diff --git a/mem0/memory/main.py b/mem0/memory/main.py
index 31d638223..78e50fb39 100644
--- a/mem0/memory/main.py
+++ b/mem0/memory/main.py
@@ -516,15 +516,15 @@ class Memory(MemoryBase):
         )
 
         try:
-            response = remove_code_blocks(response)
-            if not response.strip():
+            cleaned_response = remove_code_blocks(response)
+            if not cleaned_response.strip():
                 new_retrieved_facts = []
             else:
                 try:
                     # First try direct JSON parsing
-                    new_retrieved_facts = json.loads(response, strict=False)["facts"]
+                    new_retrieved_facts = json.loads(cleaned_response, strict=False)["facts"]
                 except json.JSONDecodeError:
-                    # Try extracting JSON from response using built-in function
+                    # Try extracting JSON from response (handles chatty LLM output)
                     extracted_json = extract_json(response)
                     new_retrieved_facts = json.loads(extracted_json, strict=False)["facts"]
                 new_retrieved_facts = normalize_facts(new_retrieved_facts)
@@ -589,8 +589,11 @@ class Memory(MemoryBase):
                     logger.warning("Empty response from LLM, no memories to extract")
                     new_memories_with_actions = {}
                 else:
-                    response = remove_code_blocks(response)
-                    new_memories_with_actions = json.loads(response, strict=False)
+                    try:
+                        new_memories_with_actions = json.loads(remove_code_blocks(response), strict=False)
+                    except json.JSONDecodeError:
+                        extracted_json = extract_json(response)
+                        new_memories_with_actions = json.loads(extracted_json, strict=False)
             except Exception as e:
                 logger.error(f"Invalid JSON response: {e}")
                 new_memories_with_actions = {}
@@ -1590,15 +1593,15 @@ class AsyncMemory(MemoryBase):
             response_format={"type": "json_object"},
         )
         try:
-            response = remove_code_blocks(response)
-            if not response.strip():
+            cleaned_response = remove_code_blocks(response)
+            if not cleaned_response.strip():
                 new_retrieved_facts = []
             else:
                 try:
                     # First try direct JSON parsing
-                    new_retrieved_facts = json.loads(response, strict=False)["facts"]
+                    new_retrieved_facts = json.loads(cleaned_response, strict=False)["facts"]
                 except json.JSONDecodeError:
-                    # Try extracting JSON from response using built-in function
+                    # Try extracting JSON from response (handles chatty LLM output)
                     extracted_json = extract_json(response)
                     new_retrieved_facts = json.loads(extracted_json, strict=False)["facts"]
                 new_retrieved_facts = normalize_facts(new_retrieved_facts)
@@ -1666,8 +1669,11 @@ class AsyncMemory(MemoryBase):
                     logger.warning("Empty response from LLM, no memories to extract")
                     new_memories_with_actions = {}
                 else:
-                    response = remove_code_blocks(response)
-                    new_memories_with_actions = json.loads(response, strict=False)
+                    try:
+                        new_memories_with_actions = json.loads(remove_code_blocks(response), strict=False)
+                    except json.JSONDecodeError:
+                        extracted_json = extract_json(response)
+                        new_memories_with_actions = json.loads(extracted_json, strict=False)
             except Exception as e:
                 logger.error(f"Invalid JSON response: {e}")
                 new_memories_with_actions = {}
diff --git a/mem0/memory/utils.py b/mem0/memory/utils.py
index e0581a09c..3a353144a 100644
--- a/mem0/memory/utils.py
+++ b/mem0/memory/utils.py
@@ -124,14 +124,20 @@ def remove_code_blocks(content: str) -> str:
 def extract_json(text):
     """
     Extracts JSON content from a string, removing enclosing triple backticks and optional 'json' tag if present.
-    If no code block is found, returns the text as-is.
+    If no code block is found, attempts to locate JSON by finding the first '{' and last '}'.
+    If that also fails, returns the text as-is.
     """
     text = text.strip()
     match = re.search(r"```(?:json)?\s*(.*?)\s*```", text, re.DOTALL)
     if match:
         json_str = match.group(1)
     else:
-        json_str = text  # assume it's raw JSON
+        start_idx = text.find("{")
+        end_idx = text.rfind("}")
+        if start_idx != -1 and end_idx != -1 and end_idx > start_idx:
+            json_str = text[start_idx : end_idx + 1]
+        else:
+            json_str = text
     return json_str
 
 
diff --git a/tests/test_chatty_llm_parsing.py b/tests/test_chatty_llm_parsing.py
new file mode 100644
index 000000000..38d4c061a
--- /dev/null
+++ b/tests/test_chatty_llm_parsing.py
@@ -0,0 +1,232 @@
+"""Tests for chatty LLM JSON parsing robustness.
