diff --git a/examples/README.md b/examples/README.md
index 1daea83c0..f8ea2cb74 100644
--- a/examples/README.md
+++ b/examples/README.md
@@ -11,7 +11,7 @@ These examples provide concrete examples to leverage vime in your own RL workflo
 - **[low_precision](./low_precision)**: Examples of FP8 training and inference for improved throughput and stability.
 - **[mem_agent](./mem_agent)**: MemAgent long-context RL — chunk-wise memory update, HotpotQA GRPO training, and RULER-HQA evaluation.
 - **[multi_agent](./multi_agent)**: Example of running multi-agent RL with `vime`.
-- **[on_policy_distillation](./on_policy_distillation)**: Example implementation for on-policy distillation, extending the reinforcement learning pipeline to support teacher–student distillation directly within on-policy training.
+- **[on_policy_distillation](./on_policy_distillation)**: On-policy distillation (OPD) with an external vLLM teacher or a Megatron-loaded teacher.
 - **[delta_weight_sync](./delta_weight_sync)**: Non-colocated weight sync that ships only the changed bytes over a shared filesystem (training/inference disaggregation), reloading via the vanilla `update_weights_from_disk` path.
 - **[reproducibility](./reproducibility)**: Guides on achieving bitwise experiment reproduction using deterministic modes.
 - **[retool](./retool)**: Demonstrates the retool functionality for tool-enabled language model generation.
diff --git a/examples/on_policy_distillation/README.md b/examples/on_policy_distillation/README.md
new file mode 100644
index 000000000..9d85d3e69
--- /dev/null
+++ b/examples/on_policy_distillation/README.md
@@ -0,0 +1,168 @@
+# On-Policy Distillation Example
+
+This example shows how to run **on-policy distillation (OPD)** using vime. A
+small student (Qwen3-8B) is aligned to imitate a larger teacher (Qwen3-32B) by
+training only on the student's own rollouts and matching the teacher's
+token-level log-probabilities.
+
+## Key Features
+
+- **OPD is orthogonal to advantage estimators**: OPD works as an additive KL
+  penalty on top of any advantage estimator (GRPO, PPO, REINFORCE++, etc.), not
+  as a separate estimator.
+- **Two teacher modes**:
+  - **vllm**: Teacher runs on an external vLLM server; teacher log-probs are
+    obtained during rollout.
+  - **megatron**: Teacher is loaded directly into Megatron via
+    `--opd-teacher-load`; teacher log-probs are computed during the training
+    forward pass.
+- **Student rollout always uses vLLM** (vime's default rollout backend).
+
+## Key Arguments
+
+| Argument | Description |
+|----------|-------------|
+| `--use-opd` | Enable on-policy distillation. Required flag to use OPD. |
+| `--opd-type` | Type of OPD: `vllm` or `megatron`. Required when `--use-opd` is set. |
+| `--opd-kl-coef` | OPD KL penalty coefficient (default: 1.0). |
+| `--opd-teacher-load` | Path to teacher checkpoint. **Required** when `--opd-type=megatron`, **must not be set** when `--opd-type=vllm`. |
+| `--opd-teacher-ckpt-step` | Optional checkpoint step for teacher model. |
+
+## Mode Comparison
+
+| Mode | Teacher Location | When to use |
+|------|------------------|-------------|
+| `vllm` | External vLLM server | Teacher has different architecture or is larger than GPU memory |
+| `megatron` | Loaded into Megatron training | Teacher has same architecture as policy/ref model |
+
+## Components
+
+- `vime/rollout/on_policy_distillation.py` implements (for vLLM mode):
+  - `reward_func` calls the teacher server (via `args.rm_url`) with every sample
+    to obtain token-level logprobs.
+  - `post_process_rewards` trims the teacher logprobs to the generated response
+    span and writes the tensors back to each `Sample` to compute advantages.
+- `run-qwen3-8B-opd.sh` launches a vLLM teacher server, then submits a Ray job
+  that runs `train.py`.
