diff --git a/src/ccstatusline.ts b/src/ccstatusline.ts
index 54b70113..877072cb 100644
--- a/src/ccstatusline.ts
+++ b/src/ccstatusline.ts
@@ -12,6 +12,11 @@ import type { StatusJSON } from './types/StatusJSON';
 import { StatusJSONSchema } from './types/StatusJSON';
 import { getVisibleText } from './utils/ansi';
 import { updateColorMap } from './utils/colors';
+import {
+    detectCompaction,
+    loadCompactionState,
+    saveCompactionState
+} from './utils/compaction';
 import {
     initConfigPath,
     loadSettings,
@@ -140,6 +145,17 @@ async function renderMultipleLines(data: StatusJSON) {
         skillsMetrics = getSkillsMetrics(data.session_id);
     }
 
+    // Compaction detection — track context percentage drops between renders
+    let compactionCount = 0;
+    const hasCompactionWidget = lines.some(line => line.some(item => item.type === 'compaction-counter'));
+    if (hasCompactionWidget && data.session_id && data.context_window?.used_percentage !== null && data.context_window?.used_percentage !== undefined) {
+        const prevState = loadCompactionState(data.session_id);
+        const ctxPct = Math.round(data.context_window.used_percentage);
+        const newState = detectCompaction(ctxPct, prevState);
+        saveCompactionState(data.session_id, newState);
+        compactionCount = newState.count;
+    }
+
     // Create render context
     const context: RenderContext = {
         data,
@@ -149,6 +165,7 @@ async function renderMultipleLines(data: StatusJSON) {
         usageData,
         sessionDuration,
         skillsMetrics,
+        compactionData: compactionCount > 0 ? { count: compactionCount } : null,
         isPreview: false
     };
 
diff --git a/src/types/RenderContext.ts b/src/types/RenderContext.ts
index 9ba86aea..0d0424ed 100644
--- a/src/types/RenderContext.ts
+++ b/src/types/RenderContext.ts
@@ -19,6 +19,10 @@ export interface RenderUsageData {
     error?: 'no-credentials' | 'timeout' | 'rate-limited' | 'api-error' | 'parse-error';
 }
 
+export interface CompactionData {
+    count: number;
+}
+
 export interface RenderContext {
     data?: StatusJSON;
     tokenMetrics?: TokenMetrics | null;
@@ -28,6 +32,7 @@ export interface RenderContext {
     sessionDuration?: string | null;
     blockMetrics?: BlockMetrics | null;
     skillsMetrics?: SkillsMetrics | null;
+    compactionData?: CompactionData | null;
     terminalWidth?: number | null;
     isPreview?: boolean;
     lineIndex?: number;  // Index of the current line being rendered (for theme cycling)
diff --git a/src/utils/__tests__/compaction.test.ts b/src/utils/__tests__/compaction.test.ts
new file mode 100644
index 00000000..2f06802d
--- /dev/null
+++ b/src/utils/__tests__/compaction.test.ts
@@ -0,0 +1,81 @@
+import {
+    describe,
+    expect,
+    it
+} from 'vitest';
+
+import {
+    detectCompaction,
+    type CompactionState
+} from '../compaction';
+
+const fresh: CompactionState = { count: 0, prevCtxPct: 0 };
+
+describe('detectCompaction', () => {
+    it('does not detect on first render (no previous state)', () => {
+        const result = detectCompaction(40, fresh);
+        expect(result.count).toBe(0);
+        expect(result.prevCtxPct).toBe(40);
+    });
+
+    it('detects compaction when ctx drops by more than 2 points', () => {
+        const prev: CompactionState = { count: 0, prevCtxPct: 40 };
+        const result = detectCompaction(30, prev);
+        expect(result.count).toBe(1);
+    });
+
+    it('does not detect when ctx drops by exactly 2 points', () => {
+        const prev: CompactionState = { count: 0, prevCtxPct: 40 };
+        const result = detectCompaction(38, prev);
+        expect(result.count).toBe(0);
+    });
+
