diff --git a/Cargo.lock b/Cargo.lock
index a2e9fc26ca..3950871688 100644
--- a/Cargo.lock
+++ b/Cargo.lock
@@ -779,6 +779,7 @@ dependencies = [
  "collections",
  "component",
  "derive_more 0.99.19",
+ "diffy",
  "editor",
  "feature_flags",
  "fs",
diff --git a/crates/assistant_tools/Cargo.toml b/crates/assistant_tools/Cargo.toml
index 2b8958feb1..e234b62b14 100644
--- a/crates/assistant_tools/Cargo.toml
+++ b/crates/assistant_tools/Cargo.toml
@@ -63,6 +63,7 @@ which.workspace = true
 workspace-hack.workspace = true
 workspace.workspace = true
 zed_llm_client.workspace = true
+diffy = "0.4.2"
 
 [dev-dependencies]
 lsp = { workspace = true, features = ["test-support"] }
diff --git a/crates/assistant_tools/src/project_notifications_tool.rs b/crates/assistant_tools/src/project_notifications_tool.rs
index 1b926bb446..ec315d9ab1 100644
--- a/crates/assistant_tools/src/project_notifications_tool.rs
+++ b/crates/assistant_tools/src/project_notifications_tool.rs
@@ -6,7 +6,7 @@ use language_model::{LanguageModel, LanguageModelRequest, LanguageModelToolSchem
 use project::Project;
 use schemars::JsonSchema;
 use serde::{Deserialize, Serialize};
-use std::sync::Arc;
+use std::{fmt::Write, sync::Arc};
 use ui::IconName;
 
 #[derive(Debug, Serialize, Deserialize, JsonSchema)]
@@ -59,7 +59,9 @@ impl Tool for ProjectNotificationsTool {
 
         // NOTE: Changes to this prompt require a symmetric update in the LLM Worker
         const HEADER: &str = include_str!("./project_notifications_tool/prompt_header.txt");
-        result(&format!("{HEADER}\n\n```diff\n{user_edits_diff}\n```\n").replace("\r\n", "\n"))
+        const MAX_BYTES: usize = 8000;
+        let diff = fit_patch_to_size(&user_edits_diff, MAX_BYTES);
+        result(&format!("{HEADER}\n\n```diff\n{diff}\n```\n").replace("\r\n", "\n"))
     }
 }
 
@@ -67,11 +69,95 @@ fn result(response: &str) -> ToolResult {
     Task::ready(Ok(response.to_string().into())).into()
 }
 
+/// Make sure that the patch fits into the size limit (in bytes).
+/// Compress the patch by omitting some parts if needed.
+/// Unified diff format is assumed.
+fn fit_patch_to_size(patch: &str, max_size: usize) -> String {
+    if patch.len() <= max_size {
+        return patch.to_string();
+    }
+
+    // Compression level 1: remove context lines in diff bodies, but
+    // leave the counts and positions of inserted/deleted lines
+    let mut current_size = patch.len();
+    let mut file_patches = split_patch(&patch);
+    file_patches.sort_by_key(|patch| patch.len());
+    let compressed_patches = file_patches
+        .iter()
+        .rev()
+        .map(|patch| {
+            if current_size > max_size {
+                let compressed = compress_patch(patch).unwrap_or_else(|_| patch.to_string());
+                current_size -= patch.len() - compressed.len();
+                compressed
+            } else {
+                patch.to_string()
+            }
+        })
+        .collect::<Vec<_>>();
+
+    if current_size <= max_size {
+        return compressed_patches.join("\n\n");
+    }
+
+    // Compression level 2: list paths of the changed files only
+    let filenames = file_patches
+        .iter()
+        .map(|patch| {
+            let patch = diffy::Patch::from_str(patch).unwrap();
+            let path = patch
+                .modified()
+                .and_then(|path| path.strip_prefix("b/"))
+                .unwrap_or_default();
+            format!("- {path}\n")
+        })
+        .collect::<Vec<_>>();
+
+    filenames.join("")
+}
+
+/// Split a potentially multi-file patch into multiple single-file patches
+fn split_patch(patch: &str) -> Vec<String> {
+    let mut result = Vec::new();
+    let mut current_patch = String::new();
+
+    for line in patch.lines() {
+        if line.starts_with("---") && !current_patch.is_empty() {
+            result.push(current_patch.trim_end_matches('\n').into());
+            current_patch = String::new();
+        }
+        current_patch.push_str(line);
+        current_patch.push('\n');
+    }
+
+    if !current_patch.is_empty() {
+        result.push(current_patch.trim_end_matches('\n').into());
+    }
+
+    result
+}
+
+fn compress_patch(patch: &str) -> anyhow::Result<String> {
+    let patch = diffy::Patch::from_str(patch)?;
+    let mut out = String::new();
+
+    writeln!(out, "--- {}", patch.original().unwrap_or("a"))?;
+    writeln!(out, "+++ {}", patch.modified().unwrap_or("b"))?;
+
+    for hunk in patch.hunks() {
+        writeln!(out, "@@ -{} +{} @@", hunk.old_range(), hunk.new_range())?;
+        writeln!(out, "[...skipped...]")?;
+    }
+
+    Ok(out)
+}
+
 #[cfg(test)]
 mod tests {
     use super::*;
     use assistant_tool::ToolResultContent;
     use gpui::{AppContext, TestAppContext};
+    use indoc::indoc;
     use language_model::{LanguageModelRequest, fake_provider::FakeLanguageModelProvider};
     use project::{FakeFs, Project};
     use serde_json::json;
@@ -206,6 +292,61 @@ mod tests {
         );
     }
 
+    #[test]
+    fn test_patch_compression() {
+        // Given a patch that doesn't fit into the size budget
+        let patch = indoc! {"
+       --- a/dir/test.txt
+       +++ b/dir/test.txt
+       @@ -1,3 +1,3 @@
+        line 1
+       -line 2
+       +CHANGED
+        line 3
+       @@ -10,2 +10,2 @@
+        line 10
+       -line 11
+       +line eleven
+
+
+       --- a/dir/another.txt
+       +++ b/dir/another.txt
+       @@ -100,1 +1,1 @@
+       -before
+       +after
+       "};
+
+        // When the size deficit can be compensated by dropping the body,
+        // then the body should be trimmed for larger files first
+        let limit = patch.len() - 10;
+        let compressed = fit_patch_to_size(patch, limit);
+        let expected = indoc! {"
+       --- a/dir/test.txt
+       +++ b/dir/test.txt
+       @@ -1,3 +1,3 @@
+       [...skipped...]
+       @@ -10,2 +10,2 @@
+       [...skipped...]
+
+
+       --- a/dir/another.txt
+       +++ b/dir/another.txt
+       @@ -100,1 +1,1 @@
+       -before
+       +after"};
+        assert_eq!(compressed, expected);
+
+        // When the size deficit is too large, then only file paths
+        // should be returned
+        let limit = 10;
+        let compressed = fit_patch_to_size(patch, limit);
+        let expected = indoc! {"
+       - dir/another.txt
+       - dir/test.txt
+       "};
+        assert_eq!(compressed, expected);
+    }
+
     fn init_test(cx: &mut TestAppContext) {
         cx.update(|cx| {
             let settings_store = SettingsStore::test(cx);