+- `run-qwen3-8B-opd-megatron.sh` uses a Megatron-loaded teacher model (no
+  external server needed).
+
+## Running the example
+
+### Using vLLM Teacher (External Server)
+
+1. Download or prepare the required checkpoints and data.
+
+```bash
+hf download Qwen/Qwen3-32B --local-dir /root/Qwen3-32B
+hf download Qwen/Qwen3-8B --local-dir /root/Qwen3-8B
+hf download --repo-type dataset zhuzilin/dapo-math-17k --local-dir /root/dapo-math-17k
+```
+
+2. Run the hf to mcore for student model conversion:
+
+```bash
+cd /root/vime
+source scripts/models/qwen3-8B.sh
+
+PYTHONPATH=/root/Megatron-LM python tools/convert_hf_to_torch_dist.py \
+    ${MODEL_ARGS[@]} \
+    --hf-checkpoint /root/Qwen3-8B \
+    --save /root/Qwen3-8B_torch_dist
+```
+
+3. Run on-policy distillation:
+
+```bash
+bash examples/on_policy_distillation/run-qwen3-8B-opd.sh
+```
+
+GPU layout:
+
+| GPUs | Role |
+|------|------|
+| 0–3 | Student Megatron train + student vLLM rollout (colocate) |
+| 4–7 | Teacher vLLM (Qwen3-32B, TP=4) |
+
+### Using Megatron Teacher (No External Server)
+
+1. Prepare student checkpoint (same as above).
+
+2. **IMPORTANT**: Convert your teacher model to Megatron format (change the path
+   to your actual teacher):
+
+```bash
+# This example uses the same model as both student and teacher (for demonstration only)
+# In practice, use a different (stronger) model as the teacher!
+cd /root/vime
+source scripts/models/qwen3-8B.sh  # Or your teacher model config
+
+PYTHONPATH=/root/Megatron-LM python tools/convert_hf_to_torch_dist.py \
+    ${MODEL_ARGS[@]} \
+    --hf-checkpoint /root/YourTeacherModel \
+    --save /root/YourTeacherModel_torch_dist
+```
+
+3. Edit `run-qwen3-8B-opd-megatron.sh` to update paths:
+   - Change `--opd-teacher-load` to your teacher model path
+   - Adjust `--opd-kl-coef` based on your task
+
+4. Run:
+
+```bash
+bash examples/on_policy_distillation/run-qwen3-8B-opd-megatron.sh
+```
+
+# Preliminary Results
+
+End-to-end run with `run-qwen3-8B-opd.sh` (dapo-math-17k train, GRPO +
+`--opd-kl-coef 1.0`, ~220 rollouts / iter_0000219). Offline GSM8K greedy eval:
+
+| Model | GSM8K Accuracy |
+|-------|----------------|
+| Qwen3-8B (pre-OPD) | 79.7% (n=300) |
+| Qwen3-8B (post-OPD) | **88.2%** (n=1319, **+8.5 pp**) |
+| Qwen3-32B teacher | 87.0% (n=300) |
+
+Training health signal: `rollout/opd_reverse_kl` dropped from 0.145 → ~0.10
+(−38%). Pure OPD uses `raw_reward=0`; the learning signal is the OPD KL term.
+
+# FAQ
+
+1. **Why are there two OPD modes?**
+   - `vllm` mode: The teacher runs on an independent vLLM server. This is useful
+     when the teacher has a different architecture or is too large to load
+     together with the policy model.
+   - `megatron` mode: The teacher is loaded into Megatron using the same
+     parameter loading mechanism as the reference model. This requires the
+     teacher to have the same architecture as the policy model.
