diff --git a/ocean/nmmo3/nmmo3.h b/ocean/nmmo3/nmmo3.h
index c48c93e567..2b16de03dd 100644
--- a/ocean/nmmo3/nmmo3.h
+++ b/ocean/nmmo3/nmmo3.h
@@ -971,6 +971,8 @@ void compute_all_obs(MMO* env) {
                     env->observations[obs_adr+7] = seen->hp / 20; // Bucketed for discrete
                     env->observations[obs_adr+8] = seen->anim;
                     env->observations[obs_adr+9] = seen->dir;
+                } else {
+                    memset(&env->observations[obs_adr+4], 0, 6*sizeof(unsigned char));
                 }
                 obs_adr += 10;
             }
diff --git a/tests/test_nmmo3_observation.c b/tests/test_nmmo3_observation.c
new file mode 100644
index 0000000000..8e7daa16bb
--- /dev/null
+++ b/tests/test_nmmo3_observation.c
@@ -0,0 +1,134 @@
+/*
+ * Native regression test; pytest and the install-only CI job do not discover it.
+ * Run after ./build.sh nmmo3 --fast has downloaded the platform Raylib archive.
+ *
+ * Linux:
+ *   mkdir -p build
+ *   ${CC:-clang} -std=gnu11 -O0 -g -DPLATFORM_DESKTOP \
+ *     -I raylib-5.5_linux_amd64/include -I ocean/nmmo3 \
+ *     tests/test_nmmo3_observation.c \
+ *     raylib-5.5_linux_amd64/lib/libraylib.a -lGL -lm -lpthread \
+ *     -o build/test_nmmo3_observation
+ *   ./build/test_nmmo3_observation
+ *
+ * macOS:
+ *   mkdir -p build
+ *   ${CC:-clang} -std=gnu11 -O0 -g -DPLATFORM_DESKTOP \
+ *     -I raylib-5.5_macos/include -I ocean/nmmo3 \
+ *     tests/test_nmmo3_observation.c raylib-5.5_macos/lib/libraylib.a \
+ *     -framework Cocoa -framework IOKit -framework CoreVideo \
+ *     -framework OpenGL -lm -lpthread -o build/test_nmmo3_observation
+ *   ./build/test_nmmo3_observation
+ *
+ * Adding one of these commands to CI remains an upstream integration decision.
+ */
+
+#include <stdio.h>
+#include <stdlib.h>
+
+#ifdef _WIN32
+static int rand_r(unsigned int* seed) {
+    *seed = *seed * 1103515245U + 12345U;
+    return (int)((*seed / 65536U) % 32768U);
+}
+#endif
+
+#include "nmmo3.h"
+
+/* Exercise the production allocation, data layout, and encoder directly. */
+_Static_assert(11 * 15 * 10 + 47 + 10 == 1707, "unexpected observation layout");
+
+static int entity_bytes_are_zero(const unsigned char* observation, int offset) {
+    for (int index = 4; index <= 9; index++) {
+        if (observation[offset + index] != 0) {
+            return 0;
+        }
+    }
+    return 1;
+}
+
+int main(void) {
+    MMO env = {
+        .width = 15,
+        .height = 11,
+        .num_agents = 1,
+        .num_enemies = 1,
+        .x_window = 7,
+        .y_window = 5,
+        .enemy_respawn_ticks = 1,
+        .item_respawn_ticks = 1,
+    };
+
+    allocate_mmo(&env);
+    const int map_size = env.width * env.height;
+    for (int index = 0; index < map_size; index++) {
+        env.pids[index] = -1;
+    }
+
+    Entity* observer = &env.players[0];
+    observer->type = ENTITY_PLAYER;
+    observer->r = env.y_window;
+    observer->c = env.x_window;
+    observer->comb_lvl = 2;
+
+    Entity* enemy = &env.enemies[0];
+    enemy->type = ENTITY_ENEMY;
+    enemy->element = ELEM_EARTH;
+    enemy->comb_lvl = 10;
+    enemy->hp = 80;
+    enemy->anim = ANIM_MOVE;
+    enemy->dir = ATN_RIGHT;
+
+    const int enemy_pid = env.num_agents;
+    const int old_row = observer->r;
+    const int old_col = observer->c + 1;
+    const int old_map_offset = map_offset(&env, old_row, old_col);
+    const int old_observation_offset = (
+        (old_row - (observer->r - env.y_window)) * 15
+        + old_col - (observer->c - env.x_window)
+    ) * 10;
+
+    enemy->r = old_row;
+    enemy->c = old_col;
+    env.pids[old_map_offset] = (short)enemy_pid;
+    compute_all_obs(&env);
+    if (env.observations[old_observation_offset + 4] != ENTITY_ENEMY) {
+        fputs("setup failed: occupied cell was not encoded\n", stderr);
+        return EXIT_FAILURE;
+    }
+
+    const int new_row = old_row + 1;
+    const int new_col = old_col;
+    const int new_map_offset = map_offset(&env, new_row, new_col);
+    const int new_observation_offset = (
+        (new_row - (observer->r - env.y_window)) * 15
+        + new_col - (observer->c - env.x_window)
+    ) * 10;
+
+    env.pids[old_map_offset] = -1;
+    env.pids[new_map_offset] = (short)enemy_pid;
+    enemy->r = new_row;
+    enemy->c = new_col;
+    compute_all_obs(&env);
+
+    if (env.observations[new_observation_offset + 4] != ENTITY_ENEMY) {
+        fputs("moved entity was not encoded at its new cell\n", stderr);
+        return EXIT_FAILURE;
+    }
+    if (!entity_bytes_are_zero(env.observations, old_observation_offset)) {
+        fprintf(
+            stderr,
+            "empty cell retained entity bytes: [%u, %u, %u, %u, %u, %u]\n",
+            env.observations[old_observation_offset + 4],
+            env.observations[old_observation_offset + 5],
+            env.observations[old_observation_offset + 6],
+            env.observations[old_observation_offset + 7],
+            env.observations[old_observation_offset + 8],
+            env.observations[old_observation_offset + 9]
+        );
+        return EXIT_FAILURE;
+    }
+
+    free_allocated_mmo(&env);
+    return EXIT_SUCCESS;
+}