diff --git a/src/lib/analytics/consent.ts b/src/lib/analytics/consent.ts
new file mode 100644
index 0000000..b941195
--- /dev/null
+++ b/src/lib/analytics/consent.ts
@@ -0,0 +1,137 @@
+import type { AnalyticsSettings } from './types';
+
+const ANALYTICS_STORAGE_KEY = 'claudia-analytics-settings';
+
+export class ConsentManager {
+  private static instance: ConsentManager;
+  private settings: AnalyticsSettings | null = null;
+  
+  private constructor() {}
+  
+  static getInstance(): ConsentManager {
+    if (!ConsentManager.instance) {
+      ConsentManager.instance = new ConsentManager();
+    }
+    return ConsentManager.instance;
+  }
+  
+  async initialize(): Promise<AnalyticsSettings> {
+    try {
+      // Try to load from localStorage first
+      const stored = localStorage.getItem(ANALYTICS_STORAGE_KEY);
+      if (stored) {
+        this.settings = JSON.parse(stored);
+      } else {
+        // Initialize with default settings
+        this.settings = {
+          enabled: false,
+          hasConsented: false,
+        };
+      }
+      
+      // Generate anonymous user ID if not exists
+      if (this.settings && !this.settings.userId) {
+        this.settings.userId = this.generateAnonymousId();
+        await this.saveSettings();
+      }
+      
+      // Generate session ID
+      if (this.settings) {
+        this.settings.sessionId = this.generateSessionId();
+      }
+      
+      return this.settings || {
+        enabled: false,
+        hasConsented: false,
+      };
+    } catch (error) {
+      console.error('Failed to initialize consent manager:', error);
+      // Return default settings on error
+      return {
+        enabled: false,
+        hasConsented: false,
+      };
+    }
+  }
+  
+  async grantConsent(): Promise<void> {
+    if (!this.settings) {
+      await this.initialize();
+    }
+    
+    this.settings!.enabled = true;
+    this.settings!.hasConsented = true;
+    this.settings!.consentDate = new Date().toISOString();
+    
+    await this.saveSettings();
+  }
+  
+  async revokeConsent(): Promise<void> {
+    if (!this.settings) {
+      await this.initialize();
+    }
+    
+    this.settings!.enabled = false;
+    
+    await this.saveSettings();
+  }
+  
+  async deleteAllData(): Promise<void> {
+    // Clear local storage
+    localStorage.removeItem(ANALYTICS_STORAGE_KEY);
+    
+    // Reset settings with new anonymous ID
+    this.settings = {
+      enabled: false,
+      hasConsented: false,
+      userId: this.generateAnonymousId(),
+      sessionId: this.generateSessionId(),
+    };
+    
+    await this.saveSettings();
+  }
+  
+  getSettings(): AnalyticsSettings | null {
+    return this.settings;
+  }
+  
+  hasConsented(): boolean {
+    return this.settings?.hasConsented || false;
+  }
+  
+  isEnabled(): boolean {
+    return this.settings?.enabled || false;
+  }
+  
+  getUserId(): string {
+    return this.settings?.userId || this.generateAnonymousId();
+  }
+  
+  getSessionId(): string {
+    return this.settings?.sessionId || this.generateSessionId();
+  }
+  
+  private async saveSettings(): Promise<void> {
+    if (!this.settings) return;
+    
+    try {
+      localStorage.setItem(ANALYTICS_STORAGE_KEY, JSON.stringify(this.settings));
+    } catch (error) {
+      console.error('Failed to save analytics settings:', error);
+    }
+  }
+  
+  private generateAnonymousId(): string {
+    // Generate a UUID v4
+    return 'xxxxxxxx-xxxx-4xxx-yxxx-xxxxxxxxxxxx'.replace(/[xy]/g, (c) => {
+      const r = (Math.random() * 16) | 0;
+      const v = c === 'x' ? r : (r & 0x3) | 0x8;
+      return v.toString(16);
+    });
+  }
+  
+  private generateSessionId(): string {
+    // Simple session ID based on timestamp and random value
