diff --git a/headroom/cli/wrap.py b/headroom/cli/wrap.py
index 3041f4fa7..ea2662779 100644
--- a/headroom/cli/wrap.py
+++ b/headroom/cli/wrap.py
@@ -18,6 +18,8 @@ import importlib.util
 import io
 import json
 import os
+import re
+import shlex
 import shutil
 import signal
 import socket
@@ -445,12 +447,64 @@ def _setup_rtk(verbose: bool = False) -> Path | None:
     if register_claude_hooks(rtk_path):
         if verbose:
             click.echo("  rtk hooks registered in Claude Code")
+        try:
+            patched = _patch_rtk_hook_absolute_path(rtk_path)
+            if patched and verbose:
+                click.echo("  rtk hook script patched to use absolute path")
+        except Exception as e:
+            if verbose:
+                click.echo(f"  rtk hook absolute-path patch skipped: {e}")
     else:
         click.echo("  rtk hook registration failed — continuing without it")
 
     return rtk_path
 
 
+def _patch_rtk_hook_absolute_path(rtk_path: Path, hook_script_path: Path | None = None) -> bool:
+    """Rewrite bare ``rtk`` invocations in the generated Claude hook script
+    to use the absolute path to the RTK binary Headroom manages.
+
+    ``rtk init --global --auto-patch`` writes ``~/.claude/hooks/rtk-rewrite.sh``
+    with a bare ``rtk`` command that depends on PATH lookup. Since
+    ``~/.headroom/bin`` (where Headroom installs rtk) is not automatically
+    added to PATH, that lookup fails and the hook silently does nothing.
+
+    This rewrites bare ``rtk`` command tokens to the absolute, shell-quoted
+    path of the rtk binary so the hook works regardless of PATH.
+
+    Idempotent: only rewrites bare ``rtk`` tokens (not paths that already
+    point elsewhere), and only writes the file back if content changed.
+
+    Returns True if the hook script was modified.
+    """
+    if hook_script_path is None:
+        hook_script_path = Path.home() / ".claude" / "hooks" / "rtk-rewrite.sh"
+
+    if not hook_script_path.exists():
+        return False
+
+    original = hook_script_path.read_text()
+
+    # Quote the absolute path safely for POSIX shells. This matters because
+    # paths containing spaces or other shell-special characters (e.g.
+    # "/Users/Alice Smith/.headroom/bin/rtk") must be quoted, or the
+    # generated script will break when the shell splits on whitespace.
+    quoted_path = shlex.quote(str(rtk_path))
+
+    # Replace bare `rtk` command tokens with the quoted absolute path.
+    # Matches `rtk` as a standalone word (preceded by start-of-line or
+    # whitespace/operators, followed by whitespace or end-of-line), so it
+    # won't touch things like "rtkfoo" or "/some/path/rtk" that are already
+    # absolute.
+    patched, count = re.subn(r"(?<![\w/-])rtk(?=\s|$)", quoted_path, original)
+
+    if count and patched != original:
+        hook_script_path.write_text(patched)
+        return True
+
+    return False
+
+
 def _setup_lean_ctx_agent(agent: str, verbose: bool = False) -> Path | None:
     """Run lean-ctx agent setup for the requested coding tool."""
 
