diff --git a/src/hooks/useAccountSync.ts b/src/hooks/useAccountSync.ts
index bc7f96f..5dd5231 100644
--- a/src/hooks/useAccountSync.ts
+++ b/src/hooks/useAccountSync.ts
@@ -6,12 +6,14 @@ import { addressLoader } from "@/services/loaders";
 import type { RelayInfo } from "@/types/app";
 import { normalizeRelayURL } from "@/lib/relay-url";
 import { getServersFromEvent } from "@/services/blossom";
+import giftWrapLoader from "@/services/gift-wrap-loader";
 
 /**
  * Hook that syncs active account with Grimoire state and fetches relay lists and blossom servers
  */
 export function useAccountSync() {
   const {
+    state,
     setActiveAccount,
     setActiveAccountRelays,
     setActiveAccountBlossomServers,
@@ -125,4 +127,33 @@ export function useAccountSync() {
       storeSubscription.unsubscribe();
     };
   }, [activeAccount?.pubkey, eventStore, setActiveAccountBlossomServers]);
+
+  // Enable/disable gift wrap loader based on feature flag and active account
+  useEffect(() => {
+    const privateMessagesEnabled = state.privateMessagesEnabled ?? false;
+
+    if (
+      privateMessagesEnabled &&
+      activeAccount?.pubkey &&
+      activeAccount.signer
+    ) {
+      // Enable gift wrap loading
+      console.log(
+        `[AccountSync] Enabling private messages for ${activeAccount.pubkey.slice(0, 8)}`,
+      );
+      giftWrapLoader.enable(activeAccount.pubkey, activeAccount.signer);
+    } else {
+      // Disable gift wrap loading
+      giftWrapLoader.disable();
+    }
+
+    return () => {
+      // Cleanup on unmount
+      giftWrapLoader.disable();
+    };
+  }, [
+    state.privateMessagesEnabled,
+    activeAccount?.pubkey,
+    activeAccount?.signer,
+  ]);
 }
diff --git a/src/services/db.ts b/src/services/db.ts
index 6e9ee79..d65d0d6 100644
--- a/src/services/db.ts
+++ b/src/services/db.ts
@@ -87,6 +87,52 @@ export interface LocalSpellbook {
   deletedAt?: number;
 }
 
+/**
+ * Gift wrap envelope (kind 1059) - tracks outer layer
+ * Records which gift wraps we've seen and their decryption status
+ */
+export interface GiftWrapEnvelope {
+  id: string; // gift wrap event ID (kind 1059)
+  recipientPubkey: string; // who it's addressed to (from p-tag)
+  event: NostrEvent; // full gift wrap event
+  status: "pending" | "decrypted" | "failed"; // decryption state
+  failureReason?: string; // if failed, why?
+  receivedAt: number; // when we first saw it
+  processedAt?: number; // when we attempted decryption
+}
+
+/**
+ * Decrypted rumor - the actual message content after unwrapping
+ * Stores the seal (kind 13) and extracted rumor (unsigned event)
+ */
+export interface DecryptedRumor {
+  giftWrapId: string; // links back to gift wrap (primary key)
+  recipientPubkey: string; // which of our accounts received this
+  senderPubkey: string; // from seal (who sent it)
+  seal: NostrEvent; // kind 13 seal event
+  rumor: NostrEvent; // the unsigned inner event
+  rumorCreatedAt: number; // canonical timestamp from rumor
+  rumorKind: number; // kind of the rumor (for filtering)
+  decryptedAt: number; // when we successfully decrypted it
+}
+
+/**
+ * Conversation metadata - denormalized cache for fast conversation list queries
+ * One entry per (sender, recipient) pair
+ */
+export interface ConversationMetadata {
+  id: string; // `${senderPubkey}:${recipientPubkey}` (primary key)
+  senderPubkey: string; // who sent messages
+  recipientPubkey: string; // which of our accounts
+  lastMessageGiftWrapId: string; // ID of most recent gift wrap
+  lastMessageCreatedAt: number; // rumor created_at of most recent message
+  lastMessagePreview: string; // content preview for UI
+  lastMessageKind: number; // rumor kind of most recent message
+  messageCount: number; // total messages in conversation
+  unreadCount: number; // unread message count
+  updatedAt: number; // when this metadata was last updated
+}
+
 class GrimoireDb extends Dexie {
   profiles!: Table<Profile>;
   nip05!: Table<Nip05>;
@@ -98,6 +144,9 @@ class GrimoireDb extends Dexie {
   blossomServers!: Table<CachedBlossomServerList>;
   spells!: Table<LocalSpell>;
   spellbooks!: Table<LocalSpellbook>;
+  giftWraps!: Table<GiftWrapEnvelope>;
+  decryptedRumors!: Table<DecryptedRumor>;
+  conversations!: Table<ConversationMetadata>;
 
   constructor(name: string) {
     super(name);
@@ -333,6 +382,28 @@ class GrimoireDb extends Dexie {
