diff --git a/src/basic_memory/config.py b/src/basic_memory/config.py
index fef79c4c0..6f957a6ee 100644
--- a/src/basic_memory/config.py
+++ b/src/basic_memory/config.py
@@ -132,6 +132,12 @@ class BasicMemoryConfig(BaseSettings):
         gt=0,
     )
 
+    sync_batch_size: int = Field(
+        default=100,
+        description="Number of files to process in a single database transaction during sync. Higher values improve performance with remote databases (Postgres) but increase memory usage. Typical values: 100 (conservative), 500 (balanced), 1000 (aggressive).",
+        gt=0,
+    )
+
     kebab_filenames: bool = Field(
         default=False,
         description="Format for generated filenames. False preserves spaces and special chars, True converts them to hyphens for consistency with permalinks",
diff --git a/src/basic_memory/repository/entity_repository.py b/src/basic_memory/repository/entity_repository.py
index 149a75156..2377cb2ab 100644
--- a/src/basic_memory/repository/entity_repository.py
+++ b/src/basic_memory/repository/entity_repository.py
@@ -63,6 +63,38 @@ async def get_by_file_path(self, file_path: Union[Path, str]) -> Optional[Entity
         )
         return await self.find_one(query)
 
+    async def get_by_file_paths_batch(
+        self, file_paths: Sequence[Union[Path, str]]
+    ) -> dict[str, Entity]:
+        """Batch fetch entities by file paths with eager-loaded relationships.
+
+        Optimized for scan operations - reduces N queries to 1 batched query.
+        Returns entities with relationships already loaded via selectinload.
+
+        Args:
+            file_paths: List of file paths to fetch entities for
+
+        Returns:
+            Dict mapping file_path (as posix string) -> Entity
+            Only includes entities that exist; missing files are not in dict
+        """
+        if not file_paths:
+            return {}
+
+        # Convert all paths to posix strings
+        posix_paths = [Path(p).as_posix() for p in file_paths]
+
+        # Batch query with eager loading
+        query = (
+            self.select().where(Entity.file_path.in_(posix_paths)).options(*self.get_load_options())
+        )
+
+        result = await self.execute_query(query)
+        entities = list(result.scalars().all())
+
+        # Return as dict for O(1) lookup
+        return {e.file_path: e for e in entities}
+
     async def find_by_checksum(self, checksum: str) -> Sequence[Entity]:
         """Find entities with the given checksum.
 
@@ -338,3 +370,80 @@ async def _handle_permalink_conflict(self, entity: Entity, session: AsyncSession
             # Re-raise if not a foreign key error
             raise
         return entity
+
+    async def upsert_entities(self, entities: List[Entity]) -> List[Entity]:
+        """Bulk insert or update multiple entities in a single transaction.
+
+        Optimized for batch operations with remote databases (Postgres).
+        Handles conflicts the same way as upsert_entity() but processes
+        all entities in one transaction.
+
+        Args:
+            entities: List of entities to upsert
+
+        Returns:
+            List of upserted entities with relationships loaded
+
+        Raises:
+            SyncFatalError: If any entity references a non-existent project_id
+        """
+        if not entities:
+            return []
+
+        async with db.scoped_session(self.session_maker) as session:
+            # Set project_id on all entities if needed
+            for entity in entities:
+                self._set_project_id_if_needed(entity)
+
+            # Try to add all entities
+            for entity in entities:
+                session.add(entity)
+
+            try:
+                await session.flush()
+
+                # Fetch all entities with relationships loaded
+                file_paths = [e.file_path for e in entities]
+                query = (
+                    self.select()
+                    .where(Entity.file_path.in_(file_paths))
+                    .options(*self.get_load_options())
+                )
+                result = await session.execute(query)
+                return list(result.scalars().all())
+
+            except IntegrityError as e:
+                # Check for foreign key constraint failures
+                error_str = str(e)
+                if (
+                    "FOREIGN KEY constraint failed" in error_str
+                    or "violates foreign key constraint" in error_str
+                ):
+                    from basic_memory.services.exceptions import SyncFatalError
+
+                    raise SyncFatalError(
+                        "Cannot sync entities: project_id does not exist in database. "
+                        "The project may have been deleted. This sync will be terminated."
+                    ) from e
+
+                # For other integrity errors (file_path or permalink conflicts),
+                # rollback and fall back to individual processing
+                await session.rollback()
+
+                # Process each entity individually to handle conflicts properly
+                logger.debug(
+                    f"Batch upsert failed with IntegrityError, falling back to individual upserts for {len(entities)} entities"
+                )
+
+                result_entities = []
+                for entity in entities:
+                    try:
+                        upserted = await self.upsert_entity(entity)
+                        result_entities.append(upserted)
+                    except Exception as individual_error:
+                        logger.error(
+                            f"Failed to upsert entity {entity.file_path}: {individual_error}"
+                        )
+                        # Continue with other entities
+
+                return result_entities
diff --git a/src/basic_memory/repository/observation_repository.py b/src/basic_memory/repository/observation_repository.py
index 5fb91595d..d6974202c 100644
--- a/src/basic_memory/repository/observation_repository.py
+++ b/src/basic_memory/repository/observation_repository.py
@@ -70,3 +70,33 @@ async def find_by_entities(self, entity_ids: List[int]) -> Dict[int, List[Observ
             observations_by_entity[obs.entity_id].append(obs)
 