@@ -4401,4 +4455,4 @@ def unwrap_codex(port: int, no_stop_proxy: bool) -> None:
     click.echo("✓ Codex is no longer routed through the Headroom proxy.")
     if not no_stop_proxy and status != "noop":
         _echo_unwrap_proxy_stop_status(_stop_local_proxy_for_unwrap(port), port)
-    click.echo()
+    click.echo()
\ No newline at end of file
diff --git a/tests/test_cli/test_wrap_rtk_hook_patch.py b/tests/test_cli/test_wrap_rtk_hook_patch.py
new file mode 100644
index 000000000..9d4322dc5
--- /dev/null
+++ b/tests/test_cli/test_wrap_rtk_hook_patch.py
@@ -0,0 +1,101 @@
+"""Tests for ``_patch_rtk_hook_absolute_path``.
+
+``rtk init --global --auto-patch`` writes ``~/.claude/hooks/rtk-rewrite.sh``
+with a bare ``rtk`` command that depends on PATH lookup. Since
+``~/.headroom/bin`` is not automatically added to PATH, that lookup fails
+silently and token compression never occurs (see issue #487).
+
+``_patch_rtk_hook_absolute_path`` rewrites bare ``rtk`` tokens in the
+generated hook script to the absolute, shell-quoted path of the rtk binary
+that Headroom manages.
+"""
+
+from __future__ import annotations
+
+import shlex
+from pathlib import Path
+
+from headroom.cli.wrap import _patch_rtk_hook_absolute_path
+
+
+def test_patches_bare_rtk_to_absolute_path(tmp_path: Path) -> None:
+    hook_script = tmp_path / "rtk-rewrite.sh"
+    hook_script.write_text(
+        "#!/bin/sh\n"
+        "if command -v rtk >/dev/null 2>&1; then\n"
+        "    exec rtk rewrite \"$@\"\n"
+        "fi\n"
+    )
+
+    rtk_path = Path("/home/user/.headroom/bin/rtk")
+    changed = _patch_rtk_hook_absolute_path(rtk_path, hook_script)
+
+    content = hook_script.read_text()
+    assert changed is True
+    assert f"exec {rtk_path} rewrite" in content
+
+
+def test_quotes_path_containing_spaces(tmp_path: Path) -> None:
+    """Paths with spaces (e.g. /Users/Alice Smith/...) must be shell-quoted."""
+    hook_script = tmp_path / "rtk-rewrite.sh"
+    hook_script.write_text(
+        "#!/bin/sh\n"
+        "if command -v rtk >/dev/null 2>&1; then\n"
+        "    exec rtk rewrite \"$@\"\n"
+        "fi\n"
+    )
+
+    rtk_path = Path("/Users/Alice Smith/.headroom/bin/rtk")
+    changed = _patch_rtk_hook_absolute_path(rtk_path, hook_script)
+
+    content = hook_script.read_text()
+    quoted = shlex.quote(str(rtk_path))
+
+    assert changed is True
+    assert f"exec {quoted} rewrite" in content
+    # The raw, unquoted path must never appear unescaped in the script.
+    assert "exec /Users/Alice Smith/.headroom/bin/rtk rewrite" not in content
+
+
+def test_idempotent_second_run_is_noop(tmp_path: Path) -> None:
+    hook_script = tmp_path / "rtk-rewrite.sh"
+    hook_script.write_text("exec rtk rewrite \"$@\"\n")
+
+    rtk_path = Path("/home/user/.headroom/bin/rtk")
+
+    first = _patch_rtk_hook_absolute_path(rtk_path, hook_script)
+    content_after_first = hook_script.read_text()
+
+    second = _patch_rtk_hook_absolute_path(rtk_path, hook_script)
+    content_after_second = hook_script.read_text()
+
+    assert first is True
+    assert second is False
+    assert content_after_first == content_after_second
+
+
+def test_missing_hook_script_is_noop(tmp_path: Path) -> None:
+    missing = tmp_path / "does-not-exist.sh"
+    rtk_path = Path("/home/user/.headroom/bin/rtk")
+
+    changed = _patch_rtk_hook_absolute_path(rtk_path, missing)
+
+    assert changed is False
+    assert not missing.exists()
+
+
+def test_does_not_touch_words_containing_rtk(tmp_path: Path) -> None:
+    """Tokens like 'rtkfoo' or an already-absolute '/some/path/rtk' are left alone."""
+    hook_script = tmp_path / "rtk-rewrite.sh"
+    original = (
+        "#!/bin/sh\n"
+        "echo rtkfoo\n"
+        "exec /already/absolute/rtk rewrite \"$@\"\n"
+    )
+    hook_script.write_text(original)
+
+    rtk_path = Path("/home/user/.headroom/bin/rtk")
+    changed = _patch_rtk_hook_absolute_path(rtk_path, hook_script)
+
+    assert changed is False
+    assert hook_script.read_text() == original