diff --git a/dotnet/tests/Microsoft.Agents.AI.UnitTests/Compaction/CompactionStrategyTests.cs b/dotnet/tests/Microsoft.Agents.AI.UnitTests/Compaction/CompactionStrategyTests.cs
new file mode 100644
index 0000000000..a89ac0702e
--- /dev/null
+++ b/dotnet/tests/Microsoft.Agents.AI.UnitTests/Compaction/CompactionStrategyTests.cs
@@ -0,0 +1,166 @@
+// Copyright (c) Microsoft. All rights reserved.
+
+using System;
+using System.Threading;
+using System.Threading.Tasks;
+using Microsoft.Agents.AI.Compaction;
+using Microsoft.Extensions.AI;
+
+namespace Microsoft.Agents.AI.UnitTests.Compaction;
+
+/// <summary>
+/// Contains tests for the <see cref="CompactionStrategy"/> abstract base class.
+/// </summary>
+public class CompactionStrategyTests
+{
+    [Fact]
+    public void ConstructorNullTriggerThrows()
+    {
+        // Act & Assert
+        Assert.Throws<ArgumentNullException>(() => new TestStrategy(null!));
+    }
+
+    [Fact]
+    public async Task CompactAsyncTriggerNotMetReturnsFalseAsync()
+    {
+        // Arrange — trigger never fires
+        TestStrategy strategy = new(_ => false);
+        MessageIndex index = MessageIndex.Create([new ChatMessage(ChatRole.User, "Hello")]);
+
+        // Act
+        bool result = await strategy.CompactAsync(index);
+
+        // Assert
+        Assert.False(result);
+        Assert.Equal(0, strategy.ApplyCallCount);
+    }
+
+    [Fact]
+    public async Task CompactAsyncTriggerMetCallsApplyAsync()
+    {
+        // Arrange — trigger always fires
+        TestStrategy strategy = new(_ => true, applyFunc: _ => true);
+        MessageIndex index = MessageIndex.Create([new ChatMessage(ChatRole.User, "Hello")]);
+
+        // Act
+        bool result = await strategy.CompactAsync(index);
+
+        // Assert
+        Assert.True(result);
+        Assert.Equal(1, strategy.ApplyCallCount);
+    }
+
+    [Fact]
+    public async Task CompactAsyncReturnsFalseWhenApplyReturnsFalseAsync()
+    {
+        // Arrange — trigger fires but Apply does nothing
+        TestStrategy strategy = new(_ => true, applyFunc: _ => false);
+        MessageIndex index = MessageIndex.Create([new ChatMessage(ChatRole.User, "Hello")]);
+
+        // Act
+        bool result = await strategy.CompactAsync(index);
+
+        // Assert
+        Assert.False(result);
+        Assert.Equal(1, strategy.ApplyCallCount);
+    }
+
+    [Fact]
+    public async Task CompactAsyncDefaultTargetIsInverseOfTriggerAsync()
+    {
+        // Arrange — trigger fires when groups > 2
+        // Default target should be: stop when groups <= 2 (i.e., !trigger)
+        CompactionTrigger trigger = CompactionTriggers.GroupsExceed(2);
+        TestStrategy strategy = new(trigger, applyFunc: index =>
+        {
+            // Exclude oldest non-system group one at a time
+            foreach (MessageGroup group in index.Groups)
+            {
+                if (!group.IsExcluded && group.Kind != MessageGroupKind.System)
+                {
+                    group.IsExcluded = true;
+                    // Target (default = !trigger) returns true when groups <= 2
+                    // So the strategy would check Target after this exclusion
+                    break;
+                }
+            }
+
+            return true;
+        });
+
+        MessageIndex index = MessageIndex.Create(
+        [
+            new ChatMessage(ChatRole.User, "Q1"),
+            new ChatMessage(ChatRole.Assistant, "A1"),
+            new ChatMessage(ChatRole.User, "Q2"),
+            new ChatMessage(ChatRole.Assistant, "A2"),
+        ]);
+
+        // Act
+        bool result = await strategy.CompactAsync(index);
+
+        // Assert — trigger fires (4 > 2), Apply is called
+        Assert.True(result);
+        Assert.Equal(1, strategy.ApplyCallCount);
+    }
+
+    [Fact]
+    public async Task CompactAsyncCustomTargetIsPassedToStrategyAsync()
+    {
+        // Arrange — custom target that always signals stop
+        bool targetCalled = false;
+        CompactionTrigger customTarget = _ =>
+        {
+            targetCalled = true;
+            return true;
+        };
+
+        TestStrategy strategy = new(_ => true, customTarget, _ =>
+        {
+            // Access the target from within the strategy
+            return true;
+        });
+
+        MessageIndex index = MessageIndex.Create([new ChatMessage(ChatRole.User, "Hello")]);
+
+        // Act
+        await strategy.CompactAsync(index);
+
+        // Assert — the custom target is accessible (verified by TestStrategy checking it)
+        Assert.Equal(1, strategy.ApplyCallCount);
+        // The target is accessible to derived classes via the protected property
+        Assert.True(strategy.InvokeTarget(index));
+        Assert.True(targetCalled);
+    }
+
+    /// <summary>
+    /// A concrete test implementation of <see cref="CompactionStrategy"/> for testing the base class.
