diff --git a/src/mudlib/entity.py b/src/mudlib/entity.py
index d00e110..7e99bec 100644
--- a/src/mudlib/entity.py
+++ b/src/mudlib/entity.py
@@ -80,3 +80,8 @@ class Mob(Entity):
     home_x_max: int | None = None
     home_y_min: int | None = None
     home_y_max: int | None = None
+    # NPC behavior state machine
+    behavior_state: str = "idle"
+    behavior_data: dict = field(default_factory=dict)
+    npc_name: str | None = None  # links to dialogue tree
+    schedule: list | None = None  # for future schedule system
diff --git a/src/mudlib/npc_behavior.py b/src/mudlib/npc_behavior.py
new file mode 100644
index 0000000..0918d82
--- /dev/null
+++ b/src/mudlib/npc_behavior.py
@@ -0,0 +1,155 @@
+"""NPC behavior state machine."""
+
+from mudlib.entity import Mob
+from mudlib.zone import Zone
+
+# Valid behavior states
+VALID_STATES = {"idle", "patrol", "converse", "flee", "working"}
+
+
+def transition_state(mob: Mob, new_state: str, data: dict | None = None) -> bool:
+    """Transition mob to a new behavior state.
+
+    Args:
+        mob: The mob to transition
+        new_state: The target state (must be in VALID_STATES)
+        data: Optional state-specific data
+
+    Returns:
+        True if transition succeeded, False if state is invalid
+    """
+    if new_state not in VALID_STATES:
+        return False
+
+    mob.behavior_state = new_state
+    mob.behavior_data = data or {}
+    return True
+
+
+async def process_behavior(mob: Mob, world: Zone) -> None:
+    """Process mob behavior for current tick.
+
+    Called each game loop tick. Dispatches based on behavior_state:
+    - idle: do nothing (existing wander logic handles movement)
+    - patrol: move through waypoints
+    - converse: do nothing (conversation is player-driven)
+    - flee: do nothing (direction computed by get_flee_direction)
+    - working: do nothing (stationary NPC)
+
+    Args:
+        mob: The mob to process
+        world: The zone the mob is in
+    """
+    if mob.behavior_state == "idle":
+        # No-op, existing wander logic handles idle movement
+        pass
+    elif mob.behavior_state == "patrol":
+        await _process_patrol(mob, world)
+    elif mob.behavior_state == "converse":
+        # No-op, mob stays put during conversation
+        pass
+    elif mob.behavior_state == "flee":
+        # No-op, mob_ai uses get_flee_direction for movement
+        pass
+    elif mob.behavior_state == "working":
+        # No-op, mob stays at their post
+        pass
+
+
+async def _process_patrol(mob: Mob, world: Zone) -> None:
+    """Process patrol behavior: advance waypoint if at current target."""
+    waypoints = mob.behavior_data.get("waypoints", [])
+    if not waypoints:
+        return
+
+    waypoint_index = mob.behavior_data.get("waypoint_index", 0)
+    current_waypoint = waypoints[waypoint_index]
+
+    # Check if at waypoint (use world wrapping for distance)
+    if mob.x == current_waypoint["x"] and mob.y == current_waypoint["y"]:
+        # Advance to next waypoint (loop back to start if at end)
+        waypoint_index = (waypoint_index + 1) % len(waypoints)
+        mob.behavior_data["waypoint_index"] = waypoint_index
+
+
+def get_flee_direction(mob: Mob, world: Zone) -> str | None:
+    """Get the cardinal direction to flee away from threat.
