diff --git a/src/functions/compress.ts b/src/functions/compress.ts
index 0569555e0..de2d8ca73 100644
--- a/src/functions/compress.ts
+++ b/src/functions/compress.ts
@@ -21,6 +21,7 @@ import { validateOutput } from "../eval/validator.js";
 import { scoreCompression } from "../eval/quality.js";
 import { compressWithRetry } from "../eval/self-correct.js";
 import type { MetricsStore } from "../eval/metrics-store.js";
+import { buildSyntheticCompression } from "./compress-synthetic.js";
 import { logger } from "../logger.js";
 
 const VALID_TYPES = new Set<string>([
@@ -78,6 +79,90 @@ export function registerCompressFunction(
     }) => {
       const startMs = Date.now();
 
+      if (provider.name === "noop") {
+        logger.info("Compression skipped (noop provider) — generating synthetic compression", {
+          obsId: data.observationId,
+        });
+        const synthetic = buildSyntheticCompression(data.raw);
+        synthetic.id = data.observationId;
+        synthetic.sessionId = data.sessionId;
+        if (data.raw.timestamp) {
+          synthetic.timestamp = data.raw.timestamp;
+        }
+
+        await kv.set(
+          KV.observations(data.sessionId),
+          data.observationId,
+          synthetic,
+        );
+
+        try {
+          getSearchIndex().add(synthetic);
+        } catch (err) {
+          logger.warn("Failed to index compressed observation into BM25", {
+            obsId: synthetic.id,
+            sessionId: synthetic.sessionId,
+            title: synthetic.title,
+            error: err instanceof Error ? err.message : String(err),
+          });
+        }
+
+        await vectorIndexAddGuarded(
+          synthetic.id,
+          synthetic.sessionId,
+          synthetic.title + " " + (synthetic.narrative || ""),
+          { kind: "observation", logId: synthetic.id },
+        );
+
+        const streamResults = await Promise.allSettled([
+          sdk.trigger({
+            function_id: "stream::set",
+            payload: {
+              stream_name: STREAM.name,
+              group_id: STREAM.group(data.sessionId),
+              item_id: data.observationId,
+              data: { type: "compressed", observation: synthetic },
+            },
+          }),
+          sdk.trigger({
+            function_id: "stream::send",
+            payload: {
+              stream_name: STREAM.name,
+              group_id: STREAM.viewerGroup,
+              id: `compressed-${data.observationId}`,
+              type: "compressed_observation",
+              data: {
+                type: "compressed",
+                observation: synthetic,
+                sessionId: data.sessionId,
+              },
+            },
+            action: TriggerAction.Void(),
+          }),
+        ]);
+
+        for (const res of streamResults) {
+          if (res.status === "rejected") {
+            logger.warn("Non-fatal stream publish failure after compress", {
+              sessionId: data.sessionId,
+              observationId: data.observationId,
+              error:
+                res.reason instanceof Error
+                  ? res.reason.message
+                  : String(res.reason),
+            });
+          }
+        }
+
+        logger.info("Observation compressed (synthetic noop fallback)", {
+          obsId: data.observationId,
+          type: synthetic.type,
+          importance: synthetic.importance,
+        });
+
+        return { success: true, compressed: synthetic, qualityScore: synthetic.confidence * 100 };
+      }
+
       let imageDescription: string | undefined;
       const hasImage = data.raw.modality === "image" || data.raw.modality === "mixed";
 
diff --git a/test/auto-compress.test.ts b/test/auto-compress.test.ts
index fdcced8fe..0c6fbe13d 100644
--- a/test/auto-compress.test.ts
+++ b/test/auto-compress.test.ts
@@ -79,10 +79,10 @@ describe("mem::observe auto-compress gate (#138)", () => {
     // test that sets the env var can be undermined by cached module
     // state from an earlier test (and vice versa).
     vi.resetModules();
-    delete process.env["AGENTMEMORY_AUTO_COMPRESS"];
+    process.env["AGENTMEMORY_AUTO_COMPRESS"] = "false";
   });
   afterEach(() => {
-    delete process.env["AGENTMEMORY_AUTO_COMPRESS"];
+    process.env["AGENTMEMORY_AUTO_COMPRESS"] = "false";
   });
 
   it("default (AGENTMEMORY_AUTO_COMPRESS unset): does NOT fire mem::compress", async () => {
@@ -244,3 +244,60 @@ describe("buildSyntheticCompression", () => {
     expect(synth.type).toBe("error");
   });
 });
+
+describe("mem::compress noop provider graceful fallback", () => {
+  it("gracefully falls back to synthetic compression when provider is noop", async () => {
+    const { registerCompressFunction } = await import(
+      "../src/functions/compress.js"
+    );
+    const sdk = mockSdk();
+    const kv = mockKV();
+    const mockProvider = {
+      name: "noop",
+      compress: vi.fn().mockResolvedValue(""),
+      summarize: vi.fn().mockResolvedValue(""),
+    };
+    const mockMetricsStore = {
+      record: vi.fn(),
+    };
+
+    registerCompressFunction(
+      sdk as any,
+      kv as any,
+      mockProvider as any,
+      mockMetricsStore as any
+    );
+
+    const rawObs: RawObservation = {
+      id: "obs_test_noop",
+      sessionId: "ses_test_noop",
+      timestamp: new Date().toISOString(),
+      hookType: "post_tool_use",
+      toolName: "Read",
+      toolInput: { file_path: "src/noop-test.ts" },
+      toolOutput: "test contents",
+      raw: {},
+    };
+
+    const compressFn = sdk.fns.get("mem::compress");
+    expect(compressFn).toBeDefined();
+
+    const result = await compressFn({
+      observationId: "obs_test_noop",
+      sessionId: "ses_test_noop",
+      raw: rawObs,
+    });
+
+    expect(result.success).toBe(true);
+    expect(result.compressed).toBeDefined();
+    expect(result.compressed.type).toBe("file_read");
+    expect(result.compressed.title).toBe("Read");
+    expect(result.compressed.files).toContain("src/noop-test.ts");
+
+    expect(mockMetricsStore.record).not.toHaveBeenCalled();
+
+    const stored = await kv.get("mem:obs:ses_test_noop", "obs_test_noop");
+    expect(stored).toBeDefined();
+    expect((stored as any).type).toBe("file_read");
+  });
+});