+    /// </summary>
+    private sealed class TestStrategy : CompactionStrategy
+    {
+        private readonly Func<MessageIndex, bool>? _applyFunc;
+
+        public TestStrategy(
+            CompactionTrigger trigger,
+            CompactionTrigger? target = null,
+            Func<MessageIndex, bool>? applyFunc = null)
+            : base(trigger, target)
+        {
+            this._applyFunc = applyFunc;
+        }
+
+        public int ApplyCallCount { get; private set; }
+
+        /// <summary>
+        /// Exposes the protected Target property for test verification.
+        /// </summary>
+        public bool InvokeTarget(MessageIndex index) => this.Target(index);
+
+        protected override Task<bool> ApplyCompactionAsync(MessageIndex index, CancellationToken cancellationToken)
+        {
+            this.ApplyCallCount++;
+            bool result = this._applyFunc?.Invoke(index) ?? false;
+            return Task.FromResult(result);
+        }
+    }
+}
diff --git a/dotnet/tests/Microsoft.Agents.AI.UnitTests/Compaction/CompactionTriggersTests.cs b/dotnet/tests/Microsoft.Agents.AI.UnitTests/Compaction/CompactionTriggersTests.cs
index fc41d7b2f1..fe4ae320a9 100644
--- a/dotnet/tests/Microsoft.Agents.AI.UnitTests/Compaction/CompactionTriggersTests.cs
+++ b/dotnet/tests/Microsoft.Agents.AI.UnitTests/Compaction/CompactionTriggersTests.cs
@@ -152,4 +152,29 @@ public class CompactionTriggersTests
         MessageIndex index = MessageIndex.Create([new ChatMessage(ChatRole.User, "A")]);
         Assert.False(trigger(index));
     }
+
+    [Fact]
+    public void TokensBelowReturnsTrueWhenBelowThreshold()
+    {
+        CompactionTrigger trigger = CompactionTriggers.TokensBelow(999_999);
+        MessageIndex index = MessageIndex.Create([new ChatMessage(ChatRole.User, "Hi")]);
+
+        Assert.True(trigger(index));
+    }
+
+    [Fact]
+    public void TokensBelowReturnsFalseWhenAboveThreshold()
+    {
+        CompactionTrigger trigger = CompactionTriggers.TokensBelow(0);
+        MessageIndex index = MessageIndex.Create([new ChatMessage(ChatRole.User, "Hello world")]);
+
+        Assert.False(trigger(index));
+    }
+
+    [Fact]
+    public void AlwaysReturnsTrue()
+    {
+        MessageIndex index = MessageIndex.Create([new ChatMessage(ChatRole.User, "A")]);
+        Assert.True(CompactionTriggers.Always(index));
+    }
 }
diff --git a/dotnet/tests/Microsoft.Agents.AI.UnitTests/Compaction/MessageIndexTests.cs b/dotnet/tests/Microsoft.Agents.AI.UnitTests/Compaction/MessageIndexTests.cs
index 3504e1a3d9..9f0eabf9d8 100644
--- a/dotnet/tests/Microsoft.Agents.AI.UnitTests/Compaction/MessageIndexTests.cs
+++ b/dotnet/tests/Microsoft.Agents.AI.UnitTests/Compaction/MessageIndexTests.cs
@@ -521,4 +521,158 @@ public class MessageIndexTests
         Assert.Equal(1, groups.TotalTurnCount);
         Assert.Equal(1, groups.IncludedTurnCount);
     }
+
+    [Fact]
+    public void UpdateAppendsNewMessagesIncrementally()
+    {
+        // Arrange — create with 2 messages
+        List<ChatMessage> messages =
+        [
+            new ChatMessage(ChatRole.User, "Q1"),
+            new ChatMessage(ChatRole.Assistant, "A1"),
+        ];
+        MessageIndex index = MessageIndex.Create(messages);
+        Assert.Equal(2, index.Groups.Count);
+        Assert.Equal(2, index.ProcessedMessageCount);
+
+        // Act — add 2 more messages and update
+        messages.Add(new ChatMessage(ChatRole.User, "Q2"));
+        messages.Add(new ChatMessage(ChatRole.Assistant, "A2"));