       spells: "&id, alias, createdAt, isPublished, deletedAt",
       spellbooks: "&id, slug, title, createdAt, isPublished, deletedAt",
     });
+
+    // Version 16: Add gift wrap (NIP-59) support
+    this.version(16).stores({
+      profiles: "&pubkey",
+      nip05: "&nip05",
+      nips: "&id",
+      relayInfo: "&url",
+      relayAuthPreferences: "&url",
+      relayLists: "&pubkey, updatedAt",
+      relayLiveness: "&url",
+      blossomServers: "&pubkey, updatedAt",
+      spells: "&id, alias, createdAt, isPublished, deletedAt",
+      spellbooks: "&id, slug, title, createdAt, isPublished, deletedAt",
+      // Gift wrap envelopes indexed by recipient and status for efficient queries
+      giftWraps: "&id, recipientPubkey, [recipientPubkey+status], receivedAt",
+      // Decrypted rumors indexed by sender and timestamp for conversation queries
+      decryptedRumors:
+        "&giftWrapId, recipientPubkey, senderPubkey, [senderPubkey+rumorCreatedAt], [recipientPubkey+senderPubkey], rumorCreatedAt",
+      // Conversation metadata for fast conversation list queries
+      conversations:
+        "&id, recipientPubkey, [recipientPubkey+lastMessageCreatedAt]",
+    });
   }
 }
 
diff --git a/src/services/gift-wrap-loader.ts b/src/services/gift-wrap-loader.ts
new file mode 100644
index 0000000..0e9ceca
--- /dev/null
+++ b/src/services/gift-wrap-loader.ts
@@ -0,0 +1,309 @@
+/**
+ * NIP-59 Gift Wrap Loader Service
+ *
+ * Loads gift wraps (kind 1059) from user's inbox relays and processes them.
+ * Gift wraps are private messages wrapped in multiple layers of encryption.
+ *
+ * Architecture:
+ * - Fetches from inbox relays (NIP-65 read relays)
+ * - Requires NIP-42 AUTH for relay access
+ * - Caches decryption results to avoid re-processing
+ * - Updates conversation metadata for UI
+ *
+ * See: https://github.com/nostr-protocol/nips/blob/master/59.md
+ */
+
+import { BehaviorSubject, Observable } from "rxjs";
+import type { NostrEvent } from "@/types/nostr";
+import type { Signer } from "applesauce-signers";
+import pool from "./relay-pool";
+import eventStore from "./event-store";
+import { relayListCache } from "./relay-list-cache";
+import { processGiftWrap, getPendingGiftWraps } from "./gift-wrap";
+import db from "./db";
+
+/**
+ * Gift wrap loader state
+ */
+interface GiftWrapLoaderState {
+  enabled: boolean;
+  loading: boolean;
+  recipientPubkey?: string;
+  lastSync?: number;
+  errorCount: number;
+}
+
+/**
+ * Gift wrap loader service
+ * Manages loading and processing of gift wraps for the active account
+ */
+class GiftWrapLoader {
+  private state$ = new BehaviorSubject<GiftWrapLoaderState>({
+    enabled: false,
+    loading: false,
+    errorCount: 0,
+  });
+
+  private subscription?: { unsubscribe: () => void };
+  private currentSigner?: Signer;
+
+  /**
+   * Observable state of the loader
+   */
+  get state(): Observable<GiftWrapLoaderState> {
+    return this.state$.asObservable();
+  }
+
+  /**
+   * Gets current state
+   */
+  getCurrentState(): GiftWrapLoaderState {
+    return this.state$.value;
+  }
+
+  /**
+   * Enables gift wrap loading for a user
+   *
+   * @param recipientPubkey - The user's public key
+   * @param signer - The user's signer (for decryption)
+   */
+  async enable(recipientPubkey: string, signer: Signer): Promise<void> {
+    // Stop any existing subscription
+    this.disable();
+
+    this.currentSigner = signer;
+
+    this.state$.next({
+      ...this.state$.value,
+      enabled: true,
+      recipientPubkey,
+    });
+
+    console.log(`[GiftWrapLoader] Enabled for ${recipientPubkey.slice(0, 8)}`);
+
+    // Start loading
+    await this.sync();
+  }
+
+  /**
+   * Disables gift wrap loading
+   */
+  disable(): void {
+    if (this.subscription) {
+      this.subscription.unsubscribe();
+      this.subscription = undefined;
+    }
+
+    this.currentSigner = undefined;
+
+    this.state$.next({
+      ...this.state$.value,
+      enabled: false,
+      loading: false,
+      recipientPubkey: undefined,
+    });
+
+    console.log("[GiftWrapLoader] Disabled");
+  }
+
+  /**
+   * Syncs gift wraps from inbox relays
+   */
+  async sync(): Promise<void> {
+    const state = this.state$.value;
+
+    if (!state.enabled || !state.recipientPubkey || !this.currentSigner) {
+      console.warn("[GiftWrapLoader] Cannot sync: not enabled or no signer");
+      return;
+    }
+
+    if (state.loading) {