         return observations_by_entity
+
+    async def delete_by_entity_ids(self, entity_ids: List[int]) -> int:
+        """Delete all observations for multiple entities in a single query.
+
+        Optimized for batch operations - deletes observations for many entities
+        in one database transaction.
+
+        Args:
+            entity_ids: List of entity IDs whose observations should be deleted
+
+        Returns:
+            Number of observations deleted
+        """
+        if not entity_ids:
+            return 0
+
+        from basic_memory import db
+
+        async with db.scoped_session(self.session_maker) as session:
+            # Use bulk delete with IN clause
+            query = select(Observation).where(Observation.entity_id.in_(entity_ids))
+            result = await session.execute(query)
+            observations_to_delete = result.scalars().all()
+
+            # Delete all observations
+            for obs in observations_to_delete:
+                await session.delete(obs)
+
+            await session.flush()
+            return len(observations_to_delete)
diff --git a/src/basic_memory/repository/relation_repository.py b/src/basic_memory/repository/relation_repository.py
index 913adb275..cd40622ff 100644
--- a/src/basic_memory/repository/relation_repository.py
+++ b/src/basic_memory/repository/relation_repository.py
@@ -67,6 +67,27 @@ async def delete_outgoing_relations_from_entity(self, entity_id: int) -> None:
         async with db.scoped_session(self.session_maker) as session:
             await session.execute(delete(Relation).where(Relation.from_id == entity_id))
 
+    async def delete_outgoing_relations_from_entities(self, entity_ids: List[int]) -> int:
+        """Delete outgoing relations for multiple entities in a single query.
+
+        Optimized for batch operations - deletes relations for many entities
+        in one database transaction. Only deletes relations where these entities
+        are the source (from_id).
+
+        Args:
+            entity_ids: List of entity IDs whose outgoing relations should be deleted
+
+        Returns:
+            Number of relations deleted
+        """
+        if not entity_ids:
+            return 0
+
+        async with db.scoped_session(self.session_maker) as session:
+            # Use bulk delete with IN clause
+            result = await session.execute(delete(Relation).where(Relation.from_id.in_(entity_ids)))
+            return result.rowcount or 0
+
     async def find_unresolved_relations(self) -> Sequence[Relation]:
         """Find all unresolved relations, where to_id is null."""
         query = select(Relation).filter(Relation.to_id.is_(None))
diff --git a/src/basic_memory/sync/sync_service.py b/src/basic_memory/sync/sync_service.py
index 9b4c78cbf..85808a522 100644
--- a/src/basic_memory/sync/sync_service.py
+++ b/src/basic_memory/sync/sync_service.py
@@ -31,6 +31,7 @@
 from basic_memory.services.exceptions import SyncFatalError
 from basic_memory.services.link_resolver import LinkResolver
 from basic_memory.services.search_service import SearchService
+from basic_memory.sync.utils import chunks
 
