How Claude Code Memory Actually Works: MEMORY.Md, Auto Dream, 200-Line Limit

An examination of Claude Code’s memory implementation describes a file-based system in which each project stores persistent Markdown memories under a local directory, with MEMORY.md serving as an index loaded at session startup. The account highlights undocumented limits of 200 lines and 25 KB for this index, arguing that excess entries may be silently truncated, causing older memories to become unavailable without notifying the model or user. It distinguishes self-generated MEMORY.md notes from user-maintained CLAUDE.md instruction files, which can operate at project, personal, and organizational scopes and are loaded in full. Memories are limited to user, feedback, project, and reference categories, while a separate Claude Sonnet call selects up to five relevant files per turn based on filenames and descriptions rather than embedding search; older loaded memories also receive staleness warnings. The described architecture includes optional background memory extraction and consolidation features, as well as potential team-scoped memories. The post presents Mem0’s vector-store-based plugin as an alternative intended to provide semantic retrieval, avoid index and file-selection caps, and offer memory management across Claude Code and Cowork.

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