diff --git a/src/models/context_manager.py b/src/models/context_manager.py
new file mode 100644
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+++ b/src/models/context_manager.py
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+"""
+Context manager for conversation history and memory compression.
+
+This module implements intelligent context window management with hybrid compression
+strategies to maintain conversation continuity while respecting token limits.
+"""
+
+import hashlib
+from datetime import datetime, timedelta
+from typing import Dict, List, Optional, Tuple, Any
+import re
+
+from .conversation import (
+    Message,
+    Conversation,
+    ContextBudget,
+    ContextWindow,
+    MessageRole,
+    MessageType,
+    MessageMetadata,
+    calculate_importance_score,
+    estimate_token_count,
+)
+
+
+class CompressionStrategy:
+    """Strategies for compressing conversation history."""
+
+    @staticmethod
+    def create_summary(messages: List[Message]) -> str:
+        """
+        Create a summary of compressed messages.
+
+        This is a simple rule-based approach - in production, this could use
+        an LLM to generate more sophisticated summaries.
+        """
+        if not messages:
+            return ""
+
+        # Extract key information
+        user_instructions = []
+        questions = []
+        key_topics = []
+
+        for msg in messages:
+            if msg.role == MessageRole.USER:
+                content_lower = msg.content.lower()
+                if any(
+                    word in content_lower
+                    for word in ["please", "help", "create", "implement", "fix"]
+                ):
+                    user_instructions.append(
+                        msg.content[:100] + "..."
+                        if len(msg.content) > 100
+                        else msg.content
+                    )
+                elif "?" in msg.content:
+                    questions.append(
+                        msg.content[:100] + "..."
+                        if len(msg.content) > 100
+                        else msg.content
+                    )
+
+            # Extract simple topic keywords
+            words = re.findall(r"\b\w+\b", msg.content.lower())
+            technical_terms = [w for w in words if len(w) > 6 and w.isalpha()]
+            key_topics.extend(technical_terms[:3])
+
+        # Build summary
+        summary_parts = []
+
+        if user_instructions:
+            summary_parts.append(f"User requested: {'; '.join(user_instructions[:3])}")
+
+        if questions:
+            summary_parts.append(f"Key questions: {'; '.join(questions[:2])}")
+
+        if key_topics:
+            topic_counts = {}
+            for topic in key_topics:
+                topic_counts[topic] = topic_counts.get(topic, 0) + 1
+            top_topics = sorted(topic_counts.items(), key=lambda x: x[1], reverse=True)[
+                :5
+            ]
+            summary_parts.append(
+                f"Topics discussed: {', '.join([topic for topic, _ in top_topics])}"
+            )
+
+        summary = " | ".join(summary_parts)
+        return summary[:500] + "..." if len(summary) > 500 else summary
+
+    @staticmethod
+    def score_message_importance(message: Message, context: Dict[str, Any]) -> float:
+        """
+        Score message importance for retention during compression.
+        """
+        base_score = calculate_importance_score(message)
+
+        # Factor in recency (more recent = slightly more important)
+        if "current_time" in context:
+            age_hours = (
+                context["current_time"] - message.timestamp
+            ).total_seconds() / 3600
+            recency_factor = max(0.1, 1.0 - (age_hours / 24))  # Decay over 24 hours
+            base_score *= recency_factor
+
+        # Boost for messages that started new topics
+        if message.role == MessageRole.USER and len(message.content) > 50:
+            # Likely a new topic or detailed request
+            base_score *= 1.2
+
+        # Boost for assistant responses that contain code or structured data
+        if message.role == MessageRole.ASSISTANT:
+            if (
+                "```" in message.content
+                or "def " in message.content
+                or "class " in message.content
+            ):
+                base_score *= 1.3
+
+        return min(1.0, base_score)
+
+
+class ContextManager:
+    """
+    Manages conversation context with intelligent compression and token budgeting.
+    """
+
+    def __init__(
+        self, default_context_size: int = 4096, compression_threshold: float = 0.7
+    ):
+        """
+        Initialize context manager.
+
+        Args:
+            default_context_size: Default token limit for context windows
+            compression_threshold: When to trigger compression (0.0-1.0)
+        """
+        self.default_context_size = default_context_size
+        self.compression_threshold = compression_threshold
+        self.conversations: Dict[str, Conversation] = {}
+        self.context_windows: Dict[str, ContextWindow] = {}
+        self.compression_strategy = CompressionStrategy()
+
+    def create_conversation(
+        self, conversation_id: str, model_context_size: Optional[int] = None
+    ) -> Conversation:
+        """
+        Create a new conversation.
