diff --git a/packages/cli/src/cli/input.ts b/packages/cli/src/cli/input.ts
index 92b7116..dfc7501 100644
--- a/packages/cli/src/cli/input.ts
+++ b/packages/cli/src/cli/input.ts
@@ -1,6 +1,8 @@
 import { EventEmitter } from 'node:events';
 import { emitKeypressEvents } from 'node:readline';
 
+import { createPasteStore, shouldStorePaste } from './paste-store.js';
+
 const ESC = '\x1B[';
 const HIDE_CURSOR = `${ESC}?25l`;
 const SHOW_CURSOR = `${ESC}?25h`;
@@ -151,6 +153,10 @@ export function createTextarea(options: TextareaOptions): Textarea {
   const wasRaw = stdin.isRaw ?? false;
   const hasTTY = !!stdin.isTTY;
 
+  // Large/multi-line pastes are kept here and represented in the buffer by a
+  // compact placeholder token, expanded back to raw text at submit (#53).
+  const pasteStore = createPasteStore();
+
   let buffer = '';
   // Caret index into `buffer` (0..buffer.length). Insertion and deletion
   // happen at this position; left/right/home/end move it, and up/down move
@@ -650,11 +656,15 @@ export function createTextarea(options: TextareaOptions): Textarea {
         .onPaste()
         .then((text) => {
           if (text) {
-            // The buffer is a single logical line; flatten newlines so the
-            // wrapped-caret math stays correct.
-            const clean = text.replace(/\r?\n/g, ' ');
-            buffer = buffer.slice(0, cursorPos) + clean + buffer.slice(cursorPos);
-            cursorPos += clean.length;
+            // A large / multi-line paste is stored behind a compact placeholder
+            // token so the single-line buffer (and its wrapped-caret math) stays
+            // intact; it's expanded back to the raw text at submit. Small,
+            // single-line pastes inline as before (newlines flattened).
+            const insert = shouldStorePaste(text)
+              ? pasteStore.register(text)
+              : text.replace(/\r?\n/g, ' ');
+            buffer = buffer.slice(0, cursorPos) + insert + buffer.slice(cursorPos);
+            cursorPos += insert.length;
             selectedCompletionIdx = 0;
           }
           redraw();
@@ -680,7 +690,10 @@ export function createTextarea(options: TextareaOptions): Textarea {
       // A slash panel: submit the selected command verbatim (so partial input
       // like "/co" submits as "/compact"). Otherwise submit the buffer as-is.
       const chosen = active ? active.matches[selectedCompletionIdx] : undefined;
-      const value = chosen ? chosen.text : buffer.trim();
+      // Expand any paste placeholders back to their original raw text (#53)
+      // before recording history / emitting. Completion text never contains a
+      // placeholder, so only the buffer path needs expansion.
+      const value = chosen ? chosen.text : pasteStore.expand(buffer.trim());
       // Full erase/redraw: a single-row clear would leave stale wrapped
       // input rows and any open completions panel on screen.
       if (textareaDrawn) eraseTextarea();
@@ -688,6 +701,7 @@ export function createTextarea(options: TextareaOptions): Textarea {
       cursorPos = 0;
       selectedCompletionIdx = 0;
       panelDismissed = false;
+      pasteStore.clear();
       recordHistory(value);
       drawTextarea();
       emitter.emit('submit', value);
@@ -758,6 +772,17 @@ export function createTextarea(options: TextareaOptions): Textarea {
     }
 
     if (key.name === 'backspace') {
+      // A paste placeholder is an atomic token: backspacing at its right edge
+      // removes the whole token (and frees its stored text), not one char (#53).
+      const token = pasteStore.tokenEndingAt(buffer, cursorPos);
+      if (token) {
+        buffer = buffer.slice(0, token.start) + buffer.slice(token.end);
+        cursorPos = token.start;
+        selectedCompletionIdx = 0;
+        resetHistoryBrowse();
+        redraw();
+        return;
+      }
       if (cursorPos > 0) {
         const hadSlash = buffer.includes('/');
         // An '@' anywhere means the path panel may need to open/close/refresh.
diff --git a/packages/cli/src/cli/paste-store.ts b/packages/cli/src/cli/paste-store.ts
new file mode 100644
index 0000000..4d6ab8d
--- /dev/null
+++ b/packages/cli/src/cli/paste-store.ts
@@ -0,0 +1,128 @@
+/**
+ * Paste store for the interactive textarea (issue #53).
+ *
+ * The textarea buffer is a single logical line that soft-wraps. A large or
+ * multi-line paste inserted inline explodes into many terminal rows and breaks
+ * the input frame / caret math. Instead we keep the raw text here and insert a
+ * compact placeholder token (`[Pasted text #1 +12 lines]`) into the buffer,
+ * expanding it back to the original text only at submit time.
