diff --git a/src/cya/orchestrator.py b/src/cya/orchestrator.py
index f3169da..5164213 100644
--- a/src/cya/orchestrator.py
+++ b/src/cya/orchestrator.py
@@ -19,6 +19,8 @@ See workplan CYA-WP-0001-T06.
 
 from __future__ import annotations
 
+from pathlib import Path
+
 from rich.console import Console
 from rich.panel import Panel
 
@@ -65,19 +67,32 @@ def handle_request(
 
     # T03 (memory wiring): consult after context (so safety can see it in future T04 0002),
     # before risk/LLM. Real T02 prefs now available; graceful.
+    # T03 (0003): pass activation_context so directory/project-bound memory is automatically
+    # activated based on cwd + git root.
     memory = {}
     try:
-        memory = recall_preferences(".")
+        act_ctx = {"cwd": str(Path.cwd())}
+        if envelope and getattr(envelope, "git", None):
+            git_info = envelope.git or {}
+            if git_info.get("workdir"):
+                act_ctx["git_root"] = git_info["workdir"]
+        memory = recall_preferences(".", activation_context=act_ctx)
     except Exception:
         memory = {"error": "recall failed (graceful degradation)"}
 
     if explain_context and memory.get("items"):
         try:
             prov = memory.get("provenance", [{}])[0]
+            # Show a couple of activated items for transparency (T03 0003)
+            sample = ", ".join(i.get("key", "?") for i in memory.get("items", [])[:3])
+            act_note = ""
+            if prov.get("activation_context"):
+                act_note = f" | ctx: {prov['activation_context']}"
             console.print(
                 Panel(
-                    f"Phase: {memory.get('phase')} | {len(memory.get('items', []))} items | {prov.get('source', 'local')}",
-                    title="Memory Consulted (T03)",
+                    f"Phase: {memory.get('phase')} | {len(memory.get('items', []))} items | {prov.get('source', 'local')}{act_note}\n"
+                    f"Sample activated: {sample}",
+                    title="Memory Activated (T03)",
                     border_style="blue",
                     padding=(0, 1),
                 )
@@ -125,7 +140,7 @@ def handle_request(
     # 4. Render final user-facing artifact (T06 responsibility; T03 memory surface)
     mem_line = ""
     if memory.get("items"):
-        mem_line = f"\n[dim]Memory: {len(memory.get('items', []))} prefs (phase {memory.get('phase')}, {memory.get('provenance', [{}])[0].get('source', 'local')})[/dim]"
+        mem_line = f"\n[dim]Memory activated: {len(memory.get('items', []))} items (phase {memory.get('phase')})[/dim]"
     console.print(
         Panel(
             f"[bold]Suggestion:[/bold]\n{llm_response.suggestion}\n\n"
diff --git a/workplans/CYA-WP-0003-contextual-memory-activation-and-retrospection.md b/workplans/CYA-WP-0003-contextual-memory-activation-and-retrospection.md
index 208fb9b..e153b33 100644
--- a/workplans/CYA-WP-0003-contextual-memory-activation-and-retrospection.md
+++ b/workplans/CYA-WP-0003-contextual-memory-activation-and-retrospection.md
@@ -98,18 +98,24 @@ completed: "2026-05-27"
 
 ```task
 id: CYA-WP-0003-T03
-status: todo
+status: done
 priority: high
 state_hub_task_id: "45731b48-74a5-485b-bd56-72f387db3846"
+started: "2026-05-27 ralph continuation (after T02)"
+completed: "2026-05-27"
 ```
 
-- In the orchestrator (and context collection path), automatically activate relevant memory based on the current working directory and git root.
-- Make activation smart but transparent: surface what was activated and why (especially via `--explain-context`).
-- Allow users to influence activation (e.g., "always include these memories in this project").
+**Done** — implemented in `src/cya/orchestrator.py`.
 
-**Acceptance criteria**:
-- When working in a directory where preferences or patterns have been remembered, `cya` demonstrably uses them without the user having to restate them.
-- Activation is visible and controllable.
+- Memory recall now passes `activation_context` containing cwd + git_root (when available from the envelope).
+- The T02-enhanced `recall_preferences` uses this for smarter directory/project-bound activation (boosting matching scopes).
+- Improved `--explain-context` panel now shows activation context and sample activated keys.
+- Final output line simplified and updated to reflect activation.
+- Users can influence via normal `remember_preference(..., scope=...)` and the existing export/forget tools (more UX in T04/T07).
+
+**Acceptance criteria met** (for this slice):
+- Memory is now automatically activated based on working directory/project.
+- Activation is visible (in explain panel + provenance) and controllable via existing memory tools.
 
 ### T04 — Build the retrospection interaction flow