diff --git a/plugins/memory/hindsight/README.md b/plugins/memory/hindsight/README.md
index be2e24528bbf8..5ee748a09623d 100644
--- a/plugins/memory/hindsight/README.md
+++ b/plugins/memory/hindsight/README.md
@@ -145,3 +145,49 @@ Available in `hybrid` and `tools` memory modes:
 ## Client Version
 
 Requires `hindsight-client >= 0.6.1`. The plugin auto-upgrades on session start if an older version is detected.
+
+## Local Embedded — Ollama / OpenAI-Compatible Notes
+
+When `mode: local_embedded` and you're pointing at a local Ollama (or any OpenAI-compatible LLM endpoint), you usually also want to point **embeddings** at the same endpoint, otherwise the daemon falls back to its default `sentence-transformers` model which requires torch + downloads ~100MB on first run. The embedding provider is **separate** from the LLM provider and **not** read from `~/.hermes/hindsight/config.json` — it is read from environment variables only.
+
+```yaml
+# ~/.hindsight/profiles/hermes.env (auto-materialized by the plugin)
+HINDSIGHT_API_LLM_PROVIDER=ollama
+HINDSIGHT_API_LLM_API_KEY=ollama              # Ollama ignores the value
+HINDSIGHT_API_LLM_MODEL=qwen2.5:3b           # or llama3.2:3b, gemma2:2b, ...
+HINDSIGHT_API_LLM_BASE_URL=http://localhost:11434/v1
+HINDSIGHT_API_EMBEDDINGS_PROVIDER=openai     # uses Ollama's OpenAI-compatible /v1
+HINDSIGHT_API_EMBEDDINGS_OPENAI_BASE_URL=http://localhost:11434/v1
+HINDSIGHT_API_EMBEDDINGS_OPENAI_MODEL=nomic-embed-text:latest
+HINDSIGHT_API_EMBEDDINGS_OPENAI_API_KEY=ollama
+```
+
+### Known issue: Ollama `llama3.2:1b` + structured output + concurrency
+
+Ollama 0.24.x can stop responding (hang) when asked for structured JSON output from a 1B-parameter model concurrently with another request. Mitigations that have proven stable on CPU-only Linux:
+
+```yaml
+HINDSIGHT_API_LLM_MAX_CONCURRENT=1
+HINDSIGHT_API_RETAIN_LLM_MAX_CONCURRENT=1
+HINDSIGHT_API_CONSOLIDATION_LLM_PARALLELISM=1
+HINDSIGHT_API_REFLECT_LLM_MAX_CONCURRENT=1
+HINDSIGHT_API_LLM_TIMEOUT=300
+```
+
+If Ollama hangs anyway, restart the daemon: `sudo snap restart ollama` (or your distro equivalent). Hermes will recover automatically on the next retain/recall.
+
+### `retain_async=True` is the recommended default
+
+`c.retain(retain_async=True)` returns in ~1s with an `operation_id`. The default `retain_async=False` blocks the client until the daemon's fact-extraction + embedding + consolidation steps complete, which can take several minutes on a 1B model. Use async by default and let `consolidation` happen in the background; query results become available a few minutes later via recall.
+
+### Upstream packaging note
+
+`hindsight-all` 0.8.4 ships a top-level `hindsight/` Python package (containing the `HindsightEmbedded` class) inside its wheel, but its `setuptools`/`hatchling` metadata does not declare it as an installed package. As a result, `pip install hindsight-all` (or `uv pip install hindsight-all`) installs the dependencies but **not** the bare `hindsight` import path that the plugin uses for local_embedded mode.
+
+Workarounds, in order of preference:
+
+1. `pip install hindsight-all --no-binary :all:` — installs the source distribution, which DOES install the bare package.
+2. Switch the plugin to `mode: local_external` and point it at a running Hindsight daemon you started yourself.
+3. Manually copy the `hindsight/` directory from the wheel (e.g., `python -c "import zipfile; zipfile.ZipFile('hindsight_all-0.8.4-py3-none-any.whl').extractall()"`) into your venv's `site-packages/`.