+
+2. **How do I use Megatron-based teacher instead of vLLM server?**
+   Replace your OPD arguments:
+   ```bash
+   # Instead of:
+   --use-opd --opd-type vllm --opd-kl-coef 1.0
+   # Use:
+   --use-opd --opd-type megatron --opd-kl-coef 1.0 --opd-teacher-load /path/to/teacher_checkpoint
+   ```
+
+3. **What happens if I set wrong arguments?**
+   The system will raise clear errors:
+   - `--use-opd` without `--opd-type`: Error asking you to specify type
+   - `--opd-type megatron` without `--opd-teacher-load`: Error asking for teacher checkpoint
+   - `--opd-type vllm` with `--opd-teacher-load`: Error indicating conflict
+
+4. **Why is `rollout/raw_reward` always 0?**
+   Pure OPD distillation does not use an external reward model. The learning
+   signal comes entirely from the OPD KL term applied to advantages.
+
+5. **Self-distillation: why is `opd_reverse_kl` near 0 at the start?**
+   Teacher and student start from the same weights, so reverse KL is ~0 until
+   the student updates. For a true distillation signal, use a stronger /
+   differently trained teacher (or `--opd-type vllm` with Qwen3-32B).
+
+# References
+
+1. https://thinkingmachines.ai/blog/on-policy-distillation/
+2. https://arxiv.org/abs/2306.13649
+3. https://arxiv.org/abs/2306.08543
diff --git a/examples/on_policy_distillation/run-qwen3-8B-opd-megatron.sh b/examples/on_policy_distillation/run-qwen3-8B-opd-megatron.sh
new file mode 100644
index 000000000..22a0c1b2e
--- /dev/null
+++ b/examples/on_policy_distillation/run-qwen3-8B-opd-megatron.sh
@@ -0,0 +1,162 @@
+#!/bin/bash
+
+# On-Policy Distillation with Megatron-based teacher model
+# This example uses the original model as the teacher (self-distillation for demonstration)
+#
+# IMPORTANT: This is just an example configuration!
+# In practice, you should:
+# 1. Use a different (stronger) model as the teacher
+# 2. Adjust --opd-kl-coef based on your task
+# 3. Configure proper evaluation metrics
+
+set -ex
+
+export PYTHONUNBUFFERED=1
+export PYTORCH_CUDA_ALLOC_CONF=expandable_segments:True
+
+NVLINK_COUNT=$(nvidia-smi topo -m 2>/dev/null | grep -o 'NV[0-9][0-9]*' | wc -l)
+if [ "$NVLINK_COUNT" -gt 0 ]; then
+    HAS_NVLINK=1
+else
+    HAS_NVLINK=0
+fi
+echo "HAS_NVLINK: $HAS_NVLINK (detected $NVLINK_COUNT NVLink references)"
+
+source "/root/vime/scripts/models/qwen3-8B.sh"
+
+CKPT_ARGS=(
+   --hf-checkpoint /root/Qwen3-8B
+   --ref-load /root/Qwen3-8B_torch_dist
+   --load /root/Qwen3-8B_torch_dist
+   --save /root/Qwen3-8B_vime/
+   --save-interval 10
+   --megatron-to-hf-mode bridge
+)
+
+ROLLOUT_ARGS=(
+   --prompt-data /root/dapo-math-17k/dapo-math-17k.jsonl
+   --input-key prompt
+   --apply-chat-template
+   --rollout-shuffle
+   --rm-type math
+   --num-rollout 300
+   --rollout-batch-size 16