+    return `${Date.now()}-${Math.random().toString(36).substr(2, 9)}`;
+  }
+}
\ No newline at end of file
diff --git a/src/lib/analytics/events.ts b/src/lib/analytics/events.ts
new file mode 100644
index 0000000..6770821
--- /dev/null
+++ b/src/lib/analytics/events.ts
@@ -0,0 +1,150 @@
+import type { 
+  EventName,
+  FeatureUsageProperties,
+  ErrorProperties,
+  SessionProperties,
+  ModelProperties,
+  AgentProperties,
+  MCPProperties,
+  SlashCommandProperties,
+  PerformanceMetrics 
+} from './types';
+
+export const ANALYTICS_EVENTS = {
+  // Session events
+  SESSION_CREATED: 'session_created' as EventName,
+  SESSION_COMPLETED: 'session_completed' as EventName,
+  SESSION_RESUMED: 'session_resumed' as EventName,
+  
+  // Feature usage events
+  FEATURE_USED: 'feature_used' as EventName,
+  MODEL_SELECTED: 'model_selected' as EventName,
+  TAB_CREATED: 'tab_created' as EventName,
+  TAB_CLOSED: 'tab_closed' as EventName,
+  FILE_OPENED: 'file_opened' as EventName,
+  FILE_EDITED: 'file_edited' as EventName,
+  FILE_SAVED: 'file_saved' as EventName,
+  AGENT_EXECUTED: 'agent_executed' as EventName,
+  MCP_SERVER_CONNECTED: 'mcp_server_connected' as EventName,
+  MCP_SERVER_DISCONNECTED: 'mcp_server_disconnected' as EventName,
+  SLASH_COMMAND_USED: 'slash_command_used' as EventName,
+  
+  // Settings and system events
+  SETTINGS_CHANGED: 'settings_changed' as EventName,
+  APP_STARTED: 'app_started' as EventName,
+  APP_CLOSED: 'app_closed' as EventName,
+  
+  // Error events
+  ERROR_OCCURRED: 'error_occurred' as EventName,
+} as const;
+
+// Event property builders - help ensure consistent event structure
+export const eventBuilders = {
+  session: (props: SessionProperties) => ({
+    event: ANALYTICS_EVENTS.SESSION_CREATED,
+    properties: {
+      category: 'session',
+      ...props,
+    },
+  }),
+  
+  feature: (feature: string, subfeature?: string, metadata?: Record<string, any>) => ({
+    event: ANALYTICS_EVENTS.FEATURE_USED,
+    properties: {
+      category: 'feature',
+      feature,
+      subfeature,
+      ...metadata,
+    } as FeatureUsageProperties,
+  }),
+  
+  error: (errorType: string, errorCode?: string, context?: string) => ({
+    event: ANALYTICS_EVENTS.ERROR_OCCURRED,
+    properties: {
+      category: 'error',
+      error_type: errorType,
+      error_code: errorCode,
+      context,
+    } as ErrorProperties,
+  }),
+  
+  model: (newModel: string, previousModel?: string, source?: string) => ({
+    event: ANALYTICS_EVENTS.MODEL_SELECTED,
+    properties: {
+      category: 'model',
+      new_model: newModel,
+      previous_model: previousModel,
+      source,
+    } as ModelProperties,
+  }),
+  
+  agent: (agentType: string, success: boolean, agentName?: string, durationMs?: number) => ({
+    event: ANALYTICS_EVENTS.AGENT_EXECUTED,
+    properties: {
+      category: 'agent',
+      agent_type: agentType,
+      agent_name: agentName,
+      success,
+      duration_ms: durationMs,
+    } as AgentProperties,
+  }),
+  
+  mcp: (serverName: string, success: boolean, serverType?: string) => ({
+    event: ANALYTICS_EVENTS.MCP_SERVER_CONNECTED,
+    properties: {
+      category: 'mcp',
+      server_name: serverName,
+      server_type: serverType,
+      success,
+    } as MCPProperties,
+  }),
+  
+  slashCommand: (command: string, success: boolean) => ({
+    event: ANALYTICS_EVENTS.SLASH_COMMAND_USED,
+    properties: {
+      category: 'slash_command',
+      command,
+      success,
+    } as SlashCommandProperties,
+  }),
+  
+  performance: (metrics: PerformanceMetrics) => ({
+    event: ANALYTICS_EVENTS.FEATURE_USED,
+    properties: {
+      category: 'performance',
+      feature: 'system_metrics',
+      ...metrics,
+    },
+  }),
+};
+
+// Sanitization helpers to remove PII
