diff --git a/crates/goose/src/agents/agent.rs b/crates/goose/src/agents/agent.rs
index 57421320e1..bb5c37747c 100644
--- a/crates/goose/src/agents/agent.rs
+++ b/crates/goose/src/agents/agent.rs
@@ -1235,11 +1235,29 @@ impl Agent {
                                 messages_to_add.push(final_message_tool_resp);
                             }
                         }
-                        Err(ProviderError::ContextLengthExceeded(_)) => {
-                            yield AgentEvent::Message(Message::assistant().with_context_length_exceeded(
-                                    "The context length of the model has been exceeded. Please start a new session and try again.",
-                                ));
-                            break;
+                        Err(ProviderError::ContextLengthExceeded(error_msg)) => {
+                            info!("Context length exceeded, attempting compaction");
+
+                            match auto_compact::perform_compaction(self, messages.messages()).await {
+                                Ok(compact_result) => {
+                                    messages = compact_result.messages;
+
+                                    yield AgentEvent::Message(
+                                        Message::assistant().with_summarization_requested(
+                                            "Context limit reached. Conversation has been automatically compacted to continue."
+                                        )
+                                    );
+                                    yield AgentEvent::HistoryReplaced(messages.messages().to_vec());
+
+                                    continue;
+                                }
+                                Err(_) => {
+                                    yield AgentEvent::Message(Message::assistant().with_context_length_exceeded(
+                                        format!("Context length exceeded and cannot summarize: {}. Unable to continue.", error_msg)
+                                    ));
+                                    break;
+                                }
+                            }
                         }
                         Err(e) => {
                             error!("Error: {}", e);
diff --git a/crates/goose/src/context_mgmt/auto_compact.rs b/crates/goose/src/context_mgmt/auto_compact.rs
index 0783a8257d..826dab8561 100644
--- a/crates/goose/src/context_mgmt/auto_compact.rs
+++ b/crates/goose/src/context_mgmt/auto_compact.rs
@@ -120,6 +120,50 @@ pub async fn check_compaction_needed(
     })
 }
 
+/// Perform compaction on messages without checking thresholds
+///
+/// This function directly performs compaction on the provided messages.
+/// If the most recent message is a user message, it will be preserved by removing it
+/// before compaction and adding it back afterwards.
+///
+/// # Arguments
+/// * `agent` - The agent to use for context management
+/// * `messages` - The current message history
+///
+/// # Returns
+/// * `AutoCompactResult` containing the compacted messages and metadata
+pub async fn perform_compaction(agent: &Agent, messages: &[Message]) -> Result<AutoCompactResult> {
+    info!("Performing message compaction");
+
+    // Check if the most recent message is a user message
+    let (messages_to_compact, preserved_user_message) = if let Some(last_message) = messages.last()
+    {
+        if matches!(last_message.role, rmcp::model::Role::User) {
+            // Remove the last user message before compaction
+            (&messages[..messages.len() - 1], Some(last_message.clone()))
+        } else {
+            (messages, None)
+        }
+    } else {
+        (messages, None)
+    };
+
+    // Perform the compaction on messages excluding the preserved user message
+    let (mut compacted_messages, _, summarization_usage) =
+        agent.summarize_context(messages_to_compact).await?;
+
+    // Add back the preserved user message if it exists
+    if let Some(user_message) = preserved_user_message {
+        compacted_messages.push(user_message);
+    }
+
+    Ok(AutoCompactResult {
+        compacted: true,
+        messages: compacted_messages,
+        summarization_usage,
+    })
+}
+
 /// Check if messages need compaction and compact them if necessary
 ///
 /// This is a convenience wrapper function that combines checking and compaction.
@@ -163,33 +207,8 @@ pub async fn check_and_compact_messages(
         check_result.usage_ratio * 100.0
     );
 
-    // Check if the most recent message is a user message
-    let (messages_to_compact, preserved_user_message) = if let Some(last_message) = messages.last()
-    {
-        if matches!(last_message.role, rmcp::model::Role::User) {
-            // Remove the last user message before auto-compaction
-            (&messages[..messages.len() - 1], Some(last_message.clone()))
-        } else {
-            (messages, None)
-        }
-    } else {
-        (messages, None)
-    };
-
-    // Perform the compaction on messages excluding the preserved user message
-    let (mut compacted_messages, _, summarization_usage) =
-        agent.summarize_context(messages_to_compact).await?;
-
-    // Add back the preserved user message if it exists
-    if let Some(user_message) = preserved_user_message {
-        compacted_messages.push(user_message);
-    }
-
-    Ok(AutoCompactResult {
-        compacted: true,
-        messages: compacted_messages,
-        summarization_usage,
-    })
+    // Use perform_compaction to do the actual work
+    perform_compaction(agent, messages).await
 }
 
 #[cfg(test)]