+    it('does not detect when ctx drops by 1 point (rounding noise)', () => {
+        const prev: CompactionState = { count: 0, prevCtxPct: 8 };
+        const result = detectCompaction(7, prev);
+        expect(result.count).toBe(0);
+    });
+
+    it('does not detect when ctx increases', () => {
+        const prev: CompactionState = { count: 0, prevCtxPct: 40 };
+        const result = detectCompaction(45, prev);
+        expect(result.count).toBe(0);
+    });
+
+    it('does not detect when ctx stays the same', () => {
+        const prev: CompactionState = { count: 0, prevCtxPct: 40 };
+        const result = detectCompaction(40, prev);
+        expect(result.count).toBe(0);
+    });
+
+    it('detects 3-point drop on 1M window', () => {
+        const prev: CompactionState = { count: 0, prevCtxPct: 8 };
+        const result = detectCompaction(5, prev);
+        expect(result.count).toBe(1);
+    });
+
+    it('detects large compaction on 200K window', () => {
+        const prev: CompactionState = { count: 0, prevCtxPct: 85 };
+        const result = detectCompaction(30, prev);
+        expect(result.count).toBe(1);
+    });
+
+    it('increments existing count', () => {
+        const prev: CompactionState = { count: 3, prevCtxPct: 70 };
+        const result = detectCompaction(40, prev);
+        expect(result.count).toBe(4);
+    });
+
+    it('updates prevCtxPct regardless of detection', () => {
+        const prev: CompactionState = { count: 0, prevCtxPct: 40 };
+        const result = detectCompaction(45, prev);
+        expect(result.prevCtxPct).toBe(45);
+    });
+
+    it('accepts custom threshold', () => {
+        const prev: CompactionState = { count: 0, prevCtxPct: 10 };
+        // 1-point drop with threshold=1 should detect
+        const result = detectCompaction(8, prev, 1);
+        expect(result.count).toBe(1);
+    });
+});
diff --git a/src/utils/compaction.ts b/src/utils/compaction.ts
new file mode 100644
index 00000000..281087e1
--- /dev/null
+++ b/src/utils/compaction.ts
@@ -0,0 +1,85 @@
+import {
+    existsSync,
+    mkdirSync,
+    readFileSync,
+    writeFileSync
+} from 'node:fs';
+import { join } from 'node:path';
+
+import { z } from 'zod';
+
+const DEFAULT_DROP_THRESHOLD = 2;
+const CACHE_SUBDIR = 'compaction';
+
+export interface CompactionState {
+    count: number;
+    prevCtxPct: number;
+}
+
+const CompactionStateSchema = z.object({
+    count: z.number().default(0),
+    prevCtxPct: z.number().default(0)
+});
+
+/**
+ * Detect context compaction events.
+ *
+ * Context only grows until compaction — any drop in used_percentage beyond
+ * the threshold indicates Claude Code compacted the conversation. The threshold
+ * filters rounding noise and cache accounting wobble (±1 point).
+ *
+ * @param currentCtxPct - Current used_percentage from StatusJSON
+ * @param state - Previous compaction state
+ * @param dropThreshold - Minimum percentage-point drop to count as compaction (default: 2)
+ * @returns Updated compaction state
+ */
+export function detectCompaction(
+    currentCtxPct: number,
+    state: CompactionState,
+    dropThreshold: number = DEFAULT_DROP_THRESHOLD
+): CompactionState {
+    let { count } = state;
+    const { prevCtxPct } = state;
+
+    if (prevCtxPct > 0 && currentCtxPct < prevCtxPct - dropThreshold) {
+        count += 1;
+    }
+
+    return { count, prevCtxPct: currentCtxPct };
+}
+
+function getCacheDir(): string {
+    const home = process.env.HOME ?? process.env.USERPROFILE ?? '';
+    return join(home, '.cache', 'ccstatusline', CACHE_SUBDIR);
+}
+
+function getStatePath(sessionId: string): string {
+    return join(getCacheDir(), `compaction-${sessionId}.json`);
+}
+
+/**
+ * Load compaction state for a session.