+export const sanitizers = {
+  // Remove file paths, keeping only extension
+  sanitizeFilePath: (path: string): string => {
+    const ext = path.split('.').pop();
+    return ext ? `*.${ext}` : 'unknown';
+  },
+  
+  // Remove project names and paths
+  sanitizeProjectPath: (_path: string): string => {
+    return 'project';
+  },
+  
+  // Sanitize error messages that might contain sensitive info
+  sanitizeErrorMessage: (message: string): string => {
+    // Remove file paths
+    message = message.replace(/\/[\w\-\/\.]+/g, '/***');
+    // Remove potential API keys or tokens
+    message = message.replace(/[a-zA-Z0-9]{20,}/g, '***');
+    // Remove email addresses
+    message = message.replace(/[\w\.-]+@[\w\.-]+\.\w+/g, '***@***.***');
+    return message;
+  },
+  
+  // Sanitize agent names that might contain user info
+  sanitizeAgentName: (name: string): string => {
+    // Only keep the type, remove custom names
+    return name.split('-')[0] || 'custom';
+  },
+};
\ No newline at end of file
diff --git a/src/lib/analytics/index.ts b/src/lib/analytics/index.ts
new file mode 100644
index 0000000..fcbad90
--- /dev/null
+++ b/src/lib/analytics/index.ts
@@ -0,0 +1,250 @@
+import posthog from 'posthog-js';
+import { ConsentManager } from './consent';
+import { sanitizers } from './events';
+import type { 
+  AnalyticsConfig, 
+  AnalyticsEvent, 
+  EventName,
+  AnalyticsSettings 
+} from './types';
+
+export * from './types';
+export * from './events';
+export { ConsentManager } from './consent';
+
+class AnalyticsService {
+  private static instance: AnalyticsService;
+  private initialized = false;
+  private consentManager: ConsentManager;
+  private config: AnalyticsConfig;
+  private eventQueue: AnalyticsEvent[] = [];
+  private flushInterval: NodeJS.Timeout | null = null;
+  
+  private constructor() {
+    this.consentManager = ConsentManager.getInstance();
+    
+    // Default configuration - pulled from Vite environment variables
+    this.config = {
+      apiKey: import.meta.env.VITE_PUBLIC_POSTHOG_KEY || 'phc_YOUR_PROJECT_API_KEY',
+      apiHost: import.meta.env.VITE_PUBLIC_POSTHOG_HOST || 'https://app.posthog.com',
+      persistence: 'localStorage',
+      autocapture: false, // We'll manually track events
+      disable_session_recording: true, // Privacy first
+      opt_out_capturing_by_default: true, // Require explicit opt-in
+    };
+  }
+  
+  static getInstance(): AnalyticsService {
+    if (!AnalyticsService.instance) {
+      AnalyticsService.instance = new AnalyticsService();
+    }
+    return AnalyticsService.instance;
+  }
+  
+  async initialize(): Promise<void> {
+    if (this.initialized) return;
+    
+    try {
+      // Initialize consent manager
+      const settings = await this.consentManager.initialize();
+      
+      // Only initialize PostHog if user has consented
+      if (settings.hasConsented && settings.enabled) {
+        this.initializePostHog(settings);
+      }
+      
+      // Start event queue flush interval
+      this.startFlushInterval();
+      
+      this.initialized = true;
+    } catch (error) {
+      console.error('Failed to initialize analytics:', error);
+    }
+  }
+  
+  private initializePostHog(settings: AnalyticsSettings): void {
+    try {
+      posthog.init(this.config.apiKey, {
+        api_host: this.config.apiHost,
+        defaults: '2025-05-24',
+        capture_exceptions: true,
+        debug: import.meta.env.MODE === 'development',
+        persistence: this.config.persistence,
+        autocapture: this.config.autocapture,
+        disable_session_recording: this.config.disable_session_recording,
+        opt_out_capturing_by_default: this.config.opt_out_capturing_by_default,
+        loaded: (ph) => {
