diff --git a/src/memory.ts b/src/memory.ts
index b4f0178..f85ec4e 100644
--- a/src/memory.ts
+++ b/src/memory.ts
@@ -170,3 +170,102 @@ export function summarizeToolLog(toolLog: Array<{ name: string; result?: string
   const toolNames = [...new Set(toolLog.map(t => t.name))];
   return `Used tools: ${toolNames.join(', ')}`;
 }
+
+// --- Session compaction ---
+
+/**
+ * Compact a session: summarize the JSONL session file into a few lines,
+ * append to recent.md, and optionally update context.md.
+ *
+ * Uses Anthropic API directly (haiku for cheap summarization).
+ */
+export async function compactSession(
+  agentHome: string,
+  projectId: string,
+  sessionContent: string,
+  apiKey: string,
+): Promise<string> {
+  if (!sessionContent.trim()) return '';
+
+  const prompt = `Summarize the following agent session into 3-5 bullet points.
+Focus on: what was done, key decisions made, problems encountered, results.
+Be concise. Output only bullet points, no headers.
+
+Session:
+${sessionContent.slice(0, 8000)}`;
+
+  try {
+    const response = await fetch('https://api.anthropic.com/v1/messages', {
+      method: 'POST',
+      headers: {
+        'Content-Type': 'application/json',
+        'x-api-key': apiKey,
+        'anthropic-version': '2023-06-01',
+      },
+      body: JSON.stringify({
+        model: 'claude-haiku-4-5',
+        max_tokens: 300,
+        messages: [{ role: 'user', content: prompt }],
+      }),
+    });
+
+    if (!response.ok) {
+      log.warn({ status: response.status }, 'Compaction API call failed');
+      return '';
+    }
+
+    const data = await response.json() as { content: Array<{ text: string }> };
+    const summary = data.content?.[0]?.text || '';
+    log.info({ projectId, summaryChars: summary.length }, 'Session compacted');
+    return summary;
+  } catch (err) {
+    log.warn({ err }, 'Session compaction failed');
+    return '';
+  }
+}
+
+/**
+ * Check if a session file is large enough to warrant compaction.
+ * Returns the session content if compaction needed, empty string otherwise.
+ */
+export function needsCompaction(sessionFile: string, maxChars: number = 50_000): string {
+  try {
+    if (!fs.existsSync(sessionFile)) return '';
+    const content = fs.readFileSync(sessionFile, 'utf-8');
+    if (content.length > maxChars) {
+      return content;
+    }
+  } catch {
+    // skip
+  }
+  return '';
+}
+
+/**
+ * Run compaction on a session: summarize → append recent → truncate session.
+ */
+export async function runCompaction(
+  agentHome: string,
+  projectId: string,
+  sessionFile: string,
+  apiKey: string,
+): Promise<void> {
+  const content = needsCompaction(sessionFile);
+  if (!content) return;
+
+  log.info({ projectId, sessionChars: content.length }, 'Starting session compaction');
+
+  const summary = await compactSession(agentHome, projectId, content, apiKey);
+  if (!summary) return;
+
+  // Append summary to recent.md
+  appendRecent(agentHome, projectId, `[compaction] ${summary.replace(/\n/g, ' | ')}`);
+
+  // Truncate session file — keep last 10K chars as context continuity
+  const keepChars = 10_000;
+  const truncated = content.length > keepChars
+    ? content.slice(content.length - keepChars)
+    : content;
+  fs.writeFileSync(sessionFile, truncated, 'utf-8');
+  log.info({ projectId, oldChars: content.length, newChars: truncated.length }, 'Session truncated after compaction');
+}
diff --git a/src/router.ts b/src/router.ts
index c4a07d1..526d4e2 100644
--- a/src/router.ts
+++ b/src/router.ts
@@ -1,7 +1,7 @@
 import path from 'path';
 import { logger } from './logger.js';
 import { runAgent } from './agent.js';
-import { appendRecent, summarizeToolLog } from './memory.js';
+import { appendRecent, summarizeToolLog, runCompaction } from './memory.js';
 import { TrackerClient } from './tracker/client.js';
 import { createTrackerTools } from './tools/index.js';
 import type { ToolDefinition } from '@mariozechner/pi-coding-agent';
@@ -87,6 +87,7 @@ export class EventRouter {
     const taskId = data.task_id as string | undefined;
     const chatId = data.chat_id as string | undefined;
     const taskKey = data.task_key as string | undefined;
+    const eventProjectId = data.project_id as string | undefined;
 
     // Extract author info from nested author object if present
     const author = data.author as Record<string, unknown> | undefined;
@@ -121,7 +122,7 @@ export class EventRouter {
     this.log.info('│  %s %s: "%s"', ctx, from, content.slice(0, 200));
 
     const target = chatId ? { chat_id: chatId } : taskId ? { task_id: taskId } : null;
-    const projectId = this.resolveProjectId(chatId);
+    const projectId = eventProjectId || this.resolveProjectId(chatId);
 
     // Stream start
     if (this.wsTransport && target) {
@@ -167,6 +168,17 @@ export class EventRouter {
       } catch (err) {
         this.log.warn({ err }, 'Failed to flush memory');
       }
+
+      // Background compaction check (non-blocking)
+      if (this.config.sessionId) {
+        const sessionFile = path.join(this.config.agentHome, 'sessions', `${this.config.sessionId}.jsonl`);
+        const apiKey = process.env.ANTHROPIC_API_KEY || '';
+        if (apiKey) {
+          runCompaction(this.config.agentHome, projectId, sessionFile, apiKey).catch(err => {
+            this.log.warn({ err }, 'Background compaction failed');
+          });
+        }
+      }
     }
 
     this.log.info('└── MESSAGE handled');