diff --git a/app/src/main/java/com/bitchat/android/MainActivity.kt b/app/src/main/java/com/bitchat/android/MainActivity.kt
index 4d7091e6..bf990d64 100644
--- a/app/src/main/java/com/bitchat/android/MainActivity.kt
+++ b/app/src/main/java/com/bitchat/android/MainActivity.kt
@@ -1,6 +1,7 @@
 package com.bitchat.android
 
 import android.Manifest
+import android.content.Intent
 import android.os.Bundle
 import androidx.activity.ComponentActivity
 import androidx.activity.compose.setContent
@@ -44,6 +45,9 @@ class MainActivity : ComponentActivity() {
         // Request necessary permissions
         requestPermissions()
         
+        // Handle notification intent if app was opened from a notification
+        handleNotificationIntent(intent)
+        
         setContent {
             BitchatTheme {
                 Surface(
@@ -56,18 +60,49 @@ class MainActivity : ComponentActivity() {
         }
     }
     
+    override fun onNewIntent(intent: Intent?) {
+        super.onNewIntent(intent)
+        // Handle notification intents when app is already running
+        intent?.let { handleNotificationIntent(it) }
+    }
+    
     override fun onResume() {
         super.onResume()
-        // Notify that app is in foreground for power optimization
+        // Notify that app is in foreground for power optimization and notifications
         chatViewModel.setAppBackgroundState(false)
     }
     
     override fun onPause() {
         super.onPause()
-        // Notify that app is in background for power optimization
+        // Notify that app is in background for power optimization and notifications
         chatViewModel.setAppBackgroundState(true)
     }
     
+    /**
+     * Handle intents from notification clicks - open specific private chat
+     */
+    private fun handleNotificationIntent(intent: Intent) {
+        val shouldOpenPrivateChat = intent.getBooleanExtra(
+            com.bitchat.android.ui.NotificationManager.EXTRA_OPEN_PRIVATE_CHAT, 
+            false
+        )
+        
+        if (shouldOpenPrivateChat) {
+            val peerID = intent.getStringExtra(com.bitchat.android.ui.NotificationManager.EXTRA_PEER_ID)
+            val senderNickname = intent.getStringExtra(com.bitchat.android.ui.NotificationManager.EXTRA_SENDER_NICKNAME)
+            
+            if (peerID != null) {
+                android.util.Log.d("MainActivity", "Opening private chat with $senderNickname (peerID: $peerID) from notification")
+                
+                // Open the private chat with this peer
+                chatViewModel.startPrivateChat(peerID)
+                
+                // Clear notifications for this sender since user is now viewing the chat
+                chatViewModel.clearNotificationsForSender(peerID)
+            }
+        }
+    }
+    
     private fun requestPermissions() {
         val permissions = mutableListOf<String>()
         
diff --git a/app/src/main/java/com/bitchat/android/ui/ChatViewModel.kt b/app/src/main/java/com/bitchat/android/ui/ChatViewModel.kt
index b1894c39..7d9a5055 100644
--- a/app/src/main/java/com/bitchat/android/ui/ChatViewModel.kt
+++ b/app/src/main/java/com/bitchat/android/ui/ChatViewModel.kt
@@ -149,11 +149,19 @@ class ChatViewModel(application: Application) : AndroidViewModel(application), B
     // MARK: - Private Chat Management (delegated)
     
     fun startPrivateChat(peerID: String) {
-        privateChatManager.startPrivateChat(peerID, meshService)
+        val success = privateChatManager.startPrivateChat(peerID, meshService)
+        if (success) {
+            // Notify notification manager about current private chat
+            setCurrentPrivateChatPeer(peerID)
+            // Clear notifications for this sender since user is now viewing the chat
+            clearNotificationsForSender(peerID)
+        }
     }
     
     fun endPrivateChat() {
         privateChatManager.endPrivateChat()
+        // Notify notification manager that no private chat is active
+        setCurrentPrivateChatPeer(null)
     }
     