+        index.Update(messages);
+
+        // Assert — should have 4 groups total, processed count updated
+        Assert.Equal(4, index.Groups.Count);
+        Assert.Equal(4, index.ProcessedMessageCount);
+        Assert.Equal(MessageGroupKind.User, index.Groups[2].Kind);
+        Assert.Equal(MessageGroupKind.AssistantText, index.Groups[3].Kind);
+    }
+
+    [Fact]
+    public void UpdateNoOpWhenNoNewMessages()
+    {
+        // Arrange
+        List<ChatMessage> messages =
+        [
+            new ChatMessage(ChatRole.User, "Q1"),
+        ];
+        MessageIndex index = MessageIndex.Create(messages);
+        int originalCount = index.Groups.Count;
+
+        // Act — update with same count
+        index.Update(messages);
+
+        // Assert — nothing changed
+        Assert.Equal(originalCount, index.Groups.Count);
+    }
+
+    [Fact]
+    public void UpdateRebuildsWhenMessagesShrink()
+    {
+        // Arrange — create with 3 messages
+        List<ChatMessage> messages =
+        [
+            new ChatMessage(ChatRole.User, "Q1"),
+            new ChatMessage(ChatRole.Assistant, "A1"),
+            new ChatMessage(ChatRole.User, "Q2"),
+        ];
+        MessageIndex index = MessageIndex.Create(messages);
+        Assert.Equal(3, index.Groups.Count);
+
+        // Exclude a group to verify rebuild clears state
+        index.Groups[0].IsExcluded = true;
+
+        // Act — update with fewer messages (simulates storage compaction)
+        List<ChatMessage> shortened =
+        [
+            new ChatMessage(ChatRole.User, "Q2"),
+        ];
+        index.Update(shortened);
+
+        // Assert — rebuilt from scratch
+        Assert.Single(index.Groups);
+        Assert.False(index.Groups[0].IsExcluded);
+        Assert.Equal(1, index.ProcessedMessageCount);
+    }
+
+    [Fact]
+    public void UpdatePreservesExistingGroupExclusionState()
+    {
+        // Arrange
+        List<ChatMessage> messages =
+        [
+            new ChatMessage(ChatRole.User, "Q1"),
+            new ChatMessage(ChatRole.Assistant, "A1"),
+        ];
+        MessageIndex index = MessageIndex.Create(messages);
+        index.Groups[0].IsExcluded = true;
+        index.Groups[0].ExcludeReason = "Test exclusion";
+
+        // Act — append new messages
+        messages.Add(new ChatMessage(ChatRole.User, "Q2"));
+        index.Update(messages);
+
+        // Assert — original exclusion state preserved
+        Assert.True(index.Groups[0].IsExcluded);
+        Assert.Equal("Test exclusion", index.Groups[0].ExcludeReason);
+        Assert.Equal(3, index.Groups.Count);
+    }
+
+    [Fact]
+    public void InsertGroupInsertsAtSpecifiedIndex()
+    {
+        // Arrange
+        MessageIndex index = MessageIndex.Create(
+        [
+            new ChatMessage(ChatRole.User, "Q1"),
+            new ChatMessage(ChatRole.User, "Q2"),
+        ]);
+
+        // Act — insert between Q1 and Q2
+        ChatMessage summaryMsg = new(ChatRole.Assistant, "[Summary]");
+        MessageGroup inserted = index.InsertGroup(1, MessageGroupKind.Summary, [summaryMsg], turnIndex: 1);
+
+        // Assert
+        Assert.Equal(3, index.Groups.Count);
+        Assert.Same(inserted, index.Groups[1]);
+        Assert.Equal(MessageGroupKind.Summary, index.Groups[1].Kind);
+        Assert.Equal("[Summary]", index.Groups[1].Messages[0].Text);
+        Assert.Equal(1, inserted.TurnIndex);
+    }
+
+    [Fact]
+    public void AddGroupAppendsToEnd()
+    {
+        // Arrange
