diff --git a/CHANGELOG.md b/CHANGELOG.md
index 7c02c01c..7676a57b 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -5,6 +5,22 @@ All notable changes to this project will be documented in this file.
 The format is based on [Keep a Changelog](https://keepachangelog.com/en/1.0.0/).
 
 
+## [4.0.2] - 2025-10-19
+
+### Changed
+- **PM2 bundled as dependency**: Moved pm2 from devDependencies to dependencies for out-of-the-box functionality
+- **Worker scripts use local PM2**: All npm worker scripts now use `npx pm2` to ensure local binary is used
+- **Worker startup uses local PM2**: Worker auto-start now uses `node_modules/.bin/pm2` instead of global pm2
+
+### Fixed
+- **Fail loudly on missing dependencies**: Worker startup now throws explicit errors when bundled pm2 is missing instead of silently falling back
+- **Better error messages**: Clear actionable error messages guide users to run `npm install` when dependencies are missing
+- **Removed silent fallback**: Eliminated silent degradation that masked "works on my machine" installation failures
+
+### Documentation
+- Updated README system requirements to reflect pm2 is bundled with plugin (no global install required)
+
+
 ## [4.0.0] - 2025-10-18
 
 ### BREAKING CHANGES
diff --git a/package.json b/package.json
index 0f4bf123..59958b83 100644
--- a/package.json
+++ b/package.json
@@ -1,6 +1,6 @@
 {
   "name": "claude-mem",
-  "version": "4.0.1",
+  "version": "4.0.2",
   "description": "Memory compression system for Claude Code - persist context across sessions",
   "keywords": [
     "claude",
diff --git a/plugin/.claude-plugin/plugin.json b/plugin/.claude-plugin/plugin.json
index deda256e..b02d59c3 100644
--- a/plugin/.claude-plugin/plugin.json
+++ b/plugin/.claude-plugin/plugin.json
@@ -1,6 +1,6 @@
 {
   "name": "claude-mem",
-  "version": "4.0.0",
+  "version": "4.0.2",
   "description": "Persistent memory system for Claude Code - seamlessly preserve context across sessions",
   "author": {
     "name": "Alex Newman"