diff --git a/scripts/check-gateway-watch-regression.mjs b/scripts/check-gateway-watch-regression.mjs
index 0dd7f864d46..285538a6618 100644
--- a/scripts/check-gateway-watch-regression.mjs
+++ b/scripts/check-gateway-watch-regression.mjs
@@ -42,6 +42,33 @@ const WATCH_GATEWAY_SKIP_ENV = {
   NODE_ENV: "test",
 };
 
+export const WATCH_LOG_CAPTURE_MAX_CHARS = 2 * 1024 * 1024;
+const WATCH_BUILD_DETECTION_MAX_CHARS = 4096;
+
+export function appendBoundedWatchLog(current, chunk, maxChars = WATCH_LOG_CAPTURE_MAX_CHARS) {
+  const next = `${current}${String(chunk)}`;
+  if (next.length <= maxChars) {
+    return { text: next, truncated: false };
+  }
+  return { text: next.slice(-maxChars), truncated: true };
+}
+
+function formatCapturedWatchLog(text, truncated) {
+  return truncated ? `[openclaw] log truncated to last ${WATCH_LOG_CAPTURE_MAX_CHARS} chars\n${text}` : text;
+}
+
+export function updateWatchBuildDetection(state, chunk) {
+  const combined = `${state.buffer ?? ""}${String(chunk)}`;
+  const next = appendBoundedWatchLog("", combined, WATCH_BUILD_DETECTION_MAX_CHARS);
+  const reason = detectWatchBuildReason(combined, "");
+  const triggered = state.triggered || combined.includes("Building TypeScript (dist is stale");
+  return {
+    buffer: next.text,
+    triggered,
+    reason: state.reason ?? reason,
+  };
+}
+
 function parseArgs(argv) {
   const options = { ...DEFAULTS };
   for (let i = 0; i < argv.length; i += 1) {
@@ -464,11 +491,20 @@ async function runTimedWatch(options, outputDir) {
 
   let stdout = "";
   let stderr = "";
+  let stdoutTruncated = false;
+  let stderrTruncated = false;
+  let buildDetection = { buffer: "", triggered: false, reason: null };
   child.stdout?.on("data", (chunk) => {
-    stdout += String(chunk);
+    const next = appendBoundedWatchLog(stdout, chunk);
+    stdout = next.text;
+    stdoutTruncated ||= next.truncated;
+    buildDetection = updateWatchBuildDetection(buildDetection, chunk);
   });
   child.stderr?.on("data", (chunk) => {
-    stderr += String(chunk);
+    const next = appendBoundedWatchLog(stderr, chunk);
+    stderr = next.text;
+    stderrTruncated ||= next.truncated;
+    buildDetection = updateWatchBuildDetection(buildDetection, chunk);
   });
 
   let watchPid = null;
@@ -492,8 +528,8 @@ async function runTimedWatch(options, outputDir) {
   const idleCpuEndMs = watchPid ? readProcessTreeCpuMs(watchPid) : null;
 
   const exit = await stopTimedWatchChild(child, watchPid, options);
-  fs.writeFileSync(stdoutPath, stdout, "utf8");
-  fs.writeFileSync(stderrPath, stderr, "utf8");
+  fs.writeFileSync(stdoutPath, formatCapturedWatchLog(stdout, stdoutTruncated), "utf8");
+  fs.writeFileSync(stderrPath, formatCapturedWatchLog(stderr, stderrTruncated), "utf8");
   const timing = fs.existsSync(timeFilePath)
     ? parseTimingFile(timeFilePath)
     : { userSeconds: Number.NaN, sysSeconds: Number.NaN, elapsedSeconds: Number.NaN };
@@ -509,6 +545,8 @@ async function runTimedWatch(options, outputDir) {
     stdoutPath,
     stderrPath,
     timeFilePath,
+    watchTriggeredBuild: buildDetection.triggered,
+    watchBuildReason: buildDetection.reason,
   };
 }
 
@@ -706,15 +744,8 @@ async function main() {
     (watchResult.timing.userSeconds + watchResult.timing.sysSeconds) * 1000,
   );
   const cpuMs = watchResult.idleCpuMs ?? totalCpuMs;
-  const watchTriggeredBuild =
-    fs
-      .readFileSync(watchResult.stderrPath, "utf8")
-      .includes("Building TypeScript (dist is stale") ||
-    fs.readFileSync(watchResult.stdoutPath, "utf8").includes("Building TypeScript (dist is stale");
-  const watchBuildReason = detectWatchBuildReason(
-    fs.readFileSync(watchResult.stdoutPath, "utf8"),
-    fs.readFileSync(watchResult.stderrPath, "utf8"),
-  );
+  const watchTriggeredBuild = watchResult.watchTriggeredBuild;
+  const watchBuildReason = watchResult.watchBuildReason;
 
   const summary = {
     windowMs: options.windowMs,
diff --git a/test/scripts/check-gateway-watch-regression.test.ts b/test/scripts/check-gateway-watch-regression.test.ts
index 015d37d3d99..2f4766fbd75 100644
--- a/test/scripts/check-gateway-watch-regression.test.ts
+++ b/test/scripts/check-gateway-watch-regression.test.ts
@@ -4,9 +4,12 @@ import os from "node:os";
 import path from "node:path";
 import { describe, expect, it, vi } from "vitest";
 import {
+  appendBoundedWatchLog,
   hasGatewayReadyLog,
   shouldRefreshBuildStampForRestoredArtifacts,
   stopTimedWatchChild,
+  updateWatchBuildDetection,
+  WATCH_LOG_CAPTURE_MAX_CHARS,
   writeBuildAndRuntimePostBuildStamps,
 } from "../../scripts/check-gateway-watch-regression.mjs";
 import {
@@ -21,6 +24,34 @@ describe("check-gateway-watch-regression", () => {
     expect(hasGatewayReadyLog("[gateway] starting HTTP server...")).toBe(false);
   });
 
+  it("bounds in-memory watch output capture while keeping the newest logs", () => {
+    const first = appendBoundedWatchLog("abc", "def", 8);
+    expect(first).toEqual({ text: "abcdef", truncated: false });
+
+    const second = appendBoundedWatchLog(first.text, "ghijkl", 8);
+    expect(second).toEqual({ text: "efghijkl", truncated: true });
+    expect(second.text).toHaveLength(8);
+    expect(WATCH_LOG_CAPTURE_MAX_CHARS).toBeGreaterThan(1024);
+  });
+
+  it("keeps build-regression detection after diagnostic logs truncate", () => {
+    const detected = updateWatchBuildDetection(
+      { buffer: "", triggered: false, reason: null },
+      "Building TypeScript (dist is stale: source_mtime_newer)\n",
+    );
+    const afterNoise = updateWatchBuildDetection(detected, "x".repeat(10_000));
+
+    expect(afterNoise.triggered).toBe(true);
+    expect(afterNoise.reason).toBe("source_mtime_newer");
+
+    const coalesced = updateWatchBuildDetection(
+      { buffer: "", triggered: false, reason: null },
+      `Building TypeScript (dist is stale: config_newer)\n${"x".repeat(10_000)}`,
+    );
+    expect(coalesced.triggered).toBe(true);
+    expect(coalesced.reason).toBe("config_newer");
+  });
+
   it("refreshes restored build stamps only for skip-build config mtime drift", () => {
     expect(
       shouldRefreshBuildStampForRestoredArtifacts({