+        MessageIndex index = MessageIndex.Create(
+        [
+            new ChatMessage(ChatRole.User, "Q1"),
+        ]);
+
+        // Act
+        ChatMessage msg = new(ChatRole.Assistant, "Appended");
+        MessageGroup added = index.AddGroup(MessageGroupKind.AssistantText, [msg], turnIndex: 1);
+
+        // Assert
+        Assert.Equal(2, index.Groups.Count);
+        Assert.Same(added, index.Groups[1]);
+        Assert.Equal("Appended", index.Groups[1].Messages[0].Text);
+    }
+
+    [Fact]
+    public void InsertGroupComputesByteAndTokenCounts()
+    {
+        // Arrange
+        MessageIndex index = MessageIndex.Create(
+        [
+            new ChatMessage(ChatRole.User, "Q1"),
+        ]);
+
+        // Act — insert a group with known text
+        ChatMessage msg = new(ChatRole.Assistant, "Hello"); // 5 bytes, ~1 token (5/4)
+        MessageGroup inserted = index.InsertGroup(0, MessageGroupKind.AssistantText, [msg]);
+
+        // Assert
+        Assert.Equal(5, inserted.ByteCount);
+        Assert.Equal(1, inserted.TokenCount); // 5 / 4 = 1 (integer division)
+    }
 }
diff --git a/dotnet/tests/Microsoft.Agents.AI.UnitTests/Compaction/SlidingWindowCompactionStrategyTests.cs b/dotnet/tests/Microsoft.Agents.AI.UnitTests/Compaction/SlidingWindowCompactionStrategyTests.cs
index 1c23d9fddd..74d057e9f0 100644
--- a/dotnet/tests/Microsoft.Agents.AI.UnitTests/Compaction/SlidingWindowCompactionStrategyTests.cs
+++ b/dotnet/tests/Microsoft.Agents.AI.UnitTests/Compaction/SlidingWindowCompactionStrategyTests.cs
@@ -157,4 +157,38 @@ public class SlidingWindowCompactionStrategyTests
         Assert.Equal("Q2", included[1].Text);
         Assert.Equal("A2", included[2].Text);
     }
+
+    [Fact]
+    public async Task CompactAsyncCustomTargetStopsExcludingEarlyAsync()
+    {
+        // Arrange — 4 turns, maxTurns=1 means 3 should be excluded
+        // But custom target stops after removing 1 turn
+        int removeCount = 0;
+        CompactionTrigger targetAfterOne = _ => ++removeCount >= 1;
+
+        SlidingWindowCompactionStrategy strategy = new(
+            maximumTurns: 1,
+            target: targetAfterOne);
+
+        MessageIndex index = MessageIndex.Create(
+        [
+            new ChatMessage(ChatRole.User, "Q1"),
+            new ChatMessage(ChatRole.Assistant, "A1"),
+            new ChatMessage(ChatRole.User, "Q2"),
+            new ChatMessage(ChatRole.Assistant, "A2"),
+            new ChatMessage(ChatRole.User, "Q3"),
+            new ChatMessage(ChatRole.Assistant, "A3"),
+            new ChatMessage(ChatRole.User, "Q4"),
+        ]);
+
+        // Act
+        bool result = await strategy.CompactAsync(index);
+
+        // Assert — only turn 1 excluded (target stopped after 1 removal)
+        Assert.True(result);
+        Assert.True(index.Groups[0].IsExcluded);   // Q1 (turn 1)
+        Assert.True(index.Groups[1].IsExcluded);   // A1 (turn 1)
+        Assert.False(index.Groups[2].IsExcluded);  // Q2 (turn 2) — kept
+        Assert.False(index.Groups[3].IsExcluded);  // A2 (turn 2)
+    }
 }
diff --git a/dotnet/tests/Microsoft.Agents.AI.UnitTests/Compaction/SummarizationCompactionStrategyTests.cs b/dotnet/tests/Microsoft.Agents.AI.UnitTests/Compaction/SummarizationCompactionStrategyTests.cs
new file mode 100644
index 0000000000..a71fc4697f
--- /dev/null
+++ b/dotnet/tests/Microsoft.Agents.AI.UnitTests/Compaction/SummarizationCompactionStrategyTests.cs
@@ -0,0 +1,302 @@
+// Copyright (c) Microsoft. All rights reserved.