+      console.log("[GiftWrapLoader] Already syncing, skipping");
+      return;
+    }
+
+    this.state$.next({ ...state, loading: true });
+
+    try {
+      // Get inbox relays from cache
+      const inboxRelays = await this.getInboxRelays(state.recipientPubkey);
+
+      if (inboxRelays.length === 0) {
+        console.warn(
+          "[GiftWrapLoader] No inbox relays found, using aggregator relays",
+        );
+        // Could fall back to aggregator relays, but gift wraps are typically private
+        // so this might not work well
+      }
+
+      console.log(
+        `[GiftWrapLoader] Syncing from ${inboxRelays.length} inbox relays`,
+      );
+
+      // Subscribe to kind 1059 events for this user
+      const filter = {
+        kinds: [1059],
+        "#p": [state.recipientPubkey],
+        // Optionally add since: to only get new messages
+        // since: state.lastSync ? Math.floor(state.lastSync / 1000) : undefined,
+      };
+
+      // Store subscription for cleanup
+      this.subscription = pool.subscribe(inboxRelays, [filter], {
+        onevent: async (event: NostrEvent) => {
+          await this.handleGiftWrap(event);
+        },
+        oneose: () => {
+          console.log("[GiftWrapLoader] EOSE received");
+          this.state$.next({
+            ...this.state$.value,
+            loading: false,
+            lastSync: Date.now(),
+          });
+        },
+        onclose: (reason: string) => {
+          console.log(`[GiftWrapLoader] Subscription closed: ${reason}`);
+          this.state$.next({
+            ...this.state$.value,
+            loading: false,
+          });
+        },
+      });
+
+      // Process any pending gift wraps from database
+      await this.processPendingGiftWraps();
+    } catch (error) {
+      console.error("[GiftWrapLoader] Sync error:", error);
+      this.state$.next({
+        ...this.state$.value,
+        loading: false,
+        errorCount: state.errorCount + 1,
+      });
+    }
+  }
+
+  /**
+   * Handles a received gift wrap event
+   */
+  private async handleGiftWrap(event: NostrEvent): Promise<void> {
+    const state = this.state$.value;
+
+    if (!state.recipientPubkey || !this.currentSigner) {
+      return;
+    }
+
+    try {
+      // Add to event store for tracking
+      eventStore.add(event);
+
+      // Process (unwrap, unseal, cache)
+      await processGiftWrap(event, state.recipientPubkey, this.currentSigner);
+
+      console.log(
+        `[GiftWrapLoader] Processed gift wrap ${event.id.slice(0, 8)}`,
+      );
+    } catch (error) {
+      console.error(
+        `[GiftWrapLoader] Failed to handle gift wrap ${event.id.slice(0, 8)}:`,
+        error,
+      );
+    }
+  }
+
+  /**
+   * Processes pending gift wraps from database
+   * (Gift wraps that were received but not yet decrypted)
+   */
+  private async processPendingGiftWraps(): Promise<void> {
+    const state = this.state$.value;
+
+    if (!state.recipientPubkey || !this.currentSigner) {
+      return;
+    }
+
+    const pending = await getPendingGiftWraps(state.recipientPubkey);
+
+    if (pending.length === 0) {
+      return;
+    }
+
+    console.log(
+      `[GiftWrapLoader] Processing ${pending.length} pending gift wraps`,
+    );
+
+    for (const envelope of pending) {
+      try {
+        await processGiftWrap(
+          envelope.event,
+          state.recipientPubkey,
+          this.currentSigner,
+        );
+      } catch (error) {
+        console.error(
+          `[GiftWrapLoader] Failed to process pending gift wrap ${envelope.id.slice(0, 8)}:`,
+          error,
+        );
+      }
+    }
+  }
+
+  /**
+   * Gets inbox relays for a user
+   */
+  private async getInboxRelays(pubkey: string): Promise<string[]> {
+    // Try cache first
+    let relays = await relayListCache.getInboxRelays(pubkey);
+
+    if (!relays || relays.length === 0) {
+      // Try to get from event store
+      const event = eventStore.getReplaceable(10002, pubkey, "");
+      if (event) {
+        // Cache it
+        relayListCache.set(event);
+        relays = await relayListCache.getInboxRelays(pubkey);
+      }
+    }
+
+    return relays || [];
+  }
+
+  /**
+   * Forces a full resync (re-fetches all gift wraps)
+   */
+  async forceSync(): Promise<void> {
+    // Clear lastSync to fetch all messages
+    this.state$.next({
+      ...this.state$.value,
+      lastSync: undefined,
