diff --git a/nanobot/agent/memory.py b/nanobot/agent/memory.py
index bf875282..9a5aa573 100644
--- a/nanobot/agent/memory.py
+++ b/nanobot/agent/memory.py
@@ -433,13 +433,33 @@ class MemoryStore:
         ]
 
     def compact_history(self) -> None:
-        """Drop oldest entries if the file exceeds *max_history_entries*."""
+        """Drop oldest processed entries without discarding pending Dream input."""
         if self.max_history_entries <= 0:
             return
         entries = self._read_entries()
         if len(entries) <= self.max_history_entries:
             return
-        kept = entries[-self.max_history_entries:]
+        last_dream_cursor = self.get_last_dream_cursor()
+        first_unprocessed = next(
+            (
+                index
+                for index, entry in enumerate(entries)
+                if (
+                    (cursor := self._valid_cursor(entry.get("cursor"))) is not None
+                    and cursor > last_dream_cursor
+                )
+            ),
+            len(entries),
+        )
+        keep_from = min(len(entries) - self.max_history_entries, first_unprocessed)
+        kept = entries[keep_from:]
+        if len(kept) > self.max_history_entries:
+            logger.warning(
+                "History compaction retained {} unprocessed entries beyond the configured "
+                "limit of {}",
+                len(kept),
+                self.max_history_entries,
+            )
         self._write_entries(kept)
 
     # -- JSONL helpers -------------------------------------------------------
diff --git a/tests/agent/test_memory_store.py b/tests/agent/test_memory_store.py
index 8de77208..bf8f4c72 100644
--- a/tests/agent/test_memory_store.py
+++ b/tests/agent/test_memory_store.py
@@ -235,11 +235,23 @@ class TestHistoryWithCursor:
         store.append_history("event 3")
         store.append_history("event 4")
         store.append_history("event 5")
+        store.set_last_dream_cursor(5)
         store.compact_history()
         entries = store.read_unprocessed_history(since_cursor=0)
         assert len(entries) == 2
         assert entries[0]["cursor"] in {4, 5}
 
+    def test_compact_history_preserves_entries_after_dream_cursor(self, tmp_path):
+        store = MemoryStore(tmp_path, max_history_entries=50)
+        for index in range(1, 101):
+            store.append_history(f"event {index}")
+        store.set_last_dream_cursor(20)
+
+        store.compact_history()
+
+        entries = store.read_unprocessed_history(since_cursor=0)
+        assert [entry["cursor"] for entry in entries] == list(range(21, 101))
+
     def test_write_entries_uses_atomic_write(self, tmp_path):
         """_write_entries uses temp file + os.replace for atomicity."""
         store = MemoryStore(tmp_path)