+
+using System.Collections.Generic;
+using System.Linq;
+using System.Threading;
+using System.Threading.Tasks;
+using Microsoft.Agents.AI.Compaction;
+using Microsoft.Extensions.AI;
+using Moq;
+
+namespace Microsoft.Agents.AI.UnitTests.Compaction;
+
+/// <summary>
+/// Contains tests for the <see cref="SummarizationCompactionStrategy"/> class.
+/// </summary>
+public class SummarizationCompactionStrategyTests
+{
+    private static readonly CompactionTrigger AlwaysTrigger = _ => true;
+
+    /// <summary>
+    /// Creates a mock <see cref="IChatClient"/> that returns the specified summary text.
+    /// </summary>
+    private static IChatClient CreateMockChatClient(string summaryText = "Summary of conversation.")
+    {
+        Mock<IChatClient> mock = new();
+        mock.Setup(c => c.GetResponseAsync(
+                It.IsAny<IEnumerable<ChatMessage>>(),
+                It.IsAny<ChatOptions>(),
+                It.IsAny<CancellationToken>()))
+            .ReturnsAsync(new ChatResponse([new ChatMessage(ChatRole.Assistant, summaryText)]));
+        return mock.Object;
+    }
+
+    [Fact]
+    public async Task CompactAsyncTriggerNotMetReturnsFalseAsync()
+    {
+        // Arrange — trigger requires > 100000 tokens
+        SummarizationCompactionStrategy strategy = new(
+            CreateMockChatClient(),
+            CompactionTriggers.TokensExceed(100000),
+            preserveRecentGroups: 1);
+
+        MessageIndex index = MessageIndex.Create(
+        [
+            new ChatMessage(ChatRole.User, "Hello"),
+            new ChatMessage(ChatRole.Assistant, "Hi!"),
+        ]);
+
+        // Act
+        bool result = await strategy.CompactAsync(index);
+
+        // Assert
+        Assert.False(result);
+        Assert.Equal(2, index.IncludedGroupCount);
+    }
+
+    [Fact]
+    public async Task CompactAsyncSummarizesOldGroupsAsync()
+    {
+        // Arrange — always trigger, preserve 1 recent group
+        SummarizationCompactionStrategy strategy = new(
+            CreateMockChatClient("Key facts from earlier."),
+            AlwaysTrigger,
+            preserveRecentGroups: 1);
+
+        MessageIndex index = MessageIndex.Create(
+        [
+            new ChatMessage(ChatRole.User, "First question"),
+            new ChatMessage(ChatRole.Assistant, "First answer"),
+            new ChatMessage(ChatRole.User, "Second question"),
+        ]);
+
+        // Act
+        bool result = await strategy.CompactAsync(index);
+
+        // Assert
+        Assert.True(result);
+
+        List<ChatMessage> included = [.. index.GetIncludedMessages()];
+
+        // Should have: summary + preserved recent group (Second question)
+        Assert.Equal(2, included.Count);
+        Assert.Contains("[Summary]", included[0].Text);
+        Assert.Contains("Key facts from earlier.", included[0].Text);
+        Assert.Equal("Second question", included[1].Text);
+    }
+
+    [Fact]
+    public async Task CompactAsyncPreservesSystemMessagesAsync()
+    {
+        // Arrange
+        SummarizationCompactionStrategy strategy = new(
+            CreateMockChatClient(),
+            AlwaysTrigger,
+            preserveRecentGroups: 1);
+
+        MessageIndex index = MessageIndex.Create(
+        [
+            new ChatMessage(ChatRole.System, "You are helpful."),
+            new ChatMessage(ChatRole.User, "Old question"),
+            new ChatMessage(ChatRole.Assistant, "Old answer"),
+            new ChatMessage(ChatRole.User, "Recent question"),
+        ]);
+
+        // Act
+        await strategy.CompactAsync(index);
+
+        // Assert
+        List<ChatMessage> included = [.. index.GetIncludedMessages()];
+
+        Assert.Equal("You are helpful.", included[0].Text);
+        Assert.Equal(ChatRole.System, included[0].Role);