     // MARK: - Message Sending
@@ -266,6 +274,19 @@ class ChatViewModel(application: Application) : AndroidViewModel(application), B
     fun setAppBackgroundState(inBackground: Boolean) {
         // Forward to connection manager for power optimization
         meshService.connectionManager.setAppBackgroundState(inBackground)
+        
+        // Forward to notification manager for notification logic
+        notificationManager.setAppBackgroundState(inBackground)
+    }
+    
+    fun setCurrentPrivateChatPeer(peerID: String?) {
+        // Update notification manager with current private chat peer
+        notificationManager.setCurrentPrivateChatPeer(peerID)
+    }
+    
+    fun clearNotificationsForSender(peerID: String) {
+        // Clear notifications when user opens a chat
+        notificationManager.clearNotificationsForSender(peerID)
     }
     
     // MARK: - Command Autocomplete (delegated)
diff --git a/app/src/main/java/com/bitchat/android/ui/MeshDelegateHandler.kt b/app/src/main/java/com/bitchat/android/ui/MeshDelegateHandler.kt
index 4a98ae57..873d9c56 100644
--- a/app/src/main/java/com/bitchat/android/ui/MeshDelegateHandler.kt
+++ b/app/src/main/java/com/bitchat/android/ui/MeshDelegateHandler.kt
@@ -46,8 +46,18 @@ class MeshDelegateHandler(
             if (message.isPrivate) {
                 // Private message
                 privateChatManager.handleIncomingPrivateMessage(message)
-                if (state.getSelectedPrivateChatPeerValue() != message.senderPeerID) {
-                    notificationManager.showPrivateMessageNotification(message.sender, message.content)
+                
+                // Show notification with enhanced information - now includes senderPeerID 
+                message.senderPeerID?.let { senderPeerID ->
+                    if (state.getSelectedPrivateChatPeerValue() != senderPeerID) {
+                        // Use nickname if available, fall back to sender or senderPeerID
+                        val senderNickname = message.sender.takeIf { it != senderPeerID } ?: senderPeerID
+                        notificationManager.showPrivateMessageNotification(
+                            senderPeerID = senderPeerID, 
+                            senderNickname = senderNickname, 
+                            messageContent = message.content
+                        )
+                    }
                 }
             } else if (message.channel != null) {
                 // Channel message
diff --git a/app/src/main/java/com/bitchat/android/ui/NotificationManager.kt b/app/src/main/java/com/bitchat/android/ui/NotificationManager.kt
index 160eccf2..ce7e1e8a 100644
--- a/app/src/main/java/com/bitchat/android/ui/NotificationManager.kt
+++ b/app/src/main/java/com/bitchat/android/ui/NotificationManager.kt
@@ -2,15 +2,60 @@ package com.bitchat.android.ui
 
 import android.app.NotificationChannel
 import android.app.NotificationManager
+import android.app.PendingIntent
 import android.content.Context
+import android.content.Intent
 import android.os.Build
+import android.util.Log
 import androidx.core.app.NotificationCompat
+import androidx.core.app.Person
+import androidx.core.app.NotificationManagerCompat
+import com.bitchat.android.MainActivity
 import com.bitchat.android.R
+import java.util.concurrent.ConcurrentHashMap
 
+/**
+ * Enhanced notification manager for direct messages with production-ready features:
+ * - Notification grouping per sender
+ * - Click handling to open specific DM
+ * - App background state awareness
+ * - Proper notification management and cleanup
+ */
 class NotificationManager(private val context: Context) {
 