+
+        Args:
+            conversation_id: Unique identifier for the conversation
+            model_context_size: Specific model's context size (uses default if None)
+
+        Returns:
+            Created conversation object
+        """
+        context_size = model_context_size or self.default_context_size
+
+        metadata = {"session_id": conversation_id, "context_window_size": context_size}
+
+        conversation = Conversation(id=conversation_id, metadata=metadata)
+
+        self.conversations[conversation_id] = conversation
+        self.context_windows[conversation_id] = ContextWindow(
+            budget=ContextBudget(
+                max_tokens=context_size,
+                compression_threshold=self.compression_threshold,
+            )
+        )
+
+        return conversation
+
+    def add_message(
+        self,
+        conversation_id: str,
+        role: MessageRole,
+        content: str,
+        metadata: Optional[Dict[str, Any]] = None,
+    ) -> Message:
+        """
+        Add a message to a conversation.
+
+        Args:
+            conversation_id: Target conversation ID
+            role: Message role (user/assistant/system/tool)
+            content: Message content
+            metadata: Optional additional metadata
+
+        Returns:
+            Created message object
+        """
+        if conversation_id not in self.conversations:
+            self.create_conversation(conversation_id)
+
+        # Create message
+        message_id = hashlib.md5(
+            f"{conversation_id}_{datetime.utcnow().isoformat()}_{len(self.conversations[conversation_id].messages)}".encode()
+        ).hexdigest()[:12]
+
+        msg_metadata = MessageMetadata()
+        if metadata:
+            for key, value in metadata.items():
+                if hasattr(msg_metadata, key):
+                    setattr(msg_metadata, key, value)
+
+        # Determine message type and set priority
+        if role == MessageRole.USER:
+            if any(
+                word in content.lower()
+                for word in ["please", "help", "create", "implement", "fix"]
+            ):
+                msg_metadata.message_type = MessageType.INSTRUCTION
+                msg_metadata.priority = 0.8
+            elif "?" in content:
+                msg_metadata.message_type = MessageType.QUESTION
+                msg_metadata.priority = 0.6
+            else:
+                msg_metadata.message_type = MessageType.CONTEXT
+                msg_metadata.priority = 0.4
+        elif role == MessageRole.SYSTEM:
+            msg_metadata.message_type = MessageType.SYSTEM
+            msg_metadata.priority = 0.9
+            msg_metadata.is_permanent = True
+        elif role == MessageRole.ASSISTANT:
+            msg_metadata.message_type = MessageType.RESPONSE
+            msg_metadata.priority = 0.5
+
+        message = Message(
+            id=message_id,
+            role=role,
+            content=content,
+            token_count=estimate_token_count(content),
+            metadata=msg_metadata,
+        )
+
+        # Calculate importance score
+        message.importance_score = self.compression_strategy.score_message_importance(
+            message, {"current_time": datetime.utcnow()}
+        )
+
+        # Add to conversation
+        conversation = self.conversations[conversation_id]
+        conversation.add_message(message)
+
+        # Add to context window and check compression
+        context_window = self.context_windows[conversation_id]
+        context_window.add_message(message)
+
+        # Check if compression is needed
+        if context_window.budget.should_compress:
+            self.compress_conversation(conversation_id)
+
+        return message
+
+    def get_context_for_model(
+        self, conversation_id: str, max_tokens: Optional[int] = None
+    ) -> List[Message]:
+        """
+        Get context messages for a model, respecting token limits.
+
+        Args:
+            conversation_id: Conversation ID
+            max_tokens: Maximum tokens (uses conversation default if None)
+
+        Returns:
+            List of messages in chronological order within token limit
+        """
+        if conversation_id not in self.context_windows:
+            return []
+
+        context_window = self.context_windows[conversation_id]
+        effective_context = context_window.get_effective_context()
+
+        # Apply token limit if specified
+        if max_tokens is None:
+            max_tokens = context_window.budget.max_tokens
+
+        # If we're within limits, return as-is
+        total_tokens = sum(msg.token_count for msg in effective_context)
+        if total_tokens <= max_tokens:
+            return effective_context
+
+        # Otherwise, apply sliding window from most recent
+        result = []
+        current_tokens = 0
+
+        # Iterate backwards (most recent first)
+        for message in reversed(effective_context):
+            if current_tokens + message.token_count <= max_tokens:
+                result.insert(0, message)  # Insert at beginning to maintain order
+                current_tokens += message.token_count
+            else:
+                break
+
+        return result
+
+    def compress_conversation(
+        self, conversation_id: str, target_ratio: float = 0.5
+    ) -> bool:
+        """
+        Compress conversation history using hybrid strategy.
