diff --git a/crates/config/src/worker_core.rs b/crates/config/src/worker_core.rs
index 47c823ab9..336059989 100644
--- a/crates/config/src/worker_core.rs
+++ b/crates/config/src/worker_core.rs
@@ -295,6 +295,10 @@ impl From<&CompactorConfig> for amp_worker_core::CompactorConfig {
 pub struct CompactionAlgorithmConfig {
     /// Base cooldown duration in seconds between compaction runs (default: 1024).
     pub cooldown_duration: ConfigDuration<1024>,
+    /// Allow compaction of recently created segments (default: false).
+    /// When false, segments must wait for the cooldown period before compaction.
+    /// When true, segments can be compacted immediately with same-generation segments.
+    pub immediate_compaction: bool,
     /// Eager compaction limits (flattened fields: `overflow`, `bytes`, `rows`).
     #[serde(
         flatten,
@@ -309,6 +313,7 @@ impl Default for CompactionAlgorithmConfig {
     fn default() -> Self {
         Self {
             cooldown_duration: ConfigDuration::default(),
+            immediate_compaction: false,
             eager_compaction_limit: SizeLimitConfig::default_eager_limit(),
         }
     }
@@ -318,6 +323,7 @@ impl From<&CompactionAlgorithmConfig> for amp_worker_core::CompactionAlgorithmCo
     fn from(config: &CompactionAlgorithmConfig) -> Self {
         Self {
             cooldown_duration: (&config.cooldown_duration).into(),
+            immediate_compaction: config.immediate_compaction,
             eager_compaction_limit: (&config.eager_compaction_limit).into(),
         }
     }
diff --git a/crates/core/worker-core/src/compaction/algorithm.rs b/crates/core/worker-core/src/compaction/algorithm.rs
index 23b28efff..02f4e530a 100644
--- a/crates/core/worker-core/src/compaction/algorithm.rs
+++ b/crates/core/worker-core/src/compaction/algorithm.rs
@@ -160,6 +160,7 @@ use crate::{
 /// ## Fields
 /// - `cooldown_duration`: The base duration used to calculate
 ///   the cooldown period for files based on their generation.
+/// - `immediate_compaction`: Whether to allow compaction of recently created segments.
 /// - `target_partition_size`: The upper bound for segment size limits.
 ///   Files exceeding this limit will not be compacted together. This
 ///   value must be non-unbounded.
@@ -170,6 +171,8 @@ pub struct CompactionAlgorithm {
     /// The amount of time a file must wait before it can be
     /// compacted with files of different generations.
     pub cooldown_duration: Duration,
+    /// Whether to allow compaction of recently created segments.
+    pub immediate_compaction: bool,
     /// The upper bound for segment size limits. Files exceeding this limit
     /// will not be compacted together. This value must be non-unbounded.
     pub target_partition_size: SegmentSizeLimit,
@@ -217,7 +220,7 @@ impl CompactionAlgorithm {
         let is_hot = self.is_hot(segment);
 
         match is_hot {
-            TestResult::Skipped => FileState::Hot,
+            TestResult::Skipped => FileState::Cold,
             TestResult::Activated(true) => FileState::Hot,
             TestResult::Activated(false) => FileState::Cold,
         }
@@ -246,7 +249,9 @@ impl CompactionAlgorithm {
         } else if state == FileState::Hot {
             // For hot files, only compact if size limit is not exceeded,
             // and both files share the same generation.
-            group.size.generation == candidate.size.generation && !*size_exceeded
+            self.immediate_compaction
+                && group.size.generation == candidate.size.generation
+                && !*size_exceeded
         } else {
             // For cold files, compact regardless of generation,
             // as long as size limit is not exceeded.
@@ -301,6 +306,7 @@ impl<'a> From<&'a ParquetConfig> for CompactionAlgorithm {
     fn from(config: &'a ParquetConfig) -> Self {
         CompactionAlgorithm {
             cooldown_duration: config.compactor.algorithm.cooldown_duration.clone().into(),
+            immediate_compaction: config.compactor.algorithm.immediate_compaction,
             target_partition_size: SegmentSizeLimit::from(&config.target_size),
             eager_compaction_limit: SegmentSizeLimit::from(
                 &config.compactor.algorithm.eager_compaction_limit,
diff --git a/crates/core/worker-core/src/config.rs b/crates/core/worker-core/src/config.rs
index 23cea9519..39178f40d 100644
--- a/crates/core/worker-core/src/config.rs
+++ b/crates/core/worker-core/src/config.rs
@@ -107,6 +107,8 @@ impl Default for CompactorConfig {
 pub struct CompactionAlgorithmConfig {
     /// Base cooldown duration in seconds (default: 1024.0)
     pub cooldown_duration: ConfigDuration<1024>,
+    /// Allow compaction of recently created segments (default: false)
+    pub immediate_compaction: bool,
     /// Eager compaction limits
     pub eager_compaction_limit: SizeLimitConfig,
 }
@@ -115,6 +117,7 @@ impl Default for CompactionAlgorithmConfig {
     fn default() -> Self {
         Self {
             cooldown_duration: ConfigDuration::default(),
+            immediate_compaction: false,
             eager_compaction_limit: SizeLimitConfig {
                 bytes: 0,
                 ..Default::default()
diff --git a/docs/config.sample.toml b/docs/config.sample.toml
index a0784dfb9..39a2678b3 100644
--- a/docs/config.sample.toml
+++ b/docs/config.sample.toml
@@ -94,6 +94,7 @@ url = "postgres://<pg_url>"
 # write_concurrency = 2           # Max concurrent compaction write operations (default: 2)
 # min_interval = 1.0              # Interval in seconds to run the compactor (default: 1.0)
 # cooldown_duration = 1024.0      # Base cooldown duration in seconds (default: 1024.0)
+# immediate_compaction = false    # Allow compaction of recently created segments (default: false)
 # overflow = "1"                  # Eager compaction overflow (default: "1")
 # bytes = 0                       # Eager compaction byte threshold (default: 0)
 # rows = 0                        # Eager compaction row threshold (default: 0)
diff --git a/docs/config/ampd.spec.json b/docs/config/ampd.spec.json
index 650923348..68d12a5d1 100644
--- a/docs/config/ampd.spec.json
+++ b/docs/config/ampd.spec.json
@@ -143,6 +143,11 @@
           "description": "Base cooldown duration in seconds between compaction runs (default: 1024).",
           "$ref": "#/$defs/ConfigDuration"
         },
+        "immediate_compaction": {
+          "description": "Allow compaction of recently created segments (default: false).\nWhen false, segments must wait for the cooldown period before compaction.\nWhen true, segments can be compacted immediately with same-generation segments.",
+          "type": "boolean",
+          "default": false
+        },
         "metadata_concurrency": {
           "description": "Maximum concurrent metadata operations (default: 2).",
           "type": "integer",