+    }
+
+    [Fact]
+    public async Task CompactAsyncInsertsSummaryGroupAtCorrectPositionAsync()
+    {
+        // Arrange
+        SummarizationCompactionStrategy strategy = new(
+            CreateMockChatClient("Summary text."),
+            AlwaysTrigger,
+            preserveRecentGroups: 1);
+
+        MessageIndex index = MessageIndex.Create(
+        [
+            new ChatMessage(ChatRole.System, "System prompt."),
+            new ChatMessage(ChatRole.User, "Q1"),
+            new ChatMessage(ChatRole.Assistant, "A1"),
+            new ChatMessage(ChatRole.User, "Q2"),
+        ]);
+
+        // Act
+        await strategy.CompactAsync(index);
+
+        // Assert — summary should be inserted after system, before preserved group
+        MessageGroup summaryGroup = index.Groups.First(g => g.Kind == MessageGroupKind.Summary);
+        Assert.NotNull(summaryGroup);
+        Assert.Contains("[Summary]", summaryGroup.Messages[0].Text);
+        Assert.True(summaryGroup.Messages[0].AdditionalProperties!.ContainsKey(MessageGroup.SummaryPropertyKey));
+    }
+
+    [Fact]
+    public async Task CompactAsyncHandlesEmptyLlmResponseAsync()
+    {
+        // Arrange — LLM returns whitespace
+        SummarizationCompactionStrategy strategy = new(
+            CreateMockChatClient("   "),
+            AlwaysTrigger,
+            preserveRecentGroups: 1);
+
+        MessageIndex index = MessageIndex.Create(
+        [
+            new ChatMessage(ChatRole.User, "Q1"),
+            new ChatMessage(ChatRole.User, "Q2"),
+        ]);
+
+        // Act
+        await strategy.CompactAsync(index);
+
+        // Assert — should use fallback text
+        List<ChatMessage> included = [.. index.GetIncludedMessages()];
+        Assert.Contains("[Summary unavailable]", included[0].Text);
+    }
+
+    [Fact]
+    public async Task CompactAsyncNothingToSummarizeReturnsFalseAsync()
+    {
+        // Arrange — preserve 5 but only 2 non-system groups
+        SummarizationCompactionStrategy strategy = new(
+            CreateMockChatClient(),
+            AlwaysTrigger,
+            preserveRecentGroups: 5);
+
+        MessageIndex index = MessageIndex.Create(
+        [
+            new ChatMessage(ChatRole.User, "Hello"),
+            new ChatMessage(ChatRole.Assistant, "Hi!"),
+        ]);
+
+        // Act
+        bool result = await strategy.CompactAsync(index);
+
+        // Assert
+        Assert.False(result);
+    }
+
+    [Fact]
+    public async Task CompactAsyncUsesCustomPromptAsync()
+    {
+        // Arrange — capture the messages sent to the chat client
+        List<ChatMessage>? capturedMessages = null;
+        Mock<IChatClient> mockClient = new();
+        mockClient.Setup(c => c.GetResponseAsync(
+                It.IsAny<IEnumerable<ChatMessage>>(),
+                It.IsAny<ChatOptions>(),
+                It.IsAny<CancellationToken>()))
+            .Callback<IEnumerable<ChatMessage>, ChatOptions?, CancellationToken>((msgs, _, _) =>
+                capturedMessages = [.. msgs])
+            .ReturnsAsync(new ChatResponse([new ChatMessage(ChatRole.Assistant, "Custom summary.")]));
+
+        const string customPrompt = "Summarize in bullet points only.";
+        SummarizationCompactionStrategy strategy = new(
+            mockClient.Object,
+            AlwaysTrigger,
+            preserveRecentGroups: 1,
+            summarizationPrompt: customPrompt);
+
+        MessageIndex index = MessageIndex.Create(
+        [
+            new ChatMessage(ChatRole.User, "Q1"),
+            new ChatMessage(ChatRole.User, "Q2"),
+        ]);
+
+        // Act
+        await strategy.CompactAsync(index);
+
+        // Assert — the custom prompt should be the first message sent to the LLM
+        Assert.NotNull(capturedMessages);
