diff --git a/src/extension.ts b/src/extension.ts
index aaf2731..517ce1e 100644
--- a/src/extension.ts
+++ b/src/extension.ts
@@ -2637,6 +2637,12 @@ class ClaudeChatProvider {
 	}
 
 	private _executeSlashCommand(command: string): void {
+		// Handle /compact in chat instead of spawning a terminal
+		if (command === 'compact') {
+			this._sendMessageToClaude(`/${command}`);
+			return;
+		}
+
 		const config = vscode.workspace.getConfiguration('claudeCodeChat');
 		const wslEnabled = config.get<boolean>('wsl.enabled', false);
 		const wslDistro = config.get<string>('wsl.distro', 'Ubuntu');
diff --git a/src/script.ts b/src/script.ts
index 2d34c42..ba846da 100644
--- a/src/script.ts
+++ b/src/script.ts
@@ -1679,18 +1679,22 @@ const getScript = (isTelemetryEnabled: boolean) => `<script>
 		function executeSlashCommand(command) {
 			// Hide the modal
 			hideSlashCommandsModal();
-			
+
 			// Clear the input since user selected a command
 			messageInput.value = '';
-			
-			// Send command to VS Code to execute in terminal
+
+			// Send command to VS Code to execute
 			vscode.postMessage({
 				type: 'executeSlashCommand',
 				command: command
 			});
-			
-			// Show user feedback
-			addMessage('user', \`Executing /\${command} command in terminal. Check the terminal output and return when ready.\`, 'assistant');
+
+			// Show user feedback - /compact runs in chat, others in terminal
+			if (command === 'compact') {
+				// No message needed - compact runs in chat and shows its own status
+			} else {
+				addMessage('user', \`Executing /\${command} command in terminal. Check the terminal output and return when ready.\`, 'assistant');
+			}
 		}
 
 		function handleCustomCommandKeydown(event) {