 # Circuit breaker configuration
 MAX_CONSECUTIVE_FAILURES = 3
@@ -299,38 +300,139 @@ async def sync(
             for path in report.deleted:
                 await self.handle_delete(path)
 
-        # then new and modified
+        # then new and modified - process in batches for better performance
+        batch_size = self.app_config.sync_batch_size
+        logger.debug(f"Using batch size of {batch_size} for file processing")
+
         with logfire.span("process_new_files", new_count=len(report.new)):
-            for path in report.new:
-                entity, _ = await self.sync_file(path, new=True)
-
-                # Track if file was skipped
-                if entity is None and await self._should_skip_file(path):
-                    failure_info = self._file_failures[path]
-                    report.skipped_files.append(
-                        SkippedFile(
-                            path=path,
-                            reason=failure_info.last_error,
-                            failure_count=failure_info.count,
-                            first_failed=failure_info.first_failure,
+            # Convert set to list for batching
+            new_files_list = list(report.new)
+
+            for batch in chunks(new_files_list, batch_size):
+                logger.debug(f"Processing batch of {len(batch)} new files")
+
+                # Separate markdown and non-markdown files
+                markdown_files = [p for p in batch if self.file_service.is_markdown(p)]
+                regular_files = [p for p in batch if not self.file_service.is_markdown(p)]
+
+                # Batch process markdown files
+                if markdown_files:
+                    try:
+                        batch_results = await self.sync_markdown_batch(markdown_files, new=True)
+
+                        # Track skipped files
+                        for path, (entity, _) in zip(markdown_files, batch_results):
+                            if entity is None and await self._should_skip_file(path):
+                                failure_info = self._file_failures[path]
+                                report.skipped_files.append(
+                                    SkippedFile(
+                                        path=path,
+                                        reason=failure_info.last_error,
+                                        failure_count=failure_info.count,
+                                        first_failed=failure_info.first_failure,
+                                    )
+                                )
+
+                    except SyncFatalError:
+                        # Re-raise fatal errors immediately
+                        raise
+                    except Exception as e:
+                        # Batch method raised an exception - record failure for all files in batch
+                        logger.error(f"Batch sync failed for {len(markdown_files)} files: {e}")
+                        for path in markdown_files:
+                            await self._record_failure(path, str(e))
+                            # Track skipped files
+                            if await self._should_skip_file(path):
+                                failure_info = self._file_failures[path]
+                                report.skipped_files.append(
+                                    SkippedFile(
+                                        path=path,
+                                        reason=failure_info.last_error,
+                                        failure_count=failure_info.count,
+                                        first_failed=failure_info.first_failure,
+                                    )
+                                )
+
+                # Process regular files individually (they're already fast)
+                for path in regular_files:
+                    entity, _ = await self.sync_file(path, new=True)
+
+                    # Track if file was skipped
+                    if entity is None and await self._should_skip_file(path):
+                        failure_info = self._file_failures[path]
+                        report.skipped_files.append(
+                            SkippedFile(
+                                path=path,
+                                reason=failure_info.last_error,
+                                failure_count=failure_info.count,
+                                first_failed=failure_info.first_failure,
+                            )
                         )
-                    )
 
