diff --git a/packages/coding-agent/src/core/agent-session.ts b/packages/coding-agent/src/core/agent-session.ts
index eaca341c..2aae1195 100644
--- a/packages/coding-agent/src/core/agent-session.ts
+++ b/packages/coding-agent/src/core/agent-session.ts
@@ -1656,7 +1656,7 @@ export class AgentSession {
 				apiKey,
 				signal: this._branchSummaryAbortController.signal,
 				customInstructions: options.customInstructions,
-				maxTokens: branchSummarySettings.maxTokens,
+				reserveTokens: branchSummarySettings.reserveTokens,
 			});
 			this._branchSummaryAbortController = undefined;
 			if (result.aborted) {
diff --git a/packages/coding-agent/src/core/compaction/branch-summarization.ts b/packages/coding-agent/src/core/compaction/branch-summarization.ts
index c303ca08..a5897455 100644
--- a/packages/coding-agent/src/core/compaction/branch-summarization.ts
+++ b/packages/coding-agent/src/core/compaction/branch-summarization.ts
@@ -53,8 +53,8 @@ export interface GenerateBranchSummaryOptions {
 	signal: AbortSignal;
 	/** Optional custom instructions for summarization */
 	customInstructions?: string;
-	/** Maximum tokens to include in summary context (default 100000) */
-	maxTokens?: number;
+	/** Tokens reserved for prompt + LLM response (default 16384) */
+	reserveTokens?: number;
 }
 
 // ============================================================================
@@ -321,9 +321,13 @@ export async function generateBranchSummary(
 	entries: SessionEntry[],
 	options: GenerateBranchSummaryOptions,
 ): Promise<BranchSummaryResult> {
-	const { model, apiKey, signal, customInstructions, maxTokens = 100000 } = options;
+	const { model, apiKey, signal, customInstructions, reserveTokens = 16384 } = options;
 
-	const { messages, fileOps } = prepareBranchEntries(entries, maxTokens);
+	// Token budget = context window minus reserved space for prompt + response
+	const contextWindow = model.contextWindow || 128000;
+	const tokenBudget = contextWindow - reserveTokens;
+
+	const { messages, fileOps } = prepareBranchEntries(entries, tokenBudget);
 
 	if (messages.length === 0) {
 		return { summary: "No content to summarize" };
diff --git a/packages/coding-agent/src/core/settings-manager.ts b/packages/coding-agent/src/core/settings-manager.ts
index 737a812e..4d58a5c1 100644
--- a/packages/coding-agent/src/core/settings-manager.ts
+++ b/packages/coding-agent/src/core/settings-manager.ts
@@ -9,7 +9,7 @@ export interface CompactionSettings {
 }
 
 export interface BranchSummarySettings {
-	maxTokens?: number; // default: 100000 (max tokens to include in branch summary context)
+	reserveTokens?: number; // default: 16384 (tokens reserved for prompt + LLM response)
 }
 
 export interface RetrySettings {
@@ -260,9 +260,9 @@ export class SettingsManager {
 		};
 	}
 
-	getBranchSummarySettings(): { maxTokens: number } {
+	getBranchSummarySettings(): { reserveTokens: number } {
 		return {
-			maxTokens: this.settings.branchSummary?.maxTokens ?? 100000,
+			reserveTokens: this.settings.branchSummary?.reserveTokens ?? 16384,
 		};
 	}