-    private val notificationManager = context.getSystemService(Context.NOTIFICATION_SERVICE) as NotificationManager
-    private val channelId = "bitchat_notifications"
+    companion object {
+        private const val TAG = "NotificationManager"
+        private const val CHANNEL_ID = "bitchat_dm_notifications"
+        private const val GROUP_KEY_DM = "bitchat_dm_group"
+        private const val NOTIFICATION_REQUEST_CODE = 1000
+        private const val SUMMARY_NOTIFICATION_ID = 999
+        
+        // Intent extras for notification handling
+        const val EXTRA_OPEN_PRIVATE_CHAT = "open_private_chat"
+        const val EXTRA_PEER_ID = "peer_id"
+        const val EXTRA_SENDER_NICKNAME = "sender_nickname"
+    }
+
+    private val notificationManager = NotificationManagerCompat.from(context)
+    private val systemNotificationManager = context.getSystemService(Context.NOTIFICATION_SERVICE) as NotificationManager
+    
+    // Track pending notifications per sender to enable grouping
+    private val pendingNotifications = ConcurrentHashMap<String, MutableList<PendingNotification>>()
+    
+    // Track app background state
+    @Volatile
+    private var isAppInBackground = false
+    
+    // Track current view state
+    @Volatile
+    private var currentPrivateChatPeer: String? = null
+
+    data class PendingNotification(
+        val senderPeerID: String,
+        val senderNickname: String, 
+        val messageContent: String,
+        val timestamp: Long
+    )
 
     init {
         createNotificationChannel()
@@ -18,24 +63,261 @@ class NotificationManager(private val context: Context) {
 
     private fun createNotificationChannel() {
         if (Build.VERSION.SDK_INT >= Build.VERSION_CODES.O) {
-            val name = "Bitchat Notifications"
-            val descriptionText = "Notifications for new messages and other events"
-            val importance = NotificationManager.IMPORTANCE_DEFAULT
-            val channel = NotificationChannel(channelId, name, importance).apply {
+            val name = "Direct Messages"
+            val descriptionText = "Notifications for private messages from other users"
+            val importance = NotificationManager.IMPORTANCE_HIGH
+            val channel = NotificationChannel(CHANNEL_ID, name, importance).apply {
                 description = descriptionText
+                enableVibration(true)
+                setShowBadge(true)
             }
-            notificationManager.createNotificationChannel(channel)
+            systemNotificationManager.createNotificationChannel(channel)
         }
     }
 
-    fun showPrivateMessageNotification(sender: String, message: String) {
-        val builder = NotificationCompat.Builder(context, channelId)
-            .setSmallIcon(R.drawable.ic_notification)
-            .setContentTitle("New message from $sender")
-            .setContentText(message)
-            .setPriority(NotificationCompat.PRIORITY_DEFAULT)
-            .setAutoCancel(true)
+    /**
+     * Update app background state - notifications should only be shown when app is backgrounded
+     */
+    fun setAppBackgroundState(inBackground: Boolean) {
+        isAppInBackground = inBackground
+        Log.d(TAG, "App background state changed: $inBackground")
+    }
 