+
+    Args:
+        mob: The mob fleeing
+        world: The zone the mob is in
+
+    Returns:
+        Cardinal direction ("north", "south", "east", "west") or None if no threat
+    """
+    flee_from = mob.behavior_data.get("flee_from")
+    if not flee_from:
+        return None
+
+    threat_x = flee_from["x"]
+    threat_y = flee_from["y"]
+
+    # Calculate direction away from threat
+    dx = mob.x - threat_x
+    dy = mob.y - threat_y
+
+    # Handle toroidal wrapping for shortest distance
+    if world.toroidal:
+        # Adjust dx/dy if wrapping gives shorter distance
+        if abs(dx) > world.width // 2:
+            dx = -(world.width - abs(dx)) * (1 if dx > 0 else -1)
+        if abs(dy) > world.height // 2:
+            dy = -(world.height - abs(dy)) * (1 if dy > 0 else -1)
+
+    # Prefer axis with larger distance (prefer moving away faster)
+    if abs(dx) >= abs(dy):
+        return "east" if dx > 0 else "west" if dx < 0 else None
+    else:
+        return "south" if dy > 0 else "north" if dy < 0 else None
+
+
+def get_patrol_direction(mob: Mob, world: Zone) -> str | None:
+    """Get the cardinal direction to move toward current patrol waypoint.
+
+    Args:
+        mob: The mob on patrol
+        world: The zone the mob is in
+
+    Returns:
+        Cardinal direction ("north", "south", "east", "west") or None if at waypoint
+    """
+    waypoints = mob.behavior_data.get("waypoints", [])
+    if not waypoints:
+        return None
+
+    waypoint_index = mob.behavior_data.get("waypoint_index", 0)
+    current_waypoint = waypoints[waypoint_index]
+
+    target_x = current_waypoint["x"]
+    target_y = current_waypoint["y"]
+
+    # Check if already at waypoint
+    if mob.x == target_x and mob.y == target_y:
+        return None
+
+    # Calculate direction to waypoint
+    dx = target_x - mob.x
+    dy = target_y - mob.y
+
+    # Handle toroidal wrapping (find shortest path)
+    if world.toroidal:
+        # Check if wrapping gives a shorter distance on x axis
+        if abs(dx) > world.width // 2:
+            # Wrapping is shorter, reverse direction
+            dx = -(world.width - abs(dx)) * (1 if dx > 0 else -1)
+
+        # Check if wrapping gives a shorter distance on y axis
+        if abs(dy) > world.height // 2:
+            # Wrapping is shorter, reverse direction
+            dy = -(world.height - abs(dy)) * (1 if dy > 0 else -1)
+
+    # Prefer axis with larger distance (ties prefer x)
+    if abs(dx) >= abs(dy):
+        return "east" if dx > 0 else "west"
+    else:
+        return "south" if dy > 0 else "north"
diff --git a/tests/test_npc_behavior.py b/tests/test_npc_behavior.py
new file mode 100644
index 0000000..f8a1494
--- /dev/null
+++ b/tests/test_npc_behavior.py
@@ -0,0 +1,229 @@
+"""Tests for NPC behavior state machine."""
+
+import pytest
+
+from mudlib.entity import Mob
+from mudlib.npc_behavior import (
+    VALID_STATES,
+    get_flee_direction,
+    get_patrol_direction,
+    process_behavior,
+    transition_state,
+)
+from mudlib.zone import Zone
+
+
+@pytest.fixture
+def test_zone():
+    """Create a simple test zone for behavior tests."""
+    terrain = [["." for _ in range(256)] for _ in range(256)]
+    zone = Zone(
+        name="testzone",
+        width=256,
+        height=256,
+        toroidal=True,
+        terrain=terrain,
+        impassable=set(),
+    )
+    return zone
+
+
+@pytest.fixture
+def mob(test_zone):
+    """Create a basic mob for testing."""
+    m = Mob(name="test mob", x=10, y=10)
+    m.location = test_zone
+    return m
+
+
+class TestTransitionState:
+    def test_valid_transition_sets_state(self, mob):
+        """transition_state with valid state sets behavior_state."""
+        result = transition_state(mob, "patrol")
+        assert result is True
+        assert mob.behavior_state == "patrol"
+
+    def test_valid_transition_sets_data(self, mob):
+        """transition_state sets behavior_data when provided."""
+        data = {"waypoints": [{"x": 5, "y": 5}]}
+        result = transition_state(mob, "patrol", data)
+        assert result is True
+        assert mob.behavior_data == data
+
+    def test_valid_transition_clears_data(self, mob):
+        """transition_state clears data if None provided."""