+        Assert.Equal(customPrompt, capturedMessages![0].Text);
+    }
+
+    [Fact]
+    public async Task CompactAsyncSetsExcludeReasonAsync()
+    {
+        // Arrange
+        SummarizationCompactionStrategy strategy = new(
+            CreateMockChatClient(),
+            AlwaysTrigger,
+            preserveRecentGroups: 1);
+
+        MessageIndex index = MessageIndex.Create(
+        [
+            new ChatMessage(ChatRole.User, "Old"),
+            new ChatMessage(ChatRole.User, "New"),
+        ]);
+
+        // Act
+        await strategy.CompactAsync(index);
+
+        // Assert
+        MessageGroup excluded = index.Groups.First(g => g.IsExcluded);
+        Assert.NotNull(excluded.ExcludeReason);
+        Assert.Contains("SummarizationCompactionStrategy", excluded.ExcludeReason);
+    }
+
+    [Fact]
+    public async Task CompactAsyncTargetStopsMarkingEarlyAsync()
+    {
+        // Arrange — 4 non-system groups, preserve 1, target met after 1 exclusion
+        int exclusionCount = 0;
+        CompactionTrigger targetAfterOne = _ => ++exclusionCount >= 1;
+
+        SummarizationCompactionStrategy strategy = new(
+            CreateMockChatClient("Partial summary."),
+            AlwaysTrigger,
+            preserveRecentGroups: 1,
+            target: targetAfterOne);
+
+        MessageIndex index = MessageIndex.Create(
+        [
+            new ChatMessage(ChatRole.User, "Q1"),
+            new ChatMessage(ChatRole.Assistant, "A1"),
+            new ChatMessage(ChatRole.User, "Q2"),
+            new ChatMessage(ChatRole.User, "Q3"),
+        ]);
+
+        // Act
+        await strategy.CompactAsync(index);
+
+        // Assert — only 1 group should have been summarized (target met after first exclusion)
+        int excludedCount = index.Groups.Count(g => g.IsExcluded);
+        Assert.Equal(1, excludedCount);
+    }
+
+    [Fact]
+    public async Task CompactAsyncPreservesMultipleRecentGroupsAsync()
+    {
+        // Arrange — preserve 2
+        SummarizationCompactionStrategy strategy = new(
+            CreateMockChatClient("Summary."),
+            AlwaysTrigger,
+            preserveRecentGroups: 2);
+
+        MessageIndex index = MessageIndex.Create(
+        [
+            new ChatMessage(ChatRole.User, "Q1"),
+            new ChatMessage(ChatRole.Assistant, "A1"),
+            new ChatMessage(ChatRole.User, "Q2"),
+            new ChatMessage(ChatRole.Assistant, "A2"),
+        ]);
+
+        // Act
+        await strategy.CompactAsync(index);
+
+        // Assert — 2 oldest excluded, 2 newest preserved + 1 summary inserted
+        List<ChatMessage> included = [.. index.GetIncludedMessages()];
+        Assert.Equal(3, included.Count); // summary + Q2 + A2
+        Assert.Contains("[Summary]", included[0].Text);
+        Assert.Equal("Q2", included[1].Text);
+        Assert.Equal("A2", included[2].Text);
+    }
+}
diff --git a/dotnet/tests/Microsoft.Agents.AI.UnitTests/Compaction/ToolResultCompactionStrategyTests.cs b/dotnet/tests/Microsoft.Agents.AI.UnitTests/Compaction/ToolResultCompactionStrategyTests.cs
index ad4fa89bb5..39c03f2631 100644
--- a/dotnet/tests/Microsoft.Agents.AI.UnitTests/Compaction/ToolResultCompactionStrategyTests.cs
+++ b/dotnet/tests/Microsoft.Agents.AI.UnitTests/Compaction/ToolResultCompactionStrategyTests.cs
@@ -191,4 +191,46 @@ public class ToolResultCompactionStrategyTests
         // Assert
         Assert.True(result);
     }
+
+    [Fact]
+    public async Task CompactAsyncTargetStopsCollapsingEarlyAsync()
+    {
+        // Arrange — 2 tool groups, target met after first collapse
+        int collapseCount = 0;
+        CompactionTrigger targetAfterOne = _ => ++collapseCount >= 1;
+
+        ToolResultCompactionStrategy strategy = new(
+            trigger: _ => true,
