diff --git a/bun.lock b/bun.lock
index 3fc50f8..741eb46 100644
--- a/bun.lock
+++ b/bun.lock
@@ -1,11 +1,10 @@
 {
   "lockfileVersion": 1,
-  "configVersion": 0,
   "workspaces": {
     "": {
       "name": "@letta-ai/letta-code",
       "dependencies": {
-        "@letta-ai/letta-client": "^1.4.0",
+        "@letta-ai/letta-client": "1.6.1",
         "glob": "^13.0.0",
         "ink-link": "^5.0.0",
         "open": "^10.2.0",
@@ -37,7 +36,7 @@
 
     "@isaacs/brace-expansion": ["@isaacs/brace-expansion@5.0.0", "", { "dependencies": { "@isaacs/balanced-match": "^4.0.1" } }, "sha512-ZT55BDLV0yv0RBm2czMiZ+SqCGO7AvmOM3G/w2xhVPH+te0aKgFjmBvGlL1dH+ql2tgGO3MVrbb3jCKyvpgnxA=="],
 
-    "@letta-ai/letta-client": ["@letta-ai/letta-client@1.4.0", "", {}, "sha512-7n59bRxjlcoRsDvE/jNDO1otqdF/m//DwGLKkx3uuf6wHwqt3qzJ7/zFVASl1by8oWsiEYUvJnQ634uA1+6q/g=="],
+    "@letta-ai/letta-client": ["@letta-ai/letta-client@1.6.1", "", {}, "sha512-kCRnEKpeTj3e1xqRd58xvoCp28p/wuJUptrIlJ8cT2GiYkrOESlKmp6lc3f246VusrowdGeB9hSXePXZgd7rAA=="],
 
     "@types/bun": ["@types/bun@1.3.1", "", { "dependencies": { "bun-types": "1.3.1" } }, "sha512-4jNMk2/K9YJtfqwoAa28c8wK+T7nvJFOjxI4h/7sORWcypRNxBpr+TPNaCfVWq70tLCJsqoFwcf0oI0JU/fvMQ=="],
 
diff --git a/package.json b/package.json
index e088837..7f4f41b 100644
--- a/package.json
+++ b/package.json
@@ -22,7 +22,7 @@
     "access": "public"
   },
   "dependencies": {
-    "@letta-ai/letta-client": "^1.4.0",
+    "@letta-ai/letta-client": "1.6.1",
     "glob": "^13.0.0",
     "ink-link": "^5.0.0",
     "open": "^10.2.0"
diff --git a/src/cli/App.tsx b/src/cli/App.tsx
index b18296e..9fb7f4b 100644
--- a/src/cli/App.tsx
+++ b/src/cli/App.tsx
@@ -1859,12 +1859,19 @@ export default function App({
             // Exit after a brief delay to show the message
             setTimeout(() => process.exit(0), 500);
           } catch (error) {
-            const errorDetails = formatErrorDetails(error, agentId);
+            let errorOutput = formatErrorDetails(error, agentId);
+
+            // Add helpful tip for summarization failures
+            if (errorOutput.includes("Summarization failed")) {
+              errorOutput +=
+                "\n\nTip: Use /clear instead to clear the current message buffer.";
+            }
+
             buffersRef.current.byId.set(cmdId, {
               kind: "command",
               id: cmdId,
               input: msg,
-              output: `Failed: ${errorDetails}`,
+              output: `Failed: ${errorOutput}`,
               phase: "finished",
               success: false,
             });
@@ -1986,6 +1993,91 @@ export default function App({
           return { submitted: true };
         }
 