+   --n-samples-per-prompt 4
+   --rollout-max-response-len 16384
+   --rollout-temperature 1
+
+   --global-batch-size 64
+   --balance-data
+)
+
+RM_ARGS=(
+   --rm-type math
+)
+
+EVAL_ARGS=(
+   # --eval-interval 20
+   # --eval-prompt-data aime /root/aime-2024/aime-2024.jsonl
+   # --n-samples-per-eval-prompt 16
+   # --eval-max-response-len 16384
+   # --eval-top-p 1
+)
+
+PERF_ARGS=(
+   --tensor-model-parallel-size 4
+   --sequence-parallel
+   --pipeline-model-parallel-size 1
+   --context-parallel-size 1
+   --expert-model-parallel-size 1
+   --expert-tensor-parallel-size 1
+
+   --recompute-granularity full
+   --recompute-method uniform
+   --recompute-num-layers 36
+
+   --use-dynamic-batch-size
+   --max-tokens-per-gpu 8192
+)
+
+GRPO_ARGS=(
+   --advantage-estimator grpo
+   # OPD Configuration
+   --use-opd
+   --opd-type megatron
+   --opd-kl-coef 1.0
+   # CHANGE THIS to a stronger teacher checkpoint in practice
+   --opd-teacher-load /root/Qwen3-8B_torch_dist
+   --use-kl-loss
+   --kl-loss-coef 0.00
+   --kl-loss-type low_var_kl
+   --entropy-coef 0.00
+)
+
+OPTIMIZER_ARGS=(
+   --optimizer adam
+   --lr 1e-6
+   --lr-decay-style constant
+   --weight-decay 0.1
+   --adam-beta1 0.9
+   --adam-beta2 0.98
+)
+
+WANDB_ARGS=(
+   #--use-wandb
+   # --wandb-project vime-opd
+   # --wandb-group qwen3-8B-opd-megatron
+   # --wandb-key ${WANDB_KEY}
+)
+
+VLLM_ARGS=(
+   --rollout-num-gpus-per-engine 1
+   --vllm-gpu-memory-utilization 0.4
+)
+
+MISC_ARGS=(
+   --attention-dropout 0.0
+   --hidden-dropout 0.0
+   --accumulate-allreduce-grads-in-fp32
+   --attention-softmax-in-fp32
+   --attention-backend flash
+   --make-vocab-size-divisible-by 128
+)
+
+export MASTER_ADDR=${MASTER_ADDR:-"127.0.0.1"}
+ray start --head --node-ip-address ${MASTER_ADDR} --num-gpus 8 --disable-usage-stats --dashboard-host=0.0.0.0 --dashboard-port=8265
+
+RUNTIME_ENV_JSON="{
+  \"env_vars\": {
+    \"PYTHONPATH\": \"/root/vime:/root/Megatron-LM/\",
+    \"CUDA_DEVICE_MAX_CONNECTIONS\": \"1\",
+    \"NCCL_NVLS_ENABLE\": \"${HAS_NVLINK}\",
+    \"PYTORCH_CUDA_ALLOC_CONF\": \"expandable_segments:True\"
+  }
+}"
+
+ray job submit --address="http://127.0.0.1:8265" \
+   --runtime-env-json="${RUNTIME_ENV_JSON}" \
+   --working-dir /root/vime \
+   -- python3 train.py \
+   --train-backend megatron \
+   --actor-num-nodes 1 \
+   --actor-num-gpus-per-node 4 \
+   --rollout-num-gpus 4 \
+   --colocate \
+   ${MODEL_ARGS[@]} \
+   ${CKPT_ARGS[@]} \
+   ${ROLLOUT_ARGS[@]} \
+   ${OPTIMIZER_ARGS[@]} \
+   ${GRPO_ARGS[@]} \
+   ${WANDB_ARGS[@]} \
+   ${PERF_ARGS[@]} \
+   ${EVAL_ARGS[@]} \
+   ${VLLM_ARGS[@]} \
+   ${MISC_ARGS[@]} \
+   ${RM_ARGS[@]}
+
+#### clear after training
+sleep 3
+ray stop --force
+pkill -9 ray
+pkill -9 -f "train.py" || true
+sleep 3