+    });
+
+    await this.sync();
+  }
+
+  /**
+   * Gets count of unread messages
+   */
+  async getUnreadCount(recipientPubkey: string): Promise<number> {
+    const conversations = await db.conversations
+      .where("recipientPubkey")
+      .equals(recipientPubkey)
+      .toArray();
+
+    return conversations.reduce((sum, conv) => sum + conv.unreadCount, 0);
+  }
+
+  /**
+   * Gets total conversation count
+   */
+  async getConversationCount(recipientPubkey: string): Promise<number> {
+    return db.conversations
+      .where("recipientPubkey")
+      .equals(recipientPubkey)
+      .count();
+  }
+}
+
+// Singleton instance
+const giftWrapLoader = new GiftWrapLoader();
+
+export default giftWrapLoader;
diff --git a/src/services/gift-wrap.test.ts b/src/services/gift-wrap.test.ts
new file mode 100644
index 0000000..85e340f
--- /dev/null
+++ b/src/services/gift-wrap.test.ts
@@ -0,0 +1,320 @@
+/**
+ * Tests for NIP-59 Gift Wrap Service
+ */
+
+import { describe, it, expect, vi, beforeEach } from "vitest";
+import { unwrapAndUnseal, GiftWrapError } from "./gift-wrap";
+import type { NostrEvent } from "@/types/nostr";
+import type { Signer } from "applesauce-signers";
+
+// Mock signer for testing
+function createMockSigner(
+  decryptResponses: Map<string, string>,
+): Signer & {
+  nip44Decrypt: (pubkey: string, ciphertext: string) => Promise<string>;
+} {
+  return {
+    getPublicKey: vi.fn().mockResolvedValue("mock-pubkey"),
+    signEvent: vi.fn(),
+    nip44Decrypt: vi.fn(async (pubkey: string, ciphertext: string) => {
+      const response = decryptResponses.get(`${pubkey}:${ciphertext}`);
+      if (!response) {
+        throw new Error("Mock decryption failed: no response configured");
+      }
+      return response;
+    }),
+  };
+}
+
+describe("GiftWrapError", () => {
+  it("should create error with code", () => {
+    const error = new GiftWrapError("Test error", "INVALID_KIND");
+    expect(error.message).toBe("Test error");
+    expect(error.code).toBe("INVALID_KIND");
+    expect(error.name).toBe("GiftWrapError");
+  });
+});
+
+describe("unwrapAndUnseal", () => {
+  describe("validation", () => {
+    it("should reject non-1059 events", async () => {
+      const invalidGiftWrap: NostrEvent = {
+        id: "test-id",
+        pubkey: "ephemeral-key",
+        created_at: 1234567890,
+        kind: 1, // Wrong kind
+        tags: [],
+        content: "encrypted-content",
+        sig: "signature",
+      };
+
+      const signer = createMockSigner(new Map());
+
+      await expect(
+        unwrapAndUnseal(invalidGiftWrap, "recipient", signer),
+      ).rejects.toThrow(GiftWrapError);
+
+      await expect(
+        unwrapAndUnseal(invalidGiftWrap, "recipient", signer),
+      ).rejects.toThrow("Expected kind 1059");
+    });
+
+    it("should reject gift wrap with empty content", async () => {
+      const emptyGiftWrap: NostrEvent = {
+        id: "test-id",
+        pubkey: "ephemeral-key",
+        created_at: 1234567890,
+        kind: 1059,
+        tags: [],
+        content: "", // Empty
+        sig: "signature",
+      };
+
+      const signer = createMockSigner(new Map());
+
+      await expect(
+        unwrapAndUnseal(emptyGiftWrap, "recipient", signer),
+      ).rejects.toThrow(GiftWrapError);
+
+      await expect(
+        unwrapAndUnseal(emptyGiftWrap, "recipient", signer),
+      ).rejects.toThrow("content is empty");
+    });
+  });
+
+  describe("unwrapping", () => {
+    it("should unwrap valid gift wrap to get seal", async () => {
+      const seal: NostrEvent = {
+        id: "seal-id",
+        pubkey: "sender-real-key",
+        created_at: 1234567890,
+        kind: 13,
+        tags: [],
+        content: "encrypted-rumor",
+        sig: "seal-signature",
+      };
+
+      const rumor = {
+        kind: 1,
+        content: "Hello, world!",
+        tags: [],
+        created_at: 1234567890,
+        pubkey: "sender-real-key",
+      };
+
+      const giftWrap: NostrEvent = {
+        id: "gift-wrap-id",
+        pubkey: "ephemeral-key",
+        created_at: 1234567899, // Tweaked timestamp
+        kind: 1059,
+        tags: [["p", "recipient-pubkey"]],
+        content: "encrypted-seal",
+        sig: "gift-wrap-signature",
+      };
+
+      const decryptResponses = new Map([
+        ["ephemeral-key:encrypted-seal", JSON.stringify(seal)],
+        ["sender-real-key:encrypted-rumor", JSON.stringify(rumor)],
