokio::sync::Mutex;
-use tracing_appender::rolling::Rotation;
-use tracing_subscriber::{fmt, layer::SubscriberExt, EnvFilter, Registry};
-use tracing::dispatcher::set_global_default;
-
-use crate::tracing::{langfuse_layer, observation_layer::{BatchManager, ObservationLayer, SpanTracker}};
-
-struct ConsoleLogger {
-    batch: Vec<Value>,
-}
-
-impl ConsoleLogger {
-    fn new() -> Self {
-        Self {
-            batch: Vec::new(),
-        }
-    }
-}
-
-impl BatchManager for ConsoleLogger {
-    fn add_event(&mut self, _event_type: &str, body: Value) {
-        self.batch.push(body);
-    }
-
-    fn send(&mut self) -> Result<(), Box<dyn std::error::Error + Send + Sync>> {
-        self.batch.clear();
-        Ok(())
-    }
-}
-
-fn get_log_directory() -> Result<PathBuf> {
-    let home = std::env::var("HOME").context("HOME environment variable not set")?;
-    let base_log_dir = PathBuf::from(home).join(".config").join("goose").join("logs");
-    
-    // Create date-based subdirectory
-    let now = chrono::Local::now();
-    let date_dir = base_log_dir.join(now.format("%Y-%m-%d").to_string());
-    
-    // Ensure log directory exists
-    fs::create_dir_all(&date_dir).context("Failed to create log directory")?;
-    
-    Ok(date_dir)
-}
-
-fn create_observation_layer() -> ObservationLayer {
-    let batch_manager = Arc::new(Mutex::new(ConsoleLogger::new()));
-    ObservationLayer {
-        batch_manager,
-        span_tracker: Arc::new(Mutex::new(SpanTracker::new())),
-    }
-}
-
-pub fn setup_logging() -> Result<()> {
-    // Set up file appender for goose module logs
-    let log_dir = get_log_directory()?;
-    let timestamp = chrono::Local::now().format("%Y%m%d_%H%M%S%.3f").to_string();
-    
-    // Create non-rolling file appender
-    let file_appender = tracing_appender::rolling::RollingFileAppender::new(
-        Rotation::NEVER,
-        log_dir,
-        &format!("{}.log", timestamp),
-    );
-
-    // Create JSON file logging layer
-    let file_layer = fmt::layer()
-        .with_target(true)
-        .with_level(true)
-        .with_writer(file_appender)
-        .with_ansi(false)
-        .with_file(true);
-
-    // Update filter to include debug level
-    let filter = EnvFilter::try_from_default_env()
-        .unwrap_or_else(|_| EnvFilter::new("goose=debug"));
-
-    // Build the base subscriber
-    let subscriber = Registry::default()
-        .with(file_layer)
-        .with(filter)
-        .with(create_observation_layer());
-
-    // Set up the dispatcher
-    let dispatcher = if let Some(langfuse) = langfuse_layer::create_langfuse_observer() {
-        subscriber.with(langfuse).into()
-    } else {
-        subscriber.into()
-    };
-
-    // Set the subscriber as the default
-    set_global_default(dispatcher)
-        .map_err(|e| anyhow::anyhow!("Failed to set global subscriber: {}", e))?;
-
-    Ok(())
-}
diff --git a/crates/goose/src/providers/databricks.rs b/crates/goose/src/providers/databricks.rs
index 862684051..c2d896885 100644
--- a/crates/goose/src/providers/databricks.rs
+++ b/crates/goose/src/providers/databricks.rs
@@ -14,6 +14,8 @@ use super::utils::{
 };
 use crate::message::Message;
 use mcp_core::tool::Tool;
+use tracing::{debug};
+
 
 pub struct DatabricksProvider {
     client: Client,
@@ -165,7 +167,7 @@ impl Provider for DatabricksProvider {
         let usage = Self::get_usage(&response)?;
         let model = get_model(&response);
         let cost = cost(&usage, &model_pricing_for(&model));
-        tracing::debug!(
+        debug!(
             model_config = %serde_json::to_string_pretty(&self.config).unwrap_or_default(),
             input = %serde_json::to_string_pretty(&payload).unwrap_or_default(),
             output = %serde_json::to_string_pretty(&response).unwrap_or_default(),