diff --git a/src/memory/README.md b/src/memory/README.md
index 3fd59bbd79..f6e0bb89e6 100644
--- a/src/memory/README.md
+++ b/src/memory/README.md
@@ -173,14 +173,14 @@ The server can be configured using the following environment variables:
         "@modelcontextprotocol/server-memory"
       ],
       "env": {
-        "MEMORY_FILE_PATH": "/path/to/custom/memory.json"
+        "MEMORY_FILE_PATH": "/path/to/custom/memory.jsonl"
       }
     }
   }
 }
 ```
 
-- `MEMORY_FILE_PATH`: Path to the memory storage JSON file (default: `memory.json` in the server directory)
+- `MEMORY_FILE_PATH`: Path to the memory storage JSONL file (default: `memory.jsonl` in the server directory)
 
 # VS Code Installation Instructions
 
diff --git a/src/memory/index.ts b/src/memory/index.ts
index 4590a1db6f..65d588fee5 100644
--- a/src/memory/index.ts
+++ b/src/memory/index.ts
@@ -11,14 +11,43 @@ import path from 'path';
 import { fileURLToPath } from 'url';
 
 // Define memory file path using environment variable with fallback
-const defaultMemoryPath = path.join(path.dirname(fileURLToPath(import.meta.url)), 'memory.json');
+const defaultMemoryPath = path.join(path.dirname(fileURLToPath(import.meta.url)), 'memory.jsonl');
 
-// If MEMORY_FILE_PATH is just a filename, put it in the same directory as the script
-const MEMORY_FILE_PATH = process.env.MEMORY_FILE_PATH
-  ? path.isAbsolute(process.env.MEMORY_FILE_PATH)
-    ? process.env.MEMORY_FILE_PATH
-    : path.join(path.dirname(fileURLToPath(import.meta.url)), process.env.MEMORY_FILE_PATH)
-  : defaultMemoryPath;
+// Handle backward compatibility: migrate memory.json to memory.jsonl if needed
+async function ensureMemoryFilePath(): Promise<string> {
+  if (process.env.MEMORY_FILE_PATH) {
+    // Custom path provided, use it as-is (with absolute path resolution)
+    return path.isAbsolute(process.env.MEMORY_FILE_PATH)
+      ? process.env.MEMORY_FILE_PATH
+      : path.join(path.dirname(fileURLToPath(import.meta.url)), process.env.MEMORY_FILE_PATH);
+  }
+  
+  // No custom path set, check for backward compatibility migration
+  const oldMemoryPath = path.join(path.dirname(fileURLToPath(import.meta.url)), 'memory.json');
+  const newMemoryPath = defaultMemoryPath;
+  
+  try {
+    // Check if old file exists and new file doesn't
+    await fs.access(oldMemoryPath);
+    try {
+      await fs.access(newMemoryPath);
+      // Both files exist, use new one (no migration needed)
+      return newMemoryPath;
+    } catch {
+      // Old file exists, new file doesn't - migrate
+      console.error('DETECTED: Found legacy memory.json file, migrating to memory.jsonl for JSONL format compatibility');
+      await fs.rename(oldMemoryPath, newMemoryPath);
+      console.error('COMPLETED: Successfully migrated memory.json to memory.jsonl');
+      return newMemoryPath;
+    }
+  } catch {
+    // Old file doesn't exist, use new path
+    return newMemoryPath;
+  }
+}
+
+// Initialize memory file path (will be set during startup)
+let MEMORY_FILE_PATH: string;
 
 // We are storing our memory using entities, relations, and observations in a graph structure
 interface Entity {
@@ -410,6 +439,9 @@ server.setRequestHandler(CallToolRequestSchema, async (request) => {
 });
 
 async function main() {
+  // Initialize memory file path with backward compatibility
+  MEMORY_FILE_PATH = await ensureMemoryFilePath();
+  
   const transport = new StdioServerTransport();
   await server.connect(transport);
   console.error("Knowledge Graph MCP Server running on stdio");