diff --git a/autogen/agentchat/contrib/capabilities/context_handling.py b/autogen/agentchat/contrib/capabilities/context_handling.py
index 286b09eb3e2..5c2d5d3ab4b 100644
--- a/autogen/agentchat/contrib/capabilities/context_handling.py
+++ b/autogen/agentchat/contrib/capabilities/context_handling.py
@@ -53,39 +53,48 @@ def _transform_messages(self, messages: List[Dict]) -> List[Dict]:
             messages: List of messages to process.
 
         Returns:
-            List of messages with the first system message and the last max_messages messages.
+            List of messages with the first system message and the last max_messages messages,
+            ensuring each message does not exceed max_tokens_per_message.
         """
+        temp_messages = messages.copy()
         processed_messages = []
-        messages = messages.copy()
-        rest_messages = messages
+        system_message = None
+        processed_messages_tokens = 0
 
-        # check if the first message is a system message and append it to the processed messages
-        if len(messages) > 0:
-            if messages[0]["role"] == "system":
-                msg = messages[0]
-                processed_messages.append(msg)
-                rest_messages = messages[1:]
+        if messages[0]["role"] == "system":
+            system_message = messages[0].copy()
+            temp_messages.pop(0)
 
-        processed_messages_tokens = 0
-        for msg in messages:
-            msg["content"] = truncate_str_to_tokens(msg["content"], self.max_tokens_per_message)
+        total_tokens = sum(
+            token_count_utils.count_token(msg["content"]) for msg in temp_messages
+        )  # Calculate tokens for all messages
+
+        # Truncate each message's content to a maximum token limit of each message
 
-        # iterate through rest of the messages and append them to the processed messages
-        for msg in rest_messages[-self.max_messages :]:
+        for msg in temp_messages[-self.max_messages :]:
+            msg["content"] = truncate_str_to_tokens(msg["content"], self.max_tokens_per_message)
             msg_tokens = token_count_utils.count_token(msg["content"])
             if processed_messages_tokens + msg_tokens > self.max_tokens:
                 break
             processed_messages.append(msg)
             processed_messages_tokens += msg_tokens
-
-        total_tokens = 0
-        for msg in messages:
-            total_tokens += token_count_utils.count_token(msg["content"])
-
+        if system_message:
+            processed_messages.insert(0, system_message)
+        # Optionally, log the number of truncated messages and tokens if needed
         num_truncated = len(messages) - len(processed_messages)
+
         if num_truncated > 0 or total_tokens > processed_messages_tokens:
-            print(colored(f"Truncated {len(messages) - len(processed_messages)} messages.", "yellow"))
-            print(colored(f"Truncated {total_tokens - processed_messages_tokens} tokens.", "yellow"))
+            print(
+                colored(
+                    f"Truncated {num_truncated} messages from {len(messages)} to {len(processed_messages)}.", "yellow"
+                )
+            )
+            print(
+                colored(
+                    f"Truncated {total_tokens - processed_messages_tokens} tokens. Tokens truncated to {processed_messages_tokens}",
+                    "yellow",
+                )
+            )
         return processed_messages