diff --git a/openclaw/package.json b/openclaw/package.json
index 16360ed5..ad95ca25 100644
--- a/openclaw/package.json
+++ b/openclaw/package.json
@@ -5,9 +5,11 @@
   "type": "module",
   "main": "dist/index.js",
   "scripts": {
-    "build": "tsc"
+    "build": "tsc",
+    "test": "tsc && node --test dist/index.test.js"
   },
   "devDependencies": {
+    "@types/node": "^25.2.1",
     "typescript": "^5.3.0"
   }
 }
diff --git a/openclaw/src/index.test.ts b/openclaw/src/index.test.ts
new file mode 100644
index 00000000..e2f63a00
--- /dev/null
+++ b/openclaw/src/index.test.ts
@@ -0,0 +1,388 @@
+import { describe, it, beforeEach, afterEach } from "node:test";
+import assert from "node:assert/strict";
+import { createServer, type Server, type IncomingMessage, type ServerResponse } from "node:http";
+import claudeMemPlugin from "./index.js";
+
+function createMockApi(configOverride: Record<string, any> = {}) {
+  const logs: string[] = [];
+  const sentMessages: Array<{ to: string; text: string; channel: string }> = [];
+
+  let registeredService: any = null;
+  let registeredCommand: any = null;
+
+  const api = {
+    getConfig: () => configOverride,
+    log: (message: string) => {
+      logs.push(message);
+    },
+    registerService: (service: any) => {
+      registeredService = service;
+    },
+    registerCommand: (command: any) => {
+      registeredCommand = command;
+    },
+    runtime: {
+      channel: {
+        telegram: {
+          sendMessageTelegram: async (to: string, text: string) => {
+            sentMessages.push({ to, text, channel: "telegram" });
+          },
+        },
+        discord: {
+          sendMessageDiscord: async (to: string, text: string) => {
+            sentMessages.push({ to, text, channel: "discord" });
+          },
+        },
+        signal: {
+          sendMessageSignal: async (to: string, text: string) => {
+            sentMessages.push({ to, text, channel: "signal" });
+          },
+        },
+        slack: {
+          sendMessageSlack: async (to: string, text: string) => {
+            sentMessages.push({ to, text, channel: "slack" });
+          },
+        },
+        whatsapp: {
+          sendMessageWhatsApp: async (to: string, text: string) => {
+            sentMessages.push({ to, text, channel: "whatsapp" });
+          },
+        },
+        line: {
+          sendMessageLine: async (to: string, text: string) => {
+            sentMessages.push({ to, text, channel: "line" });
+          },
+        },
+      },
+    },
+  };
+
+  return {
+    api: api as any,
+    logs,
+    sentMessages,
+    getService: () => registeredService,
+    getCommand: () => registeredCommand,
+  };
+}
+
+describe("claudeMemPlugin", () => {
+  it("registers service and command on load", () => {
+    const { api, logs, getService, getCommand } = createMockApi();
+    claudeMemPlugin(api);
+
+    assert.ok(getService(), "service should be registered");
+    assert.equal(getService().id, "claude-mem-observation-feed");
+    assert.ok(getCommand(), "command should be registered");
+    assert.equal(getCommand().name, "claude-mem-feed");
+    assert.ok(logs.some((l) => l.includes("plugin loaded")));
+  });
+
+  describe("service start", () => {
+    it("logs disabled when feed not enabled", async () => {
+      const { api, logs, getService } = createMockApi({});
+      claudeMemPlugin(api);
+
+      await getService().start({});
+      assert.ok(logs.some((l) => l.includes("feed disabled")));
+    });
+
+    it("logs disabled when enabled is false", async () => {
+      const { api, logs, getService } = createMockApi({
+        observationFeed: { enabled: false },
+      });
+      claudeMemPlugin(api);
+
+      await getService().start({});
+      assert.ok(logs.some((l) => l.includes("feed disabled")));
+    });
+
+    it("logs misconfigured when channel is missing", async () => {
+      const { api, logs, getService } = createMockApi({
+        observationFeed: { enabled: true, to: "123" },
+      });
+      claudeMemPlugin(api);
+
+      await getService().start({});
+      assert.ok(logs.some((l) => l.includes("misconfigured")));
+    });
+
+    it("logs misconfigured when to is missing", async () => {