+        // Special handling for /compact command - summarize conversation history
+        if (msg.trim() === "/compact") {
+          const cmdId = uid("cmd");
+          buffersRef.current.byId.set(cmdId, {
+            kind: "command",
+            id: cmdId,
+            input: msg,
+            output: "Compacting conversation history...",
+            phase: "running",
+          });
+          buffersRef.current.order.push(cmdId);
+          refreshDerived();
+
+          setCommandRunning(true);
+
+          try {
+            const client = await getClient();
+            // SDK types are out of date - compact returns CompactionResponse, not void
+            const result = (await client.agents.messages.compact(
+              agentId,
+            )) as unknown as {
+              num_messages_before: number;
+              num_messages_after: number;
+              summary: string;
+            };
+
+            // Format success message with before/after counts and summary
+            const outputLines = [
+              `Compaction completed. Message buffer length reduced from ${result.num_messages_before} to ${result.num_messages_after}.`,
+              "",
+              `Summary: ${result.summary}`,
+            ];
+
+            // Update command with success
+            buffersRef.current.byId.set(cmdId, {
+              kind: "command",
+              id: cmdId,
+              input: msg,
+              output: outputLines.join("\n"),
+              phase: "finished",
+              success: true,
+            });
+            refreshDerived();
+          } catch (error) {
+            let errorOutput: string;
+
+            // Check for summarization failure - format it cleanly
+            const apiError = error as {
+              status?: number;
+              error?: { detail?: string };
+            };
+            const detail = apiError?.error?.detail;
+            if (
+              apiError?.status === 400 &&
+              detail?.includes("Summarization failed")
+            ) {
+              // Clean format for this specific error, but preserve raw JSON
+              const cleanDetail = detail.replace(/^\d{3}:\s*/, "");
+              const rawJson = JSON.stringify(apiError.error);
+              errorOutput = [
+                `Request failed (code=400)`,
+                `Raw: ${rawJson}`,
+                `Detail: ${cleanDetail}`,
+                "",
+                "Tip: Use /clear instead to clear the current message buffer.",
+              ].join("\n");
+            } else {
+              errorOutput = formatErrorDetails(error, agentId);
+            }
+
+            buffersRef.current.byId.set(cmdId, {
+              kind: "command",
+              id: cmdId,
+              input: msg,
+              output: `Failed: ${errorOutput}`,
+              phase: "finished",
+              success: false,
+            });
+            refreshDerived();
+          } finally {
+            setCommandRunning(false);
+          }
+          return { submitted: true };
+        }
+
         // Special handling for /rename command - rename the agent
         if (msg.trim().startsWith("/rename")) {
           const parts = msg.trim().split(/\s+/);
diff --git a/src/cli/commands/registry.ts b/src/cli/commands/registry.ts
index 4dd0ac5..a984275 100644
--- a/src/cli/commands/registry.ts
+++ b/src/cli/commands/registry.ts
@@ -38,6 +38,13 @@ export const commands: Record<string, Command> = {
       return "Clearing messages...";
     },
   },
+  "/compact": {
+    desc: "Summarize conversation history (compaction)",
+    handler: () => {
+      // Handled specially in App.tsx to access client and agent ID
+      return "Compacting conversation...";
+    },
+  },
   "/logout": {
     desc: "Clear credentials and exit",
     handler: () => {
diff --git a/src/cli/helpers/backfill.ts b/src/cli/helpers/backfill.ts
index b8de77d..79c2110 100644
--- a/src/cli/helpers/backfill.ts
+++ b/src/cli/helpers/backfill.ts
@@ -19,6 +19,33 @@ function clip(s: string, limit: number): string {
   return s.length > limit ? `${s.slice(0, limit)}…` : s;
 }
 
+/**
+ * Check if a user message is a compaction summary (system_alert with summary content).
+ * Returns the summary text if found, null otherwise.
+ */
+function extractCompactionSummary(text: string): string | null {
+  try {
+    const parsed = JSON.parse(text);
+    if (
+      parsed.type === "system_alert" &&
+      typeof parsed.message === "string" &&
+      parsed.message.includes("prior messages have been hidden")
+    ) {
+      // Extract the summary part after the header
+      const summaryMatch = parsed.message.match(
+        /The following is a summary of the previous messages:\s*([\s\S]*)/,
+      );
+      if (summaryMatch?.[1]) {
+        return summaryMatch[1].trim();
+      }
+      return parsed.message;
+    }
+  } catch {
+    // Not JSON, not a compaction summary
+  }
+  return null;
+}
+
 function renderAssistantContentParts(
   parts: string | LettaAssistantMessageContentUnion[],
 ): string {
@@ -71,11 +98,32 @@ export function backfillBuffers(buffers: Buffers, history: Message[]): void {
     switch (msg.message_type) {
       // user message - content parts may include text and image parts
       case "user_message": {
+        const rawText = renderUserContentParts(msg.content);
+
+        // Check if this is a compaction summary message (system_alert with summary)
+        const compactionSummary = extractCompactionSummary(rawText);
+        if (compactionSummary) {
+          // Render as a synthetic tool call showing the compaction
+          const exists = buffers.byId.has(lineId);
+          buffers.byId.set(lineId, {
+            kind: "tool_call",
+            id: lineId,
+            toolCallId: `compaction-${lineId}`,
+            name: "Compact",
+            argsText: "messages[...]",
+            resultText: compactionSummary,
+            resultOk: true,
+            phase: "finished",
+          });
+          if (!exists) buffers.order.push(lineId);
+          break;
+        }
+
         const exists = buffers.byId.has(lineId);
         buffers.byId.set(lineId, {
           kind: "user",
           id: lineId,
-          text: renderUserContentParts(msg.content),
+          text: rawText,
         });
         if (!exists) buffers.order.push(lineId);
         break;