diff --git a/packages/memory-service/src/entities/extraction.js b/packages/memory-service/src/entities/extraction.js
index 93b1e29..8a78d6d 100644
--- a/packages/memory-service/src/entities/extraction.js
+++ b/packages/memory-service/src/entities/extraction.js
@@ -3,7 +3,7 @@ const { getEnv, SERVICES, formatEpisodeText } = require('@nexusai/shared');
 const { upsertEntity } = require('./index');
 
 const EXTRACTION_URL = getEnv('EXTRACTION_URL', 'http://localhost:11434');
-const EXTRACTION_MODEL = getEnv('EXTRACTION_MODEL', 'phi3:3.8ab');
+const EXTRACTION_MODEL = getEnv('EXTRACTION_MODEL', 'qwen2.5:3b');
 const EMBEDDING_SERVICE_URL = getEnv('EMBEDDING_SERVICE_URL', SERVICES.EMBEDDING_URL);
 
 const ENTITY_TYPES = ['person', 'place', 'project', 'technology', 'concept', 'organization'];
@@ -18,25 +18,21 @@ function buildExtractionPrompt(userMessage, aiResponse, knownEntities = []) {
         : '';
 
     return [
-        '<|user|>',
-        'Extract all named entities from this conversation as a JSON array. Output only valid JSON, nothing else.',
-        '',
+        '<|im_start|>system',
+        'You are a named entity extractor. You output only valid JSON.',
+        '<|im_end|>',
+        '<|im_start|>user',
+        'Extract all named entities from this conversation.',
         `Valid types: ${ENTITY_TYPES.join(', ')}`,
         '',
         knownBlock,
-        'Each item must have:',
-        '  "name": the entity name (match exactly if already known)',
-        '  "type": one of the valid types above',
-        '  "notes": one sentence describing this entity based on the conversation',
+        'Return a JSON object: { "entities": [ { "name": "...", "type": "...", "notes": "..." } ] }',
+        'Only include items where type is one of the valid types.',
         '',
-        'Extract all named entities from this conversation.',
-        'Respond with ONLY a JSON array. Start your response with [ and end with ].',
-        'Do not include any text before or after the array.',
         `User: ${userMessage}`,
         `Assistant: ${aiResponse}`,
-        '<|end|>',
-        '<|assistant|>',
-        '[',
+        '<|im_end|>',
+        '<|im_start|>assistant',
     ].join('\n');
 }
 
@@ -69,6 +65,7 @@ async function extractAndStoreEntities(userMessage, aiResponse, projectId=null)
                 model: EXTRACTION_MODEL,
                 prompt: buildExtractionPrompt(userMessage, aiResponse, knownEntities),
                 stream: false,
+                format: 'json',
                 options: {
                     temperature: 0.1,
                     num_predict: 1024,
@@ -82,20 +79,9 @@ async function extractAndStoreEntities(userMessage, aiResponse, projectId=null)
         const raw = data.response?.trim() ?? '';
         console.log('[entities] raw response:', JSON.stringify(raw.slice(0, 300)));
 
-        // Extract just the JSON array — everything from [ to the last ]
-        let normalized = raw.replace(/```(?:json)?/g, '').trim();
-        if (!normalized.startsWith('[')) {
-            normalized = '[' + normalized;
-        }
-        if (!normalized.endsWith(']')) {
-            // Trim any trailing comma or incomplete object before closing
-            normalized = normalized.replace(/,?\s*\{[^}]*$/, '') + ']';
-        }
-        const match = normalized.match(/\[[\s\S]*\]/);
-
-        if (!match) throw new Error('No JSON array found in response');
-        const clean = match[0];
-        const entities = JSON.parse(clean);
+        const parsed = JSON.parse(raw);
+        const entities = Array.isArray(parsed.entities) ? parsed.entities : [];
+        if (entities.length === 0) throw new Error('No entities in response');
 
         if (!Array.isArray(entities)) throw new Error('Response was not a JSON array');