+      const { api, logs, getService } = createMockApi({
+        observationFeed: { enabled: true, channel: "telegram" },
+      });
+      claudeMemPlugin(api);
+
+      await getService().start({});
+      assert.ok(logs.some((l) => l.includes("misconfigured")));
+    });
+  });
+
+  describe("service stop", () => {
+    it("logs disconnection on stop", async () => {
+      const { api, logs, getService } = createMockApi({});
+      claudeMemPlugin(api);
+
+      await getService().stop({});
+      assert.ok(logs.some((l) => l.includes("feed stopped")));
+    });
+  });
+
+  describe("command handler", () => {
+    it("returns not configured when no feedConfig", async () => {
+      const { api, getCommand } = createMockApi({});
+      claudeMemPlugin(api);
+
+      const result = await getCommand().handler([], {});
+      assert.ok(result.includes("not configured"));
+    });
+
+    it("returns status when no args", async () => {
+      const { api, getCommand } = createMockApi({
+        observationFeed: { enabled: true, channel: "telegram", to: "123" },
+      });
+      claudeMemPlugin(api);
+
+      const result = await getCommand().handler([], {});
+      assert.ok(result.includes("Enabled: yes"));
+      assert.ok(result.includes("Channel: telegram"));
+      assert.ok(result.includes("Target: 123"));
+      assert.ok(result.includes("Connection:"));
+    });
+
+    it("handles 'on' argument", async () => {
+      const { api, logs, getCommand } = createMockApi({
+        observationFeed: { enabled: false },
+      });
+      claudeMemPlugin(api);
+
+      const result = await getCommand().handler(["on"], {});
+      assert.ok(result.includes("enable requested"));
+      assert.ok(logs.some((l) => l.includes("enable requested")));
+    });
+
+    it("handles 'off' argument", async () => {
+      const { api, logs, getCommand } = createMockApi({
+        observationFeed: { enabled: true },
+      });
+      claudeMemPlugin(api);
+
+      const result = await getCommand().handler(["off"], {});
+      assert.ok(result.includes("disable requested"));
+      assert.ok(logs.some((l) => l.includes("disable requested")));
+    });
+
+    it("shows connection state in status output", async () => {
+      const { api, getCommand } = createMockApi({
+        observationFeed: { enabled: false, channel: "slack", to: "#general" },
+      });
+      claudeMemPlugin(api);
+
+      const result = await getCommand().handler([], {});
+      assert.ok(result.includes("Connection: disconnected"));
+    });
+  });
+});
+
+describe("SSE stream integration", () => {
+  let server: Server;
+  let serverPort: number;
+  let serverResponses: ServerResponse[] = [];
+
+  function startSSEServer(): Promise<number> {
+    return new Promise((resolve) => {
+      server = createServer((req: IncomingMessage, res: ServerResponse) => {
+        res.writeHead(200, {
+          "Content-Type": "text/event-stream",
+          "Cache-Control": "no-cache",
+          Connection: "keep-alive",
+        });
+        serverResponses.push(res);
+      });
+      server.listen(0, () => {
+        const address = server.address();
+        if (address && typeof address === "object") {
+          resolve(address.port);
+        }
+      });
+    });
+  }
+
+  beforeEach(async () => {
+    serverResponses = [];
+    serverPort = await startSSEServer();
+  });
+
+  afterEach(() => {
+    for (const res of serverResponses) {
+      try {
+        res.end();
+      } catch {}
+    }
+    server?.close();
+  });
+
+  it("connects to SSE stream and receives new_observation events", async () => {
+    const { api, logs, sentMessages, getService } = createMockApi({
+      workerPort: serverPort,
+      observationFeed: { enabled: true, channel: "telegram", to: "12345" },
+    });
+    claudeMemPlugin(api);
+
+    await getService().start({});
+
+    // Wait for connection
+    await new Promise((resolve) => setTimeout(resolve, 200));
+
+    assert.ok(logs.some((l) => l.includes("Connecting to SSE stream")));
+
+    // Send an SSE event
+    const observation = {
+      type: "new_observation",
+      observation: {
+        id: 1,
+        title: "Test Observation",
+        subtitle: "Found something interesting",
+        type: "discovery",