         with logfire.span("process_modified_files", modified_count=len(report.modified)):
-            for path in report.modified:
-                entity, _ = await self.sync_file(path, new=False)
-
-                # Track if file was skipped
-                if entity is None and await self._should_skip_file(path):
-                    failure_info = self._file_failures[path]
-                    report.skipped_files.append(
-                        SkippedFile(
-                            path=path,
-                            reason=failure_info.last_error,
-                            failure_count=failure_info.count,
-                            first_failed=failure_info.first_failure,
+            # Convert set to list for batching
+            modified_files_list = list(report.modified)
+
+            for batch in chunks(modified_files_list, batch_size):
+                logger.debug(f"Processing batch of {len(batch)} modified files")
+
+                # Separate markdown and non-markdown files
+                markdown_files = [p for p in batch if self.file_service.is_markdown(p)]
+                regular_files = [p for p in batch if not self.file_service.is_markdown(p)]
+
+                # Batch process markdown files
+                if markdown_files:
+                    try:
+                        batch_results = await self.sync_markdown_batch(markdown_files, new=False)
+
+                        # Track skipped files
+                        for path, (entity, _) in zip(markdown_files, batch_results):
+                            if entity is None and await self._should_skip_file(path):
+                                failure_info = self._file_failures[path]
+                                report.skipped_files.append(
+                                    SkippedFile(
+                                        path=path,
+                                        reason=failure_info.last_error,
+                                        failure_count=failure_info.count,
+                                        first_failed=failure_info.first_failure,
+                                    )
+                                )
+
+                    except SyncFatalError:
+                        # Re-raise fatal errors immediately
+                        raise
+                    except Exception as e:
+                        # Batch method raised an exception - record failure for all files in batch
+                        logger.error(f"Batch sync failed for {len(markdown_files)} files: {e}")
+                        for path in markdown_files:
+                            await self._record_failure(path, str(e))
+                            # Track skipped files
+                            if await self._should_skip_file(path):
+                                failure_info = self._file_failures[path]
+                                report.skipped_files.append(
+                                    SkippedFile(
+                                        path=path,
+                                        reason=failure_info.last_error,
+                                        failure_count=failure_info.count,
+                                        first_failed=failure_info.first_failure,
+                                    )
+                                )
+
+                # Process regular files individually (they're already fast)
+                for path in regular_files:
+                    entity, _ = await self.sync_file(path, new=False)
+
+                    # Track if file was skipped
+                    if entity is None and await self._should_skip_file(path):
+                        failure_info = self._file_failures[path]
+                        report.skipped_files.append(
+                            SkippedFile(
+                                path=path,
+                                reason=failure_info.last_error,
+                                failure_count=failure_info.count,
+                                first_failed=failure_info.first_failure,
+                            )
                         )
-                    )
 
         # Only resolve relations if there were actual changes
         # If no files changed, no new unresolved relations could have been created
@@ -484,6 +586,12 @@ async def scan(self, directory, force_full: bool = False):
 
         logger.debug(f"Processing {len(file_paths_to_scan)} files with mtime-based comparison")
 
+        # Optimization: Batch fetch all entities for files being scanned
+        # This reduces N queries to 1 batch query (massive performance win for remote DBs)
+        logger.debug(f"Batch fetching entities for {len(file_paths_to_scan)} files")
+        entities_by_path = await self.entity_repository.get_by_file_paths_batch(file_paths_to_scan)
+        logger.debug(f"Found {len(entities_by_path)} existing entities in database")
+
         for rel_path in file_paths_to_scan:
             scanned_paths.add(rel_path)
 
@@ -495,8 +603,8 @@ async def scan(self, directory, force_full: bool = False):
 
             stat_info = abs_path.stat()
 
-            # Indexed lookup - single file query (not full table scan)
-            db_entity = await self.entity_repository.get_by_file_path(rel_path)
+            # O(1) dict lookup instead of database query
+            db_entity = entities_by_path.get(rel_path)
 
             if db_entity is None:
                 # New file - need checksum for move detection
@@ -737,6 +845,206 @@ async def sync_markdown_file(self, path: str, new: bool = True) -> Tuple[Optiona
         # Return the final checksum to ensure everything is consistent
         return entity, final_checksum
 