+ *
+ * The store is pure and side-effect free so it can be unit-tested directly; the
+ * textarea owns one instance and drives it from the Ctrl+V/backspace/submit
+ * paths.
+ */
+
+/** Default thresholds above which a paste is stored instead of inlined. */
+export const DEFAULT_PASTE_CHAR_THRESHOLD = 200;
+
+export interface PasteStoreOptions {
+  /** Inline pastes at or below this many chars (and single-line). */
+  charThreshold?: number;
+}
+
+export interface PasteToken {
+  /** Byte range of the token within the buffer. */
+  start: number;
+  end: number;
+  /** The placeholder text itself. */
+  token: string;
+}
+
+export interface PasteStore {
+  /** Store `text` and return the placeholder token to insert into the buffer. */
+  register(text: string): string;
+  /** Replace every known placeholder token in `value` with its raw text. */
+  expand(value: string): string;
+  /**
+   * If a placeholder token ends exactly at `pos` (the caret), return it so the
+   * caller can delete the whole token atomically (backspace). Undefined if the
+   * caret is not immediately after a token.
+   */
+  tokenEndingAt(value: string, pos: number): PasteToken | undefined;
+  /** Drop all stored entries (e.g. after submit or clear). */
+  clear(): void;
+  /** Number of stored pastes. */
+  readonly size: number;
+}
+
+/**
+ * Whether a paste should be stored behind a placeholder rather than inlined.
+ * True for any multi-line paste (a newline always breaks the single-line
+ * buffer) or any paste longer than `charThreshold`.
+ */
+export function shouldStorePaste(
+  text: string,
+  options: PasteStoreOptions = {},
+): boolean {
+  const threshold = options.charThreshold ?? DEFAULT_PASTE_CHAR_THRESHOLD;
+  return /\r?\n/.test(text) || text.length > threshold;
+}
+
+/** Count of lines in `text` (1 for a single line; trailing newline ignored). */
+function countLines(text: string): number {
+  const normalized = text.replace(/\r\n/g, '\n').replace(/\n$/, '');
+  return normalized.split('\n').length;
+}
+
+/**
+ * A token is `[Pasted text #<id> …]`; the id is what we look up on expand. A
+ * fresh `RegExp` is built per use so the `g`-flag `lastIndex` is never shared
+ * between `expand` and `tokenEndingAt`.
+ */
+function tokenRegex(): RegExp {
+  return /\[Pasted text #(\d+)[^\]]*\]/g;
+}
+
+export function createPasteStore(): PasteStore {
+  const entries = new Map<number, string>();
+  let nextId = 1;
+
+  function placeholderFor(id: number, text: string): string {
+    if (/\r?\n/.test(text)) {
+      const lines = countLines(text);
+      return `[Pasted text #${id} +${lines} line${lines === 1 ? '' : 's'}]`;
+    }
+    return `[Pasted text #${id} ${text.length} chars]`;
+  }
+
+  return {
+    register(text: string): string {
+      const id = nextId++;
+      entries.set(id, text);
+      return placeholderFor(id, text);
+    },
+
+    expand(value: string): string {
+      return value.replace(tokenRegex(), (match, idStr: string) => {
+        const id = Number(idStr);
+        const raw = entries.get(id);
+        return raw !== undefined ? raw : match; // leave unknown tokens as typed
+      });
+    },
+
+    tokenEndingAt(value: string, pos: number): PasteToken | undefined {
+      const re = tokenRegex();
+      let m: RegExpExecArray | null;
+      while ((m = re.exec(value)) !== null) {
+        const start = m.index;
+        const end = m.index + m[0].length;
+        // Only treat as ours if the id is actually stored (avoid grabbing a
+        // user-typed look-alike).
+        if (end === pos && entries.has(Number(m[1]))) {
+          return { start, end, token: m[0] };
+        }
+      }
+      return undefined;
+    },
+
+    clear(): void {
+      entries.clear();
+      // Ids keep incrementing across clears so a stale token left in scrollback
+      // never collides with a fresh entry's id.