+        project: "test",
+        prompt_number: 1,
+        created_at_epoch: Date.now(),
+      },
+      timestamp: Date.now(),
+    };
+
+    for (const res of serverResponses) {
+      res.write(`data: ${JSON.stringify(observation)}\n\n`);
+    }
+
+    // Wait for processing
+    await new Promise((resolve) => setTimeout(resolve, 200));
+
+    assert.equal(sentMessages.length, 1);
+    assert.equal(sentMessages[0].channel, "telegram");
+    assert.equal(sentMessages[0].to, "12345");
+    assert.ok(sentMessages[0].text.includes("Test Observation"));
+    assert.ok(sentMessages[0].text.includes("Found something interesting"));
+
+    await getService().stop({});
+  });
+
+  it("filters out non-observation events", async () => {
+    const { api, sentMessages, getService } = createMockApi({
+      workerPort: serverPort,
+      observationFeed: { enabled: true, channel: "discord", to: "channel-id" },
+    });
+    claudeMemPlugin(api);
+
+    await getService().start({});
+    await new Promise((resolve) => setTimeout(resolve, 200));
+
+    // Send non-observation events
+    for (const res of serverResponses) {
+      res.write(`data: ${JSON.stringify({ type: "processing_status", isProcessing: true })}\n\n`);
+      res.write(`data: ${JSON.stringify({ type: "session_started", sessionId: "abc" })}\n\n`);
+    }
+
+    await new Promise((resolve) => setTimeout(resolve, 200));
+    assert.equal(sentMessages.length, 0, "non-observation events should be filtered");
+
+    await getService().stop({});
+  });
+
+  it("handles observation with null subtitle", async () => {
+    const { api, sentMessages, getService } = createMockApi({
+      workerPort: serverPort,
+      observationFeed: { enabled: true, channel: "telegram", to: "999" },
+    });
+    claudeMemPlugin(api);
+
+    await getService().start({});
+    await new Promise((resolve) => setTimeout(resolve, 200));
+
+    for (const res of serverResponses) {
+      res.write(
+        `data: ${JSON.stringify({
+          type: "new_observation",
+          observation: { id: 2, title: "No Subtitle", subtitle: null },
+          timestamp: Date.now(),
+        })}\n\n`
+      );
+    }
+
+    await new Promise((resolve) => setTimeout(resolve, 200));
+    assert.equal(sentMessages.length, 1);
+    assert.ok(sentMessages[0].text.includes("No Subtitle"));
+    assert.ok(!sentMessages[0].text.includes("null"));
+
+    await getService().stop({});
+  });
+
+  it("handles observation with null title", async () => {
+    const { api, sentMessages, getService } = createMockApi({
+      workerPort: serverPort,
+      observationFeed: { enabled: true, channel: "telegram", to: "999" },
+    });
+    claudeMemPlugin(api);
+
+    await getService().start({});
+    await new Promise((resolve) => setTimeout(resolve, 200));
+
+    for (const res of serverResponses) {
+      res.write(
+        `data: ${JSON.stringify({
+          type: "new_observation",
+          observation: { id: 3, title: null, subtitle: "Has subtitle" },
+          timestamp: Date.now(),
+        })}\n\n`
+      );
+    }
+
+    await new Promise((resolve) => setTimeout(resolve, 200));
+    assert.equal(sentMessages.length, 1);
+    assert.ok(sentMessages[0].text.includes("Untitled"));
+
+    await getService().stop({});
+  });
+
+  it("uses custom workerPort from config", async () => {
+    const { api, logs, getService } = createMockApi({
+      workerPort: serverPort,
+      observationFeed: { enabled: true, channel: "telegram", to: "12345" },
+    });
+    claudeMemPlugin(api);
+
+    await getService().start({});
+    await new Promise((resolve) => setTimeout(resolve, 200));
+
+    assert.ok(logs.some((l) => l.includes(`localhost:${serverPort}`)));
+
+    await getService().stop({});
+  });
+
+  it("logs unknown channel type", async () => {
+    const { api, logs, sentMessages, getService } = createMockApi({
+      workerPort: serverPort,
+      observationFeed: { enabled: true, channel: "matrix", to: "room-id" },
+    });
+    claudeMemPlugin(api);
+
+    await getService().start({});
+    await new Promise((resolve) => setTimeout(resolve, 200));
+
+    for (const res of serverResponses) {
+      res.write(
+        `data: ${JSON.stringify({