+      ]);
+
+      const signer = createMockSigner(decryptResponses);
+
+      const result = await unwrapAndUnseal(
+        giftWrap,
+        "recipient-pubkey",
+        signer,
+      );
+
+      expect(result.seal).toEqual(seal);
+      expect(result.rumor.kind).toBe(1);
+      expect(result.rumor.content).toBe("Hello, world!");
+      expect(result.rumor.pubkey).toBe("sender-real-key");
+    });
+
+    it("should attach sender pubkey to rumor", async () => {
+      const seal: NostrEvent = {
+        id: "seal-id",
+        pubkey: "sender-real-key",
+        created_at: 1234567890,
+        kind: 13,
+        tags: [],
+        content: "encrypted-rumor",
+        sig: "seal-signature",
+      };
+
+      // Rumor without pubkey (as it should be when extracted)
+      const rumor = {
+        kind: 1,
+        content: "Test message",
+        tags: [],
+        created_at: 1234567890,
+        // No pubkey initially
+      };
+
+      const giftWrap: NostrEvent = {
+        id: "gift-wrap-id",
+        pubkey: "ephemeral-key",
+        created_at: 1234567899,
+        kind: 1059,
+        tags: [["p", "recipient-pubkey"]],
+        content: "encrypted-seal",
+        sig: "gift-wrap-signature",
+      };
+
+      const decryptResponses = new Map([
+        ["ephemeral-key:encrypted-seal", JSON.stringify(seal)],
+        ["sender-real-key:encrypted-rumor", JSON.stringify(rumor)],
+      ]);
+
+      const signer = createMockSigner(decryptResponses);
+
+      const result = await unwrapAndUnseal(
+        giftWrap,
+        "recipient-pubkey",
+        signer,
+      );
+
+      // Pubkey should be attached from seal
+      expect(result.rumor.pubkey).toBe("sender-real-key");
+    });
+
+    it("should reject invalid seal kind", async () => {
+      const invalidSeal = {
+        id: "seal-id",
+        pubkey: "sender-real-key",
+        created_at: 1234567890,
+        kind: 1, // Wrong kind
+        tags: [],
+        content: "encrypted-rumor",
+        sig: "seal-signature",
+      };
+
+      const giftWrap: NostrEvent = {
+        id: "gift-wrap-id",
+        pubkey: "ephemeral-key",
+        created_at: 1234567899,
+        kind: 1059,
+        tags: [["p", "recipient-pubkey"]],
+        content: "encrypted-seal",
+        sig: "gift-wrap-signature",
+      };
+
+      const decryptResponses = new Map([
+        ["ephemeral-key:encrypted-seal", JSON.stringify(invalidSeal)],
+      ]);
+
+      const signer = createMockSigner(decryptResponses);
+
+      await expect(
+        unwrapAndUnseal(giftWrap, "recipient-pubkey", signer),
+      ).rejects.toThrow(GiftWrapError);
+
+      await expect(
+        unwrapAndUnseal(giftWrap, "recipient-pubkey", signer),
+      ).rejects.toThrow("Expected seal kind 13");
+    });
+
+    it("should reject seal with empty content", async () => {
+      const invalidSeal: NostrEvent = {
+        id: "seal-id",
+        pubkey: "sender-real-key",
+        created_at: 1234567890,
+        kind: 13,
+        tags: [],
+        content: "", // Empty
+        sig: "seal-signature",
+      };
+
+      const giftWrap: NostrEvent = {
+        id: "gift-wrap-id",
+        pubkey: "ephemeral-key",
+        created_at: 1234567899,
+        kind: 1059,
+        tags: [["p", "recipient-pubkey"]],
+        content: "encrypted-seal",
+        sig: "gift-wrap-signature",
+      };
+
+      const decryptResponses = new Map([
+        ["ephemeral-key:encrypted-seal", JSON.stringify(invalidSeal)],
+      ]);
+
+      const signer = createMockSigner(decryptResponses);
+
+      await expect(
+        unwrapAndUnseal(giftWrap, "recipient-pubkey", signer),
+      ).rejects.toThrow(GiftWrapError);
+
+      await expect(
+        unwrapAndUnseal(giftWrap, "recipient-pubkey", signer),
+      ).rejects.toThrow("Seal content is empty");
+    });
+
+    it("should reject invalid rumor structure", async () => {
+      const seal: NostrEvent = {
+        id: "seal-id",
+        pubkey: "sender-real-key",
+        created_at: 1234567890,
+        kind: 13,
+        tags: [],
+        content: "encrypted-rumor",
+        sig: "seal-signature",
+      };
+
+      const invalidRumor = {
+        kind: 1,
+        // Missing content
+        tags: [],
+        created_at: 1234567890,
+      };
+
+      const giftWrap: NostrEvent = {
+        id: "gift-wrap-id",
+        pubkey: "ephemeral-key",
