diff --git a/integration-tests/context-compress-interactive.test.ts b/integration-tests/context-compress-interactive.test.ts
new file mode 100644
index 0000000000..ddfa6839ae
--- /dev/null
+++ b/integration-tests/context-compress-interactive.test.ts
@@ -0,0 +1,116 @@
+/**
+ * @license
+ * Copyright 2025 Google LLC
+ * SPDX-License-Identifier: Apache-2.0
+ */
+
+import { expect, describe, it, beforeEach, afterEach } from 'vitest';
+import { TestRig, type } from './test-helper.js';
+
+describe('Interactive Mode', () => {
+  let rig: TestRig;
+
+  beforeEach(() => {
+    rig = new TestRig();
+  });
+
+  afterEach(async () => {
+    await rig.cleanup();
+  });
+
+  it.skipIf(process.platform === 'win32')(
+    'should trigger chat compression with /compress command',
+    async () => {
+      await rig.setup('interactive-compress-test');
+
+      const { ptyProcess } = rig.runInteractive();
+
+      let fullOutput = '';
+      ptyProcess.onData((data) => (fullOutput += data));
+
+      const authDialogAppeared = await rig.waitForText(
+        'How would you like to authenticate',
+        5000,
+      );
+
+      // select the second option if auth dialog come's up
+      if (authDialogAppeared) {
+        ptyProcess.write('2');
+      }
+
+      // Wait for the app to be ready
+      const isReady = await rig.waitForText('Type your message', 15000);
+      expect(
+        isReady,
+        'CLI did not start up in interactive mode correctly',
+      ).toBe(true);
+
+      const longPrompt =
+        'Dont do anything except returning a 1000 token long paragragh with the <name of the scientist who discovered theory of relativity> at the end to indicate end of response. This is a moderately long sentence.';
+
+      await type(ptyProcess, longPrompt);
+      await type(ptyProcess, '\r');
+
+      await rig.waitForText('einstein', 25000);
+
+      await type(ptyProcess, '/compress');
+      // A small delay to allow React to re-render the command list.
+      await new Promise((resolve) => setTimeout(resolve, 100));
+      await type(ptyProcess, '\r');
+
+      const foundEvent = await rig.waitForTelemetryEvent(
+        'chat_compression',
+        90000,
+      );
+      expect(foundEvent, 'chat_compression telemetry event was not found').toBe(
+        true,
+      );
+    },
+  );
+
+  it.skipIf(process.platform === 'win32')(
+    'should handle compression failure on token inflation',
+    async () => {
+      await rig.setup('interactive-compress-test');
+
+      const { ptyProcess } = rig.runInteractive();
+
+      let fullOutput = '';
+      ptyProcess.onData((data) => (fullOutput += data));
+
+      const authDialogAppeared = await rig.waitForText(
+        'How would you like to authenticate',
+        5000,
+      );
+
+      // select the second option if auth dialog come's up
+      if (authDialogAppeared) {
+        ptyProcess.write('2');
+      }
+
+      // Wait for the app to be ready
+      const isReady = await rig.waitForText('Type your message', 25000);
+      expect(
+        isReady,
+        'CLI did not start up in interactive mode correctly',
+      ).toBe(true);
+
+      await type(ptyProcess, '/compress');
+      await new Promise((resolve) => setTimeout(resolve, 100));
+      await type(ptyProcess, '\r');
+
+      const foundEvent = await rig.waitForTelemetryEvent(
+        'chat_compression',
+        90000,
+      );
+      expect(foundEvent).toBe(true);
+
+      const compressionFailed = await rig.waitForText(
+        'compression was not beneficial',
+        25000,
+      );
+
+      expect(compressionFailed).toBe(true);
+    },
+  );
+});
diff --git a/integration-tests/test-helper.ts b/integration-tests/test-helper.ts
index ccebae614d..df7adb1e75 100644
--- a/integration-tests/test-helper.ts
+++ b/integration-tests/test-helper.ts
@@ -12,6 +12,7 @@ import { env } from 'node:process';
 import { DEFAULT_GEMINI_MODEL } from '../packages/core/src/config/models.js';
 import fs from 'node:fs';
 import * as pty from '@lydell/node-pty';
+import stripAnsi from 'strip-ansi';
 
 const __dirname = dirname(fileURLToPath(import.meta.url));
 