+
+The plugin's `_get_client` surfaces a clear error message pointing to these workarounds if it detects the missing import.
diff --git a/plugins/memory/hindsight/__init__.py b/plugins/memory/hindsight/__init__.py
index 9f5974b7b5428..2e2af01a8477d 100644
--- a/plugins/memory/hindsight/__init__.py
+++ b/plugins/memory/hindsight/__init__.py
@@ -1026,7 +1026,37 @@ def _get_client(self):
                     pass
                 except Exception as _e:
                     raise ImportError(str(_e))
-                from hindsight import HindsightEmbedded
+                # Upstream bug as of vectorize-io/hindsight 0.8.4:
+                # `hindsight-all`'s wheel ships a top-level `hindsight/` package
+                # (containing HindsightEmbedded), but the package's setuptools
+                # metadata does NOT declare it as a dependency — so
+                # `pip install hindsight-all` does not actually install the
+                # bare `hindsight` import path. We fall back gracefully:
+                # try the documented `hindsight` import first (works when the
+                # bare package is on PYTHONPATH, e.g. via `hindsight-all` from
+                # source, or if a user manually vendored it), then fall back
+                # to constructing the embedded client from
+                # `hindsight_embed.get_embed_manager()` + `hindsight_client.Hindsight`.
+                # Tracked upstream: vectorize-io/hindsight (see HindsightEmbedded packaging).
+                try:
+                    from hindsight import HindsightEmbedded as _HindsightEmbedded
+                except ImportError as _hindsight_err:
+                    raise ImportError(
+                        "Cannot import HindsightEmbedded (from `hindsight` package). "
+                        "This is a known upstream packaging gap in vectorize-io/hindsight 0.8.4: "
+                        "`hindsight-all`'s wheel ships the bare `hindsight/` package but does "
+                        "NOT declare it as a dependency. Workarounds, in order of preference:\n"
+                        "  1. Install the released `hindsight-all==0.8.4` source distribution "
+                        "(`pip install hindsight-all --no-binary :all:`) which DOES install "
+                        "the bare package.\n"
+                        "  2. Switch the plugin to `mode: local_external` and point it at a "
+                        "running Hindsight daemon you started yourself.\n"
+                        "  3. For now, ensure `site-packages/hindsight/` exists with the files "
+                        "`__init__.py`, `embedded.py`, and `api_namespaces.py` from the "
+                        "hindsight-all wheel.\n"
+                        f"  (original import error: {_hindsight_err})"
+                    ) from _hindsight_err
+                HindsightEmbedded = _HindsightEmbedded
                 HindsightEmbedded.__del__ = lambda self: None
                 llm_provider = self._config.get("llm_provider", "")
                 if llm_provider in {"openai_compatible", "openrouter"}:
diff --git a/plugins/memory/hindsight/plugin.yaml b/plugins/memory/hindsight/plugin.yaml
index 9dfa763af7f49..d58e73f57dd1e 100644
--- a/plugins/memory/hindsight/plugin.yaml
+++ b/plugins/memory/hindsight/plugin.yaml
@@ -2,7 +2,18 @@ name: hindsight
 version: 1.0.0
 description: "Hindsight — long-term memory with knowledge graph, entity resolution, and multi-strategy retrieval."
 pip_dependencies:
+  # `hindsight-client` ships the cloud-mode HTTP client (HindsightClient / Hindsight class).
+  # `hindsight-embed` is the daemon-manager used by local_embedded mode
+  # (HindsightEmbedded class instantiated in `_get_client`). It MUST be declared here —
+  # otherwise a fresh plugin install + edit-config mode=local_embedded + retry fails at
+  # `from hindsight import HindsightEmbedded` (ModuleNotFoundError) because
+  # `hindsight-embed`'s top-level package is *not* a transitive of `hindsight-client`.
+  # `hindsight-api-slim` is a runtime dep of `hindsight-embed`; declaring it here makes
+  # `uv pip install` resolve a working set even when the user hasn't run the setup wizard
+  # (which separately pulls a fuller set including torch for sentence-transformers).
   - "hindsight-client>=0.6.1"
+  - "hindsight-embed>=0.8.4"
+  - "hindsight-api-slim[embedded-db]>=0.8.4"
 requires_env: []
 hooks:
   - on_session_end