+        created_at: 1234567899,
+        kind: 1059,
+        tags: [["p", "recipient-pubkey"]],
+        content: "encrypted-seal",
+        sig: "gift-wrap-signature",
+      };
+
+      const decryptResponses = new Map([
+        ["ephemeral-key:encrypted-seal", JSON.stringify(seal)],
+        ["sender-real-key:encrypted-rumor", JSON.stringify(invalidRumor)],
+      ]);
+
+      const signer = createMockSigner(decryptResponses);
+
+      await expect(
+        unwrapAndUnseal(giftWrap, "recipient-pubkey", signer),
+      ).rejects.toThrow(GiftWrapError);
+
+      await expect(
+        unwrapAndUnseal(giftWrap, "recipient-pubkey", signer),
+      ).rejects.toThrow("Rumor missing content");
+    });
+
+    it("should handle decryption failures", async () => {
+      const giftWrap: NostrEvent = {
+        id: "gift-wrap-id",
+        pubkey: "ephemeral-key",
+        created_at: 1234567899,
+        kind: 1059,
+        tags: [["p", "recipient-pubkey"]],
+        content: "encrypted-seal",
+        sig: "gift-wrap-signature",
+      };
+
+      // No responses configured - decryption will fail
+      const signer = createMockSigner(new Map());
+
+      await expect(
+        unwrapAndUnseal(giftWrap, "recipient-pubkey", signer),
+      ).rejects.toThrow(GiftWrapError);
+
+      await expect(
+        unwrapAndUnseal(giftWrap, "recipient-pubkey", signer),
+      ).rejects.toThrow("Failed to decrypt");
+    });
+  });
+});
diff --git a/src/services/gift-wrap.ts b/src/services/gift-wrap.ts
new file mode 100644
index 0000000..ab5fbc5
--- /dev/null
+++ b/src/services/gift-wrap.ts
@@ -0,0 +1,406 @@
+/**
+ * NIP-59 Gift Wrap Service
+ *
+ * Handles unwrapping gift wraps (kind 1059) and unsealing seals (kind 13)
+ * to extract encrypted rumors.
+ *
+ * Architecture:
+ * 1. Gift Wrap (kind 1059) - outer layer with random ephemeral key
+ * 2. Seal (kind 13) - middle layer with sender's real key
+ * 3. Rumor - inner unsigned event with actual content
+ *
+ * See: https://github.com/nostr-protocol/nips/blob/master/59.md
+ */
+
+import type { NostrEvent } from "@/types/nostr";
+import type { Signer } from "applesauce-signers";
+import db, {
+  GiftWrapEnvelope,
+  DecryptedRumor,
+  ConversationMetadata,
+} from "./db";
+
+/**
+ * Error thrown when gift wrap unwrapping fails
+ */
+export class GiftWrapError extends Error {
+  constructor(
+    message: string,
+    public code:
+      | "INVALID_KIND"
+      | "MISSING_CONTENT"
+      | "DECRYPTION_FAILED"
+      | "INVALID_SEAL"
+      | "INVALID_RUMOR"
+      | "NO_SIGNER",
+  ) {
+    super(message);
+    this.name = "GiftWrapError";
+  }
+}
+
+/**
+ * Validates that an event is a gift wrap (kind 1059)
+ */
+function validateGiftWrap(event: NostrEvent): void {
+  if (event.kind !== 1059) {
+    throw new GiftWrapError(
+      `Expected kind 1059, got ${event.kind}`,
+      "INVALID_KIND",
+    );
+  }
+
+  if (!event.content || event.content.trim() === "") {
+    throw new GiftWrapError("Gift wrap content is empty", "MISSING_CONTENT");
+  }
+}
+
+/**
+ * Validates that an event is a seal (kind 13)
+ */
+function validateSeal(event: NostrEvent): void {
+  if (event.kind !== 13) {
+    throw new GiftWrapError(
+      `Expected seal kind 13, got ${event.kind}`,
+      "INVALID_SEAL",
+    );
+  }
+
+  if (!event.content || event.content.trim() === "") {
+    throw new GiftWrapError("Seal content is empty", "INVALID_SEAL");
+  }
+
+  if (!event.pubkey) {
+    throw new GiftWrapError("Seal missing pubkey", "INVALID_SEAL");
+  }
+}
+
+/**
+ * Validates that an event is a valid rumor (unsigned event)
+ */
+function validateRumor(event: any): NostrEvent {
+  if (!event || typeof event !== "object") {
+    throw new GiftWrapError("Rumor is not an object", "INVALID_RUMOR");
+  }
+
+  if (typeof event.kind !== "number") {
+    throw new GiftWrapError("Rumor missing kind", "INVALID_RUMOR");
+  }
+
+  if (typeof event.content !== "string") {
+    throw new GiftWrapError("Rumor missing content", "INVALID_RUMOR");
+  }
+
+  if (!Array.isArray(event.tags)) {
+    throw new GiftWrapError("Rumor missing tags array", "INVALID_RUMOR");
+  }
+
+  if (typeof event.created_at !== "number") {
+    throw new GiftWrapError("Rumor missing created_at", "INVALID_RUMOR");
+  }
+
+  // Rumor should NOT have id or sig (it's unsigned)
+  // But it SHOULD have pubkey from the seal
+  if (!event.pubkey) {