+          // Set user properties
+          ph.identify(settings.userId, {
+            anonymous: true,
+            consent_date: settings.consentDate,
+          });
+          
+          // Opt in since user has consented
+          ph.opt_in_capturing();
+          
+          if (this.config.loaded) {
+            this.config.loaded(ph);
+          }
+        },
+      });
+    } catch (error) {
+      console.error('Failed to initialize PostHog:', error);
+    }
+  }
+  
+  async enable(): Promise<void> {
+    await this.consentManager.grantConsent();
+    const settings = this.consentManager.getSettings();
+    if (settings) {
+      this.initializePostHog(settings);
+    }
+  }
+  
+  async disable(): Promise<void> {
+    await this.consentManager.revokeConsent();
+    if (typeof posthog !== 'undefined' && posthog.opt_out_capturing) {
+      posthog.opt_out_capturing();
+    }
+  }
+  
+  async deleteAllData(): Promise<void> {
+    await this.consentManager.deleteAllData();
+    if (typeof posthog !== 'undefined' && posthog.reset) {
+      posthog.reset();
+    }
+  }
+  
+  track(eventName: EventName | string, properties?: Record<string, any>): void {
+    // Check if analytics is enabled
+    if (!this.consentManager.isEnabled()) {
+      return;
+    }
+    
+    // Sanitize properties to remove PII
+    const sanitizedProperties = this.sanitizeProperties(properties || {});
+    
+    // Create event
+    const event: AnalyticsEvent = {
+      event: eventName,
+      properties: sanitizedProperties,
+      timestamp: Date.now(),
+      sessionId: this.consentManager.getSessionId(),
+      userId: this.consentManager.getUserId(),
+    };
+    
+    // Add to queue
+    this.eventQueue.push(event);
+    
+    // Send immediately if PostHog is initialized
+    if (typeof posthog !== 'undefined' && typeof posthog.capture === 'function') {
+      this.flushEvents();
+    }
+  }
+  
+  identify(traits?: Record<string, any>): void {
+    if (!this.consentManager.isEnabled()) {
+      return;
+    }
+    
+    const userId = this.consentManager.getUserId();
+    const sanitizedTraits = this.sanitizeProperties(traits || {});
+    
+    if (typeof posthog !== 'undefined' && posthog.identify) {
+      posthog.identify(userId, {
+        ...sanitizedTraits,
+        anonymous: true,
+      });
+    }
+  }
+  
+  private sanitizeProperties(properties: Record<string, any>): Record<string, any> {
+    const sanitized: Record<string, any> = {};
+    
+    for (const [key, value] of Object.entries(properties)) {
+      // Skip null/undefined values
+      if (value == null) continue;
+      
+      // Apply specific sanitizers based on key
+      if (key.includes('path') || key.includes('file')) {
+        sanitized[key] = typeof value === 'string' ? sanitizers.sanitizeFilePath(value) : value;
+      } else if (key.includes('project')) {
+        sanitized[key] = typeof value === 'string' ? sanitizers.sanitizeProjectPath(value) : value;
+      } else if (key.includes('error') || key.includes('message')) {
+        sanitized[key] = typeof value === 'string' ? sanitizers.sanitizeErrorMessage(value) : value;
+      } else if (key.includes('agent_name')) {
+        sanitized[key] = typeof value === 'string' ? sanitizers.sanitizeAgentName(value) : value;
+      } else {
+        // For other properties, ensure no PII
+        if (typeof value === 'string') {
+          // Remove potential file paths
+          let cleanValue = value.replace(/\/[\w\-\/\.]+/g, '/***');
+          // Remove potential API keys
+          cleanValue = cleanValue.replace(/[a-zA-Z0-9]{32,}/g, '***');
+          // Remove emails
+          cleanValue = cleanValue.replace(/[\w\.-]+@[\w\.-]+\.\w+/g, '***@***.***');
+          sanitized[key] = cleanValue;