-        notificationManager.notify(System.currentTimeMillis().toInt(), builder.build())
+    /**
+     * Update current private chat peer - affects notification logic
+     */
+    fun setCurrentPrivateChatPeer(peerID: String?) {
+        currentPrivateChatPeer = peerID
+        Log.d(TAG, "Current private chat peer changed: $peerID")
+    }
+
+    /**
+     * Show a notification for a private message with proper grouping and state awareness
+     */
+    fun showPrivateMessageNotification(senderPeerID: String, senderNickname: String, messageContent: String) {
+        // Only show notifications if app is in background OR user is not viewing this specific chat
+        val shouldNotify = isAppInBackground || currentPrivateChatPeer != senderPeerID
+        
+        if (!shouldNotify) {
+            Log.d(TAG, "Skipping notification - app in foreground and viewing chat with $senderNickname")
+            return
+        }
+
+        Log.d(TAG, "Showing notification for message from $senderNickname (peerID: $senderPeerID)")
+
+        val notification = PendingNotification(
+            senderPeerID = senderPeerID,
+            senderNickname = senderNickname,
+            messageContent = messageContent,
+            timestamp = System.currentTimeMillis()
+        )
+
+        // Add to pending notifications for this sender
+        pendingNotifications.computeIfAbsent(senderPeerID) { mutableListOf() }.add(notification)
+
+        // Create or update notification for this sender
+        showNotificationForSender(senderPeerID)
+        
+        // Update summary notification if we have multiple senders
+        if (pendingNotifications.size > 1) {
+            showSummaryNotification()
+        }
+    }
+
+    private fun showNotificationForSender(senderPeerID: String) {
+        val notifications = pendingNotifications[senderPeerID] ?: return
+        if (notifications.isEmpty()) return
+
+        val latestNotification = notifications.last()
+        val messageCount = notifications.size
+
+        // Create intent to open the specific private chat
+        val intent = Intent(context, MainActivity::class.java).apply {
+            flags = Intent.FLAG_ACTIVITY_SINGLE_TOP or Intent.FLAG_ACTIVITY_CLEAR_TOP
+            putExtra(EXTRA_OPEN_PRIVATE_CHAT, true)
+            putExtra(EXTRA_PEER_ID, senderPeerID)
+            putExtra(EXTRA_SENDER_NICKNAME, latestNotification.senderNickname)
+        }
+
+        val pendingIntent = PendingIntent.getActivity(
+            context,
+            NOTIFICATION_REQUEST_CODE + senderPeerID.hashCode(),
+            intent,
+            PendingIntent.FLAG_IMMUTABLE or PendingIntent.FLAG_UPDATE_CURRENT
+        )
+
+        // Create person for better notification styling
+        val person = Person.Builder()
+            .setName(latestNotification.senderNickname)
+            .setKey(senderPeerID)
+            .build()
+
+        // Build notification content
+        val contentText = if (messageCount == 1) {
+            latestNotification.messageContent
+        } else {
+            "${latestNotification.messageContent} (+${messageCount - 1} more)"
+        }
+
+        val contentTitle = if (messageCount == 1) {
+            latestNotification.senderNickname
+        } else {
+            "${latestNotification.senderNickname} ($messageCount messages)"
+        }
+
+        val builder = NotificationCompat.Builder(context, CHANNEL_ID)
+            .setSmallIcon(R.drawable.ic_notification)
+            .setContentTitle(contentTitle)
+            .setContentText(contentText)
+            .setContentIntent(pendingIntent)
+            .setAutoCancel(true)
+            .setPriority(NotificationCompat.PRIORITY_HIGH)
+            .setCategory(NotificationCompat.CATEGORY_MESSAGE)
+            .addPerson(person)
+            .setShowWhen(true)
+            .setWhen(latestNotification.timestamp)
+
+        // Add to notification group if we have multiple senders
+        if (pendingNotifications.size > 1) {
+            builder.setGroup(GROUP_KEY_DM)
+        }
+
+        // Add style for multiple messages
+        if (messageCount > 1) {
+            val style = NotificationCompat.InboxStyle()
+                .setBigContentTitle(contentTitle)
+            
+            // Show last few messages in expanded view
+            notifications.takeLast(5).forEach { notif ->
+                style.addLine(notif.messageContent)
+            }
+            
+            if (messageCount > 5) {
+                style.setSummaryText("and ${messageCount - 5} more")
+            }
+            
+            builder.setStyle(style)
+        } else {