+    throw new GiftWrapError("Rumor missing pubkey", "INVALID_RUMOR");
+  }
+
+  return event as NostrEvent;
+}
+
+/**
+ * Unwraps a gift wrap to extract the seal
+ *
+ * @param giftWrap - Kind 1059 gift wrap event
+ * @param signer - Signer for recipient (to decrypt)
+ * @returns The seal event (kind 13)
+ */
+async function unwrapGiftWrap(
+  giftWrap: NostrEvent,
+  signer: Signer,
+): Promise<NostrEvent> {
+  validateGiftWrap(giftWrap);
+
+  if (!signer.nip44Decrypt) {
+    throw new GiftWrapError(
+      "Signer does not support NIP-44 decryption",
+      "NO_SIGNER",
+    );
+  }
+
+  try {
+    // Decrypt using the gift wrap author's pubkey (ephemeral key)
+    const decryptedContent = await signer.nip44Decrypt(
+      giftWrap.pubkey,
+      giftWrap.content,
+    );
+
+    // Parse the seal event
+    const seal = JSON.parse(decryptedContent);
+    validateSeal(seal);
+
+    return seal;
+  } catch (error) {
+    if (error instanceof GiftWrapError) {
+      throw error;
+    }
+
+    throw new GiftWrapError(
+      `Failed to decrypt gift wrap: ${error instanceof Error ? error.message : String(error)}`,
+      "DECRYPTION_FAILED",
+    );
+  }
+}
+
+/**
+ * Unseals a seal to extract the rumor
+ *
+ * @param seal - Kind 13 seal event
+ * @param signer - Signer for recipient (to decrypt)
+ * @returns The rumor (unsigned event) with sender's pubkey attached
+ */
+async function unsealSeal(
+  seal: NostrEvent,
+  signer: Signer,
+): Promise<NostrEvent> {
+  validateSeal(seal);
+
+  if (!signer.nip44Decrypt) {
+    throw new GiftWrapError(
+      "Signer does not support NIP-44 decryption",
+      "NO_SIGNER",
+    );
+  }
+
+  try {
+    // Decrypt using the seal author's pubkey (sender's real key)
+    const decryptedContent = await signer.nip44Decrypt(
+      seal.pubkey,
+      seal.content,
+    );
+
+    // Parse the rumor
+    const rumor = JSON.parse(decryptedContent);
+
+    // Attach sender's pubkey to rumor (from seal)
+    rumor.pubkey = seal.pubkey;
+
+    const validatedRumor = validateRumor(rumor);
+    return validatedRumor;
+  } catch (error) {
+    if (error instanceof GiftWrapError) {
+      throw error;
+    }
+
+    throw new GiftWrapError(
+      `Failed to unseal seal: ${error instanceof Error ? error.message : String(error)}`,
+      "DECRYPTION_FAILED",
+    );
+  }
+}
+
+/**
+ * Unwraps a gift wrap and unseals to extract the rumor (full process)
+ *
+ * @param giftWrap - Kind 1059 gift wrap event
+ * @param recipientPubkey - The recipient's public key
+ * @param signer - Signer for recipient (to decrypt)
+ * @returns Object with seal and rumor
+ */
+export async function unwrapAndUnseal(
+  giftWrap: NostrEvent,
+  recipientPubkey: string,
+  signer: Signer,
+): Promise<{ seal: NostrEvent; rumor: NostrEvent }> {
+  // Step 1: Unwrap gift wrap to get seal
+  const seal = await unwrapGiftWrap(giftWrap, signer);
+
+  // Step 2: Unseal to get rumor
+  const rumor = await unsealSeal(seal, signer);
+
+  return { seal, rumor };
+}
+
+/**
+ * Processes a gift wrap: unwraps, unseals, and stores in database
+ *
+ * @param giftWrap - Kind 1059 gift wrap event
+ * @param recipientPubkey - The recipient's public key
+ * @param signer - Signer for recipient (to decrypt)
+ * @returns The decrypted rumor record from database
+ */
+export async function processGiftWrap(
+  giftWrap: NostrEvent,
+  recipientPubkey: string,
+  signer: Signer,
+): Promise<DecryptedRumor | null> {
+  // Check if already processed
+  const existing = await db.giftWraps.get(giftWrap.id);
+  if (existing) {
+    // Already processed
+    if (existing.status === "decrypted") {
+      return (await db.decryptedRumors.get(giftWrap.id)) || null;
+    }
+    if (existing.status === "failed") {
+      // Already tried and failed, don't retry
+      return null;
+    }
+  }
+
+  // Store gift wrap envelope
+  const envelope: GiftWrapEnvelope = {
+    id: giftWrap.id,
+    recipientPubkey,
+    event: giftWrap,
+    status: "pending",
+    receivedAt: existing?.receivedAt || Date.now(),
+    processedAt: Date.now(),
+  };
+
+  try {
+    // Unwrap and unseal
+    const { seal, rumor } = await unwrapAndUnseal(
+      giftWrap,
+      recipientPubkey,
+      signer,
+    );
+
+    // Store decrypted rumor
+    const decryptedRumor: DecryptedRumor = {
+      giftWrapId: giftWrap.id,
+      recipientPubkey,
+      senderPubkey: seal.pubkey,
+      seal,
+      rumor,
+      rumorCreatedAt: rumor.created_at,