+        } else {
+          sanitized[key] = value;
+        }
+      }
+    }
+    
+    return sanitized;
+  }
+  
+  private flushEvents(): void {
+    if (this.eventQueue.length === 0) return;
+    
+    const events = [...this.eventQueue];
+    this.eventQueue = [];
+    
+    events.forEach(event => {
+      if (typeof posthog !== 'undefined' && posthog.capture) {
+        posthog.capture(event.event, {
+          ...event.properties,
+          $session_id: event.sessionId,
+          timestamp: event.timestamp,
+        });
+      }
+    });
+  }
+  
+  private startFlushInterval(): void {
+    // Flush events every 5 seconds
+    this.flushInterval = setInterval(() => {
+      if (this.consentManager.isEnabled()) {
+        this.flushEvents();
+      }
+    }, 5000);
+  }
+  
+  shutdown(): void {
+    if (this.flushInterval) {
+      clearInterval(this.flushInterval);
+      this.flushInterval = null;
+    }
+    
+    // Flush any remaining events
+    this.flushEvents();
+  }
+  
+  // Convenience methods
+  isEnabled(): boolean {
+    return this.consentManager.isEnabled();
+  }
+  
+  hasConsented(): boolean {
+    return this.consentManager.hasConsented();
+  }
+  
+  getSettings(): AnalyticsSettings | null {
+    return this.consentManager.getSettings();
+  }
+}
+
+// Export singleton instance
+export const analytics = AnalyticsService.getInstance();
+
+// Export for direct usage
+export default analytics;
diff --git a/src/lib/analytics/types.ts b/src/lib/analytics/types.ts
new file mode 100644
index 0000000..9cecf68
--- /dev/null
+++ b/src/lib/analytics/types.ts
@@ -0,0 +1,102 @@
+export interface AnalyticsEvent {
+  event: string;
+  properties?: {
+    category?: string;
+    action?: string;
+    label?: string;
+    value?: number;
+    [key: string]: any;
+  };
+  timestamp: number;
+  sessionId: string;
+  userId: string; // anonymous UUID
+}
+
+export interface AnalyticsSettings {
+  enabled: boolean;
+  hasConsented: boolean;
+  consentDate?: string;
+  userId?: string;
+  sessionId?: string;
+}
+
+export interface AnalyticsConfig {
+  apiKey: string;
+  apiHost?: string;
+  persistence?: 'localStorage' | 'memory';
+  autocapture?: boolean;
+  disable_session_recording?: boolean;
+  opt_out_capturing_by_default?: boolean;
+  loaded?: (posthog: any) => void;
+}
+
+export type EventName = 
+  | 'session_created'
+  | 'session_completed'
+  | 'session_resumed'
+  | 'feature_used'
+  | 'error_occurred'
+  | 'model_selected'
+  | 'tab_created'
+  | 'tab_closed'
+  | 'file_opened'
+  | 'file_edited'
+  | 'file_saved'
+  | 'agent_executed'
+  | 'mcp_server_connected'
+  | 'mcp_server_disconnected'
+  | 'slash_command_used'
+  | 'settings_changed'
+  | 'app_started'
+  | 'app_closed';
+
+export interface FeatureUsageProperties {
+  feature: string;
+  subfeature?: string;
+  metadata?: Record<string, any>;
+}
+
+export interface ErrorProperties {
+  error_type: string;
+  error_code?: string;
+  error_message?: string;
+  context?: string;
+}
+
+export interface SessionProperties {
+  model?: string;
+  source?: string;
+  resumed?: boolean;
+  checkpoint_id?: string;
+}
+
+export interface ModelProperties {
+  previous_model?: string;
+  new_model: string;
+  source?: string;
+}
+
+export interface AgentProperties {
+  agent_type: string;
+  agent_name?: string;
+  success: boolean;
+  duration_ms?: number;
+}
+
+export interface MCPProperties {
+  server_name: string;
+  server_type?: string;
+  success: boolean;
+}
+
+export interface SlashCommandProperties {
+  command: string;
+  success: boolean;
+}
+
+export interface PerformanceMetrics {
+  startup_time_ms?: number;
+  memory_usage_mb?: number;
+  api_response_time_ms?: number;
+  render_time_ms?: number;
+}
\ No newline at end of file