+            preserveRecentGroups: 1,
+            target: targetAfterOne);
+
+        MessageIndex index = MessageIndex.Create(
+        [
+            new ChatMessage(ChatRole.User, "Q1"),
+            new ChatMessage(ChatRole.Assistant, [new FunctionCallContent("c1", "fn1")]),
+            new ChatMessage(ChatRole.Tool, "result1"),
+            new ChatMessage(ChatRole.User, "Q2"),
+            new ChatMessage(ChatRole.Assistant, [new FunctionCallContent("c2", "fn2")]),
+            new ChatMessage(ChatRole.Tool, "result2"),
+            new ChatMessage(ChatRole.User, "Q3"),
+        ]);
+
+        // Act
+        bool result = await strategy.CompactAsync(index);
+
+        // Assert — only first tool group collapsed, second left intact
+        Assert.True(result);
+
+        // Count collapsed tool groups (excluded with ToolCall kind)
+        int collapsedToolGroups = 0;
+        foreach (MessageGroup group in index.Groups)
+        {
+            if (group.IsExcluded && group.Kind == MessageGroupKind.ToolCall)
+            {
+                collapsedToolGroups++;
+            }
+        }
+
+        Assert.Equal(1, collapsedToolGroups);
+    }
 }
diff --git a/dotnet/tests/Microsoft.Agents.AI.UnitTests/Compaction/TruncationCompactionStrategyTests.cs b/dotnet/tests/Microsoft.Agents.AI.UnitTests/Compaction/TruncationCompactionStrategyTests.cs
index 5d4ac003f6..1799758ddd 100644
--- a/dotnet/tests/Microsoft.Agents.AI.UnitTests/Compaction/TruncationCompactionStrategyTests.cs
+++ b/dotnet/tests/Microsoft.Agents.AI.UnitTests/Compaction/TruncationCompactionStrategyTests.cs
@@ -220,4 +220,60 @@ public class TruncationCompactionStrategyTests
         // Assert
         Assert.False(result);
     }
+
+    [Fact]
+    public async Task CompactAsyncCustomTargetStopsEarlyAsync()
+    {
+        // Arrange — always trigger, custom target stops after 1 exclusion
+        int targetChecks = 0;
+        CompactionTrigger targetAfterOne = _ => ++targetChecks >= 1;
+
+        TruncationCompactionStrategy strategy = new(
+            s_alwaysTrigger,
+            preserveRecentGroups: 1,
+            target: targetAfterOne);
+
+        MessageIndex groups = MessageIndex.Create(
+        [
+            new ChatMessage(ChatRole.User, "Q1"),
+            new ChatMessage(ChatRole.Assistant, "A1"),
+            new ChatMessage(ChatRole.User, "Q2"),
+            new ChatMessage(ChatRole.User, "Q3"),
+        ]);
+
+        // Act
+        bool result = await strategy.CompactAsync(groups);
+
+        // Assert — only 1 group excluded (target met after first)
+        Assert.True(result);
+        Assert.True(groups.Groups[0].IsExcluded);
+        Assert.False(groups.Groups[1].IsExcluded);
+        Assert.False(groups.Groups[2].IsExcluded);
+        Assert.False(groups.Groups[3].IsExcluded);
+    }
+
+    [Fact]
+    public async Task CompactAsyncIncrementalStopsAtTargetAsync()
+    {
+        // Arrange — trigger on groups > 2, target is default (inverse of trigger: groups <= 2)
+        TruncationCompactionStrategy strategy = new(
+            CompactionTriggers.GroupsExceed(2),
+            preserveRecentGroups: 1);
+
+        MessageIndex groups = MessageIndex.Create(
+        [
+            new ChatMessage(ChatRole.User, "Q1"),
+            new ChatMessage(ChatRole.Assistant, "A1"),
+            new ChatMessage(ChatRole.User, "Q2"),
+            new ChatMessage(ChatRole.Assistant, "A2"),
+            new ChatMessage(ChatRole.User, "Q3"),
+        ]);
+
+        // Act — 5 groups, trigger fires (5 > 2), compacts until groups <= 2
+        bool result = await strategy.CompactAsync(groups);
+
+        // Assert — should stop at 2 included groups (not go all the way to 1)
+        Assert.True(result);
+        Assert.Equal(2, groups.IncludedGroupCount);
+    }
 }