diff --git a/agentydragon/tasks/21-compact-markdown-rendering.md b/agentydragon/tasks/21-compact-markdown-rendering.md
index c39c6e7c36..c1f46fbfab 100644
--- a/agentydragon/tasks/21-compact-markdown-rendering.md
+++ b/agentydragon/tasks/21-compact-markdown-rendering.md
@@ -1,9 +1,9 @@
 +++
 id = "21"
 title = "Compact Markdown Rendering Option"
-status = "Not started"
-dependencies = "" # No prerequisites
-last_updated = "2025-06-25T01:40:09.600000"
+status = "Done"
+dependencies = "03,06,08,13,15,32,18,19,22,23"
+last_updated = "2025-06-24T22:25:59.864216"
 +++
 
 ## Summary
diff --git a/codex-rs/core/src/config_types.rs b/codex-rs/core/src/config_types.rs
index 3a3ef7427a..8579cc88ed 100644
--- a/codex-rs/core/src/config_types.rs
+++ b/codex-rs/core/src/config_types.rs
@@ -90,6 +90,11 @@ pub struct Tui {
     #[serde(default)]
     pub disable_mouse_capture: bool,
 
+    /// When `true`, omit blank lines immediately following Markdown headings
+    /// (levels 1–6) in TUI rendering for more compact vertical spacing.
+    #[serde(default)]
+    pub markdown_compact: bool,
+
     /// Maximum number of visible lines in the chat input composer before scrolling.
     /// The composer will expand up to this many lines; additional content will enable
     /// an internal scrollbar.
@@ -114,6 +119,7 @@ impl Default for Tui {
     fn default() -> Self {
         Self {
             disable_mouse_capture: Default::default(),
+            markdown_compact: Default::default(),
             composer_max_rows: default_composer_max_rows(),
             editor: default_editor(),
         }
diff --git a/codex-rs/tui/src/markdown.rs b/codex-rs/tui/src/markdown.rs
index ab20138298..8212cbf63a 100644
--- a/codex-rs/tui/src/markdown.rs
+++ b/codex-rs/tui/src/markdown.rs
@@ -12,7 +12,15 @@ pub(crate) fn append_markdown(
     lines: &mut Vec<Line<'static>>,
     config: &Config,
 ) {
-    append_markdown_with_opener_and_cwd(markdown_source, lines, config.file_opener, &config.cwd);
+    let mut new_lines = Vec::new();
+    append_markdown_with_opener_and_cwd(markdown_source, &mut new_lines, config.file_opener, &config.cwd);
+    if config.tui.markdown_compact {
+        for line in collapse_heading_blank_lines(new_lines) {
+            lines.push(line);
+        }
+    } else {
+        lines.extend(new_lines);
+    }
 }
 
 fn append_markdown_with_opener_and_cwd(
@@ -53,6 +61,29 @@ fn append_markdown_with_opener_and_cwd(
     }
 }
 
+/// Remove blank lines immediately following Markdown headings (levels 1–6).
+fn collapse_heading_blank_lines(lines: Vec<Line<'static>>) -> Vec<Line<'static>> {
+    let mut result = Vec::with_capacity(lines.len());
+    let mut prev_was_heading = false;
+    for line in lines {
+        let content = line.spans.iter().map(|s| s.content.clone()).collect::<String>();
+        if prev_was_heading && content.trim().is_empty() {
+            continue;
+        }
+        prev_was_heading = {
+            let s = content.as_str();
+            s.starts_with("# ")
+                || s.starts_with("## ")
+                || s.starts_with("### ")
+                || s.starts_with("#### ")
+                || s.starts_with("##### ")
+                || s.starts_with("###### ")
+        };
+        result.push(line);
+    }
+    result
+}
+
 /// Rewrites file citations in `src` into markdown hyperlinks using the
 /// provided `scheme` (`vscode`, `cursor`, etc.). The resulting URI follows the
 /// format expected by VS Code-compatible file openers:
@@ -104,6 +135,52 @@ mod tests {
     use super::*;
     use pretty_assertions::assert_eq;
 
+    #[test]
+    fn collapse_blank_after_heading() {
+        let lines = vec![
+            Line::from(vec![Span::raw("# Heading")]),
+            Line::from(vec![Span::raw("")]),
+            Line::from(vec![Span::raw("Paragraph")]),
+        ];
+        let collapsed = collapse_heading_blank_lines(lines);
+        let rendered: Vec<String> = collapsed
+            .iter()
+            .map(|l| l.spans.iter().map(|s| s.content.clone()).collect())
+            .collect();
+        assert_eq!(rendered, vec!["# Heading", "Paragraph"]);
+    }
+
+    #[test]
+    fn preserve_blank_not_after_heading() {
+        let lines = vec![
+            Line::from(vec![Span::raw("Normal")]),
+            Line::from(vec![Span::raw("")]),
+            Line::from(vec![Span::raw("Paragraph")]),
+        ];
+        let collapsed = collapse_heading_blank_lines(lines);
+        let rendered: Vec<String> = collapsed
+            .iter()
+            .map(|l| l.spans.iter().map(|s| s.content.clone()).collect())
+            .collect();
+        assert_eq!(rendered, vec!["Normal", "", "Paragraph"]);
+    }
+
+    #[test]
+    fn collapse_multiple_blanks_after_heading() {
+        let lines = vec![
+            Line::from(vec![Span::raw("## Heading2")]),
+            Line::from(vec![Span::raw("")]),
+            Line::from(vec![Span::raw("")]),
+            Line::from(vec![Span::raw("Para")]),
+        ];
+        let collapsed = collapse_heading_blank_lines(lines);
+        let rendered: Vec<String> = collapsed
+            .iter()
+            .map(|l| l.spans.iter().map(|s| s.content.clone()).collect())
+            .collect();
+        assert_eq!(rendered, vec!["## Heading2", "Para"]);
+    }
+
     #[test]
     fn citation_is_rewritten_with_absolute_path() {
         let markdown = "See 【F:/src/main.rs†L42-L50】 for details.";