+    @logfire.instrument()
+    async def sync_markdown_batch(
+        self, paths: List[str], new: bool = True
+    ) -> List[Tuple[Optional[Entity], str]]:
+        """Sync multiple markdown files in a single batch operation.
+
+        Optimized for remote databases (Postgres) - reduces N queries to 1 batch query.
+        Parses all files first, then does all database operations in one transaction.
+
+        Args:
+            paths: List of paths to markdown files
+            new: Whether these are new files
+
+        Returns:
+            List of tuples (entity, checksum) for each file
+        """
+        from basic_memory.markdown.utils import entity_model_from_markdown
+
+        if not paths:
+            return []
+
+        logger.debug(f"Batch syncing {len(paths)} markdown files (new={new})")
+
+        # Phase 1: Parse all files (no DB operations)
+        parsed_files = []
+        for path in paths:
+            # Check if file should be skipped due to repeated failures (circuit breaker)
+            if await self._should_skip_file(path):
+                logger.warning(f"Skipping file in batch due to repeated failures: {path}")
+                parsed_files.append(None)
+                continue
+
+            try:
+                file_content = await self.file_service.read_file_content(path)
+                file_contains_frontmatter = has_frontmatter(file_content)
+
+                # Get file timestamps for tracking modification times
+                file_stats = self.file_service.file_stats(path)
+                created = datetime.fromtimestamp(file_stats.st_ctime).astimezone()
+                modified = datetime.fromtimestamp(file_stats.st_mtime).astimezone()
+
+                # Parse markdown to get entity structure
+                entity_markdown = await self.entity_parser.parse_file(path)
+
+                # Resolve permalink if needed (skip conflict checks during batch)
+                permalink = entity_markdown.frontmatter.permalink
+                if file_contains_frontmatter and not self.app_config.disable_permalinks:
+                    permalink = await self.entity_service.resolve_permalink(
+                        path, markdown=entity_markdown, skip_conflict_check=True
+                    )
+
+                    # If permalink changed, update the file
+                    if permalink != entity_markdown.frontmatter.permalink:
+                        logger.info(
+                            f"Updating permalink for path: {path}, "
+                            f"old_permalink: {entity_markdown.frontmatter.permalink}, "
+                            f"new_permalink: {permalink}"
+                        )
+                        entity_markdown.frontmatter.metadata["permalink"] = permalink
+                        await self.file_service.update_frontmatter(path, {"permalink": permalink})
+
+                # Convert to entity model (without saving to DB yet)
+                entity_model = entity_model_from_markdown(Path(path), entity_markdown)
+                entity_model.checksum = None  # Will be set after relations are resolved
+
+                parsed_files.append(
+                    {
+                        "path": path,
+                        "entity_model": entity_model,
+                        "entity_markdown": entity_markdown,
+                        "created": created,
+                        "modified": modified,
+                        "mtime": file_stats.st_mtime,
+                        "size": file_stats.st_size,
+                    }
+                )
+
+            except Exception as e:
+                # Check if this is a fatal error (or caused by one)
+                # Fatal errors like project deletion should terminate sync immediately
+                if isinstance(e, SyncFatalError) or isinstance(e.__cause__, SyncFatalError):
+                    logger.error(
+                        f"Fatal sync error encountered during batch parse, terminating sync: path={path}"
+                    )
+                    raise
+
+                # Otherwise treat as recoverable file-level error
+                logger.error(f"Failed to parse file in batch: path={path}, error={e}")
+                # Track failure for circuit breaker
+                await self._record_failure(path, str(e))
+                parsed_files.append(None)  # Mark as failed
+
+        # Phase 2: Batch database operations
+        # Filter out failed parses
+        valid_files = [f for f in parsed_files if f is not None]
+        if not valid_files:
+            logger.warning("No valid files to sync in batch")
+            return [(None, "") for _ in paths]
+
+        # If this is a new batch, upsert all entities at once
+        if new:
+            entities_to_upsert = [f["entity_model"] for f in valid_files]
+            logger.debug(f"Batch upserting {len(entities_to_upsert)} new entities")
+            upserted_entities = await self.entity_repository.upsert_entities(entities_to_upsert)
+
+            # Create lookup by file_path for O(1) access
+            entities_by_path = {e.file_path: e for e in upserted_entities}
+
+        # If updating existing entities, we need to handle observations/relations differently
+        else:
+            logger.debug(f"Batch updating {len(valid_files)} existing entities")
+            # For updates, we need to:
+            # 1. Get existing entities
+            # 2. Delete old observations/relations
+            # 3. Upsert updated entities
+
+            file_paths = [f["path"] for f in valid_files]
+            existing_entities = await self.entity_repository.get_by_file_paths_batch(file_paths)
+
+            # Delete old observations and relations in batch
+            entity_ids = [e.id for e in existing_entities.values() if e.id]
+            if entity_ids:
+                await self.entity_service.observation_repository.delete_by_entity_ids(entity_ids)
+                await self.relation_repository.delete_outgoing_relations_from_entities(entity_ids)
+
+            # Upsert all updated entities
+            entities_to_upsert = [f["entity_model"] for f in valid_files]
+            upserted_entities = await self.entity_repository.upsert_entities(entities_to_upsert)
+
+            # Create lookup by file_path
+            entities_by_path = {e.file_path: e for e in upserted_entities}
+
+        # Phase 3: Post-processing (relations, checksums, search index)
+        results = []
+        for i, path in enumerate(paths):
+            parsed_file = parsed_files[i]
+
+            # Skip failed files
+            if parsed_file is None:
+                results.append((None, ""))
+                continue
+
+            entity = entities_by_path.get(parsed_file["path"])
+            if entity is None:
+                logger.error(f"Entity not found after upsert: {parsed_file['path']}")
+                results.append((None, ""))
+                continue
+
+            try:
+                # Update relations for this entity
+                entity_with_relations = await self.entity_service.update_entity_relations(
+                    parsed_file["path"], parsed_file["entity_markdown"]
+                )
+
+                # Compute final checksum after relations are resolved
+                final_checksum = await self.file_service.compute_checksum(parsed_file["path"])
+
+                # Update checksum, timestamps, and file metadata
+                await self.entity_repository.update(
+                    entity.id,
+                    {
+                        "checksum": final_checksum,
+                        "created_at": parsed_file["created"],
+                        "updated_at": parsed_file["modified"],
+                        "mtime": parsed_file["mtime"],
+                        "size": parsed_file["size"],
+                    },
+                )
+
+                # Index for search
+                await self.search_service.index_entity(entity_with_relations)
+
+                # Clear failure tracking on successful sync
+                self._clear_failure(parsed_file["path"])
+
+                results.append((entity_with_relations, final_checksum))
+
+                logger.debug(
+                    f"Batch sync completed for file: path={parsed_file['path']}, "
+                    f"entity_id={entity.id}, checksum={final_checksum[:8]}"
+                )
+
+            except Exception as e:
+                # Check if this is a fatal error
+                if isinstance(e, SyncFatalError) or isinstance(e.__cause__, SyncFatalError):
+                    logger.error(
+                        f"Fatal sync error during post-processing, terminating sync: path={parsed_file['path']}"
+                    )
+                    raise
+
+                # Otherwise treat as recoverable file-level error
+                logger.error(
+                    f"Failed to complete post-processing for file: path={parsed_file['path']}, error={e}"
+                )
+                await self._record_failure(parsed_file["path"], str(e))
+                results.append((None, ""))
+                continue
+
+        return results
+
     @logfire.instrument()
     async def sync_regular_file(self, path: str, new: bool = True) -> Tuple[Optional[Entity], str]:
         """Sync a non-markdown file with basic tracking.
@@ -1134,13 +1442,13 @@ async def _scan_directory_modified_since(
     async def _scan_directory_full(self, directory: Path) -> List[str]:
         """Full directory scan returning all file paths.
 