+
+Validates that extract_json and the full fallback chain correctly handle
+responses from local LLMs (LM Studio, Ollama) that wrap JSON in
+conversational text, markdown code blocks, or both.
+"""
+
+import json
+
+import pytest
+
+from mem0.memory.utils import extract_json, remove_code_blocks
+
+
+# --- Test extract_json ---
+
+class TestExtractJson:
+    """Tests for extract_json utility."""
+
+    def test_pure_json(self):
+        text = '{"memory": [{"id": "0", "text": "likes basketball", "event": "ADD"}]}'
+        result = extract_json(text)
+        parsed = json.loads(result)
+        assert parsed["memory"][0]["text"] == "likes basketball"
+
+    def test_json_in_markdown_code_block(self):
+        text = '```json\n{"memory": [{"id": "0", "text": "likes basketball", "event": "ADD"}]}\n```'
+        result = extract_json(text)
+        parsed = json.loads(result)
+        assert parsed["memory"][0]["text"] == "likes basketball"
+
+    def test_json_in_plain_code_block(self):
+        text = '```\n{"memory": [{"id": "0", "text": "likes basketball", "event": "ADD"}]}\n```'
+        result = extract_json(text)
+        parsed = json.loads(result)
+        assert parsed["memory"][0]["text"] == "likes basketball"
+
+    def test_chatty_with_markdown(self):
+        """extract_json can handle embedded code blocks via re.search."""
+        text = """Here is the extracted memory:
+```json
+{"memory": [{"id": "0", "text": "likes basketball", "event": "ADD"}]}
+```
+I hope this helps!"""
+        result = extract_json(text)
+        parsed = json.loads(result)
+        assert parsed["memory"][0]["text"] == "likes basketball"
+
+    def test_chatty_without_markdown(self):
+        """extract_json finds JSON by {/} boundaries when no code block is present."""
+        text = """Here is the memory update you requested:
+{"memory": [{"id": "0", "text": "likes gaming", "event": "ADD"}]}
+That's the result."""
+        result = extract_json(text)
+        parsed = json.loads(result)
+        assert parsed["memory"][0]["text"] == "likes gaming"
+
+    def test_chatty_multiline_json_without_markdown(self):
+        """extract_json finds multi-line JSON by {/} boundaries."""
+        text = """Here is the memory update:
+{
+  "memory": [
+    {
+      "id": "0",
+      "text": "User likes gaming",
+      "event": "ADD"
+    }
+  ]
+}
+"""
+        result = extract_json(text)
+        parsed = json.loads(result)
+        assert parsed["memory"][0]["text"] == "User likes gaming"
+
+    def test_no_json_at_all(self):
+        """No JSON in the text — should return as-is."""
+        text = "I don't have any memory updates."
+        result = extract_json(text)
+        assert result == text
+
+    def test_whitespace_padding(self):
+        text = '  \n  {"memory": []}  \n  '
+        result = extract_json(text)
+        parsed = json.loads(result)
+        assert parsed == {"memory": []}
+
+    def test_nested_json_objects(self):
+        """JSON with nested objects should find outermost braces."""
+        text = 'Sure! {"memory": [{"id": "0", "text": "test", "event": "ADD"}]} Done.'
+        result = extract_json(text)
+        parsed = json.loads(result)
+        assert parsed["memory"][0]["id"] == "0"
+
+
+# --- Test remove_code_blocks ---
+
+class TestRemoveCodeBlocks:
+    """Tests for remove_code_blocks — verify it does NOT handle chatty text."""
+
+    def test_clean_code_block(self):
+        text = '```json\n{"memory": []}\n```'
+        result = remove_code_blocks(text)
+        parsed = json.loads(result)
+        assert parsed == {"memory": []}
+
+    def test_no_code_block(self):
+        """Without code blocks, returns content as-is (may not be valid JSON)."""
+        text = 'Here is the result: {"memory": []}'
+        result = remove_code_blocks(text)
+        # This should NOT be parseable as JSON because it has leading text
+        with pytest.raises(json.JSONDecodeError):
+            json.loads(result)
+
+    def test_think_tags_removed_inside_code_block(self):
+        """Think tags inside a code block response are removed."""