diff --git a/examples/on_policy_distillation/run-qwen3-8B-opd.sh b/examples/on_policy_distillation/run-qwen3-8B-opd.sh
new file mode 100644
index 000000000..c02f6bc79
--- /dev/null
+++ b/examples/on_policy_distillation/run-qwen3-8B-opd.sh
@@ -0,0 +1,202 @@
+#!/bin/bash
+
+# usage: bash examples/on_policy_distillation/run-qwen3-8B-opd.sh
+
+set -ex
+
+export PYTHONUNBUFFERED=1
+
+NVLINK_COUNT=$(nvidia-smi topo -m 2>/dev/null | grep -o 'NV[0-9][0-9]*' | wc -l)
+if [ "$NVLINK_COUNT" -gt 0 ]; then
+    HAS_NVLINK=1
+else
+    HAS_NVLINK=0
+fi
+echo "HAS_NVLINK: $HAS_NVLINK (detected $NVLINK_COUNT NVLink references)"
+
+# Start the teacher model server
+TEACHER_IP="127.0.0.1"
+TEACHER_PORT=13141
+LOG_FILE="/tmp/vllm_teacher_$(head /dev/urandom | tr -dc A-Za-z0-9 | head -c 6).log"
+
+## Launch the teacher model server in the background
+CUDA_VISIBLE_DEVICES=4,5,6,7 python3 -m vllm.entrypoints.openai.api_server \
+    --model /root/Qwen3-32B \
+    --host 0.0.0.0 \
+    --port ${TEACHER_PORT} \
+    --tensor-parallel-size 4 \
+    --gpu-memory-utilization 0.85 \
+    --trust-remote-code \
+    --dtype bfloat16 \
+    --max-model-len 16384 \
+    --disable-custom-all-reduce \
+    > "${LOG_FILE}" 2>&1 &
+TEACHER_PID=$!
+
+echo "Starting teacher model server (pid=${TEACHER_PID})..."
+
+## Wait for the teacher model server to be ready
+for i in $(seq 1 120); do
+    if ! kill -0 "${TEACHER_PID}" 2>/dev/null; then
+        echo "ERROR: Teacher server process died. Check ${LOG_FILE}"
+        tail -n 20 "${LOG_FILE}"
+        exit 1
+    fi
+    HTTP_CODE=$(curl -s -o /dev/null -w "%{http_code}" "http://${TEACHER_IP}:${TEACHER_PORT}/health" 2>/dev/null || true)
+    if [ "${HTTP_CODE}" = "200" ]; then
+        echo "Teacher model server is up and running at ${TEACHER_IP}:${TEACHER_PORT}."
+        break
+    fi
+    if [ "$i" -eq 120 ]; then
+        echo "ERROR: Teacher server failed to start within 10 minutes"
+        tail -n 20 "${LOG_FILE}"
+        kill "${TEACHER_PID}" 2>/dev/null || true
+        exit 1
+    fi
+    echo "Waiting for the teacher model server to start..."
+    sleep 5
+done
+sleep 5
+
+source "/root/vime/scripts/models/qwen3-8B.sh"
+
+CKPT_ARGS=(
+   --hf-checkpoint /root/Qwen3-8B
+   --ref-load /root/Qwen3-8B_torch_dist
+   --load /root/Qwen3-8B_torch_dist
+   --save /root/Qwen3-8B_vime/
+   --save-interval 20
+   --megatron-to-hf-mode bridge
+)
+
+ROLLOUT_ARGS=(
+   --prompt-data /root/dapo-math-17k/dapo-math-17k.jsonl
+   --input-key prompt
+   --apply-chat-template
+   --rollout-shuffle
+   --rm-type math
+   --num-rollout 300
+   --rollout-batch-size 16
+   --n-samples-per-prompt 4
+   --rollout-max-response-len 4096
+   --rollout-max-context-len 8192
+   --rollout-temperature 1
+
+   --global-batch-size 64
+   --balance-data
+)
+
+RM_ARGS=(