+          type: "new_observation",
+          observation: { id: 4, title: "Test", subtitle: null },
+          timestamp: Date.now(),
+        })}\n\n`
+      );
+    }
+
+    await new Promise((resolve) => setTimeout(resolve, 200));
+    assert.equal(sentMessages.length, 0);
+    assert.ok(logs.some((l) => l.includes("Unknown channel type: matrix")));
+
+    await getService().stop({});
+  });
+});
diff --git a/openclaw/src/index.ts b/openclaw/src/index.ts
index 544fdad3..b83d7ce0 100644
--- a/openclaw/src/index.ts
+++ b/openclaw/src/index.ts
@@ -16,36 +16,220 @@ interface OpenClawPluginApi {
   };
 }
 
+interface ObservationSSEPayload {
+  id: number;
+  memory_session_id: string;
+  session_id: string;
+  type: string;
+  title: string | null;
+  subtitle: string | null;
+  text: string | null;
+  narrative: string | null;
+  facts: string | null;
+  concepts: string | null;
+  files_read: string | null;
+  files_modified: string | null;
+  project: string;
+  prompt_number: number;
+  created_at_epoch: number;
+}
+
+interface SSENewObservationEvent {
+  type: "new_observation";
+  observation: ObservationSSEPayload;
+  timestamp: number;
+}
+
+type ConnectionState = "disconnected" | "connected" | "reconnecting";
+
+let sseAbortController: AbortController | null = null;
+let connectionState: ConnectionState = "disconnected";
+
+function formatObservationMessage(observation: ObservationSSEPayload): string {
+  const title = observation.title || "Untitled";
+  let message = `🧠 Claude-Mem Observation\n**${title}**`;
+  if (observation.subtitle) {
+    message += `\n${observation.subtitle}`;
+  }
+  return message;
+}
+
+async function sendToChannel(
+  api: OpenClawPluginApi,
+  channel: string,
+  to: string,
+  text: string
+): Promise<void> {
+  const channelSendFunctions: Record<string, (to: string, text: string) => Promise<any>> = {
+    telegram: api.runtime.channel.telegram.sendMessageTelegram,
+    discord: api.runtime.channel.discord.sendMessageDiscord,
+    signal: api.runtime.channel.signal.sendMessageSignal,
+    slack: api.runtime.channel.slack.sendMessageSlack,
+    whatsapp: api.runtime.channel.whatsapp.sendMessageWhatsApp,
+    line: api.runtime.channel.line.sendMessageLine,
+  };
+
+  const senderFunction = channelSendFunctions[channel];
+  if (!senderFunction) {
+    api.log(`[claude-mem] Unknown channel type: ${channel}`);
+    return;
+  }
+
+  try {
+    await senderFunction(to, text);
+  } catch (error) {
+    api.log(`[claude-mem] Failed to send to ${channel}: ${error}`);
+  }
+}
+
+async function connectToSSEStream(
+  api: OpenClawPluginApi,
+  port: number,
+  channel: string,
+  to: string
+): Promise<void> {
+  let backoffMs = 1000;
+  const maxBackoffMs = 30000;
+
+  while (sseAbortController && !sseAbortController.signal.aborted) {
+    try {
+      connectionState = "reconnecting";
+      api.log(`[claude-mem] Connecting to SSE stream at http://localhost:${port}/stream`);
+
+      const response = await fetch(`http://localhost:${port}/stream`, {
+        signal: sseAbortController.signal,
+        headers: { Accept: "text/event-stream" },
+      });
+
+      if (!response.ok) {
+        throw new Error(`SSE stream returned HTTP ${response.status}`);
+      }
+
+      if (!response.body) {
+        throw new Error("SSE stream response has no body");
+      }
+
+      connectionState = "connected";
+      backoffMs = 1000;
+      api.log("[claude-mem] Connected to SSE stream");
+
+      const reader = response.body.getReader();
+      const decoder = new TextDecoder();
+      let buffer = "";
+
+      while (true) {
+        const { done, value } = await reader.read();
+        if (done) break;
+
+        buffer += decoder.decode(value, { stream: true });
+
+        const frames = buffer.split("\n\n");
+        buffer = frames.pop() || "";
+
+        for (const frame of frames) {
+          const dataLine = frame
+            .split("\n")
+            .find((line) => line.startsWith("data:"));
+          if (!dataLine) continue;
+
+          const jsonStr = dataLine.slice(5).trim();
+          if (!jsonStr) continue;
+
+          try {
+            const parsed = JSON.parse(jsonStr);
+            if (parsed.type === "new_observation") {