+    },
+
+    get size(): number {
+      return entries.size;
+    },
+  };
+}
diff --git a/packages/cli/tests/paste-store.test.ts b/packages/cli/tests/paste-store.test.ts
new file mode 100644
index 0000000..6ccc9a8
--- /dev/null
+++ b/packages/cli/tests/paste-store.test.ts
@@ -0,0 +1,110 @@
+import { describe, expect, it } from 'vitest';
+
+import {
+  createPasteStore,
+  DEFAULT_PASTE_CHAR_THRESHOLD,
+  shouldStorePaste,
+} from '../src/cli/paste-store.js';
+
+describe('shouldStorePaste', () => {
+  it('stores any multi-line paste (even short)', () => {
+    expect(shouldStorePaste('a\nb')).toBe(true);
+    expect(shouldStorePaste('a\r\nb')).toBe(true);
+  });
+
+  it('inlines short single-line pastes', () => {
+    expect(shouldStorePaste('hello world')).toBe(false);
+    expect(shouldStorePaste('x'.repeat(DEFAULT_PASTE_CHAR_THRESHOLD))).toBe(false);
+  });
+
+  it('stores a long single-line paste over the threshold', () => {
+    expect(shouldStorePaste('x'.repeat(DEFAULT_PASTE_CHAR_THRESHOLD + 1))).toBe(true);
+  });
+
+  it('honors a custom char threshold', () => {
+    expect(shouldStorePaste('hello', { charThreshold: 3 })).toBe(true);
+    expect(shouldStorePaste('hi', { charThreshold: 3 })).toBe(false);
+  });
+});
+
+describe('createPasteStore', () => {
+  it('registers text and returns a compact line-count placeholder', () => {
+    const store = createPasteStore();
+    const token = store.register('line1\nline2\nline3');
+    expect(token).toBe('[Pasted text #1 +3 lines]');
+    expect(store.size).toBe(1);
+  });
+
+  it('uses a char-count placeholder for a long single line', () => {
+    const store = createPasteStore();
+    const token = store.register('y'.repeat(500));
+    expect(token).toBe('[Pasted text #1 500 chars]');
+  });
+
+  it('singularizes a one-line placeholder', () => {
+    const store = createPasteStore();
+    expect(store.register('only one line, but long enough'.repeat(20))).toBe(
+      '[Pasted text #1 600 chars]',
+    );
+    // A trailing newline still counts as a single line.
+    expect(store.register('just one\n')).toBe('[Pasted text #2 +1 line]');
+  });
+
+  it('expands a placeholder back to the exact original text (newlines preserved)', () => {
+    const store = createPasteStore();
+    const raw = 'first line\nsecond line\nthird';
+    const token = store.register(raw);
+    expect(store.expand(`look at this: ${token} please`)).toBe(`look at this: ${raw} please`);
+  });
+
+  it('expands multiple placeholders, each to its own text', () => {
+    const store = createPasteStore();
+    const a = store.register('AAA\nAAA');
+    const b = store.register('z'.repeat(300));
+    expect(store.expand(`${a} and ${b}`)).toBe(`AAA\nAAA and ${'z'.repeat(300)}`);
+  });
+
+  it('leaves an unknown look-alike token untouched on expand', () => {
+    const store = createPasteStore();
+    expect(store.expand('a literal [Pasted text #999 +2 lines] I typed')).toBe(
+      'a literal [Pasted text #999 +2 lines] I typed',
+    );
+  });
+
+  it('detects a token ending exactly at the caret for atomic deletion', () => {
+    const store = createPasteStore();
+    const token = store.register('multi\nline');
+    const value = `hi ${token}`;
+    const found = store.tokenEndingAt(value, value.length);
+    expect(found).toBeDefined();
+    expect(found?.token).toBe(token);
+    expect(found?.start).toBe(3);
+    expect(found?.end).toBe(value.length);
+  });
+
+  it('does not report a token when the caret is elsewhere', () => {
+    const store = createPasteStore();
+    const token = store.register('multi\nline');
+    const value = `${token} trailing`;
+    expect(store.tokenEndingAt(value, value.length)).toBeUndefined(); // caret after " trailing"
+    expect(store.tokenEndingAt(value, token.length - 1)).toBeUndefined(); // mid-token
+  });
+
+  it('does not treat an unknown look-alike token as deletable', () => {
+    const store = createPasteStore();
+    const value = '[Pasted text #42 +1 line]';
+    expect(store.tokenEndingAt(value, value.length)).toBeUndefined();
+  });
+
+  it('clears entries but keeps ids monotonic (no stale-token collisions)', () => {
+    const store = createPasteStore();
+    const first = store.register('a\nb');
+    expect(first).toBe('[Pasted text #1 +2 lines]');
+    store.clear();
+    expect(store.size).toBe(0);
+    const second = store.register('c\nd');
+    expect(second).toBe('[Pasted text #2 +2 lines]'); // id advanced, not reused
+    // The cleared entry no longer expands.