+            // Single message - use BigTextStyle for long messages
+            builder.setStyle(
+                NotificationCompat.BigTextStyle()
+                    .bigText(latestNotification.messageContent)
+            )
+        }
+
+        // Use sender peer ID hash as notification ID to group messages from same sender
+        val notificationId = senderPeerID.hashCode()
+        notificationManager.notify(notificationId, builder.build())
+        
+        Log.d(TAG, "Displayed notification for $contentTitle with ID $notificationId")
+    }
+
+    private fun showSummaryNotification() {
+        if (pendingNotifications.isEmpty()) return
+
+        val totalMessages = pendingNotifications.values.sumOf { it.size }
+        val senderCount = pendingNotifications.size
+
+        val intent = Intent(context, MainActivity::class.java).apply {
+            flags = Intent.FLAG_ACTIVITY_SINGLE_TOP or Intent.FLAG_ACTIVITY_CLEAR_TOP
+        }
+
+        val pendingIntent = PendingIntent.getActivity(
+            context,
+            NOTIFICATION_REQUEST_CODE,
+            intent,
+            PendingIntent.FLAG_IMMUTABLE or PendingIntent.FLAG_UPDATE_CURRENT
+        )
+
+        val builder = NotificationCompat.Builder(context, CHANNEL_ID)
+            .setSmallIcon(R.drawable.ic_notification)
+            .setContentTitle("bitchat")
+            .setContentText("$totalMessages messages from $senderCount people")
+            .setContentIntent(pendingIntent)
+            .setAutoCancel(true)
+            .setPriority(NotificationCompat.PRIORITY_HIGH)
+            .setCategory(NotificationCompat.CATEGORY_MESSAGE)
+            .setGroup(GROUP_KEY_DM)
+            .setGroupSummary(true)
+
+        // Add inbox style showing recent senders
+        val style = NotificationCompat.InboxStyle()
+            .setBigContentTitle("New Messages")
+            
+        pendingNotifications.entries.take(5).forEach { (peerID, notifications) ->
+            val latestNotif = notifications.last()
+            val count = notifications.size
+            val line = if (count == 1) {
+                "${latestNotif.senderNickname}: ${latestNotif.messageContent}"
+            } else {
+                "${latestNotif.senderNickname}: $count messages"
+            }
+            style.addLine(line)
+        }
+        
+        if (pendingNotifications.size > 5) {
+            style.setSummaryText("and ${pendingNotifications.size - 5} more conversations")
+        }
+        
+        builder.setStyle(style)
+
+        notificationManager.notify(SUMMARY_NOTIFICATION_ID, builder.build())
+        
+        Log.d(TAG, "Displayed summary notification for $senderCount senders")
+    }
+
+    /**
+     * Clear notifications for a specific sender (e.g., when user opens their chat)
+     */
+    fun clearNotificationsForSender(senderPeerID: String) {
+        pendingNotifications.remove(senderPeerID)
+        
+        // Cancel the individual notification
+        val notificationId = senderPeerID.hashCode()
+        notificationManager.cancel(notificationId)
+        
+        // Update or remove summary notification
+        if (pendingNotifications.isEmpty()) {
+            notificationManager.cancel(SUMMARY_NOTIFICATION_ID)
+        } else if (pendingNotifications.size == 1) {
+            // Only one sender left, remove group summary
+            notificationManager.cancel(SUMMARY_NOTIFICATION_ID)
+        } else {
+            // Update summary notification
+            showSummaryNotification()
+        }
+        
+        Log.d(TAG, "Cleared notifications for sender: $senderPeerID")
+    }
+
+    /**
+     * Clear all pending notifications
+     */
+    fun clearAllNotifications() {
+        pendingNotifications.clear()
+        notificationManager.cancelAll()
+        Log.d(TAG, "Cleared all notifications")
+    }
+
+    /**
+     * Get pending notification count for UI badging
+     */
+    fun getPendingNotificationCount(): Int {
+        return pendingNotifications.values.sumOf { it.size }
+    }
+
+    /**
+     * Get pending notifications for debugging
+     */
+    fun getDebugInfo(): String {
+        return buildString {
+            appendLine("Notification Manager Debug Info:")
+            appendLine("App in background: $isAppInBackground")
+            appendLine("Current private chat peer: $currentPrivateChatPeer")
+            appendLine("Pending notifications: ${pendingNotifications.size} senders")
+            pendingNotifications.forEach { (peerID, notifications) ->
+                appendLine("  $peerID: ${notifications.size} messages")
+            }
+        }
     }
 }