+        text = '```json\n<think>reasoning here</think>\n{"memory": []}\n```'
+        result = remove_code_blocks(text)
+        parsed = json.loads(result)
+        assert parsed == {"memory": []}
+
+    def test_think_tags_before_code_block_not_handled(self):
+        """Think tags before code block cause regex to miss — fallback needed.
+
+        This is a known limitation of remove_code_blocks: it matches the code
+        block regex first, and only strips think tags from the result. When
+        think tags come before the code block, the regex fails entirely.
+        The fallback chain (extract_json) handles this case.
+        """
+        text = '<think>reasoning here</think>\n```json\n{"memory": []}\n```'
+        result = remove_code_blocks(text)
+        with pytest.raises(json.JSONDecodeError):
+            json.loads(result)
+
+
+# --- Test the full fallback chain (remove_code_blocks -> extract_json) ---
+
+class TestFallbackChain:
+    """Tests the actual fallback pattern used in _add_to_vector_store:
+    try json.loads(remove_code_blocks(response))
+    except JSONDecodeError: json.loads(extract_json(response))
+    """
+
+    def _parse_with_fallback(self, response):
+        """Mimics the parsing logic in _add_to_vector_store."""
+        try:
+            return json.loads(remove_code_blocks(response), strict=False)
+        except json.JSONDecodeError:
+            extracted = extract_json(response)
+            return json.loads(extracted, strict=False)
+
+    def test_clean_json(self):
+        response = '{"memory": [{"id": "0", "text": "Name is Alex", "event": "ADD"}]}'
+        result = self._parse_with_fallback(response)
+        assert result["memory"][0]["text"] == "Name is Alex"
+
+    def test_markdown_wrapped(self):
+        response = '```json\n{"memory": [{"id": "0", "text": "Name is Alex", "event": "ADD"}]}\n```'
+        result = self._parse_with_fallback(response)
+        assert result["memory"][0]["text"] == "Name is Alex"
+
+    def test_chatty_markdown(self):
+        """Issue #3788: LLM wraps in conversational text + markdown."""
+        response = """Here is the extracted memory:
+```json
+{
+  "memory": [
+    {"id": "0", "text": "Name is Alex", "event": "ADD"},
+    {"id": "1", "text": "Love basketball", "event": "ADD"},
+    {"id": "2", "text": "Love gaming", "event": "ADD"}
+  ]
+}
+```
+I hope this helps!"""
+        result = self._parse_with_fallback(response)
+        assert len(result["memory"]) == 3
+        assert result["memory"][0]["text"] == "Name is Alex"
+        assert result["memory"][1]["text"] == "Love basketball"
+        assert result["memory"][2]["text"] == "Love gaming"
+
+    def test_chatty_no_markdown(self):
+        """Issue #3788: LLM wraps in conversational text without markdown."""
+        response = """Here is the memory update you requested:
+{
+  "memory": [
+    {"id": "0", "text": "Name is Alex", "event": "ADD"},
+    {"id": "1", "text": "Love basketball", "event": "ADD"}
+  ]
+}"""
+        result = self._parse_with_fallback(response)
+        assert len(result["memory"]) == 2
+
+    def test_think_tags_with_json(self):
+        """Reasoning model with <think> tags."""
+        response = '<think>Let me process this...</think>\n```json\n{"memory": [{"id": "0", "text": "test", "event": "ADD"}]}\n```'
+        result = self._parse_with_fallback(response)
+        assert result["memory"][0]["text"] == "test"
+
+    def test_lmstudio_style_response(self):
+        """Mimics the actual LM Studio response format from the issue."""
+        response = """{
+  "memory": [
+    {
+      "id": "0",
+      "text": "Name is Alex",
+      "event": "ADD"
+    },
+    {
+      "id": "1",
+      "text": "Love basketball",
+      "event": "ADD"
+    },
+    {
+      "id": "2",
+      "text": "Love gaming",
+      "event": "ADD"
+    }
+  ]
+}"""
+        result = self._parse_with_fallback(response)
+        assert len(result["memory"]) == 3
+
+    def test_completely_invalid_response(self):
+        """If both attempts fail, the outer except in main.py catches it."""
+        response = "I don't understand the question"
+        with pytest.raises(json.JSONDecodeError):
+            self._parse_with_fallback(response)
+
+    def test_facts_extraction_fallback(self):
+        """Also verify the pattern works for facts extraction responses."""
+        response = 'Sure! Here are the facts:\n{"facts": ["Name is Alex", "Loves basketball"]}\nHope that helps!'
+        result = self._parse_with_fallback(response)
+        assert result["facts"] == ["Name is Alex", "Loves basketball"]