diff --git a/extensions/matrix/src/matrix/monitor/mentions.test.ts b/extensions/matrix/src/matrix/monitor/mentions.test.ts
index c6afad3681d..0e264a46b51 100644
--- a/extensions/matrix/src/matrix/monitor/mentions.test.ts
+++ b/extensions/matrix/src/matrix/monitor/mentions.test.ts
@@ -194,6 +194,21 @@ describe("resolveMentions", () => {
       expect(result.wasMentioned).toBe(true);
     });
 
+    it("detects mention when the visible label encodes the bot's displayName", () => {
+      const result = resolveMentions({
+        content: {
+          msgtype: "m.text",
+          body: "R&D Bot: hello",
+          formatted_body: '<a href="https://matrix.to/#/@bot:matrix.org">R&amp;D Bot</a>: hello',
+        },
+        userId,
+        displayName: "R&D Bot",
+        text: "R&D Bot: hello",
+        mentionRegexes: [],
+      });
+      expect(result.wasMentioned).toBe(true);
+    });
+
     it("does not detect mention when displayName is spoofed", () => {
       const result = resolveMentions({
         content: {
diff --git a/extensions/matrix/src/matrix/monitor/mentions.ts b/extensions/matrix/src/matrix/monitor/mentions.ts
index 70739f446d4..f1388de2652 100644
--- a/extensions/matrix/src/matrix/monitor/mentions.ts
+++ b/extensions/matrix/src/matrix/monitor/mentions.ts
@@ -1,10 +1,34 @@
 import { getMatrixRuntime } from "../../runtime.js";
 import type { RoomMessageEventContent } from "./types.js";
 
+const HTML_ENTITY_REPLACEMENTS: Readonly<Record<string, string>> = {
+  amp: "&",
+  apos: "'",
+  gt: ">",
+  lt: "<",
+  nbsp: " ",
+  quot: '"',
+};
+
+function decodeHtmlEntities(value: string): string {
+  return value.replace(/&(#x?[0-9a-f]+|\w+);/gi, (match, entity: string) => {
+    const normalized = entity.toLowerCase();
+    if (normalized.startsWith("#x")) {
+      const codePoint = Number.parseInt(normalized.slice(2), 16);
+      return Number.isNaN(codePoint) ? match : String.fromCodePoint(codePoint);
+    }
+    if (normalized.startsWith("#")) {
+      const codePoint = Number.parseInt(normalized.slice(1), 10);
+      return Number.isNaN(codePoint) ? match : String.fromCodePoint(codePoint);
+    }
+    return HTML_ENTITY_REPLACEMENTS[normalized] ?? match;
+  });
+}
+
 function normalizeVisibleMentionText(value: string): string {
-  return value
-    .replace(/<[^>]+>/g, " ")
-    .replace(/[\u200b-\u200f\u202a-\u202e\u2060-\u206f]/g, "")
+  return decodeHtmlEntities(
+    value.replace(/<[^>]+>/g, " ").replace(/[\u200b-\u200f\u202a-\u202e\u2060-\u206f]/g, ""),
+  )
     .replace(/\s+/g, " ")
     .trim()
     .toLowerCase();
@@ -41,13 +65,11 @@ function isVisibleMentionLabel(params: {
   }
   const localpart = resolveMatrixUserLocalpart(params.userId);
   const candidates = [
-    params.userId.trim().toLowerCase(),
-    localpart,
-    localpart ? `@${localpart}` : null,
+    extractVisibleMentionText(params.userId),
+    localpart ? extractVisibleMentionText(localpart) : null,
+    localpart ? extractVisibleMentionText(`@${localpart}`) : null,
     params.displayName ? extractVisibleMentionText(params.displayName) : null,
-  ]
-    .filter((value): value is string => Boolean(value))
-    .map((value) => value.toLowerCase());
+  ].filter((value): value is string => Boolean(value));
   return candidates.includes(cleaned);
 }
 
diff --git a/extensions/matrix/src/matrix/monitor/room-info.test.ts b/extensions/matrix/src/matrix/monitor/room-info.test.ts
index 0cfb3c4ab1c..f3ffb1768b3 100644
--- a/extensions/matrix/src/matrix/monitor/room-info.test.ts
+++ b/extensions/matrix/src/matrix/monitor/room-info.test.ts
@@ -45,6 +45,51 @@ describe("createMatrixRoomInfoResolver", () => {
     expect(client.getRoomStateEvent).toHaveBeenCalledTimes(3);
   });
 