+              const event = parsed as SSENewObservationEvent;
+              const message = formatObservationMessage(event.observation);
+              await sendToChannel(api, channel, to, message);
+            }
+          } catch {
+            // Ignore malformed JSON frames
+          }
+        }
+      }
+    } catch (error: any) {
+      if (sseAbortController?.signal.aborted) {
+        break;
+      }
+      connectionState = "reconnecting";
+      api.log(`[claude-mem] SSE stream error: ${error.message ?? error}. Reconnecting in ${backoffMs / 1000}s`);
+    }
+
+    if (sseAbortController?.signal.aborted) break;
+
+    await new Promise((resolve) => setTimeout(resolve, backoffMs));
+    backoffMs = Math.min(backoffMs * 2, maxBackoffMs);
+  }
+
+  connectionState = "disconnected";
+}
+
 export default function claudeMemPlugin(api: OpenClawPluginApi): void {
   api.registerService({
     id: "claude-mem-observation-feed",
-    start: async (ctx) => {
+    start: async (_ctx) => {
       const config = api.getConfig();
-      const feedConfig = config.observationFeed as any;
+      const workerPort = (config.workerPort as number) || 37777;
+      const feedConfig = config.observationFeed as
+        | { enabled?: boolean; channel?: string; to?: string }
+        | undefined;
+
       if (!feedConfig?.enabled) {
         api.log("[claude-mem] Observation feed disabled");
         return;
       }
+
+      if (!feedConfig.channel || !feedConfig.to) {
+        api.log("[claude-mem] Observation feed misconfigured — channel or target missing");
+        return;
+      }
+
       api.log(`[claude-mem] Observation feed starting — channel: ${feedConfig.channel}, target: ${feedConfig.to}`);
-      // SSE connection logic added in Phase 2
+
+      sseAbortController = new AbortController();
+      connectToSSEStream(api, workerPort, feedConfig.channel, feedConfig.to);
+    },
+    stop: async (_ctx) => {
+      if (sseAbortController) {
+        sseAbortController.abort();
+        sseAbortController = null;
+      }
+      connectionState = "disconnected";
+      api.log("[claude-mem] Observation feed stopped — SSE connection closed");
     },
-    stop: async (ctx) => {
-      api.log("[claude-mem] Observation feed stopping");
-      // SSE disconnect logic added in Phase 2
-    }
   });
 
   api.registerCommand({
     name: "claude-mem-feed",
     description: "Show or toggle Claude-Mem observation feed status",
-    handler: async (args, ctx) => {
+    handler: async (args, _ctx) => {
       const config = api.getConfig();
-      const feedConfig = config.observationFeed as any;
+      const feedConfig = config.observationFeed as
+        | { enabled?: boolean; channel?: string; to?: string }
+        | undefined;
+
       if (!feedConfig) {
         return "Observation feed not configured. Add observationFeed to your plugin config.";
       }
-      return `Claude-Mem Observation Feed\nEnabled: ${feedConfig.enabled ? "yes" : "no"}\nChannel: ${feedConfig.channel || "not set"}\nTarget: ${feedConfig.to || "not set"}`;
-    }
+
+      if (args[0] === "on") {
+        api.log("[claude-mem] Feed enable requested via command");
+        return "Feed enable requested. Update observationFeed.enabled in your plugin config to persist.";
+      }
+
+      if (args[0] === "off") {
+        api.log("[claude-mem] Feed disable requested via command");
+        return "Feed disable requested. Update observationFeed.enabled in your plugin config to persist.";
+      }
+
+      return [
+        "Claude-Mem Observation Feed",
+        `Enabled: ${feedConfig.enabled ? "yes" : "no"}`,
+        `Channel: ${feedConfig.channel || "not set"}`,
+        `Target: ${feedConfig.to || "not set"}`,
+        `Connection: ${connectionState}`,
+      ].join("\n");
+    },
   });
 
   api.log("[claude-mem] OpenClaw plugin loaded — v1.0.0");
diff --git a/openclaw/tsconfig.json b/openclaw/tsconfig.json
index 129f41be..ac91678f 100644
--- a/openclaw/tsconfig.json
+++ b/openclaw/tsconfig.json
@@ -3,7 +3,7 @@
     "target": "ES2022",
     "module": "ESNext",
     "moduleResolution": "node",
-    "lib": ["ES2022"],
+    "lib": ["ES2022", "DOM"],
     "outDir": "./dist",
     "rootDir": "./src",
     "strict": true,