+   --custom-rm-path vime.rollout.on_policy_distillation.reward_func
+   --custom-reward-post-process-path vime.rollout.on_policy_distillation.post_process_rewards
+   --rm-url http://${TEACHER_IP}:${TEACHER_PORT}/inference/v1/generate
+)
+
+EVAL_ARGS=(
+   # --eval-interval 50
+   # --eval-prompt-data gsm8k /root/gsm8k/test.parquet
+   # --eval-input-key messages
+   # --n-samples-per-eval-prompt 1
+   # --eval-max-response-len 4096
+   # --eval-top-k 1
+)
+
+PERF_ARGS=(
+   --tensor-model-parallel-size 2
+   --sequence-parallel
+   --pipeline-model-parallel-size 1
+   --context-parallel-size 1
+   --expert-model-parallel-size 1
+   --expert-tensor-parallel-size 1
+
+   --recompute-granularity full
+   --recompute-method uniform
+   --recompute-num-layers 1
+
+   --use-dynamic-batch-size
+   --max-tokens-per-gpu 2048
+)
+
+GRPO_ARGS=(
+   --advantage-estimator grpo
+   --use-opd
+   --opd-type vllm
+   --opd-kl-coef 1.0
+   --use-kl-loss
+   --kl-loss-coef 0.00
+   --kl-loss-type low_var_kl
+   --entropy-coef 0.00
+   --eps-clip 0.2
+   --eps-clip-high 0.28
+)
+
+OPTIMIZER_ARGS=(
+   --optimizer adam
+   --lr 1e-6
+   --lr-decay-style constant
+   --weight-decay 0.1
+   --adam-beta1 0.9
+   --adam-beta2 0.98
+)
+
+WANDB_ARGS=(
+   #--use-wandb
+   # --wandb-project vime-opd
+   # --wandb-group qwen3-8B-opd
+   # --wandb-key ${WANDB_KEY}
+)
+
+VLLM_ARGS=(
+   --rollout-num-gpus-per-engine 1
+   --vllm-gpu-memory-utilization 0.25
+)
+
+MISC_ARGS=(
+   --attention-dropout 0.0
+   --hidden-dropout 0.0
+   --accumulate-allreduce-grads-in-fp32
+   --attention-softmax-in-fp32
+   --attention-backend flash
+   --make-vocab-size-divisible-by 128
+)
+
+# launch the master node of ray in container
+export CUDA_VISIBLE_DEVICES=0,1,2,3
+export MASTER_ADDR=${MASTER_ADDR:-"127.0.0.1"}
+ray start --head --node-ip-address ${MASTER_ADDR} --num-gpus 4 --disable-usage-stats --dashboard-host=0.0.0.0 --dashboard-port=8265
+
+RUNTIME_ENV_JSON="{
+  \"env_vars\": {
+    \"PYTHONPATH\": \"/root/vime:/root/Megatron-LM/\",
+    \"CUDA_DEVICE_MAX_CONNECTIONS\": \"1\",
+    \"NCCL_NVLS_ENABLE\": \"${HAS_NVLINK}\"
+  }
+}"
+
+ray job submit --address="http://127.0.0.1:8265" \
+   --runtime-env-json="${RUNTIME_ENV_JSON}" \
+   --working-dir /root/vime \
+   -- python3 train.py \
+   --train-backend megatron \
+   --actor-num-nodes 1 \
+   --actor-num-gpus-per-node 4 \
+   --colocate \
+   ${MODEL_ARGS[@]} \
+   ${CKPT_ARGS[@]} \
+   ${ROLLOUT_ARGS[@]} \
+   ${OPTIMIZER_ARGS[@]} \
+   ${GRPO_ARGS[@]} \
+   ${WANDB_ARGS[@]} \
+   ${PERF_ARGS[@]} \
+   ${EVAL_ARGS[@]} \
+   ${VLLM_ARGS[@]} \
+   ${MISC_ARGS[@]} \
+   ${RM_ARGS[@]}
+
+#### clear after training
+kill ${TEACHER_PID} 2>/dev/null || true
+sleep 3
+ray stop --force
+pkill -9 ray
+pkill -9 -f "train.py" || true
+sleep 3