@@ -112,6 +113,15 @@ export function validateModelOutput(
   return true;
 }
 
+// Simulates typing a string one character at a time to avoid paste detection.
+export async function type(ptyProcess: pty.IPty, text: string) {
+  const delay = 5;
+  for (const char of text) {
+    ptyProcess.write(char);
+    await new Promise((resolve) => setTimeout(resolve, delay));
+  }
+}
+
 interface ParsedLog {
   attributes?: {
     'event.name'?: string;
@@ -134,6 +144,7 @@ export class TestRig {
   testDir: string | null;
   testName?: string;
   _lastRunStdout?: string;
+  _interactiveOutput = '';
 
   constructor() {
     this.bundlePath = join(__dirname, '..', 'bundle/gemini.js');
@@ -782,6 +793,20 @@ export class TestRig {
     return null;
   }
 
+  async waitForText(text: string, timeout?: number): Promise<boolean> {
+    if (!timeout) {
+      timeout = this.getDefaultTimeout();
+    }
+    return this.poll(
+      () =>
+        stripAnsi(this._interactiveOutput)
+          .toLowerCase()
+          .includes(text.toLowerCase()),
+      timeout,
+      200,
+    );
+  }
+
   runInteractive(...args: string[]): {
     ptyProcess: pty.IPty;
     promise: Promise<{ exitCode: number; signal?: number; output: string }>;
@@ -789,6 +814,8 @@ export class TestRig {
     const { command, initialArgs } = this._getCommandAndArgs(['--yolo']);
     const commandArgs = [...initialArgs, ...args];
 
+    this._interactiveOutput = ''; // Reset output for the new run
+
     const ptyProcess = pty.spawn(command, commandArgs, {
       name: 'xterm-color',
       cols: 80,
@@ -797,9 +824,8 @@ export class TestRig {
       env: process.env as { [key: string]: string },
     });
 
-    let output = '';
     ptyProcess.onData((data) => {
-      output += data;
+      this._interactiveOutput += data;
       if (env.KEEP_OUTPUT === 'true' || env.VERBOSE === 'true') {
         process.stdout.write(data);
       }
@@ -811,7 +837,7 @@ export class TestRig {
       output: string;
     }>((resolve) => {
       ptyProcess.onExit(({ exitCode, signal }) => {
-        resolve({ exitCode, signal, output });
+        resolve({ exitCode, signal, output: this._interactiveOutput });
       });
     });
 
diff --git a/package-lock.json b/package-lock.json
index d6d2cdba3c..1668c241ff 100644
--- a/package-lock.json
+++ b/package-lock.json
@@ -47,6 +47,7 @@
         "prettier": "^3.5.3",
         "react-devtools-core": "^4.28.5",
         "semver": "^7.7.2",
+        "strip-ansi": "^7.1.2",
         "tsx": "^4.20.3",
         "typescript-eslint": "^8.30.1",
         "vitest": "^3.2.4",
@@ -14736,9 +14737,9 @@
       }
     },
     "node_modules/strip-ansi": {
-      "version": "7.1.0",
-      "resolved": "https://registry.npmjs.org/strip-ansi/-/strip-ansi-7.1.0.tgz",
-      "integrity": "sha512-iq6eVVI64nQQTRYq2KtEg2d2uU7LElhTJwsH4YzIHZshxlgZms/wIc4VoDQTlG/IvVIrBKG06CrZnp0qv7hkcQ==",
+      "version": "7.1.2",
+      "resolved": "https://registry.npmjs.org/strip-ansi/-/strip-ansi-7.1.2.tgz",
+      "integrity": "sha512-gmBGslpoQJtgnMAvOVqGZpEz9dyoKTCzy2nfz/n8aIFhN/jCE/rCmcxabB6jOOHV+0WNnylOxaxBQPSvcWklhA==",
       "license": "MIT",
       "dependencies": {
         "ansi-regex": "^6.0.1"
diff --git a/package.json b/package.json
index ceb63ea411..95baad8498 100644
--- a/package.json
+++ b/package.json
@@ -99,6 +99,7 @@
     "prettier": "^3.5.3",
     "react-devtools-core": "^4.28.5",
     "semver": "^7.7.2",
+    "strip-ansi": "^7.1.2",
     "tsx": "^4.20.3",
     "typescript-eslint": "^8.30.1",
     "vitest": "^3.2.4",