+
+        Args:
+            conversation_id: Conversation to compress
+            target_ratio: Target ratio of original size to keep
+
+        Returns:
+            True if compression was performed, False otherwise
+        """
+        if conversation_id not in self.conversations:
+            return False
+
+        conversation = self.conversations[conversation_id]
+        context_window = self.context_windows[conversation_id]
+
+        # Get all messages from context (excluding permanent ones)
+        compressible_messages = [
+            msg for msg in context_window.messages if not msg.metadata.is_permanent
+        ]
+
+        if len(compressible_messages) < 3:  # Need some messages to compress
+            return False
+
+        # Sort by importance (ascending - least important first)
+        compressible_messages.sort(key=lambda m: m.importance_score)
+
+        # Calculate target count
+        target_count = max(2, int(len(compressible_messages) * target_ratio))
+        messages_to_compress = compressible_messages[:-target_count]
+        messages_to_keep = compressible_messages[-target_count:]
+
+        if not messages_to_compress:
+            return False
+
+        # Create summary of compressed messages
+        summary = self.compression_strategy.create_summary(messages_to_compress)
+
+        # Update context window
+        context_window.messages = [
+            msg
+            for msg in context_window.messages
+            if msg.metadata.is_permanent or msg in messages_to_keep
+        ]
+
+        context_window.compressed_summary = summary
+
+        # Recalculate token usage
+        total_tokens = sum(msg.token_count for msg in context_window.messages)
+        if summary:
+            summary_tokens = estimate_token_count(summary)
+            total_tokens += summary_tokens
+
+        context_window.budget.used_tokens = total_tokens
+
+        return True
+
+    def get_conversation_summary(self, conversation_id: str) -> Optional[str]:
+        """
+        Get a summary of the entire conversation.
+
+        Args:
+            conversation_id: Conversation ID
+
+        Returns:
+            Conversation summary or None if not available
+        """
+        if conversation_id not in self.context_windows:
+            return None
+
+        context_window = self.context_windows[conversation_id]
+        if context_window.compressed_summary:
+            # Combine current summary with remaining recent messages
+            recent_content = " | ".join(
+                [
+                    f"{msg.role.value}: {msg.content[:100]}..."
+                    for msg in context_window.messages[-3:]
+                ]
+            )
+            return f"{context_window.compressed_summary} | Recent: {recent_content}"
+
+        # Generate quick summary of recent messages
+        if context_window.messages:
+            recent_messages = context_window.messages[-5:]
+            return " | ".join(
+                [f"{msg.role.value}: {msg.content[:80]}..." for msg in recent_messages]
+            )
+
+        return None
+
+    def clear_conversation(
+        self, conversation_id: str, keep_system: bool = True
+    ) -> None:
+        """
+        Clear a conversation's messages.
+
+        Args:
+            conversation_id: Conversation ID to clear
+            keep_system: Whether to keep system messages
+        """
+        if conversation_id in self.conversations:
+            self.conversations[conversation_id].clear_messages(keep_system)
+
+        if conversation_id in self.context_windows:
+            self.context_windows[conversation_id].clear()
+
+    def get_conversation_stats(self, conversation_id: str) -> Dict[str, Any]:
+        """
+        Get statistics about a conversation.
+
+        Args:
+            conversation_id: Conversation ID
+
+        Returns:
+            Dictionary of conversation statistics
+        """
+        if conversation_id not in self.conversations:
+            return {}
+
+        conversation = self.conversations[conversation_id]
+        context_window = self.context_windows.get(conversation_id)
+
+        stats = {
+            "conversation_id": conversation_id,
+            "total_messages": len(conversation.messages),
+            "total_tokens": conversation.metadata.total_tokens,
+            "session_duration": (
+                conversation.metadata.last_active - conversation.metadata.created_at
+            ).total_seconds(),
+            "messages_by_role": {},
+        }
+
+        # Count by role
+        for role in MessageRole:
+            count = len([msg for msg in conversation.messages if msg.role == role])
+            if count > 0:
+                stats["messages_by_role"][role.value] = count
+
+        # Add context window stats if available
+        if context_window:
+            stats.update(
+                {
+                    "context_usage_percentage": context_window.budget.usage_percentage,
+                    "context_should_compress": context_window.budget.should_compress,
+                    "context_compressed": context_window.compressed_summary is not None,
+                    "context_tokens_used": context_window.budget.used_tokens,
+                    "context_tokens_max": context_window.budget.max_tokens,
+                }
+            )
+
+        return stats
+
+    def list_conversations(self) -> List[Dict[str, Any]]:
+        """
+        List all conversations with basic info.
+
+        Returns:
+            List of conversation summaries
+        """
+        return [
+            {
+                "id": conv_id,
+                "message_count": len(conv.messages),
+                "total_tokens": conv.metadata.total_tokens,
+                "last_active": conv.metadata.last_active.isoformat(),
+                "session_id": conv.metadata.session_id,
+            }
+            for conv_id, conv in self.conversations.items()
+        ]
+
+    def delete_conversation(self, conversation_id: str) -> bool:
+        """
+        Delete a conversation.
+
+        Args:
+            conversation_id: Conversation ID to delete
+
+        Returns:
+            True if deleted, False if not found
+        """
+        deleted = conversation_id in self.conversations
+        if deleted:
+            del self.conversations[conversation_id]
+            del self.context_windows[conversation_id]
+        return deleted