+        mob.behavior_data = {"old": "data"}
+        result = transition_state(mob, "idle", None)
+        assert result is True
+        assert mob.behavior_data == {}
+
+    def test_invalid_state_returns_false(self, mob):
+        """transition_state with invalid state returns False."""
+        result = transition_state(mob, "invalid_state")
+        assert result is False
+
+    def test_invalid_state_no_change(self, mob):
+        """transition_state with invalid state doesn't change mob."""
+        original_state = mob.behavior_state
+        original_data = mob.behavior_data
+        transition_state(mob, "invalid_state")
+        assert mob.behavior_state == original_state
+        assert mob.behavior_data == original_data
+
+    def test_all_valid_states_accepted(self, mob):
+        """All states in VALID_STATES can be transitioned to."""
+        for state in VALID_STATES:
+            result = transition_state(mob, state)
+            assert result is True
+            assert mob.behavior_state == state
+
+
+class TestDefaultState:
+    def test_new_mob_starts_idle(self):
+        """New Mob instance defaults to idle state."""
+        mob = Mob(name="new mob", x=0, y=0)
+        assert mob.behavior_state == "idle"
+        assert mob.behavior_data == {}
+
+
+class TestPatrolMovement:
+    @pytest.mark.asyncio
+    async def test_patrol_moves_toward_waypoint(self, mob, test_zone):
+        """Mob on patrol moves toward current waypoint."""
+        waypoints = [{"x": 15, "y": 10}]
+        transition_state(mob, "patrol", {"waypoints": waypoints, "waypoint_index": 0})
+
+        # process_behavior should determine direction but not move
+        # (movement is handled by mob_ai integration later)
+        direction = get_patrol_direction(mob, test_zone)
+        assert direction == "east"  # mob at (10, 10) moves east to (15, 10)
+
+    @pytest.mark.asyncio
+    async def test_patrol_advances_waypoint(self, mob, test_zone):
+        """Mob reaching waypoint advances to next."""
+        waypoints = [{"x": 10, "y": 10}, {"x": 15, "y": 15}]
+        transition_state(mob, "patrol", {"waypoints": waypoints, "waypoint_index": 0})
+
+        # At first waypoint already
+        direction = get_patrol_direction(mob, test_zone)
+        assert direction is None  # at waypoint
+        # Process behavior to advance
+        await process_behavior(mob, test_zone)
+        assert mob.behavior_data["waypoint_index"] == 1
+
+    @pytest.mark.asyncio
+    async def test_patrol_loops_waypoints(self, mob, test_zone):
+        """Patrol loops back to first waypoint after last."""
+        waypoints = [{"x": 5, "y": 5}, {"x": 10, "y": 10}]
+        transition_state(mob, "patrol", {"waypoints": waypoints, "waypoint_index": 1})
+
+        # At second waypoint (last one)
+        direction = get_patrol_direction(mob, test_zone)
+        assert direction is None
+        await process_behavior(mob, test_zone)
+        assert mob.behavior_data["waypoint_index"] == 0  # looped back
+
+    def test_patrol_direction_north(self, mob, test_zone):
+        """get_patrol_direction returns 'north' when waypoint is north."""
+        waypoints = [{"x": 10, "y": 5}]
+        transition_state(mob, "patrol", {"waypoints": waypoints, "waypoint_index": 0})
+        direction = get_patrol_direction(mob, test_zone)
+        assert direction == "north"
+
+    def test_patrol_direction_south(self, mob, test_zone):
+        """get_patrol_direction returns 'south' when waypoint is south."""
+        waypoints = [{"x": 10, "y": 15}]
+        transition_state(mob, "patrol", {"waypoints": waypoints, "waypoint_index": 0})
+        direction = get_patrol_direction(mob, test_zone)
+        assert direction == "south"
+
+    def test_patrol_direction_west(self, mob, test_zone):
+        """get_patrol_direction returns 'west' when waypoint is west."""