-        Uses scan_directory() which respects .bmignore patterns.
+                Uses scan_directory() which respects .bmignore patterns.
 
-        Args:
-            directory: Directory to scan
+                Args:
+                    directory: Directory to scan
 
         Returns:
-            List of relative file paths (respects .bmignore)
+                    List of relative file paths (respects .bmignore)
         """
         file_paths = []
         async for file_path_str, _ in self.scan_directory(directory):
diff --git a/src/basic_memory/sync/utils.py b/src/basic_memory/sync/utils.py
new file mode 100644
index 000000000..b3b5172df
--- /dev/null
+++ b/src/basic_memory/sync/utils.py
@@ -0,0 +1,23 @@
+"""Utilities for sync operations."""
+
+from typing import Iterator, List, TypeVar
+
+T = TypeVar("T")
+
+
+def chunks(items: List[T], size: int) -> Iterator[List[T]]:
+    """Split a list into chunks of specified size.
+
+    Args:
+        items: List of items to chunk
+        size: Size of each chunk
+
+    Yields:
+        Lists of items, each of specified size (last chunk may be smaller)
+
+    Example:
+        >>> list(chunks([1, 2, 3, 4, 5], 2))
+        [[1, 2], [3, 4], [5]]
+    """
+    for i in range(0, len(items), size):
+        yield items[i : i + size]
diff --git a/tests/sync/test_sync_service.py b/tests/sync/test_sync_service.py
index e54b1413c..e64cf05e9 100644
--- a/tests/sync/test_sync_service.py
+++ b/tests/sync/test_sync_service.py
@@ -1486,11 +1486,12 @@ async def test_circuit_breaker_skips_after_three_failures(
     # Create a file with malformed content that will fail to parse
     await create_test_file(test_file, "invalid markdown content")
 