+ */
+export function loadCompactionState(sessionId: string): CompactionState {
+    const path = getStatePath(sessionId);
+    if (!existsSync(path)) {
+        return { count: 0, prevCtxPct: 0 };
+    }
+    try {
+        const raw: unknown = JSON.parse(readFileSync(path, 'utf-8'));
+        return CompactionStateSchema.parse(raw);
+    } catch {
+        return { count: 0, prevCtxPct: 0 };
+    }
+}
+
+/**
+ * Save compaction state for a session.
+ */
+export function saveCompactionState(sessionId: string, state: CompactionState): void {
+    const dir = getCacheDir();
+    if (!existsSync(dir)) {
+        mkdirSync(dir, { recursive: true });
+    }
+    writeFileSync(getStatePath(sessionId), JSON.stringify(state) + '\n');
+}
\ No newline at end of file
diff --git a/src/utils/widget-manifest.ts b/src/utils/widget-manifest.ts
index 890abd9f..ce02a1d2 100644
--- a/src/utils/widget-manifest.ts
+++ b/src/utils/widget-manifest.ts
@@ -54,7 +54,8 @@ export const WIDGET_MANIFEST: WidgetManifestEntry[] = [
     { type: 'context-bar', create: () => new widgets.ContextBarWidget() },
     { type: 'skills', create: () => new widgets.SkillsWidget() },
     { type: 'thinking-effort', create: () => new widgets.ThinkingEffortWidget() },
-    { type: 'vim-mode', create: () => new widgets.VimModeWidget() }
+    { type: 'vim-mode', create: () => new widgets.VimModeWidget() },
+    { type: 'compaction-counter', create: () => new widgets.CompactionCounterWidget() }
 ];
 
 export const LAYOUT_WIDGET_MANIFEST: LayoutWidgetManifestEntry[] = [
diff --git a/src/widgets/CompactionCounter.ts b/src/widgets/CompactionCounter.ts
new file mode 100644
index 00000000..60cfaf13
--- /dev/null
+++ b/src/widgets/CompactionCounter.ts
@@ -0,0 +1,40 @@
+import type { RenderContext } from '../types/RenderContext';
+import type { Settings } from '../types/Settings';
+import type {
+    Widget,
+    WidgetEditorDisplay,
+    WidgetItem
+} from '../types/Widget';
+
+/**
+ * Displays a count of context compaction events in the current session.
+ *
+ * Claude Code periodically compacts (summarizes) conversation context when it
+ * approaches the context window limit. This widget tracks how many times
+ * compaction has occurred by detecting drops in used_percentage between renders.
+ *
+ * Hidden when count is 0. Shows ↻N when compactions have occurred.
+ */
+export class CompactionCounterWidget implements Widget {
+    getDefaultColor(): string { return 'yellow'; }
+    getDescription(): string { return 'Count of context compaction events in the current session. Hidden when no compactions have occurred.'; }
+    getDisplayName(): string { return 'Compaction Counter'; }
+    getCategory(): string { return 'Context'; }
+    getEditorDisplay(_item: WidgetItem): WidgetEditorDisplay {
+        return { displayText: 'Compaction Counter' };
+    }
+
+    render(_item: WidgetItem, context: RenderContext, _settings: Settings): string | null {
+        if (context.isPreview) {
+            return '\u21BB2';
+        }
+
+        const count = context.compactionData?.count;
+        if (!count) return null;
+
+        return `\u21BB${count}`;
+    }
+
+    supportsRawValue(): boolean { return false; }
+    supportsColors(_item: WidgetItem): boolean { return true; }
+}
diff --git a/src/widgets/__tests__/CompactionCounter.test.ts b/src/widgets/__tests__/CompactionCounter.test.ts
new file mode 100644
index 00000000..0c70b482
--- /dev/null
+++ b/src/widgets/__tests__/CompactionCounter.test.ts
@@ -0,0 +1,87 @@
+import {
+    describe,
+    expect,
+    it
+} from 'vitest';
+
+import type {
+    RenderContext,
+    WidgetItem
+} from '../../types';