+        waypoints = [{"x": 5, "y": 10}]
+        transition_state(mob, "patrol", {"waypoints": waypoints, "waypoint_index": 0})
+        direction = get_patrol_direction(mob, test_zone)
+        assert direction == "west"
+
+    def test_patrol_direction_with_wrapping(self, mob, test_zone):
+        """get_patrol_direction handles toroidal wrapping."""
+        # Mob at (10, 10), waypoint at (250, 10)
+        # Direct path: 240 tiles east
+        # Wrapped path: 20 tiles west (256 - 240 + 10)
+        waypoints = [{"x": 250, "y": 10}]
+        transition_state(mob, "patrol", {"waypoints": waypoints, "waypoint_index": 0})
+        direction = get_patrol_direction(mob, test_zone)
+        assert direction == "west"  # wrapping is shorter
+
+
+class TestConverseState:
+    @pytest.mark.asyncio
+    async def test_converse_state_no_movement(self, mob, test_zone):
+        """Mob in converse state doesn't move."""
+        original_x, original_y = mob.x, mob.y
+        transition_state(mob, "converse")
+        await process_behavior(mob, test_zone)
+        assert mob.x == original_x
+        assert mob.y == original_y
+
+
+class TestFleeState:
+    def test_flee_direction_west(self, mob, test_zone):
+        """get_flee_direction returns 'west' when fleeing from threat to the east."""
+        # Threat at (15, 10), mob at (10, 10)
+        # Should flee west (away from threat)
+        transition_state(mob, "flee", {"flee_from": {"x": 15, "y": 10}})
+        direction = get_flee_direction(mob, test_zone)
+        assert direction == "west"
+
+    def test_flee_direction_east(self, mob, test_zone):
+        """get_flee_direction returns 'east' when fleeing from threat to the west."""
+        # Threat at (5, 10), mob at (10, 10)
+        # Should flee east (away from threat)
+        transition_state(mob, "flee", {"flee_from": {"x": 5, "y": 10}})
+        direction = get_flee_direction(mob, test_zone)
+        assert direction == "east"
+
+    def test_flee_direction_north(self, mob, test_zone):
+        """get_flee_direction returns 'north' when fleeing from threat to the south."""
+        # Threat at (10, 15), mob at (10, 10)
+        # Should flee north (away from threat)
+        transition_state(mob, "flee", {"flee_from": {"x": 10, "y": 15}})
+        direction = get_flee_direction(mob, test_zone)
+        assert direction == "north"
+
+    def test_flee_direction_south(self, mob, test_zone):
+        """get_flee_direction returns 'south' when fleeing from threat to the north."""
+        # Threat at (10, 5), mob at (10, 10)
+        # Should flee south (away from threat)
+        transition_state(mob, "flee", {"flee_from": {"x": 10, "y": 5}})
+        direction = get_flee_direction(mob, test_zone)
+        assert direction == "south"
+
+    def test_flee_no_threat(self, mob, test_zone):
+        """get_flee_direction returns None when no threat specified."""
+        transition_state(mob, "flee", {})
+        direction = get_flee_direction(mob, test_zone)
+        assert direction is None
+
+
+class TestWorkingState:
+    @pytest.mark.asyncio
+    async def test_working_state_no_movement(self, mob, test_zone):
+        """Mob in working state stays put."""
+        original_x, original_y = mob.x, mob.y
+        transition_state(mob, "working")
+        await process_behavior(mob, test_zone)
+        assert mob.x == original_x
+        assert mob.y == original_y
+
+
+class TestIdleState:
+    @pytest.mark.asyncio
+    async def test_idle_state_no_action(self, mob, test_zone):
+        """Idle state does nothing (movement handled by mob_ai)."""
+        original_x, original_y = mob.x, mob.y
+        transition_state(mob, "idle")
+        await process_behavior(mob, test_zone)
+        # process_behavior is a no-op for idle
+        assert mob.x == original_x
+        assert mob.y == original_y