+  it("caches fallback user IDs when member display names are missing", async () => {
+    const client = {
+      getRoomStateEvent: vi.fn(
+        async (_roomId: string, eventType: string): Promise<Record<string, unknown>> => {
+          if (eventType === "m.room.member") {
+            return {};
+          }
+          return {};
+        },
+      ),
+    } as unknown as MatrixClient & {
+      getRoomStateEvent: ReturnType<typeof vi.fn>;
+    };
+    const resolver = createMatrixRoomInfoResolver(client);
+
+    await expect(
+      resolver.getMemberDisplayName("!room:example.org", "@alice:example.org"),
+    ).resolves.toBe("@alice:example.org");
+    await expect(
+      resolver.getMemberDisplayName("!room:example.org", "@alice:example.org"),
+    ).resolves.toBe("@alice:example.org");
+
+    expect(client.getRoomStateEvent).toHaveBeenCalledTimes(1);
+  });
+
+  it("caches fallback user IDs when member display-name lookups fail", async () => {
+    const client = {
+      getRoomStateEvent: vi.fn(async (): Promise<Record<string, unknown>> => {
+        throw new Error("member lookup failed");
+      }),
+    } as unknown as MatrixClient & {
+      getRoomStateEvent: ReturnType<typeof vi.fn>;
+    };
+    const resolver = createMatrixRoomInfoResolver(client);
+
+    await expect(
+      resolver.getMemberDisplayName("!room:example.org", "@alice:example.org"),
+    ).resolves.toBe("@alice:example.org");
+    await expect(
+      resolver.getMemberDisplayName("!room:example.org", "@alice:example.org"),
+    ).resolves.toBe("@alice:example.org");
+
+    expect(client.getRoomStateEvent).toHaveBeenCalledTimes(1);
+  });
+
   it("bounds cached room and member entries", async () => {
     const client = createClientStub();
     const resolver = createMatrixRoomInfoResolver(client);
diff --git a/extensions/matrix/src/matrix/monitor/room-info.ts b/extensions/matrix/src/matrix/monitor/room-info.ts
index cbfc4b173b5..07af0df1a0f 100644
--- a/extensions/matrix/src/matrix/monitor/room-info.ts
+++ b/extensions/matrix/src/matrix/monitor/room-info.ts
@@ -83,27 +83,21 @@ export function createMatrixRoomInfoResolver(client: MatrixClient) {
 
   const getMemberDisplayName = async (roomId: string, userId: string): Promise<string> => {
     const cacheKey = `${roomId}:${userId}`;
-    const cached = memberDisplayNameCache.get(cacheKey);
-    if (cached) {
-      return cached;
-    }
-    try {
-      const memberState = await client
-        .getRoomStateEvent(roomId, "m.room.member", userId)
-        .catch(() => null);
-      if (memberState && typeof memberState.displayname === "string") {
-        rememberBounded(
-          memberDisplayNameCache,
-          cacheKey,
-          memberState.displayname,
-          MAX_TRACKED_MEMBER_DISPLAY_NAMES,
-        );
-        return memberState.displayname;
-      }
-      return userId;
-    } catch {
-      return userId;
+    if (memberDisplayNameCache.has(cacheKey)) {
+      return memberDisplayNameCache.get(cacheKey) ?? userId;
     }
+    const memberState = await client
+      .getRoomStateEvent(roomId, "m.room.member", userId)
+      .catch(() => null);
+    const displayName =
+      memberState && typeof memberState.displayname === "string" ? memberState.displayname : userId;
+    rememberBounded(
+      memberDisplayNameCache,
+      cacheKey,
+      displayName,
+      MAX_TRACKED_MEMBER_DISPLAY_NAMES,
+    );
+    return displayName;
   };
 
   return {