-    # Mock sync_markdown_file to always fail
-    async def mock_sync_markdown_file(*args, **kwargs):
+    # Mock sync_markdown_batch to always fail for all files in batch
+    async def mock_sync_markdown_batch(paths, new=True):
+        # Simulate batch failure - return (None, "") for each path
         raise ValueError("Simulated sync failure")
 
-    with patch.object(sync_service, "sync_markdown_file", side_effect=mock_sync_markdown_file):
+    with patch.object(sync_service, "sync_markdown_batch", side_effect=mock_sync_markdown_batch):
         # First sync - should fail and record (1/3)
         report1 = await sync_service.sync(project_dir)
         assert len(report1.skipped_files) == 0  # Not skipped yet
@@ -1545,15 +1546,15 @@ async def test_circuit_breaker_resets_on_file_change(
     # Create initial failing content
     await create_test_file(test_file, "initial bad content")
 
-    # Mock sync_markdown_file to fail
+    # Mock sync_markdown_batch to fail
     call_count = 0
 
-    async def mock_sync_markdown_file(*args, **kwargs):
+    async def mock_sync_markdown_batch(paths, new=True):
         nonlocal call_count
-        call_count += 1
+        call_count += len(paths)
         raise ValueError("Simulated sync failure")
 
-    with patch.object(sync_service, "sync_markdown_file", side_effect=mock_sync_markdown_file):
+    with patch.object(sync_service, "sync_markdown_batch", side_effect=mock_sync_markdown_batch):
         # Fail 3 times to hit circuit breaker threshold
         await sync_service.sync(project_dir)  # Fail 1
         await touch_file(test_file)  # Touch to trigger incremental scan
@@ -1670,8 +1671,8 @@ async def test_circuit_breaker_handles_checksum_computation_failure(
     test_file = project_dir / "checksum_fail.md"
     await create_test_file(test_file, "content")
 
-    # Mock sync_markdown_file to fail
-    async def mock_sync_markdown_file(*args, **kwargs):
+    # Mock sync_markdown_batch to fail
+    async def mock_sync_markdown_batch(paths, new=True):
         raise ValueError("Sync failure")
 
     # Mock checksum computation to fail only during _record_failure (not during scan)
@@ -1688,7 +1689,7 @@ async def mock_compute_checksum(path):
         raise IOError("Cannot read file")
 
     with (
-        patch.object(sync_service, "sync_markdown_file", side_effect=mock_sync_markdown_file),
+        patch.object(sync_service, "sync_markdown_batch", side_effect=mock_sync_markdown_batch),
         patch.object(
             sync_service.file_service,
             "compute_checksum",
@@ -1757,16 +1758,16 @@ async def test_sync_fatal_error_terminates_sync_immediately(
         ),
     )
 
-    # Mock entity_service.create_entity_from_markdown to raise SyncFatalError on first file
-    # This simulates project being deleted during sync
-    async def mock_create_entity_from_markdown(*args, **kwargs):
+    # Mock entity_repository.upsert_entities to raise SyncFatalError
+    # This simulates project being deleted during batch sync
+    async def mock_upsert_entities(entities):
         raise SyncFatalError(
-            "Cannot sync file 'file1.md': project_id=99999 does not exist in database. "
+            "Cannot sync entities: project_id=99999 does not exist in database. "
             "The project may have been deleted. This sync will be terminated."
         )
 
     with patch.object(
-        entity_service, "create_entity_from_markdown", side_effect=mock_create_entity_from_markdown
+        sync_service.entity_repository, "upsert_entities", side_effect=mock_upsert_entities
     ):
         # Sync should raise SyncFatalError and terminate immediately
         with pytest.raises(SyncFatalError, match="project_id=99999 does not exist"):