+import { DEFAULT_SETTINGS } from '../../types/Settings';
+import { CompactionCounterWidget } from '../CompactionCounter';
+
+const ITEM: WidgetItem = { id: 'compaction-counter', type: 'compaction-counter' };
+
+function makeContext(overrides: Partial<RenderContext> = {}): RenderContext {
+    return { ...overrides };
+}
+
+describe('CompactionCounterWidget', () => {
+    describe('metadata', () => {
+        it('has correct display name', () => {
+            expect(new CompactionCounterWidget().getDisplayName()).toBe('Compaction Counter');
+        });
+
+        it('has correct category', () => {
+            expect(new CompactionCounterWidget().getCategory()).toBe('Context');
+        });
+
+        it('does not support raw value', () => {
+            expect(new CompactionCounterWidget().supportsRawValue()).toBe(false);
+        });
+
+        it('supports colors', () => {
+            expect(new CompactionCounterWidget().supportsColors(ITEM)).toBe(true);
+        });
+
+        it('has correct default color', () => {
+            expect(new CompactionCounterWidget().getDefaultColor()).toBe('yellow');
+        });
+    });
+
+    describe('render()', () => {
+        it('renders compaction count with arrow', () => {
+            const ctx = makeContext({ compactionData: { count: 3 } });
+            expect(new CompactionCounterWidget().render(ITEM, ctx, DEFAULT_SETTINGS)).toBe('\u21BB3');
+        });
+
+        it('renders count of 1', () => {
+            const ctx = makeContext({ compactionData: { count: 1 } });
+            expect(new CompactionCounterWidget().render(ITEM, ctx, DEFAULT_SETTINGS)).toBe('\u21BB1');
+        });
+
+        it('returns null when count is 0', () => {
+            const ctx = makeContext({ compactionData: { count: 0 } });
+            expect(new CompactionCounterWidget().render(ITEM, ctx, DEFAULT_SETTINGS)).toBeNull();
+        });
+
+        it('returns null when compactionData is undefined', () => {
+            const ctx = makeContext();
+            expect(new CompactionCounterWidget().render(ITEM, ctx, DEFAULT_SETTINGS)).toBeNull();
+        });
+
+        it('returns null when compactionData is null', () => {
+            const ctx = makeContext({ compactionData: null });
+            expect(new CompactionCounterWidget().render(ITEM, ctx, DEFAULT_SETTINGS)).toBeNull();
+        });
+
+        it('returns null when context.data is absent', () => {
+            const ctx = makeContext();
+            expect(new CompactionCounterWidget().render(ITEM, ctx, DEFAULT_SETTINGS)).toBeNull();
+        });
+
+        it('returns sample data in preview mode', () => {
+            const ctx = makeContext({ isPreview: true });
+            expect(new CompactionCounterWidget().render(ITEM, ctx, DEFAULT_SETTINGS)).toBe('\u21BB2');
+        });
+    });
+
+    describe('editor', () => {
+        it('has correct editor display', () => {
+            expect(new CompactionCounterWidget().getEditorDisplay(ITEM)).toEqual({
+                displayText: 'Compaction Counter'
+            });
+        });
+    });
+});
diff --git a/src/widgets/index.ts b/src/widgets/index.ts
index 74d92bce..8220f4cc 100644
--- a/src/widgets/index.ts
+++ b/src/widgets/index.ts
@@ -35,4 +35,5 @@ export { ContextBarWidget } from './ContextBar';
 export { LinkWidget } from './Link';
 export { SkillsWidget } from './Skills';
 export { ThinkingEffortWidget } from './ThinkingEffort';
-export { VimModeWidget } from './VimMode';
\ No newline at end of file
+export { VimModeWidget } from './VimMode';
+export { CompactionCounterWidget } from './CompactionCounter';
\ No newline at end of file