+      rumorKind: rumor.kind,
+      decryptedAt: Date.now(),
+    };
+
+    // Update envelope and store rumor in transaction
+    await db.transaction("rw", [db.giftWraps, db.decryptedRumors], async () => {
+      envelope.status = "decrypted";
+      await db.giftWraps.put(envelope);
+      await db.decryptedRumors.put(decryptedRumor);
+    });
+
+    // Update conversation metadata
+    await updateConversationMetadata(decryptedRumor);
+
+    return decryptedRumor;
+  } catch (error) {
+    // Store failure
+    envelope.status = "failed";
+    envelope.failureReason =
+      error instanceof Error ? error.message : String(error);
+    await db.giftWraps.put(envelope);
+
+    console.error(`[GiftWrap] Failed to process ${giftWrap.id}:`, error);
+    return null;
+  }
+}
+
+/**
+ * Updates conversation metadata after processing a new message
+ */
+async function updateConversationMetadata(
+  rumor: DecryptedRumor,
+): Promise<void> {
+  const conversationId = `${rumor.senderPubkey}:${rumor.recipientPubkey}`;
+
+  const existing = await db.conversations.get(conversationId);
+
+  // Get content preview (first 100 chars)
+  const preview = rumor.rumor.content.slice(0, 100);
+
+  if (!existing) {
+    // Create new conversation
+    const conversation: ConversationMetadata = {
+      id: conversationId,
+      senderPubkey: rumor.senderPubkey,
+      recipientPubkey: rumor.recipientPubkey,
+      lastMessageGiftWrapId: rumor.giftWrapId,
+      lastMessageCreatedAt: rumor.rumorCreatedAt,
+      lastMessagePreview: preview,
+      lastMessageKind: rumor.rumorKind,
+      messageCount: 1,
+      unreadCount: 1,
+      updatedAt: Date.now(),
+    };
+    await db.conversations.put(conversation);
+  } else {
+    // Update existing conversation if this is newer
+    if (rumor.rumorCreatedAt > existing.lastMessageCreatedAt) {
+      const conversation: ConversationMetadata = {
+        ...existing,
+        lastMessageGiftWrapId: rumor.giftWrapId,
+        lastMessageCreatedAt: rumor.rumorCreatedAt,
+        lastMessagePreview: preview,
+        lastMessageKind: rumor.rumorKind,
+        messageCount: existing.messageCount + 1,
+        unreadCount: existing.unreadCount + 1,
+        updatedAt: Date.now(),
+      };
+      await db.conversations.put(conversation);
+    } else {
+      // Just increment message count for older messages
+      existing.messageCount++;
+      await db.conversations.put(existing);
+    }
+  }
+}
+
+/**
+ * Gets all conversations for a recipient, sorted by most recent
+ */
+export async function getConversations(
+  recipientPubkey: string,
+): Promise<ConversationMetadata[]> {
+  return db.conversations
+    .where("recipientPubkey")
+    .equals(recipientPubkey)
+    .reverse()
+    .sortBy("lastMessageCreatedAt");
+}
+
+/**
+ * Gets all decrypted messages in a conversation
+ */
+export async function getConversationMessages(
+  recipientPubkey: string,
+  senderPubkey: string,
+): Promise<DecryptedRumor[]> {
+  return db.decryptedRumors
+    .where("[recipientPubkey+senderPubkey]")
+    .equals([recipientPubkey, senderPubkey])
+    .sortBy("rumorCreatedAt");
+}
+
+/**
+ * Marks a conversation as read
+ */
+export async function markConversationAsRead(
+  recipientPubkey: string,
+  senderPubkey: string,
+): Promise<void> {
+  const conversationId = `${senderPubkey}:${recipientPubkey}`;
+  const conversation = await db.conversations.get(conversationId);
+
+  if (conversation) {
+    conversation.unreadCount = 0;
+    conversation.updatedAt = Date.now();
+    await db.conversations.put(conversation);
+  }
+}
+
+/**
+ * Gets all pending gift wraps that need processing
+ */
+export async function getPendingGiftWraps(
+  recipientPubkey: string,
+): Promise<GiftWrapEnvelope[]> {
+  return db.giftWraps
+    .where("[recipientPubkey+status]")
+    .equals([recipientPubkey, "pending"])
+    .toArray();
+}
diff --git a/src/types/app.ts b/src/types/app.ts
index 09a1148..d61f3b3 100644
--- a/src/types/app.ts
+++ b/src/types/app.ts
@@ -110,4 +110,9 @@ export interface GrimoireState {
     localId?: string; // Local DB ID if saved to library
     isPublished?: boolean; // Whether it has been published to Nostr
   };
+  /**
+   * Feature flag: Enable NIP-59 private messages (gift wraps)
+   * When enabled, gift wraps will be fetched from inbox relays and decrypted
+   */
+  privateMessagesEnabled?: boolean;
 }