+    expect(store.expand(first)).toBe(first);
+  });
+});
diff --git a/packages/cli/tests/textarea-paste.test.ts b/packages/cli/tests/textarea-paste.test.ts
index 4be309c..3259f11 100644
--- a/packages/cli/tests/textarea-paste.test.ts
+++ b/packages/cli/tests/textarea-paste.test.ts
@@ -63,7 +63,9 @@ describe('textarea Ctrl+V paste', () => {
     textarea.close();
   });
 
-  it('flattens newlines in pasted text (single-line buffer)', async () => {
+  it('preserves newlines in a multiline paste via the placeholder (#53)', async () => {
+    // Previously the Ctrl+V path flattened newlines to spaces; a multiline paste
+    // is now stored behind a placeholder and expanded verbatim at submit.
     const onPaste = vi.fn(async () => 'line1\nline2\r\nline3');
     const onSubmit = vi.fn();
     const textarea = createTextarea({ prompt: '> ', onPaste });
@@ -73,7 +75,7 @@ describe('textarea Ctrl+V paste', () => {
     await tick();
     emitKey(stdin, 'return');
 
-    expect(onSubmit).toHaveBeenCalledWith('line1 line2 line3');
+    expect(onSubmit).toHaveBeenCalledWith('line1\nline2\r\nline3');
     textarea.close();
   });
 
@@ -92,3 +94,86 @@ describe('textarea Ctrl+V paste', () => {
     textarea.close();
   });
 });
+
+describe('textarea large/multiline paste placeholder (issue #53)', () => {
+  let originalStdin: NodeJS.ReadStream;
+  let stdin: FakeStdin;
+
+  beforeEach(() => {
+    originalStdin = process.stdin;
+    stdin = makeFakeStdin();
+    Object.defineProperty(process, 'stdin', { value: stdin, configurable: true });
+  });
+
+  afterEach(() => {
+    Object.defineProperty(process, 'stdin', { value: originalStdin, configurable: true });
+  });
+
+  it('stores a multiline paste and expands it (newlines preserved) at submit', async () => {
+    const pasted = 'def main():\n    print("hi")\n    return 0';
+    const onPaste = vi.fn(async () => pasted);
+    const onSubmit = vi.fn();
+    const textarea = createTextarea({ prompt: '> ', onPaste });
+    textarea.on('submit', onSubmit);
+
+    emitKey(stdin, 'v', { ctrl: true });
+    await tick();
+    emitKey(stdin, 'return');
+
+    // Submit emits the ORIGINAL text (placeholder expanded, newlines intact) —
+    // not the flattened inline form a small paste would produce.
+    expect(onSubmit).toHaveBeenCalledWith(pasted);
+    textarea.close();
+  });
+
+  it('expands a placeholder embedded among typed text', async () => {
+    const pasted = 'alpha\nbeta\ngamma';
+    const onPaste = vi.fn(async () => pasted);
+    const onSubmit = vi.fn();
+    const textarea = createTextarea({ prompt: '> ', onPaste });
+    textarea.on('submit', onSubmit);
+
+    // Type "see ", then paste, then type " ok".
+    for (const ch of 'see ') emitKey(stdin, ch, { sequence: ch });
+    emitKey(stdin, 'v', { ctrl: true });
+    await tick();
+    for (const ch of ' ok') emitKey(stdin, ch, { sequence: ch });
+    emitKey(stdin, 'return');
+
+    expect(onSubmit).toHaveBeenCalledWith(`see ${pasted} ok`);
+    textarea.close();
+  });
+
+  it('deletes the whole placeholder token with a single backspace (atomic)', async () => {
+    const onPaste = vi.fn(async () => 'a\nb\nc\nd\ne');
+    const onSubmit = vi.fn();
+    const textarea = createTextarea({ prompt: '> ', onPaste });
+    textarea.on('submit', onSubmit);
+
+    emitKey(stdin, 'v', { ctrl: true });
+    await tick();
+    // One backspace removes the entire placeholder (proving it's a single token,
+    // not the ~9 raw characters inlined).
+    emitKey(stdin, 'backspace');
+    emitKey(stdin, 'return');
+
+    expect(onSubmit).toHaveBeenCalledWith('');
+    textarea.close();
+  });
+
+  it('still inlines a short single-line paste (flattened), unchanged', async () => {
+    const onPaste = vi.fn(async () => 'short paste');
+    const onSubmit = vi.fn();
+    const textarea = createTextarea({ prompt: '> ', onPaste });
+    textarea.on('submit', onSubmit);
+
+    emitKey(stdin, 'v', { ctrl: true });
+    await tick();
+    // A single backspace removes just one char (it was inlined, not a token).
+    emitKey(stdin, 'backspace');
+    emitKey(stdin, 'return');
+
+    expect(onSubmit).toHaveBeenCalledWith('short past');
+    textarea.close();
+  });
+});